As filed with the Securities and Exchange Commission on February 26, 1999
Registration No. 33-36317
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11 [X]
(Check appropriate box or boxes)
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue, New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5200
BERNADETTE N. FINN
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and Address of Agent for Service)
Copy to: MICHAEL ROSELLA, ESQ.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on March 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
[ ] on (date) pursuant to paragraph (a) (1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
Registration Statement on form N-1A
CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
Part A
Item No. Prospectus Heading
1. Front and Back Cover Pages Cover Page; Back Page
2. Risk/Return Summary: Risk/Return Summary:
Investments, Risks and Performance Investments, Risks and Performance
3. Risk/Return Summary:
Fee Table Fee Table
4. Investment Objectives, Principal Investment Objectives, Principal
Investment Strategies and Related Risks Investment Strategies and Related
Risks
5. Management's Discussion of
Fund Performance Not Applicable
6. Management, Organization, and Management, Organization, and
Capital Structure Capital Structure
7. Shareholder Information Shareholder Information
8. Distribution Arrangements Distribution Arrangements
9. Financial Highlights Information Financial Highlights
<PAGE>
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
Registration Statement on Form N-1A
Part B
Item No. Caption in Statement of Additional
Information
10. Cover Page and Table of Contents Cover Page and Table of Contents
11. Fund History Fund History
12. Description of the Fund and Its Description of the Fund and Its
Investments and Risks Investments and Risks
13. Management of the Fund Management of the Fund
14. Control Persons and Principal Holders Control Persons and Principal Holders
of Securities of Securities
15. Investment Advisory and Investment Advisory and
Other Services Other Services
16. Brokerage Allocation and Brokerage Allocation and
Other Practices Other Practices
17. Capital Stock and Other Capital Stock and Other
Securities Securities
18. Purchase, Redemption, and Purchase, Redemption, and
Pricing of Shares Pricing of Shares
19. Taxation of the Fund Taxation of the Fund; New Jersey
Taxes
20. Underwriters Underwriters
21. Calculation of Performance Data Calculation of Performance Data
22. Financial Statements Financial Statements
<PAGE>
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NEW JERSEY DAILY MUNICIPAL PROSPECTUS
INCOME FUND, INC. March 1, 1999
Class A Shares; Class B Shares
================================================================================
A money market fund whose investment objectives are to seek as high a level of
current income exempt from Federal income tax and, to the extent possible, from
New Jersey gross income tax, as is believed to be consistent with preservation
of capital, maintenance of liquidity and stability of principal.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense
- --------------------------------------------------------------------------------
<TABLE>
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CONTENTS
<S> <C> <C> <C>
Risk/Return Summary............................2 Shareholder Information......................8
Fee Table......................................3 Tax Consequences............................14
Investment Objectives, Principal Federal Income Taxes........................15
Investment Strategies and New Jersey Income Taxes.....................16
Related Risks................................5 Distribution Arrangements...................16
Management, Organization and Capital Financial Highlights........................18
Structure.....................................7
</TABLE>
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I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS, AND PERFORMANCE
INVESTMENT OBJECTIVES
The Fund seeks as high a level of current income exempt from Federal income tax
and, to the extent possible, New Jersey gross income tax, as is believed to be
consistent with preservation of capital, maintenance of liquidity, and stability
of principal. There can be no assurance that the Fund will achieve its
investment objectives.
PRINCIPAL INVESTMENT STRATEGIES
The Fund intends to achieve its investment objectives by investing principally
in short-term, high quality, debt obligations of:
(i) New Jersey, and its political subdivisions;
(ii) Puerto Rico and other United States Territories; and their political
subdivisions, and
(iii) other states.
The Fund is a money market fund and seeks to maintain an investment portfolio
with a dollar-weighted average maturity of 90 days or less, to value its
investment portfolio at amortized cost and to maintain a net asset value of
$1.00 per share.
The Fund intends to concentrate (i.e. 25% or more of the Fund's total net
assets) in New Jersey Municipal Obligations, including Participation
Certificates therein. Participation Certificates evidence ownership of an
interest in the underlying Municipal Obligations, purchased from banks,
insurance companies, or other financial institutions.
PRINCIPAL RISKS
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
The value of the Fund's shares and the securities held by the Fund can each
decline in value.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other governmental agency.
Because the Fund intends to concentrate in New Jersey Municipal Obligations,
including Participation Certificates therein, investors should also consider the
greater risk of the Portfolio's concentration versus the safety that comes with
a less concentrated investment portfolio.
An investment in the Fund should be made with an understanding of the risks
that an investment in New Jersey Municipal Obligations may entail. Payment of
interest and preservation of capital are dependent upon the continuing ability
of New Jersey issuers and/or obligators of state, municipal and public authority
debt obligations to meet their payment obligations. Risk factors affecting the
State of New Jersey are described in "New Jersey Risk Factors" in the Statement
of Additional Information.
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table may assist you in your decision to invest in
the Fund. The bar chart shows the change in the annual returns of the Fund over
the last 8 calendar years. The table shows the average annual return for the
last one and five year periods. The table also includes the Fund's average
annual return since inception. While analyzing this information, please note
that the Fund's past performance is not an indicator of how the Fund will
perform in the future. The Fund's current 7-day yield may be obtained by calling
the Fund toll-free at 1-800-221-3079
2
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[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.- Class A Shares (1),(2),(3)
CALENDAR YEAR END % TOTAL RETURN
<S> <C>
1991 4.35%
1992 2.71%
1993 1.91%
1994 2.23%
1995 3.09%
1996 2.62%
1997 2.74%
1998 2.58%
</TABLE>
(1) As of December 31, 1998, the Fund had a year-to-date return of 2.58%.
(2) The Fund's highest quarterly return was 1.13% for the quarter ended March
31, 1991; the lowest quarterly return was 0.43% for the quarter ended March
31, 1994.
(3) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than if they had invested in the Fund directly.
AVERAGE ANNUAL TOTAL RETURNS - NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
CLASS A CLASS B
For the periods ended December 31, 1998
One Year 2.58% 2.79%
Five Years 2.65% N/A
Ten Years N/A N/A
Average Annual Total Return
since Inception 2.82% 2.85%
</TABLE>
3
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FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES CLASS A SHARES CLASS B SHARES
(expenses that are deducted from Fund assets)
Management Fees 0.30% 0.30%
Distribution and Service (12b-1) Fees 0.20% 0.00%
Other Expenses 0.34% 0.33%
Administration Fees 0.21% ----- 0.21% -----
Total Annual Fund Operating Expenses 0.84% 0.63%
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other money market funds.
Assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Also assume that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A: $86 $268 $466 $1,037
Class B: $64 $202 $351 $786
</TABLE>
4
<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
INVESTMENT OBJECTIVES
The Fund is a short-term, tax-exempt money market fund whose investment
objectives are to seek as high a level of current income exempt from Federal
income tax and, to the extent possible, from New Jersey gross income tax,
consistent with preserving capital, maintaining liquidity and stabilizing
principal.
The investment objectives of the Fund described in this section may only be
changed upon the approval of the holders of a majority of the outstanding shares
of the Fund that would be affected by such a change.
PRINCIPAL INVESTMENT STRATEGIES
GENERALLY
The Fund will invest primarily (i.e., at least 80%) in short-term, high quality,
debt obligations which include:
(i) New Jersey Municipal Obligations issued by or on behalf of the State of New
Jersey or any New Jersey local governments, or their instrumentalities,
authorities or districts;
(ii) Territorial Municipal Obligations issued by or on behalf of Puerto Rico and
the Virgin Islands or their instrumentalities, authorities, agencies and
political subdivisions; and
(iii)Municipal Obligations issued by or on behalf of other states, their
authorities, agencies, instrumentalities and political subdivisions.
These debt obligations are collectively referred to throughout this Prospectus
as Municipal Obligations.
The Fund will also invest in Participation Certificates in Municipal
Obligations. These instruments are purchased by the Fund from banks, insurance
companies or other financial institutions and in the opinion of Battle Fowler
LLP, counsel to the Fund, cause the Fund to be treated as the owner of the
underlying Municipal Obligations for Federal income tax purposes.
The Fund may invest more than 25% of its assets in Participation Certificates in
industrial revenue bonds and other New Jersey Municipal Obligations.
Although the Fund will attempt to invest 100% of its total assets in Municipal
Obligations and Participation Certificates, the Fund reserves the right to
invest up to 20% of its total assets in taxable securities whose interest income
is subject to regular Federal, state and local income tax. The kinds of taxable
securities in which the Fund may invest are limited to short-term, fixed income
securities as more fully described in "Taxable Securities" in the Statement of
Additional Information.
Included in the same 20% of total assets in taxable securities, the Fund may
also purchase securities and Participation Certificates whose interest income
may be subject to the Federal alternative minimum tax.
To the extent suitable New Jersey Municipal Obligations are not available for
investment by the Fund, the Fund may purchase Municipal Obligations issued by
other states, their agencies and instrumentalities, the dividends on which will
be designated by the Fund as derived from interest income which will be, in the
opinion of bond counsel to the issuer at the date of issuance, exempt from
regular Federal income tax, but will be subject to New Jersey income tax.
The Fund will invest at least 65% of its total assets in New Jersey Municipal
Obligations, although the exact amount may vary from time to time. As a
temporary defensive measure the Fund may, from time to time, invest in
securities that are inconsistent with its principal investment strategies in an
attempt to respond to adverse market, economic, political or other conditions as
determined by the Manager. Such a temporary defensive position may cause the
Fund to not achieve its investment objectives.
With respect to 75% of its total assets, the Fund shall invest not more than 5%
of its total assets in Municipal Obligations or Participation Certificates
issued by a single issuer. The Fund shall not invest more than 5% of its total
assets in Municipal Securities or Participation Certificates issued by a single
issuer unless the Municipal Obligations are of the highest quality.
5
<PAGE>
With respect to 75% of its total assets, the Fund shall invest not more than 10%
of its total assets in Municipal Obligations or Participation Certificates
backed by a demand feature or guarantee from the same institution.
The Fund's investments may also include "when-issued" Municipal Obligations and
stand-by commitments.
The Fund's investment manager considers the following factors when buying and
selling securities for the portfolio: (i) availability of cash, (ii) redemption
requests, (iii) yield management, and (iv) credit management.
In order to maintain a share price of $1.00, the Fund must comply with certain
industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other requirements pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have or are deemed to have a remaining maturity
of 397 days or less. Also, the average maturity for all securities contained in
the Fund, on a dollar-weighted basis, will be 90 days or less.
The Fund will only invest in either securities which have been rated (or whose
issuers have been rated) in the highest short-term rating category by nationally
recognized statistical rating organizations, or are unrated securities but which
have been determined by the Fund's Board of Directors to be of comparable
quality.
Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. If this occurs, the Board of Directors of the Fund shall reassess
the security's credit risks and shall take such action as it determines is in
the best interest of the Fund and its shareholders. Reassessment is not
required, however, if the security is disposed of or matures within five
business days of the Manager becoming aware of the new rating and provided
further that the Board of Directors is subsequently notified of the Manager's
actions.
For a more detailed description of (i) the securities that the Fund will invest
in, (ii) fundamental investment restrictions, and (iii) industry regulations
governing credit quality and maturity, please refer to the Statement of
Additional Information.
RISKS
The Fund complies with industry-standard requirements on the quality, maturity
and diversification of its investments which are designed to help maintain a
$1.00 share price. A significant change in interest rates or a default on the
Fund's investments could cause its share price (and the value of your
investment) to change.
By investing in liquid, short-term, high quality investments that have high
quality credit support from banks, insurance companies or other financial
institutions (i.e. Participation Certificates and other variable rate demand
instruments), the Fund's management believes that it can protect the Fund
against credit risks that may exist on long-term New Jersey Municipal
Obligations. The Fund may still be exposed to the credit risk of the institution
providing the investment. Changes in the credit quality of the provider could
affect the value of the security and your investment in the Fund.
Because of the Fund's concentration in investments in New Jersey Municipal
Obligations, the safety of an investment in the Fund will depend substantially
upon the financial strength of New Jersey and its political subdivisions.
The primary purpose of investing in a portfolio of New Jersey Municipal
Obligations is the special tax treatment accorded New Jersey resident individual
investors. Payment of interest and preservation of principal, however, are
dependent upon the continuing ability of the New Jersey issuers and/or obligors
of state, municipal and public authority debt obligations to meet their
obligations thereunder. Investors should consider the greater risk of the Fund's
concentration versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of New Jersey issues
with those of more diversified portfolios, including out-of-state issues, before
making an investment decision.
Because the Fund may concentrate in Participation
6
<PAGE>
Certificates which may be secured by bank letters of credit or guarantees, an
investment in the Fund should be made with an understanding of the
characteristics of the banking industry and the risks which such an investment
may entail. This includes extensive governmental regulations, changes in the
availability and cost of capital funds, and general economic conditions (see
"Variable Rate Demand Instruments and Participation Certificates" in the
Statement of Additional Information) which may limit both the amounts and types
of loans and other financial commitments which may be made and interest rates
and fees which may be charged. The profitability of this industry is largely
dependent upon the availability and cost of capital funds for the purpose of
financing lending operations under prevailing money market conditions. Also,
general economic conditions play an important part in the operations of this
industry and exposure to credit losses arising from possible financial
difficulties of borrowers might affect a bank's ability to meet its obligations
under a letter of credit.
As the Year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the Year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be Year 2000 compliant. Although the Manager does not anticipate that the
Year 2000 issue will have a material impact on the Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the Year 2000 will be sufficient to avoid an adverse impact on
the Fund. The Year 2000 problem may also adversely affect issuers of the
securities contained in the Fund, to varying degrees based upon various factors,
and thus may have a corresponding adverse effect on the Fund's performance. The
Manager is unable to predict what effect, if any, the Year 2000 problem will
have on such issuers.
III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of December 31, 1998 the Manager was the
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $12.0 billion. The Manager has been an investment adviser since 1970
and currently is manager of seventeen other registered investment companies and
also advises pension trusts, profit-sharing trusts and endowments.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund. Pursuant to the Investment Management Contract, the Fund pays the
Manager a fee equal to .30% per annum of the Fund's average daily net assets for
managing the Fund's investment portfolio and performing related services.
Pursuant to the Administrative Services Contract, the Manager performs clerical,
accounting supervision and office service functions for the Fund. The Manager
provides the Fund with the personnel to perform all other clerical and
accounting type functions not performed by the Manager. For its services under
the Administrative Services Contract, the Fund pays the Manager a fee equal to
.21% per annum of the Fund's average daily net assets.
The Manager, at its discretion, may voluntarily waive all or a portion of the
investment management and the administrative services fee. Any portion of the
total fees received by the Manager may be used to provide shareholder services
and for distribution of Fund shares.
In addition, Reich & Tang Distributors Inc., the Distributor, receives a
servicing fee equal to .20% per annum of the average daily net assets of the
Class A shares of the Fund under the Shareholder Servicing Agreement. The fees
are accrued daily and paid
7
<PAGE>
monthly. Investment management fees and operating expenses, which are
attributable to both Classes of shares of the Fund, will be allocated daily to
each Class of shares based on the percentage of shares outstanding for each
Class at the end of the day.
IV. SHAREHOLDER INFORMATION
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions from Participating Organizations
(discussed herein) and from investors directly.
PRICING OF FUND SHARES
The net asset value of each Class of the Fund's shares is determined as of 12
noon, New York City time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except days on which the New York Stock
Exchange is closed for trading. The net asset value of a Class is computed by
dividing the value of the Fund's net assets for such Class (i.e., the value of
its securities and other assets less its liabilities, including expenses payable
or accrued, but excluding capital stock and surplus) by the total number of
shares outstanding for such Class. The Fund intends to maintain a stable net
asset value at $1.00 per share although there can be no assurance that this will
be achieved.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If fluctuating interest
rates cause the market value of the Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Board of
Directors will consider whether any action should be initiated. Although the
amortized cost method provides certainty in valuation, it may result in periods
during which the value of an instrument is higher or lower than the price an
investment company would receive if the instrument were sold.
Shares are issued as of the first determination of the Fund's net asset value
per share for each Class made after acceptance of the investor's purchase order.
In order to maximize earnings on its portfolio, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Fund
shares begin accruing income on the day the shares are issued to an investor.
The Fund reserves the right to reject any purchase order for its shares.
Certificates for Fund shares will not be issued to an investor.
PURCHASE OF FUND SHARES
The Fund does not accept a purchase order until an investor's payment has been
converted into Federal Funds and is received by the Fund's transfer agent.
Orders accompanied by Federal Funds and received after 12 noon, New York City
time, on a Fund Business Day will result in the issuance of shares on the
following Fund Business Day.
Investors purchasing shares through a Participating Organization with which they
have an account become Class A shareholders. All other investors, and investors
who have accounts with Participating Organizations but do not wish to invest in
the Fund through them, may invest in the Fund directly as Class B shareholders
of the Fund. Class B shareholders do not receive the benefit of the servicing
functions performed by a Participating Organization. Class B shares may also be
offered to investors who purchase their shares through Participating
Organizations who, because they may not be legally permitted to receive such as
fiduciaries, do not receive compensation from the Distributor or the Manager.
The minimum initial investment in the Fund for both classes of shares is (i)
$1,000 for purchases through
8
<PAGE>
Participating Organizations - this may be satisfied by initial investments
aggregating $1,000 by a Participating Organization on behalf of their customers
whose initial investments are less than $1,000; (ii) $1,000 for securities
brokers, financial institutions and other industry professionals that are not
Participating Organizations and (iii) $5,000 for all other investors. Initial
investments may be made in any amount in excess of the applicable minimums. The
minimum amount for subsequent investments is $100 unless the investor is a
client of a Participating Organization whose clients have made aggregate
subsequent investments of $100.
Each shareholder, except those purchasing through Participating Organizations,
will receive from the Fund a personalized monthly statement listing (i) the
total number of Fund shares owned as of the statement closing date, (ii)
purchase and redemptions of Fund shares and (iii) the dividends paid on Fund
shares (including dividends paid in cash or reinvested in additional Fund
shares).
INVESTMENTS THROUGH PARTICIPATING
ORGANIZATIONS - PURCHASE OF CLASS A SHARES
Investors may, if they wish, invest in the Fund through the Participating
Organizations with which they have accounts. "Participating Organizations" are
securities brokers, banks and financial institutions or other industry
professionals or organizations which have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by its customer to purchase or redeem Fund
shares, the Participating Organization, on behalf of the customer, transmits to
the Fund's transfer agent a purchase or redemption order, and in the case of a
purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund ("Participant Investors") each purchase and redemption of Fund
shares for the customers' accounts. Also, Participating Organizations may send
periodic account statements to the Participant Investors showing (i) the total
number of Fund shares owned as of the statement closing date, (ii) purchases and
redemptions of Fund shares during the period covered by the statement, and (iii)
the income earned by Fund shares during the statement period (including
dividends paid in cash or reinvested in additional Fund shares). Participant
Investors whose Participating Organizations have not undertaken to provide such
statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly, may impose
charges, limitations, minimums and restrictions in addition to or different from
those applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will result in share issuance the following Fund Business Day.
Participating Organizations are responsible for instituting procedures to insure
that purchase orders by their respective clients are processed expeditiously.
9
<PAGE>
INITIAL DIRECT PURCHASES OF CLASS B SHARES
Investors who wish to invest in the Fund directly may obtain a current
prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
MAIL
Investors may send a check made payable to "New Jersey Daily Municipal Income
Fund, Inc." along with a completed subscription order form to:
New Jersey Daily Municipal
Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will normally be converted into Federal Funds within two business days after
receipt of the check. Checks drawn on a non-member bank may take substantially
longer to convert into Federal Funds. An investor's purchase order will not be
accepted until the Fund receives Federal Funds.
BANK WIRE
To purchase shares of the Fund using the wire system for transmittal of money
among banks, investors should first obtain a new account number by telephoning
the Fund at 212-830-5220 (within New York) or at 800-221-3079 (outside New York)
and then instruct a member commercial bank to wire money immediately to:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
DDA # 890752-954-6
For New Jersey Daily Municipal
Income Fund, Inc.
Account of (Investor's Name)
Fund Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order form.
Investors planning to wire funds should instruct their bank so the wire transfer
can be accomplished before 12 noon, New York City time, on the same day. There
may be a charge by the investor's bank for transmitting the money by bank wire,
and there also may be a charge for use of Federal Funds. The Fund does not
charge investors in the Fund for its receipt of wire transfers. Payment in the
form of a "bank wire" received prior to 12 noon, New York City time, on a Fund
Business Day will be treated as a Federal Funds payment received on that day.
PERSONAL DELIVERY
Deliver a check made payable to "New Jersey Daily Municipal Income Fund, Inc."
along with a completed subscription order form to:
Reich & Tang Mutual Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
ELECTRONIC FUNDS TRANSFERS (EFT), PRE-AUTHORIZED CREDIT AND DIRECT DEPOSIT
PRIVILEGE
You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, federal
salary, social security, or certain veteran's, military or other payments from
the federal government, automatically deposited into your Fund account. You can
also have money debited from your checking account. To enroll in any one of
these programs, you must file with the Fund a completed EFT Application,
Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form for each
type of payment that you desire to include in the Privilege. The appropriate
form may be obtained from your broker or the Fund. You may elect at any time to
terminate your participation by notifying in writing the appropriate depositing
entity and/or federal agency.
10
<PAGE>
Death or legal incapacity will automatically terminate your participation in the
Privilege. Further, the Fund may terminate your participation upon 30 days'
notice to you.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases can be made by bank wire, as indicated above, or by mailing
a check to:
New Jersey Daily Municipal
Income Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate the shareholder's account number.
Provided that the information on the subscription form on file with the Fund is
still applicable, a shareholder may reopen an account without filing a new
subscription order form at any time during the year the shareholder's account is
closed or during the following calendar year.
REDEMPTION OF SHARES
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class upon receipt by the Fund's transfer agent of the redemption order (and any
supporting documentation which it may require). Normally, payment for redeemed
shares is made on the same Fund Business Day after the redemption is effected,
provided the redemption request is received prior to 12 noon, New York City
time. However, redemption payments will not be effected unless the check
(including a certified or cashier's check) used for investment has been cleared
for payment by the investor's bank, which can take up to 15 days after
investment. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee. When a
signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature. It should be signed and guaranteed by
an eligible guarantor institution which includes a domestic bank, a domestic
savings and loan institution, a domestic credit union, a member bank of the
Federal Reserve system or a member firm of a national securities exchange,
pursuant to the Fund's transfer agent's standards and procedures.
WRITTEN REQUESTS
Shareholders may make a redemption in any amount by sending a written request to
the Fund addressed to:
New Jersey Daily Municipal
Income Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.
CHECKS
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $250 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional
11
<PAGE>
shares in the shareholder's account to cover the amount of the check. The use of
a check to make a withdrawal enables a shareholder in the Fund to receive
dividends on the shares to be redeemed up to the Fund Business Day on which the
check clears. Checks provided by the Fund may not be certified. Fund shares
purchased by check may not be redeemed by check until the check has cleared,
which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. Checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment will not be honored.
Since the dollar value of the account changes daily, the total value of the
account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a post-dated check. The
Fund reserves the right to terminate or modify the check redemption procedure at
any time or to impose additional fees following notification to the Fund's
shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution or other evidence of authorization in accordance
with the Fund's normal practices. Individuals and joint tenants are not required
to furnish any supporting documentation. Appropriate authorization forms will be
sent by the Fund or its agents to corporations and other shareholders who select
this option. As soon as the authorization forms are filed in good order with the
Fund's agent bank, it will provide the shareholder with a supply of checks.
Telephone
The Fund accepts telephone requests for redemption from shareholders who elect
this option on their subscription order form. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or, if in excess
of $1,000, to their bank accounts, both as set forth in the subscription order
form or in a subsequent written authorization. The Fund may accept telephone
redemption instructions from any person with respect to accounts of shareholders
who elect this service and thus such shareholders risk possible loss of
principal and interest in the event of a telephone redemption not authorized by
them. The Fund will employ reasonable procedures to confirm that telephone
redemption instructions are genuine, and will require that shareholders electing
such option provide a form of personal identification. Failure by the Fund to
employ such reasonable procedures may cause the Fund to be liable for the losses
incurred by investors due to unauthorized or fraudulent telephone redemptions.
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption request is received before 12
noon, New York City time. Proceeds are sent the next Fund Business Day if the
redemption request is received after 12 noon, New York City time. The Fund
reserves the right to terminate or modify the telephone redemption service in
whole or in part at any time and will notify shareholders accordingly.
12
<PAGE>
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed or the Fund may
impose a monthly service charge of $10 on such accounts. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization. The Participating Organization
will be responsible for notifying the Participant Investor of the proposed
mandatory redemption. During the notice period, a shareholder or Participating
Organization who receives such a notice may avoid mandatory redemption by
purchasing sufficient additional shares to increase his total net asset value to
the minimum amount.
SPECIFIED AMOUNT AUTOMATIC
WITHDRAWAL PLAN
Shareholders may elect to withdraw shares and receive payment from the Fund of a
specified amount of $50 or more automatically on a monthly or quarterly basis.
The monthly or quarterly withdrawal payments of the specified amount are made by
the Fund on the 23rd day of the month. Whenever such 23rd day of a month is not
a Fund Business Day, the payment date is the Fund Business Day preceding the
23rd day of the month. In order to make a payment, a number of shares equal in
aggregate net asset value to the payment amount are redeemed at their net asset
value on the Fund Business Day immediately preceding the date of payment. To the
extent that the redemptions to make plan payments exceed the number of shares
purchased through reinvestment of dividends and distributions, the redemptions
reduce the number of shares purchased on original investment, and may ultimately
liquidate a shareholder's investment.
The election to receive automatic withdrawal payments may be made at the time of
the original subscription by so indicating on the subscription order form. The
election may also be made, changed or terminated at any later time by sending a
signature guaranteed written request to the transfer agent. Because the
withdrawal plan involves the redemption of Fund shares, such withdrawals may
constitute taxable events to the shareholder but the Fund does not expect that
there will be any realized capital gains.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends equal to all its net investment income (excluding
long-term capital gains and losses, if any, and amortization of market discount)
on each Fund Business Day and pays dividends monthly. There is no fixed dividend
rate. In computing these dividends, interest earned and expenses are accrued
daily.
Net realized capital gains, if any, are distributed at least annually and in no
event later than 60 days after the end
13
<PAGE>
of the Fund's fiscal year.
All dividends and distributions of capital gains are automatically invested, at
no charge, in additional Fund shares of the same Class of shares immediately
upon payment thereof unless a shareholder has elected by written notice to the
Fund to receive either of such distributions in cash.
Because Class A shares bear the service fee under the Fund's 12b-1 Plan, the net
income of and the dividends payable to the Class A shares will be lower than the
net income of and dividends payable to the Class B shares of the Fund. Dividends
paid to each Class of shares of the Fund will, however, be declared and paid on
the same days at the same times and, except as noted with respect to the service
fees payable under the Plan, will be determined in the same manner and paid in
the same amounts.
EXCHANGE PRIVILEGE
Shareholders of the Fund are entitled to exchange some or all of their Class of
shares in the Fund for shares of the same Class of certain other investment
companies which retain Reich & Tang Asset Management L.P. as investment adviser
and which participate in the exchange privilege program with the Fund. If only
one Class of shares is available in a particular exchange fund, the shareholder
of the Fund is entitled to exchange their shares for the shares available in
that exchange fund. Currently the exchange privilege program has been
established between the Fund and California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Georgia Daily Municipal Income Fund, Inc., Michigan Daily Tax Free Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich &
Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc. In the future, the exchange privilege program may be
extended to other investment companies which retain Reich & Tang Asset
Management L.P. as investment adviser or manager.
There is no charge for the exchange privilege or limitation as to frequency of
exchange. The minimum amount for an exchange is $1,000. However, shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure that a sufficient number of shares are exchanged
to meet the minimum initial investment required for the investment company into
which the exchange is being made. Each Class of shares is exchanged at its
respective net asset value.
The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Shares of the same Class may be exchanged
only between investment company accounts registered in identical names. Before
making an exchange, the investor should review the current prospectus of the
investment company into which the exchange is to be made.
Instructions for exchanges may be made by sending a signature guaranteed written
request to:
New Jersey Daily Municipal
Income Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
or, for shareholders who have elected that option, by telephoning the Fund at
212-830-5220 (within New York) or 800-221-3079 (outside New York). The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.
TAX CONSEQUENCES
Dividends paid by the Fund, which are "exempt-interest dividends" by virtue of
being properly designated by the
14
<PAGE>
Fund as derived from Municipal Obligations and Participation Certificates, will
be exempt from regular Federal income tax provided the Fund complies with
Section 852(b)(5) of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Exempt-interest dividends paid by the Fund correctly
identified by the Fund as derived from obligations issued by or on behalf of the
State of New Jersey or any New Jersey local governments, or their
instrumentalities, authorities or districts ("New Jersey Municipal Obligations")
will be exempt from the New Jersey gross income tax, provided that the Fund
complies with New Jersey Law. Exempt-interest dividends correctly identified by
the Fund as derived from obligations of Puerto Rico and the Virgin Islands, as
well as other types of obligations that New Jersey is prohibited from taxing
under the Constitution, the laws of the United States of America or the laws of
New Jersey ("Territorial Municipal Obligations") also should be exempt from the
New Jersey gross income tax provided the Fund complies with New Jersey law.
FEDERAL INCOME TAXES
The Fund has elected to qualify under the Code as a regulated investment company
that distributes "exempt-interest dividends" as defined in the Code. The Fund's
policy is to distribute as dividends each year 100% (and in no event less than
90%) of its tax-exempt interest income, net of certain deductions, and its
investment company taxable income (if any). If distributions are made in this
manner, dividends derived from the interest earned on Municipal Obligations and
properly designated by the Fund not later than 60 days after the close of its
taxable year are "exempt-interest dividends" and are not subject to regular
Federal income tax, although as described below, such "exempt-interest
dividends" may be subject to Federal alternative minimum tax. Dividends paid
from taxable income, if any, and distributions of any realized short-term
capital gains (whether from tax-exempt or taxable obligations) are taxable to
shareholders as ordinary income for Federal income tax purposes, whether
received in cash or reinvested in additional shares of the Fund. The Fund does
not expect to realize long-term capital gains, and thus does not contemplate
distributing "capital gain dividends" or having undistributed capital gain
income within the meaning of the Code. The Fund will inform shareholders of the
amount and nature of its income and gains in a written notice mailed to
shareholders not later than 60 days after the close of the Fund's taxable year.
For Social Security recipients, interest on tax-exempt bonds, including "exempt
interest dividends" paid by the Fund, is to be added to adjusted gross income
for purposes of computing the amount of Social Security benefits includible in
gross income. Interest on certain "private activity bonds" (generally, a bond
issue in which more than 10% of the proceeds are used for a non-governmental
trade or business and which meets the private security or payment test, or a
bond issue which meets the private loan financing test) issued after August 7,
1986 will constitute an item of tax preference subject to the individual
alternative minimum tax. Corporations will be required to include in alternative
minimum taxable income 75% of the amount by which their adjusted current
earnings (including generally, tax-exempt interest) exceeds their alternative
minimum taxable income (determined without this tax item). In certain cases
Subchapter S corporations with accumulated earnings and profits from Subchapter
C years will be subject to a tax on "passive investment income", including
tax-exempt interest. Although the Fund intends to maintain a $1.00 per share net
asset value, a shareholder may realize a taxable gain or loss upon the
disposition of shares.
With respect to variable rate demand instruments, including Participation
Certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for Federal income tax purposes as
the owner of an interest in the underlying Municipal Obligations and that the
interest thereon will be exempt from regular Federal income taxes to the Fund to
the same extent as the interest on the underlying Municipal Obligations. Counsel
has pointed out that the Internal Revenue Service has announced it will not
ordinarily issue advance rulings on the question of the ownership of securities
or participation interests therein subject to a put and could reach a conclusion
different from that
15
<PAGE>
reached by counsel.
In South Carolina v. Baker, the United States Supreme Court held that the
Federal government may constitutionally require states to register bonds they
issue and may subject the interest on such bonds to Federal tax if not
registered. The Court further held that there is no constitutional prohibition
against the Federal government's taxing the interest earned on state or other
municipal bonds. The Supreme Court decision affirms the authority of the Federal
government to regulate and control bonds such as the Municipal Obligations and
to tax the intrest on such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the
Municipal Obligations in accordance with Section 103 of the Code.
The Fund may invest a portion of its assets in securities that generate income
that is not exempt from Federal or state income tax. Income exempt from Federal
income tax may be subject to state and local income tax. Capital gains
distributed by the Fund may be taxable.
NEW JERSEY INCOME TAXES
The following is based upon the advice of Sills Cummis Radin Tischman Epstein &
Gross, P.A., special tax counsel to the Fund. The designation of all or a
portion of a dividend paid by the Fund as an "exempt-interest dividend" under
the Code does not necessarily result in the exemption of such amount from tax
under the laws of any state or local taxing authority.
The Fund intends to be a "qualified investment fund" within the meaning of the
New Jersey gross income tax. The primary criteria for constituting a "qualified
investment fund" are that (i) such fund is an investment company registered with
the SEC which, for the calendar year in which the distribution is paid, has no
investments other than interest bearing obligations, obligations issued at a
discount, cash and cash items, including receivables and financial options,
futures, forward contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond indexes
related thereto and (ii) at the close of each quarter of the taxable year, such
fund has not less than 80% of the aggregate principal amount of all of its
investments, excluding financial options, futures, forward contracts, or other
similar financial instruments relating to interest-bearing obligations,
obligations issued at a discount or bond indexes related thereto to the extent
such instruments are authorized under the regulated investment company rules
under the Code, cash and cash items, which cash items shall include receivables,
in New Jersey Municipal Obligations, Territorial Municipal Obligations and
certain other specified securities. Additionally, a qualified investment fund
must comply with certain continuing reporting requirements. In the opinion of
Sills Cummis Radin Tischman Epstein & Gross, P.A., assuming that the Fund
constitutes a qualified investment fund and that the Fund complies with the
reporting obligations under New Jersey law with respect to qualified investment
funds, (a) distributions paid by the Fund to a New Jersey resident individual
shareholder will not be subject to the New Jersey gross income tax to the extent
that the distributions are attributable to income received as interest on or
gain from New Jersey Municipal Obligations or Territorial Municipal Obligations,
and (b) gain from the sale of shares in the Fund by a New Jersey resident
individual shareholder will not be subject to the New Jersey gross income tax.
Shareholders are urged to consult with their tax advisors with respect to the
treatment of distributions from the Fund and ownership of shares of the Fund in
their own states and localities.
Although the Fund intends to maintain a $1.00 per share net asset value, the
redemption of shares may result in the investor's receipt of more or less than
he paid for his shares and, thus, in a taxable gain or loss to the investor. An
exchange pursuant to the exchange privilege is treated for Federal income tax
purposes as a sale on which a shareholder may realize a taxable gain or loss.
However, if the Fund is a New Jersey qualified investment fund, any such gains
received by a New Jersey resident individual shareholder should not be subject
to the New Jersey gross income tax.
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
16
<PAGE>
Investors do not pay a sales charge to purchase shares of the Fund. However, the
Fund pays fees in connection with the distribution of shares and for services
provided to the Class A shareholders. The Fund pays these fees from its assets
on an ongoing basis and therefore, over time, the payment of these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and service
plan (the "Plan") and, pursuant to the Plan, the Fund and Reich & Tang
Distributors, Inc. (the "Distributor") have entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to the Class A
shares of the Fund only).
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares. For nominal consideration (i.e., $1.00) and as agent for the
Fund, the Distributor solicits orders for the purchase of the Fund's shares,
provided that any orders will not be binding on the Fund until accepted by the
Fund as principal.
Under the Shareholder Servicing Agreement, the Distributor receives, with
respect only to the Class A shares, a service fee equal to .20% per annum of the
Class A shares' average daily net assets (the "Shareholder Servicing Fee") for
providing personal shareholder services and for the maintenance of shareholder
accounts. The fee is accrued daily and paid monthly. Any portion of the fee may
be deemed to be used by the Distributor for payments to Participating
Organizations with respect to their provision of such services to their clients
or customers who are shareholders of the Class A shares of the Fund. The Class B
shareholders will not receive the benefit of such services from Participating
Organizations and, therefore, will not be assessed a Shareholder Servicing Fee.
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Distributor and Participating Organizations in carrying out their
obligations under the Shareholder Servicing Agreement with respect to Class A
shares, and (ii) preparing, printing and delivering the Fund's prospectus to
existing shareholders of the Fund and preparing and printing subscription
application forms for shareholder accounts. These Payments are limited to a
maximum of .05% per annum of the Class A`s shares' average daily net assets.
The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the management fee and past profits for the
following purposes: (i) to defray costs, and to compensate others, including
Participating Organizations with whom the Distributor has entered into written
agreements, for performing shareholder servicing on behalf of the Class A shares
of the Fund; (ii) to compensate certain Participating Organizations for
providing assistance in distributing the Class A shares of the Fund; and (iii)
to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the Fund's
Class A shares. The Distributor may also make payments from time to time from
its own resources, which may include the Shareholding Servicing Fee (with
respect to Class A shares) and past profits, for the purposes enumerated in (i)
above. The Distributor will determine the amount of such payments made pursuant
to the Plan, provided that such payments will not increase the amount which the
Fund is required to pay to the Manager and Distributor for any fiscal year under
either the Investment Management Contract in effect for that year or under the
Shareholder Servicing Agreement in effect for that year.
17
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey and Pullen, LLP, whose report, along
with the Fund's financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
Year Ended October 31,
<S> <C> <C> <C> <C> <C>
CLASS A 1998 1997 1996 1995 1994
PER SHARE OPERATING PERFORMANCE:
(for a share outstanding throughout the
period)
Net asset value, beginning of period ........... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ..................... 0.026 0.027 0.027 0.030 0.020
Less distributions:
Dividends from net investment income
(0.026) (0.027) (0.027) (0.030) (0.020)
(0.026)
Net asset value, end of period ................. $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN ................................... 2.65% 2.70% 2.69% 3.08% 2.03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) ................ $166,234 $217,529 $151,421 $130,128 $105,929
Ratios to average net assets:
Expenses .................................. 0.84%+ 0.86%+ 0.78%+ 0.72% 0.66%
Net investment income ..................... 2.60% 2.66% 2.65% 3.02% 2.02%
Management, shareholder servicing
and administration fees waived ............ -- -- 0.06% 0.18% 0.26%
</TABLE>
<TABLE>
<CAPTION>
February 9, 1996
(Commencement of
Year Ended October 31, Operations) to
October 31, 1996
<S> <C> <C> <C>
CLASS B 1998 1997
PER SHARE OPERATING PERFORMANCE:
(for a share outstanding throughout the period)
Net asset value, beginning of period............... $1.00 $1.00 $1.00
Income from investment operations:
Net investment income........................... 0.028 0.029 0.020
Less distributions:
Dividends from net investment income............ (0.028) (0.029) (0.020)
Net asset value, end of period..................... $1.00 $1.00 $1.00
TOTAL RETURN....................................... 2.86% 2.91% 2.77%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $2,278 $366 $315
Ratios to average net assets:
Expenses 0.63%+ 0.65%+ 0.61%+*
Net investment income........................... 2.76% 2.88% 2.72%*
+ Includes expense offsets
* Annualized
</TABLE>
18
<PAGE>
A Statement of Additional Information (SAI), dated March 2, 1999, and the Fund's
Annual and Semi-Annual Reports include additional information about the Fund and
its investments and are incorporated by reference into this prospectus. You may
obtain the SAI, the Annual and Semi-Annual Reports and other material
incorporated by reference without charge by calling the Fund at 1-800-221-3079.
To request other information, call your financial intermediary or the Fund.
A current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's
Public Reference Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
PROSPECTUS
MARCH 1, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
(212) 830-5220
811-6152
NJ399P
<PAGE>
[GRAPHIC OMITTED]
PROSPECTUS
CHASE VISTA SELECT SHARES OF NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
Class A Shares
March 1, 1999
A money market fund whose investment objectives are to seek as high a level of
current income exempt from Federal income tax and, to the extent possible, from
New Jersey gross income tax, as is believed to be consistent with preservation
of capital, maintenance of liquidity and stability of principal.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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Risk/Return Summary: Investments, Risks, Shareholder Information
and Performance Tax Consequences
Fee Table Federal Income Taxes
Investment Objectives, Principal Investment New Jersey Income Taxes
Strategies and Related Risks Distribution Arrangements
Management, Organization and Capital Structure Financial Highlights
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I. RISK/RETURN SUMMARY
INVESTMENTS, RISKS, AND PERFORMANCE
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INVESTMENT OBJECTIVES
The Fund seeks as high a level of current income exempt from Federal income tax
and, to the extent possible, New Jersey gross income tax, as is believed to be
consistent with preservation of capital, maintenance of liquidity, and stability
of principal. There can be no assurance that the Fund will achieve its
investment objectives.
PRINCIPAL INVESTMENT STRATEGIES
The Fund intends to achieve its investment objectives by investing principally
in short-term, high quality, debt obligations of:
(i) New Jersey, and its political subdivisions;
(ii) Puerto Rico and other United States Territories, and their political
subdivisions; and
(iii) other states.
The Fund is a money market fund and seeks to maintain an investment portfolio
with a dollar-weighted average maturity of 90 days or less, to value its
investment portfolio at amortized cost and to maintain a net asset value of
$1.00 per share.
The Fund intends to concentrate (i.e. 25% or more of the Fund's total net
assets) in New Jersey Municipal Obligations, including Participation
Certificates therein. Participation Certificates evidence ownership of an
interest in the underlying Municipal Obligations purchased from banks,
insuracnce companies, or other financial institutions.
PRINCIPAL RISKS
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
The value of the Fund's shares and the securities held by the Fund can each
decline in value.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other governmental agency.
Because the Fund intends to concentrate in New Jersey Municipal Obligations,
including Participation Certificates therein, investors should also consider the
greater risk of the Portfolio's concentration versus the safety that comes with
a less concentrated investment portfolio.
An investment in the Fund should be made with an understanding of the risks that
an investment in New Jersey Municipal Obligations may entail. Payment of
interest and preservation of capital are dependent upon the continuing ability
of New Jersey issuers and/or obligators of state, municipal and public authority
debt obligations to meet their payment obligations. Risk factors affecting the
State of New Jersey are described in "New Jersey Risk Factors" in the Statement
of Additional Information.
RISK/RETURN BAR CHART AND TABLE
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The following bar chart and table may assist you in your decision to invest in
the Fund. The bar chart shows the change in the annual return of the Fund over
the last 8 calendar years. The table shows the average annual returns for the
last one and five year periods. The table also includes the Fund's average
annual return since inception. While analyzing this information, please note
that the Fund's past performance is not an indicator of how the Fund will
perform in the future. The Fund's current 7-day yield may be obtained by calling
the Fund toll-free at 1-800-221-3079.
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NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.- Class A Shares (1),(2),(3)
CALENDAR YEAR END % TOTAL RETURN
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1991 4.35%
1992 2.71%
1993 1.91%
1994 2.23%
1995 3.09%
1996 2.62%
1997 2.74%
1998 2.58%
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(1) As of December 31, 1998, the Fund had a year-to-date return of 2.58%.
(2) The Fund's highest quarterly return was 1.13% for the quarter ended March
31, 1991; the lowest quarterly return was 0.43% for the quarter ended March
31, 1994.
(3) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than if they had invested in the Fund directly.
AVERAGE ANNUAL TOTAL RETURNS - NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
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CLASS A
For the periods ended December 31, 1998
One Year 2.58%
Five Years 2.65%
Ten Years N/A
Average Annual Total Return
since Inception 2.82%
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FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
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ANNUAL FUND OPERATING EXPENSES CLASS A SHARES
(expenses that are deducted from Fund assets)
Management Fees 0.30%
Distribution and Service (12b-1) Fees 0.20%
Other Expenses 0.34%
Administration Fees 0.21% -----
Total Annual Fund Operating Expenses 0.84%
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EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other money market funds.
Assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Also assume that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A: $86 $268 $466 $1,037
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II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
INVESTMENT OBJECTIVES
The Fund is a short-term, tax-exempt money market fund whose investment
objectives are to seek as high a level of current income exempt from Federal
income tax and, to the extent possible, from New Jersey gross income tax,
consistent with preserving capital, maintaining liquidity and stabilizing
principal.
The investment objectives of the Fund described in this section may only be
changed upon the approval of the holders of a majority of the outstanding shares
of the Fund that would be affected by such a change.
PRINCIPAL INVESTMENT STRATEGIES
GENERALLY
The Fund will invest primarily (i.e., at least 80%) in short-term, high quality,
debt obligations which include:
(i) New Jersey Municipal Obligations issued by or on behalf of the State of
New Jersey or any New Jersey local governments, or their
instrumentalities, authorities or districts;
(ii) Territorial Municipal Obligations issued by or on behalf of Puerto Rico
and the Virgin Islands or their instrumentalities, authorities, agencies
and political subdivisions; and
(iii) Municipal Obligations issued by or on behalf of other states, their
authorities, agencies, instrumentalities and political subdivisions.
These debt obligations are collectively referred to throughout this Prospectus
as Municipal Obligations.
The Fund will also invest in Participation Certificates in Municipal
Obligations. These instruments are purchased by the Fund from banks, insurance
companies or other financial institutions and in the opinion of Battle Fowler
LLP, counsel to the Fund, cause the Fund to be treated as the owner of the
underlying Municipal Obligations for Federal income tax purposes.
The Fund may invest more than 25% of its assets in Participation Certificates in
industrial revenue bonds and other New Jersey Municipal Obligations.
Although the Fund will attempt to invest 100% of its total assets in Municipal
Obligations and Participation Certificates, the Fund reserves the right to
invest up to 20% of its total assets in taxable securities whose interest income
is subject to regular Federal, state and local income tax. The kinds of taxable
securities in which the Fund may invest are limited to short-term, fixed income
securities as more fully described in "Taxable Securities" in the Statement of
Additional Information.
Included in the same 20% of total assets in taxable securities, the Fund may
also purchase securities and Participation Certificates
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whose interest income may be subject to the Federal alternative minimum tax.
To the extent suitable New Jersey Municipal Obligations are not available for
investment by the Fund, the Fund may purchase Municipal Obligations issued by
other states, their agencies and instrumentalities, the dividends on which will
be designated by the Fund as derived from interest income which will be, in the
opinion of bond counsel to the issuer at the date of issuance, exempt from
regular Federal income tax, but will be subject to New Jersey income tax.
The Fund will invest at least 65% of its total assets in New Jersey Municipal
Obligations, although the exact amount may vary from time to time. As a
temporary defensive measure the Fund may, from time to time, invest in
securities that are inconsistent with its principal investment strategies in an
attempt to respond to adverse market, economic, political or other conditions as
determined by the Manager. Such a temporary defensive position may cause the
Fund to not achieve its investment objectives.
With respect to 75% of its total assets, the Fund shall invest not more than 5%
of its total assets in Municipal Obligations or Participation Certificates
issued by a single issuer. The Fund shall not invest more than 5% of its total
assets in Municipal Securities or Participation Certificates issued by a single
issuer unless the Municipal Obligations are of the highest quality.
With respect to 75% of its total assets, the Fund shall invest not more than 10%
of its total assets in Municipal Obligations or Participation Certificates
backed by a demand feature or guarantee from the same institution.
The Fund's investments may also include "when-issued" Municipal Obligations and
stand-by commitments.
The Fund's investment manager considers the following factors when buying and
selling securities for the portfolio: (i) availability of cash, (ii) redemption
requests, (iii) yield management, and (iv) credit management.
In order to maintain a share price of $1.00, the Fund must comply with certain
industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other requirements pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have or are deemed to have a remaining maturity
of 397 days or less. Also, the average maturity for all securities contained in
the Fund, on a dollar-weighted basis, will be 90 days or less.
The Fund will only invest in either securities which have been rated (or whose
issuers have been rated) in the highest short-term rating category by nationally
recognized statistical rating organizations, or are unrated securities but which
have been determined by the Fund's Board of Directors to be of comparable
quality.
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Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. If this occurs, the Board of Directors of the Fund shall reassess
the security's credit risks and shall take such action as it determines is in
the best interest of the Fund and its shareholders. Reassessment is not
required, however, if the security is disposed of or matures within five
business days of the Manager becoming aware of the new rating and provided
further that the Board of Directors is subsequently notified of the Manager's
actions.
For a more detailed description of (i) the securities that the Fund will invest
in, (ii) fundamental investment restrictions, and (iii) industry regulations
governing credit quality and maturity, please refer to the Statement of
Additional Information.
RISKS
The Fund complies with industry-standard requirements on the quality, maturity
and diversification of its investments which are designed to help maintain a
$1.00 share price. A significant change in interest rates or a default on the
Fund's investments could cause its share price (and the value of your
investment) to change.
By investing in liquid, short-term, high quality investments that have high
quality credit support from banks, insurance companies or other financial
institutions (i.e. Participation Certificates and other variable rate demand
instruments), the Fund's management believes that it can protect the Fund
against credit risks that may exist on long-term New Jersey Municipal
Obligations. The Fund may still be exposed to the credit risk of the institution
providing the investment. Changes in the credit quality of the provider could
affect the value of the security and your investment in the Fund.
Because of the Fund's concentration in investments in New Jersey Municipal
Obligations, the safety of an investment in the Fund will depend substantially
upon the financial strength of New Jersey and its political subdivisions.
The primary purpose of investing in a portfolio of New Jersey Municipal
Obligations is the special tax treatment accorded New Jersey resident individual
investors. Payment of interest and preservation of principal, however, are
dependent upon the continuing ability of the New Jersey issuers and/or obligors
of state, municipal and public authority debt obligations to meet their
obligations thereunder. Investors should consider the greater risk of the Fund's
concentration versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of New Jersey issues
with those of more diversified portfolios, including out-of-state issues, before
making an investment decision.
Because the Fund may concentrate in Participation Certificates which may be
secured by bank letters of credit or guarantees, an investment in the Fund
should be made with an
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understanding of the characteristics of the banking industry and the risks which
such an investment may entail. This includes extensive governmental regulations,
changes in the availability and cost of capital funds, and general economic
conditions (see "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information) which may limit both
the amounts and types of loans and other financial commitments which may be made
and interest rates and fees which may be charged. The profitability of this
industry is largely dependent upon the availability and cost of capital funds
for the purpose of financing lending operations under prevailing money market
conditions. Also, general economic conditions play an important part in the
operations of this industry and exposure to credit losses arising from possible
financial difficulties of borrowers might affect a bank's ability to meet its
obligations under a letter of credit.
As the Year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the Year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be Year 2000 compliant. Although the Manager does not anticipate that the
Year 2000 issue will have a material impact on the Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the Year 2000 will be sufficient to avoid an adverse impact on
the Fund. The Year 2000 problem may also adversely affect issuers of the
securities contained in the Fund, to varying degrees based upon various factors,
and thus may have a corresponding adverse effect on the Fund's performance. The
Manager is unable to predict what effect, if any, the Year 2000 problem will
have on such issuers.
III. MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of December 31, 1998, the Manager was the
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $12.0 billion. The Manager has been an investment adviser since 1970
and currently is manager of seventeen other registered investment companies and
also advises pension trusts, profit-sharing trusts and endowments.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund. Pursuant to the Investment Management Contract, the Fund pays the
Manager a fee equal to .30% per annum of the Fund's
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average daily net assets for managing the Fund's investment portfolio and
performing related services.
Pursuant to the Administrative Services Contract, the Manager performs clerical,
accounting supervision and office service functions for the Fund. The Manager
provides the Fund with the personnel to perform all other clerical and
accounting type functions not performed by the Manager. For its services under
the Administrative Services Contract, the Fund pays the Manager a fee equal to
.21% per annum of the Fund's average daily net assets.
The Manager, at its discretion, may voluntarily waive all or a portion of the
investment management fee and the administrative services fee. Any portion of
the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares.
In addition, Reich & Tang Distributors Inc., the Distributor, receives a
servicing fee equal to .20% per annum of the average daily net assets of the
Class A shares of the Fund under the Shareholder Servicing Agreement. The fees
are accrued daily and paid monthly. Investment management fees and operating
expenses, which are attributable to both Classes of shares of the Fund, will be
allocated daily to each Class of shares based on the percentage of shares
outstanding for each Class at the end of the day.
IV. SHAREHOLDER INFORMATION
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions from Participating Organizations
(discussed herein) and from investors directly.
PRICING OF FUND SHARES
The net asset value of each Class of the Fund's shares is determined as of 12
noon, New York City time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except days on which the New York Stock
Exchange is closed for trading. The net asset value of a Class is computed by
dividing the value of the Fund's net assets for such Class (i.e., the value of
its securities and other assets less its liabilities, including expenses payable
or accrued, but excluding capital stock and surplus) by the total number of
shares outstanding for such Class. The Fund intends to maintain a stable net
asset value at $1.00 per share although there can be no assurance that this will
be achieved.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If fluctuating interest
rates cause the market value of the Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis
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of amortized cost, the Board of Directors will consider whether any action
should be initiated. Although the amortized cost method provides certainty in
valuation, it may result in periods during which the value of an instrument is
higher or lower than the price an investment company would receive if the
instrument were sold.
Shares are issued as of the first determination of the Fund's net asset value
per share for each Class made after acceptance of the investor's purchase order.
In order to maximize earnings on its portfolio, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Fund
shares begin accruing income on the day the shares are issued to an investor.
The Fund reserves the right to reject any purchase order for its shares.
Certificates for Fund shares will not be issued to an investor.
PURCHASE OF FUND SHARES
The Fund does not accept a purchase order until an investor's payment has been
converted into Federal Funds and is received by the Fund's transfer agent.
Orders accompanied by Federal Funds and received after 12 noon, New York City
time, on a Fund Business Day will result in the issuance of shares on the
following Fund Business Day.
Investors may invest in Chase Vista Select shares through VFD or through dealers
with whom VFD has entered into agreements for this purpose as described herein.
Those who have accounts with Participating Organizations may invest in the Chase
Vista Select shares through their Participating Organizations in accordance with
the procedures established by the Participating Organizations. (See "Investments
Through Participating Organizations" herein.) Only Class A shares are offered
through this Prospectus. Certain Participating Organizations are compensated by
the Distributor from its shareholder servicing fee and by the Manager from its
management fee for the performance of these services. An investor who purchases
shares through a Participating Organization that receives payment from the
Manager or the Distributor will become a Class A shareholder. All other
investors, and investors who have accounts with Participating Organizations but
who do not wish to invest in the Fund through their Participating Organizations,
may invest in the Fund directly as Class B shareholders of the Fund and not
receive the benefit of the servicing functions performed by a Participating
Organization. Class B shares may also be offered to investors who purchase their
shares through Participating Organizations who do not receive compensation from
the Distributor or the Manager because they may not be legally permitted to
receive such as fiduciaries. The Manager
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pays the expenses incurred in the distribution of Class B shares. Participating
Organizations whose clients become Class B shareholders will not receive
compensation from the Manager or Distributor for the servicing they may provide
to their clients. The minimum initial investment in the Chase Vista Select
shares is $2,500. Initial investments may be made in any amount in excess of the
applicable minimums. The minimum amount for subsequent investments is $100.
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent,
which accepts orders for purchases and redemptions from Participating
Organizations, VFD, and from dealers with whom VFD has entered into agreements
for this purpose.
INVESTMENTS THROUGH PARTICIPATING ORGANIZATIONS - PURCHASE OF CHASE VISTA SELECT
CLASS A SHARES
Investors may, if they wish, invest in the Fund through the Participating
Organizations with which they have accounts. "Participating Organizations" are
securities brokers, banks and financial institutions or other industry
professionals or organizations which have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by its customer to purchase or redeem Fund
shares, the Participating Organization, on behalf of the customer, transmits to
the Fund's transfer agent a purchase or redemption order, and in the case of a
purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund ("Participating Investors") each purchase and redemption of Fund
shares for the customers' accounts. Also, Participating Organizations may send
periodic account statements to the Participating Investors showing (i) the total
number of Fund shares owned as of the statement closing date, (ii) purchases and
redemptions of Fund shares during the period covered by the statement, and (iii)
the income earned by Fund shares during the statement period (including
dividends paid in cash or reinvested in additional Fund shares). Participant
Investors whose Participating Organizations have not undertaken to provide such
statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly,
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may impose charges, limitations, minimums and restrictions in addition to or
different from those applicable to shareholders who invest in the Fund directly.
Accordingly, the net yield to investors who invest through Participating
Organizations may be less than by investing in the Fund directly. A Participant
Investor should read this Prospectus in conjunction with the materials provided
by the Participating Organization describing the procedures under which Fund
shares may be purchased and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will result in share issuance the following Fund Business Day.
Participating Organizations are responsible for instituting procedures to insure
that purchase orders by their respective clients are processed expeditiously.
INITIAL PURCHASE OF CHASE VISTA SELECT CLASS A SHARES
Investors may obtain a current prospectus and the order form necessary to open
an account by telephoning the Chase Vista Service Center at 1-800-34-VISTA.
MAIL. To purchase shares of the "Chase Vista Select shares" send a check made
payable to "Vista Select Shares of New Jersey Daily Municipal Income Fund, Inc."
along with a completed subscription order form to:
New Jersey Daily Municipal Income Fund, Inc.
P.O. Box 419392
Kansas City, Missouri 64141-6392
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member bank of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
BANK WIRE. To purchase shares of the Chase Vista Select shares using the wire
system for transmittal of money among banks, investors should first telephone
the Fund at 1-800-34-VISTA to obtain a new account number. The investor should
then instruct a member commercial bank to wire the money immediately to:
DST Systems, Inc.
ABA #1010-0362-1
CHASE VISTA FUNDS
DDA #751-1-629
For New Jersey Daily Municipal Income Fund, Inc.
Account of
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Fund Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order form.
Investors planning to wire funds should instruct their bank so the wire transfer
can be accomplished before 12 noon, New York City time, on that same day. There
may be a charge by the investor's bank for transmitting the money by bank wire,
and there also may be a charge for use of Federal Funds. The Fund does not
charge investors in the Fund for its receipt of wire transfers. Payment in the
form of a "bank wire" received prior to 12 noon, New York City time, on a Fund
Business Day will be treated as a Federal Funds payment received on that day.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases can be made either by bank wire or by mailing a check to:
Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392
There is a $100 minimum for each subsequent purchase. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription order form on file with the Fund is still applicable, a
shareholder may re-open an account without filing a new subscription order form
at any time during the year the shareholder's account is closed or during the
following calendar year.
REDEMPTION OF SHARES
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class upon receipt by the Fund's transfer agent of the redemption order (and any
supporting documentation which it may require). Normally, payment for redeemed
shares is made on the same Fund Business Day after the redemption is effected,
provided the redemption request is received prior to 12 noon, New York City
time. However, redemption payments will not be effected unless the check
(including a certified or cashier's check) used for investment has been cleared
for payment by the investor's bank, which can take up to 15 days after
investment. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature. It should be signed and guaranteed by
an eligible guarantor institution
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which includes a domestic bank, a domestic savings and loan institution, a
domestic credit union, a member bank of the Federal Reserve system or a member
firm of a national securities exchange, pursuant to the Fund's transfer agent's
standards and procedures.
WRITTEN REQUESTS
Shareholders may make a redemption in any amount by sending a written request to
the Fund addressed to:
Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392
All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.
CHECKS
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $500 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which the check clears. Checks provided by the Fund may not be certified.
Fund shares purchased by check may not be redeemed by check until the check has
cleared, which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. Checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment will not be honored.
Since the dollar value of the account changes daily, the total value of the
account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a
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post-dated check. The Fund reserves the right to terminate or modify the check
redemption procedure at any time or to impose additional fees following
notification to the Fund's shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution or other evidence of authorization in accordance
with the Fund's normal practices. Individuals and joint tenants are not required
to furnish any supporting documentation. Appropriate authorization forms will be
sent by the Fund or its agents to corporations and other shareholders who select
this option. As soon as the authorization forms are filed in good order with the
Fund's agent bank, it will provide the shareholder with a supply of checks.
TELEPHONE
The Fund accepts telephone requests for redemption from shareholders who elect
this option on their subscription order form. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or to their bank
accounts, both as set forth in the subscription order form or in a subsequent
written authorization. However, all telephone redemption instructions in excess
of $25,000 will be wired directly to such previously designated bank account.
The Fund may accept telephone redemption instructions from any person with
respect to accounts of shareholders who elect this service and thus such
shareholders risk possible loss of principal and interest in the event of a
telephone redemption not authorized by them. To provide evidence of telephone
instructions, for Chase Vista Select Shares, the transfer agent will record
telephone conversations with shareholders. The Fund will employ reasonable
procedures to confirm that telephone redemption instructions are genuine, and
will require that shareholders electing such option provide a form of personal
identification. Failure by the Fund to employ such reasonable procedures may
cause the Fund to be liable for the losses incurred by investors due to
unauthorized or fraudulent telephone instructions.
A shareholder making a telephone withdrawal should call the Fund at
1-800-34-VISTA, and state: (i) the name of the shareholder appearing on the
Funds records; (ii) the shareholders account number with the Fund; (iii) the
amount to be withdrawn; (iv) whether such amount is to be forwarded to the
shareholders designated bank account or address; and (v) the name of the person
requesting the redemption. Usually the proceeds are sent to the designated bank
account or address on the same Fund Business Day the redemption is effected,
provided the redemption request is received before 12 noon, New York City time.
Proceeds are sent the next Fund Business Day if the redemption request is
received after 12 noon, New York City time. The Fund reserves the right to
terminate or modify the telephone redemption service in whole or in
16
<PAGE>
part at any time and will notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholders or his
Participating Organizations account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization. The Participating Organization
will be responsible for notifying the Participant Investor of the proposed
mandatory redemption. During the notice period, a shareholder or Participating
Organization who receives such a notice may avoid mandatory redemption by
purchasing sufficient additional shares (without regard to the normal $100
requirement for an initial investment) to increase his total net asset value to
the minimum amount.
SPECIFIED AMOUNT AUTOMATIC
WITHDRAWAL PLAN
Shareholders who own $10,000 or more shares of the Fund may elect to withdraw
shares and receive payment from the Fund of a specified amount of $100 or more
automatically on a monthly or quarterly basis in an amount approved and
confirmed by the Manager. In order to make a payment, a number of shares equal
in aggregate net asset value to the payment amount are redeemed at their net
asset value so that the designated payment is received on approximately the
first or fifteenth day of the month following the end of the selected payment
period. To
17
<PAGE>
the extent that the redemptions to make plan payments exceed the number of
shares purchased through reinvestment of dividends and distributions, the
redemptions reduce the number of shares purchased on original investment, and
may ultimately liquidate a shareholders investment.
The election to receive automatic withdrawal payments may be made at the time of
the original subscription by so indicating on the subscription order form. The
election may also be made, changed or terminated at any later time by the
participant. Because the withdrawal plan involves the redemption of Fund shares,
such withdrawals may constitute taxable events to the shareholder.
However, the Fund does not expect that there will be any realizable capital
gains.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends equal to all its net investment income (excluding
long-term capital gains and losses, if any, and amortization of market discount)
on each Fund Business Day and pays dividends monthly. There is no fixed dividend
rate. In computing these dividends, interest earned and expenses are accrued
daily.
Net realized capital gains, if any, are distributed at least annually and in no
event later than 60 days after the end of the Funds fiscal year.
All dividends and distributions of capital gains are automatically invested, at
no charge, in additional Fund shares of the same Class of shares immediately
upon payment thereof unless a shareholder has elected by written notice to the
Fund to receive either of such distributions in cash.
Because Class A shares bear the service fee under the Fund's 12b-1 Plan, the net
income of and the dividends payable to the Class A shares will be lower than the
net income of and dividends payable to the Class B shares of the Fund. Dividends
paid to each Class of shares of the Fund will, however, be declared and paid on
the same days at the same times and, except as noted with respect to the service
fees payable under the Plan, will be determined in the same manner and paid in
the same amounts.
EXCHANGE PRIVILEGE
Shareholders of the Chase Vista Select shares may exchange at relative net asset
value for Vista Shares of the Chase Vista U.S. Government Money Market Fund, the
Chase Vista 100% U.S. Treasury Securities Money Market Fund, the Chase Vista
Treasury Plus Money Market Fund, the Chase Vista Federal Money Market Fund, the
Chase Vista Prime Money Market Fund, the Chase Vista Cash Management Fund, the
Chase Vista Tax Free Money Market Fund, the Chase Vista New York Tax Free Money
Market Fund, the Chase Vista California Tax Free Money Market Fund, and the
Chase Vista Select shares of any Reich & Tang Asset Management L.P. sponsored
fund and may exchange at relative net asset value plus any applicable
18
<PAGE>
sales charges, the Chase Vista Select shares of the Fund for the shares of the
non-money market Chase Vista Funds, in accordance with the terms of the
then-current prospectus of the fund being acquired. The prospectus of the Chase
Vista Fund into which shares are being exchanged should be read carefully prior
to any exchange and retained for future reference. With respect to exchanges
into a fund which charges a front-end sales charge, such sales charge will not
be applicable if the shareholder previously acquired his Chase Vista Select
shares by exchange from such fund. Under the exchange privilege, Chase Vista
Select shares may be exchanged for shares of other funds only if those funds are
registered in the states where the exchange may legally be made. In addition,
the account registration for the Chase Vista Funds into which Chase Vista Select
shares are being exchanged must be identical to that of the account registration
for the Fund from which shares are being redeemed. Any such exchange may create
a gain or loss to be recognized for Federal income tax purposes. Normally,
shares of the fund to be acquired are purchased on the redemption date, but such
purchase may be delayed by either Fund up to five business days if the Fund
determined that it would be disadvantaged by an immediate transfer of the
proceeds. (This privilege may be amended or terminated at any time following 60
day" written notice.) Arrangements have been made for the acceptance of
instructions by telephone to exchange shares if certain pre-authorizations or
indemnifications are accepted and on file. Further information is available from
the Transfer Agent.
TAX CONSEQUENCES
Dividends paid by the Fund, which are "exempt-interest dividend" by virtue of
being properly designated by the Fund as derived from Municipal Obligations and
Participation Certificates, will be exempt from regular Federal income tax
provided the Fund complies with Section 852(b)(5) of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). Exempt-interest
dividends paid by the Fund correctly identified by the Fund as derived from
obligations issued by or on behalf of the State of New Jersey or any New Jersey
local governments, or their instrumentalities, authorities or districts " New
Jersey Municipal Obligation") will be exempt from the New Jersey gross income
tax. Exempt-interest dividends correctly identified by the Fund as derived from
obligations of Puerto Rico and the Virgin Islands, as well as other types of
obligations that New Jersey is prohibited from taxing under the Constitution,
the laws of the United States of America or the laws of New Jersey " Territorial
Municipal Obligation") also should be exempt from the New Jersey gross income
tax provided the Fund complies with New Jersey law.
FEDERAL INCOME TAXES
The Fund has elected to qualify under the Code as a regulated investment company
that distributes "exempt-interest
19
<PAGE>
dividends" as defined in the Code. The Fund's policy is to distribute as
dividends each year 100% (and in no event less than 90%) of its tax-exempt
interest income, net of certain deductions, and its investment company taxable
income (if any). If distributions are made in this manner, dividends derived
from the interest earned on Municipal Obligations and properly designated by the
Fund not later than 60 days after the close of its taxable year are
"exempt-interest dividends" and are not subject to regular Federal income tax,
although as described below, such "exempt-interest dividends" may be subject to
Federal alternative minimum tax. Dividends paid from taxable income, if any, and
distributions of any realized short-term capital gains (whether from tax-exempt
or taxable obligations) are taxable to shareholders as ordinary income for
Federal income tax purposes, whether received in cash or reinvested in
additional shares of the Fund. The Fund does not expect to realize long-term
capital gains, and thus does not contemplate distributing "capital gain
dividends" or having undistributed capital gain income within the meaning of the
Code. The Fund will inform shareholders of the amount and nature of its income
and gains in a written notice mailed to shareholders not later than 60 days
after the close of the Funds taxable year. For Social Security recipients,
interest on tax-exempt bonds, including "exempt interest dividends" paid by the
Fund, is to be added to adjusted gross income for purposes of computing the
amount of Social Security benefits includible in gross income. Interest on
certain "private activity bonds" (generally, a bond issue in which more than 10%
of the proceeds are used for a non-governmental trade or business and which
meets the private security or payment test, or a bond issue which meets the
private loan financing test) issued after August 7, 1986 will constitute an item
of tax preference subject to the individual alternative minimum tax.
Corporations will be required to include in alternative minimum taxable income
75% of the amount by which their adjusted current earnings (including generally,
tax-exempt interest) exceeds their alternative minimum taxable income
(determined without this tax item). In certain cases Subchapter S corporations
with accumulated earnings and profits from Subchapter C years will be subject to
a tax on "passive investment income", including tax-exempt interest. Although
the Fund intends to maintain a $1.00 per share net asset value, a shareholder
may realize a taxable gain or loss upon the disposition of shares.
With respect to variable rate demand instruments, including participation
certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for Federal income tax purposes as
the owner of an interest in the underlying Municipal Obligations and that the
interest thereon will be exempt from regular Federal income taxes to the
20
<PAGE>
Fund to the same extent as the interest on the underlying Municipal Obligations.
Counsel has pointed out that the Internal Revenue Service has announced it will
not ordinarily issue advance rulings on the question of the ownership of
securities or participation interests therein subject to a put and could reach a
conclusion different from that reached by counsel.
In South Carolina v. Baker, the United States Supreme Court held that the
Federal government may constitutionally require states to register bonds they
issue and may subject the interest on such bonds to Federal tax if not
registered. The Court further held that there is no constitutional prohibition
against the Federal governments taxing the interest earned on state or other
municipal bonds. The Supreme Court decision affirms the authority of the Federal
government to regulate and control bonds such as the Municipal Obligations and
to tax the interest on such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the
Municipal Obligations in accordance with Section 103 of the Code.
The Fund may invest a portion of its assets in securities that generate income
that is not exempt from Federal or state income tax. Income exempt from Federal
income tax may be subject to state and local income tax. Capital gains
distributed by the Fund may be taxable.
NEW JERSEY INCOME TAXES
The following is based upon the advice of Sills Cummis Radin Tischman Epstein &
Gross, P.A., special tax counsel to the Fund. The designation of all or a
portion of a dividend paid by the Fund as an "exempt-interest dividend" under
the Code does not necessarily result in the exemption of such amount from tax
under the laws of any state or local taxing authority.
The Fund intends to be a "qualified investment fund" within the meaning of the
New Jersey gross income tax. The primary criteria for constituting a "qualified
investment fund" are that (i) such fund is an investment company registered with
the SEC which, for the calendar year in which the distribution is paid, has no
investments other than interest bearing obligations, obligations issued at a
discount, cash and cash items, including receivables and financial options,
futures, forward contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond indexes
related thereto and (ii) at the close of each quarter of the taxable year, such
fund has not less than 80% of the aggregate principal amount of all of its
investments, excluding financial options, futures, forward contracts, or other
similar financial instruments relating to interest-bearing obligations,
obligations issued at a discount or bond indexes related thereto to the extent
such instruments are authorized under the regulated investment company rules
under the Code, cash and cash
21
<PAGE>
items, which cash items shall include receivables, in New Jersey Municipal
Obligations, Territorial Municipal Obligations and certain other specified
securities. Additionally, a qualified investment fund must comply with certain
continuing reporting requirements. In the opinion of Sills Cummis Radin Tischman
Epstein & Gross, P.A., assuming that the Fund constitutes a qualified investment
fund and that the Fund complies with the reporting obligations under New Jersey
law with respect to qualified investment funds, (a) distributions paid by the
Fund to a New Jersey resident individual shareholder will not be subject to the
New Jersey gross income tax to the extent that the distributions are
attributable to income received as interest on or gain from New Jersey Municipal
Obligations or Territorial Municipal Obligations, and (b) gain from the sale of
shares in the Fund by a New Jersey resident individual shareholder will not be
subject to the New Jersey gross income tax.
Shareholders are urged to consult with their tax advisors with respect to the
treatment of distributions from the Fund and ownership of shares of the Fund in
their own states and localities.
Although the Fund intends to maintain a $1.00 per share net asset value, the
redemption of shares may result in the investors receipt of more or less than he
paid for his shares and, thus, in a taxable gain or loss to the investor.
However, if the Fund is a New Jersey qualified investment fund, any such gains
received by a New Jersey resident individual shareholder should not be subject
to the New Jersey gross income tax.
An exchange pursuant to the exchange privilege is treated for Federal income tax
purposes as a sale on which a shareholder may realize a taxable gain or loss.
V. DISTRIBUTION ARRANGEMENTS
RULE 12B-1 FEES
Investors do not pay a sales charge to purchase shares of the Fund. However, the
Fund pays fees in connection with the distribution of shares and for services
provided to the Class A shareholders. The Fund pays these fees from its assets
on an ongoing basis and therefore, over time, the payment of these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and service
plan (the "Plan") and, pursuant to the Plan, the Fund and Reich & Tang
Distributors, Inc. (the "Distributor") have entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to the Class A
shares of the Fund only).
Under the Distribution Agreement, the Distributor serves as distributor of the
Funds shares. For nominal consideration (i.e., $1.00) and as agent for the Fund,
the Distributor solicits orders for the purchase of the Funds' shares, provided
that any orders will not be binding on the Fund until accepted by the Fund as
principal.
22
<PAGE>
Under the Shareholder Servicing Agreement, the Distributor receives, with
respect only to the Class A shares, a service fee equal to .20% per annum of the
Class A shares average daily net assets (the "Shareholder Servicing Fee") for
providing personal shareholder services and for the maintenance of shareholder
accounts. The fee is accrued daily and paid monthly. Any portion of the fee may
be deemed to be used by the Distributor for payments to Participating
Organizations with respect to their provision of such services to their clients
or customers who are shareholders of the Class A shares of the Fund. The Class B
shareholders will not receive the benefit of such services from Participating
Organizations and, therefore, will not be assessed a Shareholder Servicing Fee.
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Distributor and Participating Organizations in carrying out their
obligations under the Shareholder Servicing Agreement with respect to Class A
shares, and (ii) preparing, printing and delivering the Fund's prospectus to
existing shareholders of the Fund and preparing and printing subscription
application forms for shareholder accounts. These Payments are limited to a
maximum of .05% per annum of the Class A's shares' average daily net assets.
The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the management fee and past profits for the
following purposes: (i) to defray costs, and to compensate others, including
Participating Organizations with whom the Distributor has entered into written
agreements, for performing shareholder servicing on behalf of the Class A shares
of the Fund; (ii) to compensate certain Participating Organizations for
providing assistance in distributing the Class A shares of the Fund; and (iii)
to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the Funds
Class A shares. The Distributor may also make payments from time to time from
its own resources, which may include the Shareholding Servicing Fee (with
respect to Class A shares) and past profits, for the purposes enumerated in (i)
above. The Distributor will determine the amount of such payments made pursuant
to the Plan, provided that such payments will not increase the amount which the
Fund is required to pay to the Manager and Distributor for any fiscal year under
either the Investment Management Contract in effect for that year or under the
Shareholder Servicing Agreement in effect for that year.
23
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey and Pullen, LLP, whose report, along
with the Fund's financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
Year Ended October 31,
<S> <C> <C> <C> <C> <C>
CLASS A 1998 1997 1996 1995 1994
PER SHARE OPERATING PERFORMANCE:
(for a share outstanding throughout the
period)
Net asset value, beginning of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ..................... 0.026 0.027 0.027 0.030 0.020
Less distributions:
Dividends from net investment income
(0.026) (0.027) (0.027) (0.030) (0.020)
(0.026)
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN ................................... 2.65% 2.70% 2.69% 3.08% 2.03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) ................ $166,234 $217,529 $ 151,421 $ 130,128 $ 105,929
Ratios to average net assets:
Expenses .................................. 0.84%+ 0.86%+ 0.78%+ 0.72% 0.66%
Net investment income ..................... 2.60% 2.66% 2.65% 3.02% 2.02%
Management, shareholder servicing
and administration fees waived ............ -- -- 0.06% 0.18% 0.26%
+ Includes expense offsets
</TABLE>
24
<PAGE>
A Statement of Additional Information (SAI) dated March 2, 1999, and the Fund's
Annual and Semi-Annual Reports include additional information about the Fund and
its investments and are incorporated by reference into this prospectus. You may
obtain the SAI, the Annual and Semi-Annual Reports and other material
incorporated by reference without charge by calling the Fund at 1-800-221-3079.
To request other information, call your financial intermediary or the Fund.
A current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's
Public Reference Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.
Chase Vista Service Center
P.O. Box 419392
Kansas City, Missouri 64141-6392
[GRAPHIC OMITTED]
811-6152
VSNJ-1-398
<PAGE>
Chase Vista Money Market Funds
(For Chase Clients Only)
- --------------------------------------------------------------------------------
1. Instructions
Please complete this form and return it to your Chase Manhattan Bank Account
Representative or in the enclosed postage-paid envelope.
2. Investment
- --------------------------------------------------------------------------------
Please indicate the amount you would like to invest and read the fund prospectus
carefully before investing or sending money.
Chase Vista Fund Name Amount
CA Tax Free Money Market Fund (99) $
Cash Management Fund (223) $
CT Daily Tax Free Income Fund (140) $
(Select Shares)
Federal Money Market Fund (353) $
NJDaily Municipal Income Fund $
(Select Shares) (141)
NY Tax Free Money Market Fund (003) $
Prime Money Market Fund (233) $
Tax Free Money Market Fund (002) $
Treasury Plus Money Market Fund (678) $
U.S. Government Money Market Fund (220) $
100% U.S. Treasury Securities (677) $
Money Market Fund
Other _______________________ $
3. Initial Investment Options
- --------------------------------------------------------------------------------
The undersigned authorizes The Chase Manhattan Bank or its affiliates ("Chase")
to debit Chase account #______________ for the initial purchase of shares in
Chase Vista Funds ("the Funds").
APP3-8-199
<PAGE>
4. Account Registration
- --------------------------------------------------------------------------------
Please print name clearly and exactly as account is to be registered
Individual:
- --------------------------------------------------------------------------------
First Name M.I. Last Name
- -----------
Social Security Number
Joint TENANT:
- --------------------------------------------------------------------------------
First Name M.I. Last Name
- -----------
Social Security Number
- --------------------------------------------------------------------------------
First Name M.I. Last Name
- -----------
Social Security Number
Corporation, Partnership or other entity (THECOMPANY):
- --------------------------------------------------------------------------------
Name of Corporation, Partnership or Entity
- ----------
Taxpayer Identification Number
- --------------------------------------------------------------------------------
Contact Name Phone Number
Trustee's Name (if Trust) Date of Trust
TRANSFERTO A Minor:
- --------------------------------------------------------------------------------
Custodian First Name M.I. Last Name
As Custodian for
- --------------------------------------------------------------------------------
Minor's First Name M.I Last Name
- -----------
Minor's Social Security Number
- --------------------------------------------------------------------------------
Minor's Birthday Name of State
<PAGE>
5. Mailing Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Street Apt. No.
City State Zip
Daytime Phone Number Evening Phone Number
Citizen of: _ U.S._ Other________________________________________________
Other Address (if necessary for mailing of duplicate statements)
- --------------------------------------------------------------------------------
Street Apt. No.
City State Zip
>
2
<
6. Distribution Options
Please indicate how you would like to receive distributions
- --------------------------------------------------------------------------------
1. _ Dividends are to be reinvested
2. _ Dividends are to be credited to account indicated above
3. _ Capital gains are to be reinvested
4. _ Capital gains are to be credited to account indicated above
Dividends and capital gains will be automatically reinvested at net asset value
unless otherwise indicated.
<PAGE>
7. Systematic Investment Plan
Amounts (minimum $100) will be automatically drawn on your designated Chase
deposit account and invested in your Chase Vista Money Market Fund. Please
staple voided check or savings deposit slip.
Authorization Form
_ Invest automatically the amount of $__________________ on or about the
___________________day of the month. Purchases will be made monthly unless
you wish to elect quarterly by checking this box.
If the day you selected for your automatic purchase falls on a holiday or a
weekend, the purchase will occur on the following business day. Your first
automatic investment will occur no sooner than two weeks after the receipt of
your request.
Funds will be drawn from my/our
- --------------------------------------------------------------------------------
Chase deposit account #
(this must be the same as the Chase deposit account currently linked to your
Chase Vista Money Market Fund).
- --------------------------------------------------------------------------------
Chase Vista Money Market Fund Name
Chase Vista Money Market Fund Account No.
Bank Address
Account Representative Name Account Representative Telephone No.
Customer Name
Customer Name
- --------------------------------------------------------------------------------
Customer Signature Date
Customer Signature Date
<PAGE>
8. Telephone Authorization
- --------------------------------------------------------------------------------
My initial purchase of shares in this mutual fund is being made in writing on
this mutual fund order form. Subsequent purchases, redemptions, or other
transactions may be made by telephone, facsimile or other electronic
communication without a signature guarantee. I authorize Chase to accept my
telephone instructions and agree to the terms and conditions contained in this
mutual fund order form. Chase may delay any instructions, however given, if it
has reason to believe they are incomplete, inaccurate or unauthorized. In
connection with telephone transactions, Chase may employ one or more of the
following or similar procedures: PIN number, request for identification (e.g.,
social security number or account number), recorded line or written
confirmation.
9. Customer Warranties and Agreements
- --------------------------------------------------------------------------------
I/we/the undersigned (the undersigned) represents that he/she has full authority
and is of legal age to purchase and redeem and effect other transactions in Fund
shares pursuant to this Fund Account Application. The undersigned acknowledges
that he/she has received and read the applicable Fund Prospectus and agrees to
its terms and conditions. The undersigned understands the investment objectives
of the Fund(s) and has determined that the Fund(s) is/are a suitable investment
based upon his/her investment needs and financial situation. The undersigned
hereby appoints Chase as his/her agent in dealing with Vista Fund Distributors,
Inc. (VFD) with respect to all purchases, redemptions and other transactions in
shares of the Fund(s), and, in this capacity, to accept and act upon his/her
instructions.
The undersigned agrees to the terms and conditions of this Fund Account
Application.
By signing below the undersigned consents to Chase and its affiliates, VFD, the
Funds, their affiliates, subagents, and agents exchanging among themselves and
others certain information about him/her and his/her accounts, including
information used to offer investment products and insurance products to him/her,
except to the extent that the undersigned instructs Chase otherwise in
accordance with Chase's Fair Credit Reporting Act Disclosure.
Joint Tenants: The Fund(s) may accept instruction(s) regarding the Chase Vista
Funds Account from either of the undersigned without liability to the other
joint tenant. If neither joint tenant provides the Fund with a signed written
request not to redeem shares or release any monies in the Account, the Fund(s)
may, at (its) (their) option, require the written authorization of both of the
undersigned before redeeming any shares or releasing any monies from the
Account.
The distributor of the Fund(s) is VFD, an entity not affiliated with Chase.
Chase and its affiliates receive compensation for providing services to the
Funds, including shareholder services.
The undersigned further acknowledges and certifies that he/she understands that:
Securities (including mutual funds) are not bank deposits and are not FDIC
insured, nor are they obligations of or guaranteed by Chase or its affiliates.
Securities (including mutual funds) and annuities involve investment risks,
including the possible loss of the principal amount invested.
<PAGE>
Individual
- --------------------------------------------------------------------------------
Signature Date
Signature Date
Corporations, Partnerships, or Other Entity
- --------------------------------------------------------------------------------
Signature Title. Date
Signature Title Date
<PAGE>
10. Authorization to Initiate Debit and Credit Entries
and IRS Certification
- --------------------------------------------------------------------------------
This authority is to remain in full force and effect until Chase has received
written notification from me of its termination in such time and in such manner
as to afford Chase and VFD a reasonable opportunity to act on it.
The undersigned agrees that neither Chase, VFD, the Funds, nor any of their
affiliates will be responsible for the authenticity of any instructions given
and shall be fully indemnified and held harmless from any and all direct and
indirect liabilities, losses, or costs or expenses resulting from acting upon
such transactions.
Subject to the terms and conditions herein and in the applicable Fund's
prospectus and statement of additional information, the undersigned releases and
agrees to hold harmless Chase, VFD, the Funds or any of their affiliates or
agents against any claim, liability, loss, damage, and expense for any act or
failure to act in connection with Fund shares, any related investment account,
privileges or services, and oral and written instructions relating thereto.
The undersigned certifies that any tax certifications made to Chase and its
affiliates may be used by and relied upon by VFD, the Funds or any of their
affiliates or agents.
Check One: _ U.S. Citizen _ Resident Alien
_ Non-Resident Alien: Country of Tax Residency _________________
Under the penalties of perjury, the undersigned certifies that (1) he/she is a
citizen or resident of the United States or (state Country)
__________________________, (2) the Social Security Number or Taxpayer
Identification Number shown in Section 2 above is correct, and (3) he/she is not
subject to backup withholding either because he/she has not been notified that
he/she is subject to backup withholding, as a result of a failure to report all
interest and dividends, or the Internal Revenue Service has notified him/her
that he/she is no longer subject to backup withholding. (If the undersigned is
subject to backup withholding, cross out the words after (3) above). The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
Individual
- --------------------------------------------------------------------------------
Signature Date
Signature Date
Corporations, Partnerships, or Other Entity
- --------------------------------------------------------------------------------
Signature Title. Date
Signature Title Date
<PAGE>
11. Certificate of Authority
- --------------------------------------------------------------------------------
A. PARTNERSHIPS AND TRUSTS (Even if you are the sole trustee)
The above signed certify (certifies) that they are all the general
partners/trustees of the Shareholder and that they have done the following under
the authority of the Shareholder's partnership agreement/trust instrument: (1)
empowered the general partner/trustee executing this Application to do so on
behalf of the shareholder; and (2) empowered the below-named Authorized
Person(s) to effect securities transactions for the Shareholder on the terms
described above. This authorization will remain in full force until otherwise
notified in writing by the Partnership or Trust. If there are not enough spaces
here for all the necessary signatures, complete a separate certificate
containing the language of Certificate A and attach it to the Application.
- --------------------------------------------------------------------------------
Name/Title Signature Date
Name/Title Signature Date
B. CERTIFICATE OF CORPORATE RESOLUTION (Required for Corporations)
The above signed is (are) duly authorized by corporate resolution or otherwise
to act on behalf of the Company in connection with the Company's ownership of
shares of the Fund(s). In particular, and without limitation of the foregoing,
said individual(s) is (are) authorized to give instructions for the purchase,
sale or transfer of said shares and to execute any necessary forms in connection
therewith. The Fund(s) and the agents of the Fund(s) may consider this
authorization to be in full force and effect until otherwise notified in writing
by the Company:
In Witness Whereof, the undersigned has executed this certification this
________________________ day of ___________________________ 19
- --------------------------------------------------------------------------------
Secretary
- --------------------------------------------------------------------------------
Another officer if Secretary is authorized to act pursuant to the above
<PAGE>
12. Person(s) Authorized To Conduct Transactions
- --------------------------------------------------------------------------------
The following persons ("Authorized Person(s)") are currently officers, trustees,
general partners, or other authorized agents of the Shareholder. Any _____* of
the Authorized Person(s) is, by lawful and appropriate action of the
Shareholder, a person entitled to give instructions regarding purchases and
redemptions or to make inquiries, regarding your Account.
- --------------------------------------------------------------------------------
Name/Title Signature Date
Name/Title Signature Date
Name/Title Signature Date
Name/Title Signature Date
DSTSystems, Inc. ("DST") may, without inquiry, act upon the instructions
(whether verbal, written, or provided by wire, telecommunication, or any other
process) of any person claiming to be an Authorized Person. Neither DST nor any
entity on behalf of which DST is acting shall be liable for any claims or
expenses (including legal fees) or for any losses, resulting from actions taken
upon any instructions believed to be genuine. DST may continue to rely on the
instructions made by any person claiming to be an Authorized Person until it is
informed through an amended Application that the person is no longer an
Authorized Person and it has a reasonable period (not to exceed one week) to
process the amended Application. Provisions of this Application shall be equally
applicable to any successor of DST.
*If this space is left blank, any one Authorized Person is authorized to give
instructions and make inquiries. Verbal instructions will be accepted from any
one Authorized Person. Written instructions will require signatures of the
number of Authorized Persons indicated in this space.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Return form to your account officer or:
The Chase Manhattan Bank, New Account Processing, P.O. Box 2105,
Jericho, NY 11753-9932
For Internal Use Only (to be completed by Chase Account Representative)
- --------------------------------------------------------------------------------
Chase Manhattan Bank Division Profit/Cost Center Dealer
- --------------------------------------------------------------------------------
Account Representative Name Social Code
- --------------------------------------------------------------------------------
Account Representative No. Account Representative Telephone No.
- --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY
DAILY MUNICIPAL 600 Fifth Avenue, New York, NY 10020
INCOME FUND, INC. (212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1999
RELATING TO THE NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
AND THE
CHASE VISTA SELECT SHARES OF NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
PROSPECTUSES DATED MARCH 1, 1999
This Statement of Additional Information (SAI) is not a Prospectus. The SAI
expands upon and supplements the information contained in the current
Prospectuses of New Jersey Daily Municipal Income Fund, Inc. and Chase Vista
Select Shares of New Jersey Daily Municipal Income Fund, Inc. (each, the
"Fund"), dated March 1, 1999, and should be read in conjunction with each Fund's
Prospectus.
A Prospectus may be obtained from any Participating Organization or by writing
or calling the Fund toll-free at (800) 221-3079. The Financial Statements of the
Fund have been incorporated by reference to the Fund's Annual Report. The Annual
Report is available, without charge, upon request by calling the toll-free
number provided.
If you wish to invest in Chase Vista Select Shares of New Jersey Daily Municipal
Income Fund, Inc. you should obtain a separate prospectus by writing to Chase
Vista Service Center, P.O. Box 419392, Kansas City, Missouri 64141-6392 or by
calling (800) 34-VISTA.
This Statement of Additional Information is incorporated by reference into the
respective Prospectus in its entirety.
<TABLE>
<CAPTION>
Table of Contents
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<S> <C> <C> <C>
Fund History.......................................... Capital Stock and Other Securities........................
Description of the Fund and Its Investments and Purchase, Redemption and Pricing of Shares................
Risks............................................... Taxation of the Fund......................................
Management of the Fund................................ Underwriters..............................................
Control Persons and Principal Holders of Calculation of Performance Data...........................
Securities.......................................... Financial Statements......................................
Investment Advisory and Other Services................ Description of Ratings....................................
Brokerage Allocation and Other Practices.............. Corporate Taxable Equivalent Yield Table..................
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
I. FUND HISTORY
The Fund was incorporated on July 24, 1990 in the state of Maryland.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is an open-end, management investment company that is a short-term,
tax-exempt money market fund. The Fund's investment objectives are to seek a
high level of current income exempt from regular Federal tax and New Jersey
gross income tax consistent with preserving capital, maintaining liquidity and
stabilizing principal. No assurance can be given that these objectives will be
achieved.
The following discussion expands upon the description of the Fund's investment
objectives and policies in the Prospectus.
The Fund's assets will be invested primarily in (i) high quality debt
obligations issued by or on behalf of the State of New Jersey, other states,
territories and possessions of the United States and their authorities,
agencies, instrumentalities and political subdivisions, the interest on which
is, in the opinion of bond counsel to the issuer at the date of issuance,
currently exempt from regular Federal income taxation ("Municipal Obligations")
and in (ii) Participation Certificates (which, in the opinion of Battle Fowler
LLP, counsel to the Fund, cause the Fund to be treated as the owner of the
underlying Municipal Obligations for Federal income tax purposes) in Municipal
Obligations purchased from banks, insurance companies or other financial
institutions ("Participation Certificates"). Dividends paid by the Fund are
"exempt-interest dividends" by virtue of being properly designated by the Fund
as derived from Municipal Obligations and Participation Certificates. They will
be exempt from regular Federal income tax provided the Fund qualifies as a
regulated investment company under Subchapter M of the Code and complies with
Section 852(b)(5) of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Although the Supreme Court has determined that Congress
has the authority to subject the interest on bonds such as the Municipal
Obligations to regular Federal income taxation, existing law excludes such
interest from regular Federal income tax. However, such interest, including
"exempt-interest dividends" may be subject to the Federal alternative minimum
tax.
Securities, the interest income on which may be subject to the Federal
alternative minimum tax (including Participation Certificates), may be purchased
by the Fund without limit. Securities, the interest income on which is subject
to regular Federal, state and local income tax, will not exceed 20% of the value
of the Fund's total assets. (See "Federal Income Taxes" herein.) Exempt-interest
dividends paid by the Fund that are correctly identified by the Fund as derived
from obligations issued by or on behalf of the State of New Jersey or any New
Jersey local governments, or their instrumentalities, authorities or districts
("New Jersey Municipal Obligations") will be exempt from the New Jersey gross
income tax. Exempt-interest dividends correctly identified by the Fund as
derived from obligations of Puerto Rico and the Virgin Islands, as well as any
other types of obligations that New Jersey is prohibited from taxing under the
Constitution, the laws of the United States of America or the New Jersey
Constitution ("Territorial Municipal Obligations"), also should be exempt from
New Jersey gross income tax provided the Fund complies with applicable New
Jersey laws. (See "New Jersey Income Taxes" herein.) To the extent that suitable
New Jersey Municipal Obligations are not available for investment by the Fund,
the Fund may purchase Municipal Obligations issued by other states, their
agencies and instrumentalities. The dividends on these will be designated by the
Fund as derived from interest income which will be, in the opinion of bond
counsel to the issuer at the date of issuance, exempt from regular Federal
Income Tax but will be subject to the New Jersey gross income tax. Except as a
temporary defensive measure during periods of adverse market conditions as
determined by the Manager, the Fund will invest at least 65% of its assets in
New Jersey Municipal Obligations, although the exact amount of the Fund's assets
invested in such securities will vary from time to time. The Fund seeks to
maintain an investment portfolio with a dollar-weighted average maturity of 90
days or less and to value its investment portfolio at amortized cost and
maintain a net asset value at $1.00 per share of each Class. There can be no
assurance that this value will be maintained.
The Fund may hold uninvested cash reserves pending investment. The Fund's
investments may include "when-issued" Municipal Obligations, stand-by
commitments and taxable repurchase agreements. Although the Fund will attempt to
invest 100% of its assets in Municipal Obligations and in Participation
Certificates, the Fund reserves the right to invest up to 20% of the value of
its total assets in securities, the interest income on which is subject to
regular Federal, state and local income tax. The Fund will invest more than 25%
of its assets in Participation Certificates purchased from banks in industrial
revenue bonds and other New Jersey Municipal Obligations. In view of this
"concentration" in bank Participation Certificates in New Jersey Municipal
Obligations, an investment in Fund shares should be made with an understanding
of the characteristics of the banking industry and the risks which such an
investment may entail. (See "Variable Rate Demand Instruments and Participation
Certificates" herein.) The investment objectives of the Fund described in the
preceding paragraphs of this section may not be changed unless approved by the
holders of a majority of the outstanding shares of the Fund that would be
affected by such a
2
<PAGE>
change. As used herein, the term "majority of the outstanding shares" of the
Fund means, respectively, the vote of the lesser of (i) 67% or more of the
shares of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Fund.
The Fund may only purchase United States dollar-denominated securities that have
been determined by the Fund's Board of Directors to present minimal credit risks
and that are Eligible Securities at the time of acquisition. The term Eligible
Securities means: (i) securities which have or are deemed to have remaining
maturities of 397 days or less and rated in the two highest short-term rating
categories by any two nationally recognized statistical rating organizations
("NRSROs") or in such categories by the only NRSRO that has rated the Municipal
Obligations (collectively, the "Requisite NRSROs"); or (ii) unrated securities
determined by the Fund's Board of Directors to be of comparable quality. In
addition, securities which have or are deemed to have remaining maturities of
397 days or less but that at the time of issuance were long-term securities
(i.e. with maturities greater than 366 days) are deemed unrated and may be
purchased if such had received a long-term rating from the Requisite NRSROs in
one of the three highest rating categories. Provided, however, that such may not
be purchased if it (i) does not satisfy the rating requirements set forth in the
preceding sentence and (ii) has received a long-term rating from any NRSRO that
is not within the three highest long-term rating categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities. While there are several organizations that currently qualify as
NRSROs, two examples of NRSROs are Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, ("S&P") and Moody's Investors Service, Inc.
("Moody's"). The two highest ratings by S&P and Moody's are "AAA" and "AA" by
S&P in the case of long-term bonds and notes or "Aaa" and "Aa" by Moody's in the
case of bonds; "SP-1" and "SP-2" by S&P or "MIG-1" and "MIG-2" by Moody's in the
case of notes; "A-1" and "A-2" by S&P or "Prime-1" and "Prime-2" by Moody's in
the case of tax-exempt commercial paper. The highest rating in the case of
variable and floating demand notes is "VMIG-1" by Moody's or "SP-1/AA" by S&P.
Such instruments may produce a lower yield than would be available from less
highly rated instruments.
Subsequent to its purchase by the Fund, a rated security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Fund. If this occurs, the Board of Directors of the Fund shall promptly reassess
whether the security presents minimal credit risks and shall cause the Fund to
take such action as the Board of Directors determines is in the best interest of
the Fund and its shareholders. However, reassessment is not required if the
security is disposed of or matures within five business days of the Manager
becoming aware of the new rating and provided further that the Board of
Directors is subsequently notified of the Manager's actions.
In addition, in the event that a security (i) is in default, (ii) ceases to be
an Eligible Security under Rule 2a-7 of the 1940 Act or (iii) is determined to
no longer present minimal credit risks, or an event of insolvency occurs with
respect to the issues of a portfolio security or the provider of any Demand
Feature or Guarantee, the Fund will dispose of the security absent a
determination by the Fund's Board of Directors that disposal of the security
would not be in the best interests of the Fund. Disposal of the security shall
occur as soon as practicable consistent with achieving an orderly disposition by
sale, exercise of any demand feature or otherwise. In the event of a default
with respect to a security which immediately before default accounted for 1/2 of
1% or more of the Fund's total assets, the Fund shall promptly notify the SEC of
such fact and of the actions that the Fund intends to take in response to the
situation.
All investments by the Fund will mature or will be deemed to mature within 397
days or less from the date of acquisition and the average maturity of the Fund
portfolio (on a dollar-weighted basis) will be 90 days or less. The maturities
of variable rate demand instruments held in the Fund's portfolio will be deemed
to be the longer of the period required before the Fund is entitled to receive
payment of the principal amount of the instrument through demand, or the period
remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.
With respect to 75% of its total assets, the Fund shall invest not more than 5%
of its total assets in Municipal Obligations or Participation Certificates
issued by a single issuer. However, the Fund shall not invest more than 5% of
its total assets in Municipal Obligations or Participation Certificates issued
by a single issuer, unless Municipal Obligations are First Tier Securities.
The Fund intends to qualify as a "regulated investment company" under Subchapter
M of the Code. The Fund will be restricted in that at the close of each quarter
of the taxable year, at least 50% of the value of its total assets must be
represented by cash, government securities, regulated investment company
securities and other securities which is limited in respect of any one issuer to
not more than 5% in value of the total assets of the Fund and to not more than
10% of the outstanding voting securities of such issuer. In addition, at the
close of each quarter of its taxable year, not more than 25% in value of the
Fund's total assets may be invested in securities of one issuer other than
Government securities or regulated investment company securities. The
limitations described in this paragraph regarding qualification as a "regulated
investment
3
<PAGE>
company" are not fundamental policies and may be revised to the extent
applicable Federal income tax requirements are revised. (See "Federal Income
Taxes" herein.)
DESCRIPTION OF MUNICIPAL OBLIGATIONS
As used herein, "Municipal Obligations" include the following as well as
"Variable Rate Demand Instruments" and "Participation Certificates".
1. Municipal Bonds with remaining maturities of 397 days or less that are
Eligible Securities at the time of acquisition. Municipal Bonds are debt
obligations of states, cities, counties, municipalities and municipal agencies
(all of which are generally referred to as "municipalities"). They generally
have a maturity at the time of issue of one year or more and are issued to raise
funds for various public purposes such as construction of a wide range of public
facilities, to refund outstanding obligations and to obtain funds for
institutions and facilities.
The two principal classifications of Municipal Bonds are "general obligation"
and "revenue" bonds. General obligation bonds are secured by the issuer's pledge
of its faith, credit and taxing power for the payment of principal and interest.
Issuers of general obligation bonds include states, counties, cities, towns and
other governmental units. The principal of, and interest on revenue bonds are
payable from the income of specific projects or authorities and generally are
not supported by the issuer's general power to levy taxes. In some cases,
revenues derived from specific taxes are pledged to support payments on a
revenue bond.
In addition, certain kinds of "private activity bonds" are issued by public
authorities to provide funding for various privately operated industrial
facilities (hereinafter referred to as "industrial revenue bonds" or "IRBs").
Interest on IRBs is generally exempt, with certain exceptions, from regular
Federal income tax pursuant to Section 103(a) of the Code, provided the issuer
and corporate obligor thereof continue to meet certain conditions. (See "Federal
Income Taxes" herein.) IRBs are, in most cases, revenue bonds and do not
generally constitute the pledge of the credit of the issuer of such bonds. The
payment of the principal and interest on IRBs usually depends solely on the
ability of the user of the facilities financed by the bonds or other guarantor
to meet its financial obligations and, in certain instances, the pledge of real
and personal property as security for payment. If there is no established
secondary market for the IRBs, the IRBs or the Participation Certificates in
IRBs purchased by the Fund will be supported by letters of credit, guarantees or
insurance that meet the definition of Eligible Securities at the time of
acquisition and provide the demand feature which may be exercised by the Fund at
any time to provide liquidity. Shareholders should note that the Fund may invest
in IRBs acquired in transactions involving a Participating Organization. In
accordance with Investment Restriction 6 herein, the Fund is permitted to invest
up to 10% of the portfolio in high quality, short-term Municipal Obligations
(including IRBs) meeting the definition of Eligible Securities at the time of
acquisition that may not be readily marketable or have a liquidity feature.
2. Municipal Notes with remaining maturities of 397 days or less that are
Eligible Securities at the time of acquisition. The principal kinds of Municipal
Notes include tax anticipation notes, bond anticipation notes, revenue
anticipation notes and project notes. Notes sold in anticipation of collection
of taxes, a bond sale or receipt of other revenues are usually general
obligations of the issuing municipality or agency. Project notes are issued by
local agencies and are guaranteed by the United States Department of Housing and
Urban Development. Project notes are also secured by the full faith and credit
of the United States. The Fund's investments may be concentrated in Municipal
Notes of New Jersey issuers.
3. Municipal Commercial Paper that is an Eligible Security at the time of
acquisition. Issues of Municipal Commercial Paper typically represent very
short-term, unsecured, negotiable promissory notes. These obligations are often
issued to meet seasonal working capital needs of municipalities or to provide
interim construction financing. They are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases Municipal
Commercial Paper is backed by letters of credit, lending agreements, note
repurchase agreements or other credit facility agreements offered by banks or
other institutions which may be called upon in the event of default by the
issuer of the commercial paper.
4. Municipal Leases, which may take the form of a lease or an installment
purchase or conditional sale contract, issued by state and local governments and
authorities to acquire a wide variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications equipment and other capital assets.
Municipal Leases frequently have special risks not normally associated with
general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the governmental issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses. These clauses provide that the governmental issuer
has no obligation to make future payments under the lease or contract unless
money is
4
<PAGE>
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase Municipal
Leases subject to a non-appropriation clause where the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, a
guarantee, insurance or other comparable undertaking of an approved financial
institution. These types of Municipal Leases may be considered illiquid and
subject to the 10% limitation of investments in illiquid securities set forth
under "Investment Restrictions" contained herein. The Board of Directors may
adopt guidelines and delegate to the Manager the daily function of determining
and monitoring the liquidity of Municipal Leases. In making such determination,
the Board and the Manager may consider such factors as the frequency of trades
for the obligation, the number of dealers willing to purchase or sell the
obligations and the number of other potential buyers and the nature of the
marketplace for the obligations, including the time needed to dispose of the
obligations and the method of soliciting offers. If the Board determines that
any Municipal Leases are illiquid, such lease will be subject to the 10%
limitation on investments in illiquid securities.
5. Any other Federal tax-exempt, and to the extent possible, New Jersey gross
income tax-exempt obligations issued by or on behalf of states and municipal
governments and their authorities, agencies, instrumentalities and political
subdivisions, whose inclusion in the Fund would be consistent with the Fund's
"Investment Objectives, Policies and Risks" and permissible under Rule 2a-7
under the 1940 Act.
Subsequent to its purchase by the Fund, a rated Municipal Obligation may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. If this occurs, the Board of Directors of the Fund shall promptly
reassess whether the Municipal Obligation presents minimal credit risks and
shall cause the Fund to take such action as the Board of Directors determines is
in the best interest of the Fund and its shareholders. However, reassessment is
not required if the Municipal Obligation is disposed of or matures within five
business days of the Manager becoming aware of the new rating and provided
further that the Board of Directors is subsequently notified of the Manager's
actions.
In addition, in the event that a Municipal Obligation (i) is in default, (ii)
ceases to be an Eligible Security under Rule 2a-7 of the 1940 Act or (iii) is
determined to no longer present minimal credit risks, or an event of insolvency
occurs with respect to the issues of a portfolio security or the provider of any
Demand Feature or Guarantee, the Fund will dispose of the security absent a
determination by the Fund's Board of Directors that disposal of the security
would not be in the best interests of the Fund. Disposal of the security shall
occur as soon as practicable consistent with achieving an orderly disposition by
sale, exercise of any demand feature or otherwise. In the event of a default
with respect to a security which immediately before default accounted for 1/2 of
1% or more of the Fund's total assets, the Fund shall promptly notify the SEC of
such fact and of the actions that the Fund intends to take in response to the
situation.
VARIABLE RATE DEMAND INSTRUMENTS AND PARTICIPATION CERTIFICATES
Variable rate demand instruments that the Fund will purchase are tax-exempt
Municipal Obligations. They provide for a periodic adjustment in the interest
rate paid on the instrument and permit the holder to demand payment of the
unpaid principal balance plus accrued interest at specified intervals upon a
specified number of days notice either from the issuer or by drawing on a bank
letter of credit, a guarantee or insurance issued with respect to such
instrument.
The variable rate demand instruments in which the Fund may invest are payable on
demand on not more than thirty calendar days' notice and may be exercised at any
time or at specified intervals not exceeding 397 days depending upon the terms
of the instrument. Variable rate demand instruments that can not be disposed of
properly within seven days in the ordinary course of business are illiquid
securities. The terms of the instruments provide that interest rates are
adjustable at intervals ranging from daily to up to 397 days. The adjustments
are based upon the "prime rate" of a bank or other appropriate interest rate
adjustment index as provided in the respective instruments. The Fund decides
which variable rate demand instruments it will purchase in accordance with
procedures prescribed by its Board of Directors to minimize credit risks. A fund
utilizing the amortized cost method of valuation under Rule 2a-7 of the 1940 Act
may purchase variable rate demand instruments only if (i) the instrument is
subject to an unconditional demand feature, exercisable by the Fund in the event
of a default in the payment of principal or interest on the underlying
securities, that is an Eligible Security or (ii) the instrument is not subject
to an unconditional demand feature but does qualify as an Eligible Security and
has a long-term rating by the Requisite NRSROs in one of the two highest rating
categories, or if unrated, is determined to be of comparable quality by the
Fund's Board of Directors. The Fund's Board of Directors may determine that an
unrated variable rate demand instrument meets the Fund's high quality criteria
if it is backed by a letter of credit or guarantee or is insured by an insurer
that meets the quality criteria for the Fund stated herein or on the basis of a
credit evaluation of the underlying obligor. If an instrument is ever not deemed
to be an Eligible Security, the Fund either will sell it in the market or
exercise the demand feature.
5
<PAGE>
The variable rate demand instruments that the Fund may invest in include
Participation Certificates purchased by the Fund from banks, insurance companies
or other financial institutions in fixed or variable rate, tax-exempt Municipal
Obligations (expected to be concentrated in IRBs) owned by such institutions or
affiliated organizations. The Fund will not purchase Participation Certificates
in fixed rate tax-exempt Municipal Obligations without obtaining an opinion of
counsel that the Fund will be treated as the owner thereof for Federal income
tax purposes. A Participation Certificate gives the Fund an undivided interest
in the Municipal Obligation in the proportion that the Fund's participation
interest bears to the total principal amount of the Municipal Obligation and
provides the demand repurchase feature described below. Where the institution
issuing the participation does not meet the Fund's eligibility criteria, the
participation is backed by an irrevocable letter of credit or guaranty of a bank
(which may be the bank issuing the Participation Certificate, a bank issuing a
confirming letter of credit to that of the issuing bank, or a bank serving as
agent of the issuing bank with respect to the possible repurchase of the
certificate of participation) or insurance policy of an insurance company that
the Board of Directors of the Fund has determined meets the prescribed quality
standards for the Fund. The Fund has the right to sell the Participation
Certificate back to the institution. Where applicable, the Fund can draw on the
letter of credit or insurance after no more than 30 days notice either at any
time or at specified intervals not exceeding 397 days (depending on the terms of
the participation), for all or any part of the full principal amount of the
Fund's participation interest in the security plus accrued interest. The Fund
intends to exercise the demand only (i) upon a default under the terms of the
bond documents, (ii) as needed to provide liquidity to the Fund in order to make
redemptions of Fund shares or (iii) to maintain a high quality investment
portfolio. The institutions issuing the Participation Certificates will retain a
service and letter of credit fee (where applicable) and a fee for providing the
demand repurchase feature, in an amount equal to the excess of the interest paid
on the instruments over the negotiated yield at which the participations were
purchased by the Fund. The total fees generally range from 5% to 15% of the
applicable prime rate* or other interest rate index. With respect to insurance,
the Fund will attempt to have the issuer of the Participation Certificate bear
the cost of the insurance. However, the Fund retains the option to purchase
insurance if necessary, in which case the cost of insurance will be an expense
of the Fund subject to the expense limitation (see "Expense Limitation" herein).
The Manager has been instructed by the Fund's Board of Directors to continually
monitor the pricing, quality and liquidity of the variable rate demand
instruments held by the Fund, including the Participation Certificates, on the
basis of published financial information and reports of the rating agencies and
other bank analytical services to which the Fund may subscribe. Although these
instruments may be sold by the Fund, the Fund intends to hold them until
maturity, except under the circumstances stated above (see "Federal Income
Taxes" herein).
In view of the "concentration" of the Fund in Participation Certificates in New
Jersey Municipal Obligations, which may be secured by bank letters of credit or
guarantees, an investment in the Fund should be made with an understanding of
the characteristics of the banking industry and the risks which such an
investment may entail. Banks are subject to extensive governmental regulations
which may limit both the amounts and types of loans and other financial
commitments which may be made and interest rates and fees which may be charged.
The profitability of this industry is largely dependent upon the availability
and cost of capital funds for the purpose of financing lending operations under
prevailing money market conditions. Also, general economic conditions play an
important part in the operations of this industry and exposure to credit losses
arising from possible financial difficulties of borrowers might affect a bank's
ability to meet its obligations under a letter of credit. The Fund may invest
25% or more of the net assets of any portfolio in securities that are related in
such a way that an economic, business or political development or change
affecting one of the securities would also affect the other securities. This
includes, for example, securities the interest upon which is paid from revenues
of similar type projects, or securities the issuers of which are located in the
same state.
While the value of the underlying variable rate demand instruments may change
with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation and the risk of potential capital
depreciation is less than would be the case with a portfolio of fixed income
securities. The portfolio may contain variable maximum rates set by state law,
which limit the degree to which interest on such variable rate demand
instruments may fluctuate; to the extent state law contains such limits,
increases or decreases in value may be somewhat greater than would be the case
without such limits. Additionally, the portfolio may contain variable rate
demand Participation Certificates in fixed rate Municipal Obligations. The fixed
rate of interest on these Municipal Obligations will be a ceiling on the
variable rate of the Participation Certificate. In the event that interest rates
increase so that the variable rate exceeds the fixed rate on the Municipal
Obligations, the Municipal Obligations
- --------
* The prime rate is generally the rate charged by a bank to its most
creditworthy customers for short-term loans. The prime rate of a particular bank
may differ from other banks and will be the rate announced by each bank on a
particular day. Changes in the prime rate may occur with great frequency and
generally become effective on the date announced.
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can no longer be valued at par and may cause the Fund to take corrective action,
including the elimination of the instruments from the portfolio. Because the
adjustment of interest rates on the variable rate demand instruments is made in
relation to movements of the applicable banks' "prime rates", or other interest
rate adjustment index, the variable rate demand instruments are not comparable
to long-term fixed rate securities. Accordingly, interest rates on the variable
rate demand instruments may be higher or lower than current market rates for
fixed rate obligations of comparable quality with similar maturities.
Because of the variable rate nature of the instruments, the Fund's yield will
decline and its shareholders will forego the opportunity for capital
appreciation during periods when prevailing interest rates have declined. On the
other hand, during periods where prevailing interest rates have increased, the
Fund's yield will increase and its shareholders will have reduced risk of
capital depreciation.
For purposes of determining whether a variable rate demand instrument held by
the Fund matures within 397 days from the date of its acquisition, the maturity
of the instrument will be deemed to be the longer of (i) the period required
before the Fund is entitled to receive payment of the principal amount of the
instrument or (ii) the period remaining until the instrument's next interest
rate adjustment. The maturity of a variable rate demand instrument will be
determined in the same manner for purposes of computing the Fund's
dollar-weighted average portfolio maturity. If a variable rate demand instrument
ceases to be an Eligible Security it will be sold in the market or through
exercise of the repurchase demand feature to the issuer.
WHEN-ISSUED SECURITIES
New issues of certain Municipal Obligations frequently are offered on a
when-issued basis. The payment obligation and the interest rate received on
these Municipal Obligations are each fixed at the time the buyer enters into the
commitment although delivery and payment of the Municipal Obligations normally
take place within 45 days after the date of the Fund's commitment to purchase.
Although the Fund only makes commitments to purchase when-issued Municipal
Obligations with the intention of actually acquiring them, the Fund may sell
these securities before the settlement date if deemed advisable by the Manager.
Municipal Obligations purchased on a when-issued basis and the securities held
in the Fund's portfolio are subject to changes in value (both generally changing
in the same way; that is, both experiencing appreciation when interest rates
decline and depreciation when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Purchasing Municipal Obligations on
a when-issued basis can involve a risk that the yields available in the market
when the delivery takes place may actually be higher or lower than those
obtained in the transaction itself. A separate account of the Fund consisting of
cash or liquid debt securities equal to the amount of the when-issued
commitments will be established at the Fund's custodian bank. For the purpose of
determining the adequacy of the securities in the account, the deposited
securities will be valued at market value. If the market or fair value of such
securities declines, additional cash or highly liquid securities will be placed
in the account daily so that the value of the account will equal the amount of
such commitments by the Fund. On the settlement date of the when-issued
securities, the Fund will meet its obligations from then-available cash flow,
sale of securities held in the separate account, sale of other securities or,
although it will not normally expect to do so, from sale of the when-issued
securities themselves (which may have a value greater or lesser than the Fund's
payment obligations). Sale of securities to meet such obligations may result in
the realization of capital gains or losses, which are not exempt from Federal
income tax.
STAND-BY COMMITMENTS
When the Fund purchases Municipal Obligations, it may also acquire stand-by
commitments from banks and other financial institutions. Under a stand-by
commitment, a bank or broker-dealer agrees to purchase at the Fund's option a
specified Municipal Obligation at a specified price with same day settlement. A
stand-by commitment is the equivalent of a "put" option acquired by the Fund
with respect to a particular Municipal Obligation held in its portfolio.
The amount payable to the Fund upon its exercise of a stand-by commitment
normally will be (i) the acquisition cost of the Municipal Obligation (excluding
any accrued interest that the Fund paid on the acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the security, plus (ii) all interest accrued on the
security since the last interest payment date during the period the security was
owned by the Fund. Absent unusual circumstances relating to a change in market
value, the Fund will value the underlying Municipal Obligation at amortized
cost. Accordingly, the amount payable by a bank or dealer during the time a
stand-by commitment is exercisable will be substantially the same as the market
value of the underlying Municipal Obligation.
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The Fund's right to exercise a stand-by commitment will be unconditional and
unqualified. A stand-by commitment will not be transferable by the Fund,
although it can sell the underlying Municipal Obligation to a third party at any
time.
The Fund expects stand-by commitments to generally be available without the
payment of any direct or indirect consideration. However, if necessary and
advisable, the Fund may pay for stand-by commitments either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to such a commitment (thus reducing the yield to maturity otherwise available
for the same securities). The total amount paid in either manner for outstanding
stand-by commitments held in the Fund's portfolio will not exceed 1/2 of 1% of
the value of the Fund's total assets calculated immediately after the
acquisition of each stand-by commitment.
The Fund will enter into stand-by commitments only with banks and other
financial institutions that, in the Manager's opinion, present minimal credit
risks. If the issuer of the Municipal Obligation does not meet the eligibility
criteria, the issuer of the stand-by commitment will have received a rating
which meets the eligibility criteria or, if not rated, will present a minimal
risk of default as determined by the Board of Directors. The Fund's reliance
upon the credit of these banks and broker-dealers will be supported by the value
of the underlying Municipal Obligations held by the Fund that were subject to
the commitment.
The Fund intends to acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. The purpose of this practice is to permit the Fund to be fully
invested in securities the interest on which is exempt from Federal income tax
while preserving the necessary liquidity to purchase securities on a when-issued
basis, to meet unusually large redemptions and to purchase at a later date
securities other than those subject to the stand-by commitment. The acquisition
of a stand-by commitment will not affect the valuation or assumed maturity of
the underlying Municipal Obligations which will continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Fund will be valued at zero in determining net asset value. In those cases in
which the Fund pays directly or indirectly for a stand-by commitment, its cost
will be reflected as unrealized depreciation for the period during which the
commitment is held by the Fund. Stand-by commitments will not affect the
dollar-weighted average maturity of the Fund's portfolio. The maturity of a
security subject to a stand-by commitment is longer than the stand-by repurchase
date.
The stand-by commitments the Fund may enter into are subject to certain risks.
These include the ability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, the fact that the commitment
is not marketable by the Fund, and that the maturity of the underlying security
will generally be different from that of the commitment.
In addition, the Fund may apply to the Internal Revenue Service for a ruling, or
seek from its counsel an opinion, that interest on Municipal Obligations subject
to stand-by commitments will be exempt from Federal income taxation (see
"Federal Income Taxes" herein). In the absence of a favorable tax ruling or
opinion of counsel, the Fund will not engage in the purchase of securities
subject to stand-by commitments.
TAXABLE SECURITIES
Although the Fund will attempt to invest 100% of its net assets in tax-exempt
Municipal Obligations, the Fund may invest up to 20% of the value of its total
assets in securities of the kind described below. The interest income from such
securities is subject to regular Federal or New Jersey state income tax, under
any one or more of the following circumstances: (i) pending investment of
proceeds of sales of Fund shares or of portfolio securities; (ii) pending
settlement of purchases of portfolio securities; and (iii) to maintain liquidity
for the purpose of meeting anticipated redemptions. In addition, the Fund may
temporarily invest more than 20% in such taxable securities when, in the opinion
of the Manager, it is advisable to do so because of adverse market conditions
affecting the market for Municipal Obligations. The kinds of taxable securities
in which the Fund may invest are limited to the following short-term,
fixed-income securities (maturing in 397 days or less from the time of
purchase): (i) obligations of the United States Government or its agencies,
instrumentalities or authorities; (ii) commercial paper meeting the definition
of Eligible Securities at the time of acquisition; (iii) certificates of deposit
of domestic banks with assets of $1 billion or more; and (iv) repurchase
agreements with respect to any Municipal Obligations or other securities which
the Fund is permitted to own. (See "Federal Income Taxes" herein.)
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REPURCHASE AGREEMENTS
The Fund may invest in instruments subject to repurchase agreements with
securities dealers or member banks of the Federal Reserve System. Under the
terms of a typical repurchase agreement, the Fund will acquire an underlying
debt instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase and the Fund to resell the
instrument at a fixed price and time, thereby determining the yield during the
Fund's holding period. This results in a fixed rate of return insulated from
market fluctuations during such period. A repurchase agreement is subject to the
risk that the seller may fail to repurchase the security. Repurchase agreements
may be deemed to be loans under the 1940 Act. All repurchase agreements entered
into by the Fund shall be fully collateralized at all times during the period of
the agreement in that the value of the underlying security shall be at least
equal to the amount of the loan, including the accrued interest thereon.
Additionally, the Fund or its custodian shall have possession of the collateral,
which the Fund's Board believes will give it a valid, perfected security
interest in the collateral. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the underlying
securities are not owned by the Fund but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the Fund may suffer
time delays and incur costs in connection with the disposition of the
collateral. The Fund's Board believes that the collateral underlying repurchase
agreements may be more susceptible to claims of the seller's creditors than will
be the case with securities owned by the Fund. It is expected that repurchase
agreements will give rise to income which will not qualify as tax-exempt income
when distributed by the Fund. The Fund will not invest in a repurchase agreement
maturing in more than seven days if any such investment, together with illiquid
securities held by the Fund, exceeds 10% of the Fund's total net assets. (See
Investment Restriction Number 6 herein.) Repurchase agreements are subject to
the same risks described herein for stand-by commitments.
NEW JERSEY RISK FACTORS
This summary is included for the purpose of providing a general description of
the credit and financial condition of the State of New Jersey.
STATE FINANCE
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective commercial agriculture.
After enjoying an extraordinary boom during the mid-1980's, New Jersey, as well
as the rest of the Northeast, slipped into a slowdown well before the national
recession which officially began in July 1990 (according to the National Bureau
of Economic Research). At the onset of that recession, New Jersey experienced
accelerated declines in its construction and manufacturing sectors and overall
increases in the rates of unemployment. In the wake of the continued expansion
of the national economy which began in late 1993, New Jersey's economy
experienced a protracted recovery that in 1994 began to generate internal
momentum due to increases in employment and income levels. Unemployment in New
Jersey has continued to recede while home-building and retail sales have
continued to increase steadily from 1992 lows. New Jersey has benefited and will
continue to benefit from national growth. At the end of calendar year 1998, New
Jersey's recovery was in its seventh year and appears to be sustainable now that
the national economy has "soft landed." It is expected that the employment and
income growth that has and is taking place will lead to further growth in
consumer outlays. Reasons for continued optimism in New Jersey include
increasing employment levels, a low jobless rate, and a higher-than-national
level of per capita personal income. While growth in the State is likely to be
slower than the nation, the advantages of location that have served New Jersey
well for many years will still be there. Structural changes that have been going
on for years can be expected to continue, with job creation concentrated most
heavily in the service industries.
The largest part of the total financial operations of the State is accounted for
in the General Fund, which is the fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations are
made. New Jersey's Constitution and budget and appropriations system require a
balanced budget. Pursuant to the State Constitution, no money may be drawn from
the State Treasury except for appropriations made by law. In addition, all
monies for the support of State purposes must be provided for in one general
appropriation law covering one and the same fiscal year. The State's current
Fiscal Year ends June 30th.
The budget for Fiscal Year 1999 became effective June 30, 1998. The Fiscal Year
1998 budget produced a Fund Balance in the General Fund of approximately $228.2
million at the end of Fiscal Year 1998.
The primary method for State financing of capital projects is through the sale
of the general obligation bonds of the State. These bonds are backed by the full
faith and credit of the State. State tax revenues and certain other fees are
pledged to meet the principal and interest payments required to fully pay the
debt. No general obligation debt can be issued by the State without prior voter
approval.
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The State made appropriations for principal and interest payments for general
obligation bonds for Fiscal Years 1996, 1997, 1998 and 1999 in the amounts of
$466.3 million, $446.9 million, $483.7 million and $501.1 million respectively.
For Fiscal Year 2000, the State has made appropriations of $518.7 million for
principal and interest payments for general obligation bonds. The aggregate
outstanding general obligation bonded indebtedness of the State as of June 30,
1998 was $3.6 billion.
The State's Master Lease Program is used primarily to finance various
departmental equipment needs at tax-exempt rates by issuing Certificates of
Participation. Beginning in Fiscal Year 1996 the State modified the Master Lease
Program and began using a line of credit as the preferred method of financing
various departmental equipment needs. As of June 30, 1998, outstanding
Certificates of Participation totaled $103.4 million and the States' outstanding
balance on its line of credit totaled $25.4 million.
As of February 9, 1999, S&P, Moody's and Fitch IBCA, Inc. ("Fitch") rate the
State's long-term general obligation debt "AA+", "Aa1" and "AA+", respectively.
The State's Certificates of Participation are rated AA- by S&P and A1 by
Moody's. There is no assurance that such ratings will continue for any given
period of time or that either rating will not be suspended, lowered or withdrawn
entirely by S&P, Moody's or Fitch if, in the judgment of S&P, Moody's or Fitch,
circumstances so warrant. Any explanation of the significance of the ratings may
be obtained only from S&P, Moody's and Fitch.
Aside from its general obligation bonds, the State's "moral obligation" backs
certain obligations issued by the Higher Education Assistance Authority, the New
Jersey Housing and Mortgage Finance Agency and the South Jersey Port Corporation
(the "Corporation"). As of June 30, 1998, there was outstanding in excess of
$658.08 million of moral obligation bonded indebtedness issued by such entities,
for which the maximum annual debt service was over $81.57 million as of such
date. In addition, the State guarantees the payments of obligations of the New
Jersey Sports and Exposition Authority and has incurred other obligations on a
"subject to appropriation basis." As of June 30, 1998, the total of these
obligations, including the "moral obligation" debt was approximately $9.2
billion.
At any given time, there are various numbers of claims and cases pending against
the University of Medicine and Dentistry and it's employees, seeking recovery of
monetary damages that are primarily paid out of the Self Insurance Reserve Fund
created pursuant to the Tort Claims Act. An independent study estimated an
aggregate potential exposure of $90.8 million for claims pending, as of December
31, 1997. In addition, at any given time, there are various numbers of contract
and other claims against the University of Medicine and Dentistry, seeking
recovery of monetary damages or other relief which, if granted, would require
the expenditure of funds. The State is unable to estimate its exposure for these
claims. New Jersey is involved in a number of lawsuits in which adverse
decisions could materially affect revenue or expenditures. Such cases include
claims that the State failed to properly conduct remediation and health screens
concerning chromium contamination, challenges to constitutionality of annual
A-901 hazardous and solid waste licensure renewal fees collected by the State,
challenges to the State's funding mechanism for school districts within the
State, challenges to the State's use of assessments made against certain
property and casualty insurers, challenges to the State's Medical reimbursement
procedures, and challenges to the State's highway and tunnel development funding
mechanisms.
MUNICIPAL FINANCE
New Jersey's local finance system is regulated by various statutes designed to
assure that all local governments and their issuing authorities remain on a
sound financial basis. Regulatory and remedial statutes are enforced by the
Division of Local Government Services (the "Division") in the State Department
of Community Affairs.
Counties and Municipalities
The Local Budget Law imposes specific budgetary procedures upon counties and
municipalities ("local units"). Every local unit must adopt an operating budget
which is balanced on a cash basis, and items of revenue and appropriation must
be independently audited by a registered municipal accountant. The Division
reviews all municipal and county annual budgets prior to adoption. The Director
is empowered to require changes for compliance with law as a condition of
approval; to disapprove budgets not in accordance with law; and to prepare the
budget of a local unit if the local unit is unwilling to prepare a budget in
accordance with law. This process insures that every municipality and county
annually adopts a budget balanced on a cash basis, within limitations on
appropriations or tax levies, respectively, and makes adequate provision for
principal of and interest on indebtedness falling due in the fiscal year,
deferred charges and other statutory expenditure requirements.
The Local Government Cap Law (the "Cap Law") generally limits the year-to-year
increase of the total appropriations of any municipality and the tax levy of any
county to either 5% or an index rate determined annually by the Director,
whichever is less. However, where the index percentage rate exceeds 5%, the Cap
Law permits the governing body of any municipality or county to approve the use
of a higher percentage rate up to the index rate. Further, where the
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index percentage rate is less than 5%, the Cap Law also permits the governing
body of any municipality or county to approve the use of a higher percentage
rate up to 5%. Certain exceptions exist to the Cap Law's limitation on increases
in appropriations. The principal exceptions to these limitations are municipal
and county appropriations to pay debt service requirements; to comply with other
State or Federal mandates enacted after the effective date of the Cap Law;
amounts approved by referendum; and, in the case of municipalities only, to fund
the preceding year's cash deficit or to reserve for shortfalls in tax
collections. The Cap Law was re-enacted in 1990 with amendments and made a
permanent part of the Municipal Finance System.
State law also regulates the issuance of debt by local units. The Local Budget
Law limits the amount of tax anticipation notes that may be issued by local
units and requires the repayment of such notes within three months of the end of
the fiscal year (six months in the case of the counties) in which issued. No
local unit is permitted to issue bonds for the payment of current expenses.
Local units may not issue bonds to pay outstanding obligations, except for
refunding purposes, and then only with the approval of the Local Finance Board.
Local units may issue bond anticipation notes for temporary periods not
exceeding in the aggregate approximately ten years from the date of issue. The
debt that any local unit may authorize is limited to a percentage of its
equalized valuation basis, which is the three year average of the equalized
value of all taxable real property and improvements within the geographic
boundaries of the local unit. Authorized net capital debt is limited to 3.5% of
the equalized valuation basis in the case of municipalities and 2% of the
equalized valuation basis in the case of counties. The debt limit of a county or
municipality, with certain exceptions, may be exceeded only with the approval of
the Local Finance Board.
Chapter 75 of the Pamphlet Laws of 1991, signed into law on March 28, 1991,
requires certain municipalities and permits all other municipalities to adopt
the State fiscal year in place of the existing calendar fiscal year.
Municipalities that change fiscal years must adopt a six month transition budget
for January to June. Since expenditures would be expected to exceed revenues
primarily because state aid for the calendar year would not be received by the
municipality until after the end of the transition year budget, the Act
authorizes the issuance of Fiscal Year Adjustment Bonds to fund the one time
deficit for the six month transition budget. The Act provides that the deficit
in the six month transition budget may be funded initially with bond
anticipation notes based on the estimated deficit in the six month transition.
Notes issued in anticipation of Fiscal Year Adjustment Bonds, including
renewals, can only be issued for up to one year unless the Local Finance Board
permits the municipality to renew them for a further period. The Local Finance
Board must confirm the actual deficit experienced by the municipality. The
municipality then may issue Fiscal Year Adjustment Bonds to finance the deficit
on a permanent basis. The purpose of the Act is to assist municipalities that
are heavily dependent on state aid and that have had to issue tax anticipation
notes to fund operating cash flow deficits each year. While the Act does not
authorize counties to change their fiscal years, it does provide that counties
with cash flow deficits may issue Fiscal Year Adjustment Bonds as well.
SCHOOL DISTRICTS
New Jersey's school districts operate under the same comprehensive review and
regulation as do its counties and municipalities. Certain exceptions and
differences are provided, but the State supervision of school finance closely
parallels that of local governments. The State Department of Education has been
empowered with the necessary and effective authority in extreme cases to take
over the operation of local school districts which cannot or will not correct
severe and complex educational deficiencies.
SCHOOL BUDGETS
In each school district having a Board of School Estimate, the Board of School
Estimate examines the budget request and fixes the appropriation amounts for the
next year's operating budget after a public hearing. This board, whose
composition is fixed by statute, certifies the budget to the municipal governing
bodies and to the local board of education. If the local board of education
disagrees, it must appeal to the State Commissioner of Education (the
"Commissioner") to request changes.
In each school district without a Board of School Estimate, the elected board of
education develops the budget proposal and, after public hearing, submits to the
voters of such district for approval. Previously authorized debt service is not
subject to referendum in the annual budget process. If approved, the budget goes
into effect. If defeated, the governing body of each municipality in the school
district has approximately 20 days to determine the amount necessary to be
appropriated for each item appearing in such budget. Should the governing body
fail to certify any amount determined by them to be necessary for any item
rejected at the election, the board of education of such district may appeal the
action to the Commissioner.
SCHOOL DISTRICT BONDS
School district bonds and temporary notes are issued in conformity with the
School Bond Law. Schools are subject
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to debt limits and to State regulation of their borrowing. The debt limitation
on school district bonds depends upon the classification of the school district,
but may be as high as 4% of the average equalized valuation basis of the
constituent municipality. In certain cases involving school districts in cities
with populations exceeding 100,000, the debt limit is 8% of the average
equalized valuation basis of the constituent municipality, and in cities with
population in excess of 80,000 the debt limit is 6% of the aforesaid average
equalized valuation.
SCHOOL DISTRICT LEASE PURCHASE FINANCINGS
In 1982, school districts were given an alternative to the traditional method of
bond financing capital improvements pursuant to the Lease Purchase Law. The
Lease Purchase Law permits school districts to acquire a site and school
buildings through a lease purchase agreement with a private lessor corporation.
The lease purchase agreement does not require voter approval. The rent payments
attributable to the lease purchase agreement are subject to annual appropriation
by the school district and are required to be included in the annual current
expense budget of the school district. Furthermore, the rent payments
attributable to the lease purchase agreement do not constitute debt of the
school district and therefore do not impact on the school district's debt
limitation. Lease purchase agreements in excess of five years require the
approval of the Commissioner and the Local Finance Board.
LOCAL FINANCING AUTHORITIES
The Local Authorities Fiscal Control Law provides for state supervision of the
fiscal operations and debt issuance practices of independent local authorities
and special taxing districts by the State Department of Community Affairs. The
Local Authorities Fiscal Control Law applies to all autonomous public bodies
created by counties or municipalities, which are empowered to issue bonds, to
impose facility or service charges, or to levy taxes in their districts. This
encompasses most autonomous local authorities (sewerage, municipal utilities,
parking, pollution control, improvement, etc.) and special taxing districts
(fire, water, sewer, street lighting, etc.).
Financial control responsibilities over local authorities and special districts
are assigned to the Local Finance Board and the Director of the Division of
Local Government Services. The Local Finance Board exercises approval power over
the creation of new authorities and special districts as well as their
dissolution. The Local Finance Board also reviews, conducts public hearings and
issues findings and recommendations on any proposed project financing of an
authority or district, and on any proposed financing agreement between a
municipality or county and an authority or special district. The Director
reviews and approves annual budgets of authorities and special districts.
The Fund believes the information summarized above describes some of the more
significant aspects relating to the Fund. The sources of such information are
the official statements of issuers located in New Jersey as well as other
publicly available documents. While the Sponsors have not independently verified
this information, they have no reason to believe that such information is not
correct in all material respects.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions which
apply to all portfolios. They may not be changed unless approved by a majority
of the outstanding shares "of each series of the Fund's shares that would be
affected by such a change." The term "majority of the outstanding shares" of the
Fund means the vote of the lesser of (i) 67% or more of the shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
The Fund may not:
1. Make portfolio investments other than as described under "Investment
Objectives, Policies and Risks." Any other form of Federal tax-exempt investment
must meet the Fund's high quality criteria, as determined by the Board of
Directors, and be consistent with the Fund's objectives and policies.
2. Borrow money. This restriction shall not apply to borrowings from banks for
temporary or emergency (not leveraging) purposes. This includes the meeting of
redemption requests that might otherwise require the untimely disposition of
securities, in an amount up to 15% of the value of the Fund's total assets
(including the amount borrowed) valued at market less liabilities (not including
the amount borrowed) at the time the borrowing was made. While borrowings exceed
5% of the value of the Fund's total assets, the Fund will not make any
investments. Interest paid on borrowings will reduce net income.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets, except in an
amount up to 15% of the value of its total assets and only to secure borrowings
for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin, or engage in the
purchase and sale of put, call, straddle or spread options or in writing such
options. However, securities subject to a demand obligation and stand-by
commitments may be purchased as set forth under "Investment Objectives, Policies
and Risks" herein.
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5. Underwrite the securities of other issuers, except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933 in disposing of a
portfolio security.
6. Purchase securities subject to restrictions on disposition under the
Securities Act of 1933 ("restricted securities"), except the Fund may purchase
variable rate demand instruments which contain a demand feature. The Fund will
not invest in a repurchase agreement maturing in more than seven days if any
such investment together with securities that are not readily marketable held by
the Fund exceed 10% of the Fund's net assets.
7. Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or oil and gas interests. This shall not
prevent the Fund from investing in Municipal Obligations secured by real estate
or interests in real estate.
8. Make loans to others, except through the purchase of portfolio investments,
including repurchase agreements, as described under "Investment Objectives,
Policies and Risks" herein.
9. Purchase more than 10% of all outstanding voting securities of any one issuer
or invest in companies for the purpose of exercising control.
10. Invest more than 25% of its assets in the securities of "issuers" in any
single industry. The Fund may invest more than 25% of its assets in
Participation Certificates and there shall be no limitation on the purchase of
those Municipal Obligations and other obligations issued or guaranteed by the
United States Government, its agencies or instrumentalities. When the assets and
revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating the issuing entity and a
security is backed only by the assets and revenues of the entity, the entity
will be deemed to be the sole issuer of the security. Similarly, in the case of
an industrial revenue bond, if that bond is backed only by the assets and
revenues of the non-government user, then such non-government user will be
deemed to be the sole issuer. If, however, in either case, the creating
government or some other entity, such as an insurance company or other corporate
obligor, guarantees a security or a bank issues a letter of credit, such a
guarantee or letter of credit will be considered a separate security and will be
treated as an issue of such government, other entity or bank. Immediately after
the acquisition of any securities subject to a Demand Feature or Guarantee (as
such terms are defined in Rule 2a-7 of the 1940 Act), with respect to 75% of the
total assets of the Fund, not more than 10% of the Fund's assets may be invested
in securities that are subject to a Guarantee or Demand Feature from the same
institution. However, the Fund may only invest more than 10% of its assets in
securities subject to a Guarantee or Demand Feature issued by a Non-Controlled
Person (as such term is defined in Rule 2a-7 of the 1940 Act).
11. Invest in securities of other investment companies. The Fund may purchase
unit investment trust securities where such unit trusts meet the investment
objectives of the Fund and then only up to 5% of the Fund's net assets, except
as they may be acquired as part of a merger, consolidation or acquisition of
assets.
12. Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with a permitted borrowing.
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or in the amount of the Fund's assets will not constitute a
violation of such restriction.
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, employs the Manager to serve as investment manager
of the Fund. The Manager provides persons satisfactory to the Fund's Board of
Directors to serve as officers of the Fund. Such officers, as well as certain
other employees and directors of the Fund, may be directors or officers of Reich
& Tang Asset Management, Inc., the sole general partner of the Manager or
employees of the Manager or its affiliates. Due to the services performed by the
Manager, the Fund currently has no employees and its officers are not required
to devote their full-time to the affairs of the Fund.
The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below. Unless otherwise specified, the address
of each of the following persons is 600 Fifth Avenue, New York, New York 10020.
Mr. Duff may be deemed an "interested person" of the Fund, as defined in the
1940 Act, on the basis of his affiliation with Reich & Tang Asset Management
L.P.
Steven W. Duff, 44 - President and Director of the Fund, has been President of
the Mutual Funds Division of the Manager since September 1994. Mr. Duff was
formerly Director of Mutual Fund Administration at NationsBank which he was
associated with from June 1981 to August 1994. Mr. Duff is also President and a
Director /Trustee of 14 other funds in the Reich & Tang Fund Complex, Director
of Pax World Money Market Fund, Inc., Executive Vice
13
<PAGE>
President of Reich & Tang Equity Fund, Inc., and President and Chief Executive
Officer of Tax Exempt Proceeds Fund, Inc.
Dr. W. Giles Mellon, 67 - Director of the Fund, is Professor of Business
Administration and Area Chairman of Economics in the Graduate School of
Management, Rutgers University which he has been associated with since 1966. His
address is Rutgers University Graduate School of Management, 92 New Street,
Newark, New Jersey 07102. Dr. Mellon is also a Director/Trustee of 15 other
funds in the Reich & Tang Fund Complex.
Robert Straniere, 56 - Director of the Fund, has been a member of the New York
State Assembly and a partner with the Straniere & Straniere Law Firm since 1981.
His address is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is
also a Director/Trustee of 15 other funds in the Reich & Tang Fund Complex and
Director of Life Cycle Mutual Funds, Inc.
Dr. Yung Wong, 59 - Director of the Fund, was Director of Shaw Investment
Management (UK) Limited from 1994 to October 1995 and formerly General Partner
of Abacus Partners Limited Partnership (a general partner of a venture capital
investment firm) from 1984 to 1994. His address is 29 Alden Road, Greenwich,
Connecticut 06831. Dr. Wong has been a Director of Republic Telecom Systems
Corporation (a provider of telecommunications equipment) since January 1989 and
of TelWatch, Inc. (a provider of network management software) since August 1989.
Dr. Wong is also a Director/Trustee of 15 other funds in the Reich & Tang Fund
Complex. Dr. Wong is also a Trustee of Eclipse Financial Asset Trust.
Molly Flewharty, 47 - Vice President of the Fund, has been Vice President of the
Mutual Funds Division of the Manager since September 1993. Ms. Flewharty was
formerly Vice President of Reich & Tang, Inc. which she was associated with from
December 1977 to September 1993. Ms. Flewharty is also Vice President of 16
other funds in the Reich & Tang Fund Complex.
Lesley M. Jones, 50 - Vice President of the Fund, has been Senior Vice President
of the Mutual Funds Division of the Manager since September 1993. Ms. Jones was
formerly Senior Vice President of Reich & Tang, Inc. which she was associated
with from April 1973 to September 1993. Ms. Jones is also a Vice President of 14
other funds in the Reich & Tang Fund Complex.
Dana E. Messina, 41 - Vice President of the Fund, has been Executive Vice
President of the Mutual Funds Division of the Manager since January 1995 and was
Vice President from September 1993 to January 1995. Ms. Messina was formerly
Vice President of Reich & Tang, Inc. with which she was associated with from
December 1980 to September 1993. Ms. Messina is also Vice President of 15 other
funds in the Reich & Tang Fund Complex.
Bernadette N. Finn, 51 - Secretary of the Fund, has been Vice President of the
Mutual Funds Division of the Manager since September 1993. Ms. Finn was formerly
Vice President and Assistant Secretary of Reich & Tang, Inc. which she was
associated with from September 1970 to September 1993. Ms. Finn is also
Secretary of 13 other funds in the Reich & Tang Fund Complex, and a Vice
President and Secretary of 5 funds in the Reich & Tang Fund Complex.
Richard De Sanctis, 41 - Treasurer of the Fund, has been Assistant Treasurer of
NEIC since September 1993. Mr. De Sanctis was formerly Controller of Reich &
Tang, Inc., from January 1991 to September 1993 and Vice President and Treasurer
of Cortland Financial Group, Inc. and Vice President of Cortland Distributors,
Inc. from 1989 to December 1990. Mr. De Sanctis is also Treasurer of 17 other
funds in the Reich & Tang Fund Complex and is Vice President and Treasurer of
Cortland Trust, Inc.
Rosanne Holtzer, 33 - Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Manager since December 1997. Ms. Holtzer was
formerly Manager of Fund Accounting for the Manager with which she was
associated with from June 1986. Ms. Holtzer is also Assistant Treasurer of 18
other funds in the Reich & Tang Fund Complex.
The Fund paid an aggregate remuneration of $6,000 to its directors with respect
to the period ended October 31, 1998, all of which consisted of directors' fees
paid to the three disinterested directors, pursuant to the terms of the
Investment Management Contract (see "Manager" herein).
Directors of the Fund not affiliated with the Manager receive from the Fund an
annual retainer of $1,000 and a fee of $250 for each Board of Directors meeting
attended and are reimbursed for all out-of-pocket expenses relating to
attendance at such meetings. Directors who are affiliated with the Manager do
not receive compensation from the Fund. (See "Compensation Table".)
14
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
<S> <C> <C> <C> <C>
AGGREGATE COMPENSATION PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION FROM
NAME OF PERSON, FROM THE FUND BENEFITS ACCRUED AS PART BENEFITS UPON RETIREMENT FUND AND FUND COMPLEX PAID
POSITION OF FUND EXPENSES TO DIRECTORS*
Dr. W. Giles Mellon, $2,000 0 0 $54,500 (14 Funds)
Director
Robert Straniere, $2,000 0 0 $54,500 (14 Funds
Director
Dr. Yung Wong, $2,000 0 0 $54,500 (14 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex
for the fiscal year ending October 31, 1998. The parenthetical number
represents the number of investment companies (including the Fund) from
which such person receives compensation that are considered part of the
same Fund complex as the Fund, because, among other things, they have a
common investment advisor.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On December 31, 1998 there were 162,809,783 Class A Shares of the Fund
outstanding, and 2,470,946 Class B Shares outstanding. As of December 31, 1998,
the amount of shares owned by all officers and directors of the Fund, as a
group, was less than 1% of the outstanding shares. Set forth below is certain
information as to persons who owned 5% or more of the Fund's outstanding shares
as of December 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C>
NATURE OF
NAME AND ADDRESS % OF CLASS OWNERSHIP
CLASS A SHARES
Reich & Tang Services, Inc. 71.02% Record
as Agent for Various
Beneficial Owners
600 Fifth Avenue
New York, NY 10020
Investors Fiduciary Trust Company 31.00% Record
210 West 10th Street
Kansas City, MO 64105
CLASS B SHARES
Lowell Millar 40.37% Beneficial
66 Fernwood Rd.
Summit, NJ 07901
James A. Coufos 26.13% Beneficial
1 Wentworth Drive
Summit, NJ 07901-3723
Donadio Irrevocable Trust 13.22% Beneficial
600 Fifth Avenue
New York, N.Y. 10020
Lowell Millar & Jennifer 11.41% Beneficial
66 Fernwood Rd.
Summit, NJ 07901
</TABLE>
V. INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020. The Manager was, as of December 31, 1998, investment
manager, adviser, or supervisor with respect to assets aggregating in excess of
$12.0 billion. In addition to the Fund, the Manager acts as investment manager
and administrator of fifteen other investment companies and also advises pension
trusts, profit-sharing trusts and endowments.
15
<PAGE>
Effective January 1, 1998, NEIC Operating Partnership, L.P. ("NEICOP") was the
limited partner and owner of a 99.5% interest in the Manager replacing New
England Investment Companies, L.P. ("NEICLP") as the limited partner and owner
of such interest in the Manager due to a restructuring by New England Investment
Companies, Inc. ("NEIC"). Subsequently, effective March 31, 1998, Nvest
Companies, L.P. ("Nvest Companies") due to a change in name of NEICOP, replaced
NEICOP as the limited partner and owner of a 99.5% interest in the Manager.
Reich & Tang Asset Management, Inc. (an indirect wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining 0.5%
interest of the Manager. Nvest Corporation, a Massachusetts Corporation
(formerly known as New England Investment Companies, Inc.), serves as the
managing general partner of Nvest Companies.
Reich & Tang Asset Management, Inc. is an indirect subsidiary of Metropolitan
Life Insurance Company ("MetLife"). MetLife directly and indirectly owns
approximately 47% of the outstanding partnership interests of Nvest Companies
and may be deemed a "controlling person" of the Manager. Reich & Tang, Inc.
owns, directly and indirectly, approximately 13% of the outstanding partnership
interests of Nvest Companies.
MetLife is a mutual life insurance company and is the second largest life
insurance company in the United States in terms of total assets. MetLife
provides a wide range of insurance and investment products and services to
individuals and groups and is the leader among United States life insurance
companies in terms of total life insurance in force. MetLife and its affiliates
provide insurance or other financial services to approximately 36 million people
worldwide.
Nvest Companies is a holding company offering a broad array of investment styles
across a wide range of asset categories through thirteen subsidiaries, divisions
and affiliates offering a wide array of investment styles and products to
institutional clients. Its business units, in addition to the Manager, include
AEW Capital Management, L.P., Back Bay Advisors, L.P., Capital Growth Management
Limited Partnerships; Greystone Partners; L.P. Harris Associates; L.P. Jurika &
Voyles, L.P., Loomis, Sayles & Company, L.P., New England Funds, L.P., Nvest
Associates, Inc., Snyder Capital Management, L.P., Vaughan, Nelson, Scarborough
& McCullough, L.P., and Westpeak Investment Advisors, L.P. These affiliates in
the aggregate are investment advisors or managers to 80 other registered
investment companies.
The recent name change did not result in a change of control of the Manager and
has no impact upon the Manager's performance of its responsibilities and
obligations.
On July 17, 1998, the Board of Directors, including a majority of the directors
who are not interested persons (as defined in the 1940 Act) of the Fund or the
Manager, approved the annual continuance of the Investment Management Contract
and extended the term to July 31, 1999. It is continued in force thereafter for
successive twelve-month periods beginning each August 1, provided that such
majority vote of the Fund's outstanding voting securities or by a majority of
the directors who are not parties to the Investment Management Contract or
interested persons of any such party, by votes cast in person at a meeting
called for the purpose of voting on such matter.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund.
The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of NEIC, the
sole general partner of the Manager, or employees of the Manager or its
affiliates.
The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by the Manager on sixty days written notice, and will automatically terminate
in the event of its assignment. The Investment Management Contract provides that
in the absence of willful misfeasance, bad faith or gross negligence on the part
of the Manager, or of reckless disregard of its obligations thereunder, the
Manager shall not be liable for any action or failure to act in accordance with
its duties thereunder.
Under the Investment Management Contract, the Manager receives from the Fund a
fee (the "Management Fee") equal to .30% per annum of the Fund's average daily
net assets. The fees are accrued daily and paid monthly. The Manager, at its
discretion, may voluntarily waive all or a portion of the Management Fee.
Pursuant to the Administrative Services Contract with the Fund, the Manager also
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to (i) supervise the
performance of accounting related services by Investors Fiduciary Trust Company,
the Fund's bookkeeping or recordkeeping agent, (ii) prepare reports to and
filings with regulatory authorities and (iii) perform such other services
16
<PAGE>
as the Fund may from time to time request of the Manager. The personnel
rendering such services may be employees of the Manager, of its affiliates or of
other organizations. For its services under the Administrative Services
Contract, the Manager receives from the Fund a fee (the "Administrative Services
Fee") equal to .21% per annum of the Fund's average daily net assets. For the
Funds' fiscal years ended October 31, 1998, October 31, 1997 and October 31,
1996, the Manager received a fee of $506,649 $400,463 and $331,405.
For the Fund's fiscal years ended October, 1998, October 31, 1997 and October
31, 1996, the fee paid to the Manager under the Investment Management Contract
was $723,784, $572,090, and $475,005, respectively, of which $0, $0 and $0 was
voluntarily waived. The Fund's net assets at the close of business on October
31, 1998 totaled $168,512,272. The Manager may waive its rights to any portion
of the Management Fee and may use any portion of the Management Fee for purposes
of shareholder and administrative services and distribution of the Fund's
shares.
The Manager at its discretion may waive its rights to any portion of the
Management Fee or the Administrative Services Fee and may use any portion of the
management fee for purposes of shareholder and administrative services and
distribution of the Fund's shares. There can be no assurance that such fees will
be waived in the future (see "Distribution and Service Plan" herein).
Investment management fees and operating expenses which are attributable to both
Classes of the Fund will be allocated daily to each Class based on the
percentage of outstanding shares at the end of the day. Additional shareholder
services provided by Participating Organizations to Class A shareholders
pursuant to the Plan shall be compensated by the Distributor from its
shareholder servicing fee, the Manager from its Management Fee and the Fund
itself. Expenses incurred in the distribution of Class B shares and the
servicing of Class B shares shall be paid by the Manager.
Expense Limitation
The Manager has agreed, pursuant to the Investment Management Contract, (See
"Distribution and Service Plan" herein), to reimburse the Fund for its expenses
(exclusive of interest, taxes, brokerage and extraordinary expenses) which in
any year exceed the limits on investment company expenses prescribed by any
state in which the Fund's shares are qualified for sale. For the purpose of this
obligation to reimburse expenses, the Fund's annual expenses are estimated and
accrued daily, and any appropriate estimated payments are made to it on a
monthly basis. Subject to the obligations of the Manager to reimburse the Fund
for its excess expenses as described above, the Fund has, under the Investment
Management Contract, confirmed its obligation for payment of all its other
expenses. This includes all operating expenses, taxes, brokerage fees and
commissions, commitment fees, certain insurance premiums, interest charges and
expenses of the custodian, transfer agent and dividend disbursing agent's fees,
telecommunications expenses, auditing and legal expenses, bookkeeping agent
fees, costs of forming the corporation and maintaining corporate existence,
compensation of directors, officers and employees of the Fund and costs of other
personnel performing services for the Fund who are not officers of the Manager
or its affiliates, costs of investor services, shareholders' reports and
corporate meetings, SEC registration fees and expenses, state securities laws
registration fees and expenses, expenses of preparing and printing the Fund's
prospectus for delivery to existing shareholders and of printing application
forms for shareholder accounts, and the fees and reimbursements payable to the
Manager under the Investment Management Contract and the Distributor under the
Shareholder Servicing Agreement.
The Fund may from time to time hire its own employees or contract to have
management services performed by third parties (including Participating
Organizations) as discussed herein. The management of the Fund intends to do so
whenever it appears advantageous to the Fund. The Fund's expenses for employees
and for such services are among the expenses subject to the expense limitation
described above.
DISTRIBUTION AND SERVICE PLAN
The Fund's distributor is Reich & Tang Distributors, Inc., a Delaware
corporation with principal officers at 600 Fifth Avenue, New York, New York
10020. Pursuant to Rule 12b-1 under the 1940 Act, the SEC requires that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund has entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to Class A shares
only) with Reich & Tang Distributors, Inc., (the "Distributor"), as distributor
of the Fund's shares.
Effective January 26, 1995, a majority of the Fund's Board of Directors,
including independent directors, approved the creation of a second class of
shares of the Fund's outstanding common stock. In furtherance of this action,
the Board of Directors reclassified the common stock of the Fund into Class A
and Class B shares. The Class A shares will be offered to
17
<PAGE>
investors who desire certain additional shareholder services from Participating
Organizations that are compensated by the Fund's Manager and Distributor for
such services. For its services under the Shareholder Servicing Agreement (with
respect to the Class A shares only), the Distributor receives from the Fund a
fee equal to .20% per annum of the Fund's average daily net assets of the Class
A shares of the Fund (the "Shareholder Servicing Fee"). The fee is accrued daily
and paid monthly and any portion of the fee may be deemed to be used by the
Distributor for purposes of distribution of the Fund's Class A shares and for
payments to Participating Organizations with respect to servicing their clients
or customers who are Class A shareholders of the Fund. The Class B shareholders
will not receive the benefit of such services from Participating Organizations
and, therefore, will not be assessed a Shareholder Servicing Fee.
The following information applies only to the Class A shares of the Fund. For
the Fund's fiscal year ended October 31, 1998, the amount payable to the
Distributor under the Distribution Plan and Shareholder Servicing Agreement
adopted thereunder pursuant to Rule 12b-1 under the 1940 Act, totaled $478,895,
none of which was voluntarily waived. During the same period, the Manager made
total payments under the plan to or on behalf of Participating Organizations of
$1,000,600. For the Fund's fiscal year ended October 31, 1997, the amount
payable to the Distributor under the Distribution Plan and Shareholder Servicing
Agreement adopted thereunder pursuant to Rule 12b-1 under the 1940 Act, totaled
$380,685, none of which was voluntarily waived. During the same period, the
Manager made total payments under the plan to or on behalf of Participating
Organizations of $789,346. For the Fund's fiscal year ended October 31, 1996,
the amount payable to the Distributor under the Distribution Plan and
Shareholder Servicing Agreement adopted thereunder pursuant to Rule 12b-1 under
the 1940 Act, totaled $303,547, of which $94,933 was voluntarily waived. During
the same period, the Manager made total payments under the Plan to or on behalf
of Participating Organizations of $598,171. The excess of such payments over the
total payments the Distributor received from the Fund under the Plan represents
distribution and servicing expenses funded by the Manager from its own resources
including the management fee. For the fiscal year ended October 31, 1998, the
total amount spent pursuant to the Plan for Class A shares was .43% of the
average daily net assets of the Fund, of which .20% of the average daily net
assets was paid by the Fund to the Distributor, pursuant to the Shareholder
Servicing Agreement and an amount representing .23% was paid by the Manager
(which may be deemed an indirect payment by the Fund).
Under the Distribution Agreement, the Distributor, for nominal consideration
(i.e., $1.00) and as agent for the Fund, will solicit orders for the purchase of
the Fund's shares, provided that any subscriptions and orders will not be
binding on the Fund until accepted by the Fund as principal.
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses, including the cost of dedicated lines and CRT terminals, incurred by
the Participating Organizations and Distributor in carrying out their
obligations under the Shareholder Servicing Agreement with respect to the Class
A shares and (ii) preparing, printing and delivering the Fund's prospectus to
existing shareholders of the Fund and preparing and printing subscription
application forms for shareholder accounts.
The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the management fee, and past profits for the
following purposes: (i) to defray the costs of, and to compensate others,
including Participating Organizations with whom the Distributor has entered into
written agreements for performing shareholder servicing and related
administrative functions on behalf of the Class A shares of the Fund; (ii) to
compensate certain Participating Organizations for providing assistance in
distributing the Fund's shares; and (iii) to pay the costs of printing and
distributing the Fund's prospectus to prospective investors, and to defray the
cost of the preparation and printing of brochures and other promotional
materials, mailings to prospective shareholders, advertising, and other
promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee with respect to Class A shares
and past profits for the purpose enumerated in (i) above. The Distributor
determines the amount of such payments made pursuant to the Plan, provided that
such payments will not increase the amount which the Fund is required to pay to
the Manager or the Distributor for any fiscal year under the Investment
Management Contract or the Shareholder Servicing Agreement in effect for that
year.
In accordance with the Rule, the Plan provides that all written agreements
relating to the Plan entered into between either the Fund or the Distributor and
Participating Organizations or other organizations must be in a form
satisfactory to the Fund's Board of Directors. In addition, the Plan requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and the
Distributor pursuant to the Plan and identifying the distribution activities for
which those expenditures were made.
18
<PAGE>
The Plan provided that it would remain in effect until July 31, 1998. Thereafter
it may continue in effect for successive annual periods commencing August 1,
provided it is approved by the Class A shareholders or by the Board of
Directors. This includes a majority of directors who are not interested persons
of the Fund and who have no direct or indirect interest in the operation of the
Plan or in the agreements related to the Plan. The Plan further provides that it
may not be amended to increase materially the costs which may be spent by the
Fund for distribution pursuant to the Plan without Class A shareholder approval,
and the other material amendments must be approved by the directors in the
manner described in the preceding sentence. The Plan may be terminated at any
time by a vote of a majority of the disinterested directors of the Fund or the
Fund's Class A shareholders.
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., an affiliate of the Fund's Manager, located at 600 Fifth Avenue, New York,
NY 10020, is transfer agent and dividend agent for the shares of the Fund. The
custodian and transfer agents do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
COUNSEL AND AUDITORS
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
Matters in connection with New Jersey law are passed upon by Sills Cummis Radin
Tischman Epstein & Gross, P.A., The Legal Center, One Riverfront Plaza, Newark,
New Jersey 07102.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected as auditors for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
The Fund's purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There usually are no brokerage commissions paid for
such purchases. The Fund has paid no brokerage commissions since its formation.
Any transaction for which the Fund pays a brokerage commission will be effected
at the best price and execution available. Thus, the Fund will select a broker
for such a transaction based upon which broker can effect the trade at the best
price and execution available. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price. The Fund purchases Participation
Certificates in variable rate Municipal Obligations with a demand feature from
banks or other financial institutions at a negotiated yield to the Fund based on
the applicable interest rate adjustment index for the security. The interest
received by the Fund is net of a fee charged by the issuing institution for
servicing the underlying obligation and issuing the Participation Certificate,
letter of credit, guarantee or insurance and providing the demand repurchase
feature.
Allocation of transactions, including their frequency, to various dealers is
determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities will
be given to banks or dealers that are Participating Organizations.
Investment decisions for the Fund are made independently from those for any
other investment companies or accounts that may be or become managed by the
Manager or its affiliates. If, however, the Fund and other investment companies
or accounts managed by the Manager are simultaneously engaged in the purchase or
sale of the same security, the transactions may be averaged as to price and
allocated equitably to each account. In some cases, this policy might adversely
affect the price paid or received by the Fund or the size of the position
obtainable for the Fund. In addition, when purchases or sales of the same
security for the Fund and for other investment companies managed by the Manager
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantage available to large denomination purchasers or
sellers.
No portfolio transactions are executed with the Manager or its affiliates acting
as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Manager or its affiliates.
VII. CAPITAL STOCK AND OTHER SECURITIES
The authorized capital stock of the Fund consists of twenty billion shares of
stock having a par value of one tenth of one cent ($.001) per share. The Fund's
Board of Directors is authorized to divide the shares into separate series of
stock, one for each of the portfolios that may be created. Each share of any
series of shares when issued has equal dividend, distribution and liquidation
rights within the series for which it was issued and each fractional share has
19
<PAGE>
those rights in proportion to the percentage that the fractional share
represents of a whole share. Shares of all series have identical voting rights,
except where, by law, certain matters must be approved by a majority of the
shares of the unaffected series. Shares will be voted in the aggregate. There
are no conversion or preemptive rights in connection with any shares of the
Fund. All shares, when issued in accordance with the terms of the offering, will
be fully paid and nonassessable. Shares are redeemable at net asset value, at
the option of the shareholder. The Fund is subdivided into two classes of common
stock, Class A and Class B. Each share, regardless of class, represents an
interest in the same portfolio of investments and has identical voting,
dividend, liquidation and other rights, preferences, powers, restrictions,
limitations, qualifications, designations and terms and conditions, except: (i)
the Class A and Class B shares have different class designations; (ii) only the
Class A shares are assessed a service fee pursuant to the Rule 12b-1
Distribution and Service Plan of the Fund of .20% of the Class A shares' average
daily net assets; (iii) only the holders of the Class A shares are entitled to
vote on matters pertaining to the Plan and any related agreements in accordance
with provisions of Rule 12b-1; and (iv) the exchange privilege permits
stockholders to exchange their shares only for shares of the same class of an
investment company that participates on an exchange privilege program with the
Fund. Payments that are made under the Plan will be calculated and charged daily
to the appropriate class prior to determining daily net asset value per share
and dividends/distributions.
Under its amended Articles of Incorporation, the Fund has the right to redeem
for cash shares of stock owned by any shareholder to the extent and at such
times as the Fund's Board of Directors determines to be necessary or appropriate
to prevent an undue concentration of stock ownership which would cause the Fund
to become a "personal holding company" for Federal income tax purposes. In this
regard, the Fund may also exercise its right to reject purchase orders.
The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors can elect 100% of the directors if the holders choose to do so. In
that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Unless specifically requested by an
investor, the Fund will not issue certificates evidencing Fund shares.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
or special meetings only (i) for the election (or re-election) of directors,
(ii) for approval of the revised investment advisory contracts with respect to a
particular class or series of stock, (iii) for approval of the Fund's
distribution agreement with respect to a particular class or series of stock,
and (iv) upon the written request of shareholders entitled to cast not less than
25% of all the votes entitled to be cast at such meeting. Annual and other
meetings may be required with respect to such additional matters relating to the
Fund as may be required by the 1940 Act, including the removal of Fund
director(s) and communication among shareholders, any registration of the Fund
with the SEC or any state, or as the Directors may consider necessary or
desirable. Each Director serves until his successor is elected or qualified or
until such Director sooner dies, resigns, retires or is removed by the vote of
the shareholders.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
PRICING OF FUND SHARES
The net asset value of each Class of the Fund's shares is determined as of 12
noon, New York City time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except days on which the New York Stock
Exchange is closed for trading. The net asset value of a Class is computed by
dividing the value of the Fund's net assets for such Class (i.e., the value of
its securities and other assets less its liabilities, including expenses payable
or accrued, but excluding capital stock and surplus) by the total number of
shares outstanding for such Class. The Fund intends to maintain a stable net
asset value at $1.00 per share although there can be no assurance that this will
be achieved.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If fluctuating interest
rates cause the market value of the Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Board of
Directors will consider whether any action should be initiated. Although the
amortized cost method provides certainty in valuation, it may result in periods
during which the value of an instrument is higher or lower than the price an
investment company would receive if the instrument were sold.
Shares are issued as of the first determination of the Fund's net asset value
per share for each Class made after acceptance of the investor's purchase order.
In order to maximize earnings on its portfolio, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as
20
<PAGE>
"Federal Funds"). Fund shares begin accruing income on the day the shares are
issued to an investor. The Fund reserves the right to reject any purchase order
for its shares. Certificates for Fund shares will not be issued to an investor.
NET ASSET VALUE
The Fund does not determine net asset value per share of each Class on any day
in which the New York Stock Exchange is closed for trading. Those days include:
New Year's Day, Martin Luther King Jr. Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The net asset value of the Fund's shares is determined as of 12 noon, New York
City time, on each Fund Business Day. The net asset value of a Class is computed
by dividing the value of the Fund's net assets for such Class (i.e., the value
of its securities and other assets less its liabilities, including expenses
payable or accrued but excluding capital stock and surplus) by the total number
of shares outstanding for such Class.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If fluctuating interest
rates cause the market value of the Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Board of
Directors will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the value of an instrument
is higher or lower than the price an investment company would receive if the
instrument were sold.
The Fund's Board of Directors has established procedures to stabilize the Fund's
net asset value at $1.00 per share of each Class. These procedures include a
review of the extent of any deviation of net asset value per share, based on
available market rates, from the Fund's $1.00 amortized cost per share of each
Class. Should that deviation exceed 1/2 of 1%, the Board will consider whether
any action should be initiated to eliminate or reduce material dilution or other
unfair results to shareholders. Such action may include redemption of shares in
kind, selling portfolio securities prior to maturity, reducing or withholding
dividends and utilizing a net asset value per share as determined by using
available market quotations. The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less, will not purchase any instrument with a
remaining maturity greater than 397 days, will limit portfolio investments,
including repurchase agreements, to those United States dollar-denominated
instruments that the Fund's Board of Directors determines present minimal credit
risks, and will comply with certain reporting and record keeping procedures. The
Fund has also established procedures to ensure compliance with the requirement
that portfolio securities are Eligible Securities. (See "Description of the Fund
and its Investments and Risks" herein.)
PURCHASE OF FUND SHARES
The Fund does not accept a purchase order until an investor's payment has been
converted into Federal Funds and is received by the Fund's transfer agent.
Orders accompanied by Federal Funds and received after 12 noon, New York City
time, on a Fund Business Day will result in the issuance of shares on the
following Fund Business Day.
Investors purchasing shares through a Participating Organization with which they
have an account become Class A shareholders. All other investors, and investors
who have accounts with Participating Organizations but do not wish to invest in
the Fund through them, may invest in the Fund directly as Class B shareholders
of the Fund. Class B shareholders do not receive the benefit of the servicing
functions performed by a Participating Organization. Class B shares may also be
offered to investors who purchase their shares through Participating
Organizations who, because they may not be legally permitted to receive such as
fiduciaries, do not receive compensation from the Distributor or the Manager.
The minimum initial investment in the Fund for both classes of shares is (i)
$1,000 for purchases through Participating Organizations - this may be satisfied
by initial investments aggregating $1,000 by a Participating Organization on
behalf of their customers whose initial investments are less than $1,000; (ii)
$1,000 for securities brokers, financial institutions and other industry
professionals that are not Participating Organizations and (iii) $5,000 for all
other investors. Initial investments may be made in any amount in excess of the
applicable minimums. The minimum amount for subsequent investments is $100
unless the investor is a client of a Participating Organization whose clients
have made aggregate subsequent investments of $100.
Each shareholder, except certain Participant Investors, will receive from the
Fund a personalized monthly statement listing (i) the total number of Fund
shares owned as of the statement closing date, (ii) purchase and redemptions of
Fund shares and (iii) the dividends paid on Fund shares (including dividends
paid in cash or reinvested in additional Fund shares).
INVESTMENTS THROUGH PARTICIPATING
ORGANIZATIONS - PURCHASE OF CLASS A SHARES
21
<PAGE>
Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Distributor with respect to investment of their
customer accounts in the Fund. When instructed by its customer to purchase or
redeem Fund shares, the Participating Organization, on behalf of the customer,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Fund shares for the customers'
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly, may impose
charges, limitations, minimums and restrictions in addition to or different from
those applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will result in share issuance the following Fund Business Day.
Participating Organizations are responsible for instituting procedures to insure
that purchase orders by their respective clients are processed expeditiously.
INITIAL DIRECT PURCHASES OF CLASS B SHARES
Investors who wish to invest in the Fund directly may obtain a current
prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
MAIL
Investors may send a check made payable to "New Jersey Daily Municipal Income
Fund, Inc." along with a completed subscription order form to:
New Jersey Daily Municipal
Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will normally be converted into Federal Funds within two business days after
receipt of the check. Checks drawn on a non-member bank may take substantially
longer to convert into Federal Funds. An investor's purchase order will not be
accepted until the Fund receives Federal Funds.
BANK WIRE
To purchase shares of the Fund using the wire system for transmittal of money
among banks, investors should first obtain a new account number by telephoning
the Fund at 212-830-5220 (within New York) or at 800-221-3079 (outside New York)
and then instruct a member commercial bank to wire money immediately to:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
22
<PAGE>
DDA # 890752-954-6
For New Jersey Daily Municipal
Income Fund, Inc.
Account of (Investor's Name)
Fund Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order form.
Investors planning to wire funds should instruct their bank early in the day so
the wire transfer can be accomplished before 12 noon, New York City time, on the
same day. There may be a charge by the investor's bank for transmitting the
money by bank wire, and there also may be a charge for use of Federal Funds. The
Fund does not charge investors in the Fund for its receipt of wire transfers.
Payment in the form of a "bank wire" received prior to 12 noon, New York City
time, on a Fund Business Day will be treated as a Federal Funds payment received
on that day.
PERSONAL DELIVERY
Deliver a check made payable to "New Jersey Daily Municipal Income Fund, Inc."
along with a completed subscription order form to:
Reich & Tang Mutual Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
ELECTRONIC FUNDS TRANSFERS (EFT), PRE-AUTHORIZED CREDIT AND DIRECT DEPOSIT
PRIVILEGE
You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, Federal
salary, social security, or certain veteran's, military or other payments from
the Federal government, automatically deposited into your Fund account. You can
also have money debited from your checking account. To enroll in any one of
these programs, you must file with the Fund a completed EFT Application,
Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form for each
type of payment that you desire to include in the Privilege. The appropriate
form may be obtained from your broker or the Fund. You may elect at any time to
terminate your participation by notifying in writing the appropriate depositing
entity and/or Federal agency. Death or legal incapacity will automatically
terminate your participation in the Privilege. Further, the Fund may terminate
your participation upon 30 days' notice to you.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases can be made by bank wire, as indicated above, or by mailing
a check to:
New Jersey Daily Municipal
Income Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate the shareholder's account number.
Provided that the information on the subscription form on file with the Fund is
still applicable, a shareholder may reopen an account without filing a new
subscription order form at any time during the year the shareholder's account is
closed or during the following calendar year.
REDEMPTION OF SHARES
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class upon receipt by the Fund's transfer agent of the redemption order (and any
supporting documentation which it may require). Normally, payment for redeemed
shares is made on the same Fund Business Day after the redemption is effected,
provided the redemption request is received prior to 12 noon, New York City
time. However, redemption payments will not be effected unless the check
(including a certified or cashier's check) used for investment has been cleared
for payment by the investor's bank, which could take up to 15 days after
investment. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer
23
<PAGE>
agent. Requests to institute or change any of the additional redemption
procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature. It should be signed and guaranteed by
an eligible guarantor institution which includes a domestic bank, a domestic
savings and loan institution, a domestic credit union, a member bank of the
Federal Reserve system or a member firm of a national securities exchange,
pursuant to the Fund's transfer agent's standards and procedures.
WRITTEN REQUESTS
Shareholders may make a redemption in any amount by sending a written request to
the Fund addressed to:
New Jersey Daily Municipal
Income Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.
CHECKS
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $250 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which the check clears. Checks provided by the Fund may not be certified.
Fund shares purchased by check may not be redeemed by check until the check has
cleared, which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. Checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment will not be honored.
Since the dollar value of the account changes daily, the total value of the
account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a post-dated check. The
Fund reserves the right to terminate or modify the check redemption procedure at
any time or to impose additional fees following notification to the Fund's
shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution or other evidence of authorization in accordance
with the Fund's normal practices. Individuals and joint tenants are not required
to furnish any supporting documentation. Appropriate authorization forms will be
sent by the Fund or its agents to corporations and other shareholders who select
this option. As soon as the authorization forms are filed in good order with the
Fund's agent bank, it will provide the shareholder with a supply of checks.
TELEPHONE
The Fund accepts telephone requests for redemption from shareholders who elect
this option on their subscription order form. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or, if in excess
of $1,000, to their bank accounts, both as set forth in the subscription order
form or in a subsequent written authorization. The Fund may accept telephone
redemption instructions from any person with respect to accounts of shareholders
who elect this service and thus such shareholders risk possible loss of
principal and interest in the event of a telephone redemption not authorized by
them. The Fund will employ reasonable procedures to confirm that telephone
redemption instructions are genuine, and will require that shareholders electing
such option provide a form of personal identification. Failure by the Fund to
employ such reasonable procedures may cause the Fund to be liable for the losses
incurred by investors due to unauthorized or fraudulent telephone redemptions.
24
<PAGE>
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption request is received before 12
noon, New York City time. Proceeds are sent the next Fund Business Day if the
redemption request is received after 12 noon, New York City time. The Fund
reserves the right to terminate or modify the telephone redemption service in
whole or in part at any time and will notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed or the Fund may
impose a monthly service charge of $10 on such accounts. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization. The Participating Organization
will be responsible for notifying the Participant Investor of the proposed
mandatory redemption. During the notice period, a shareholder or Participating
Organization who receives such a notice may avoid mandatory redemption by
purchasing sufficient additional shares to increase his total net asset value to
the minimum amount.
PURCHASE OF CHASE VISTA SELECT FUND SHARES
Investors may invest in Chase Vista Select shares through VFD or through dealers
with whom VFD has entered into agreements for this purpose as described herein
and those who have accounts with Participating Organizations may invest in the
Chase Vista Select shares through their Participating Organizations in
accordance with the procedures established by the Participating Organizations.
(See "Investments Through Participating Organizations" herein.) Only Class A
shares are offered through this Prospectus. Certain Participating Organizations
are compensated by the Distributor from its shareholder servicing fee and by the
Manager from its management fee for the performance of these services. An
investor who purchases shares through a Participating Organization that receives
payment from the Manager or the Distributor will become a Class A shareholder.
All other investors, and investors who have accounts with Participating
Organizations but who do not wish to invest in the Fund through their
Participating Organizations, may invest in the Fund directly as Class B
shareholders of the Fund and not receive the benefit of the servicing functions
performed by a Participating Organization. Class B shares may also be offered to
investors who purchase their shares through Participating Organizations who do
not receive compensation from the Distributor or the Manager because they may
not be legally permitted to receive such as fiduciaries. The Manager pays the
expenses incurred in the distribution of Class B shares. Participating
Organizations whose clients become Class B shareholders will not receive
compensation from the Manager or Distributor for the servicing they may provide
to their clients. The minimum initial investment in the Chase Vista Select
shares is $2,500. Initial investments may be made in any amount in excess of the
applicable minimums. The minimum amount for subsequent investments is $100.
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent,
which accepts orders for purchases and redemptions from Participating
Organizations, VFD, and from dealers with whom VFD has entered into agreements
for this purpose.
INVESTMENTS THROUGH PARTICIPATING ORGANIZATIONS -
PURCHASE OF CHASE VISTA SELECT CLASS A SHARES
25
<PAGE>
Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Distributor with respect to investment of their
customer accounts in the Fund. When instructed by its customer to purchase or
redeem Fund shares, the Participating Organization, on behalf of the customer,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Fund shares for the customers'
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly, may impose
charges, limitations, minimums and restrictions in addition to or different from
those applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will result in share issuance the following Fund Business Day.
Participating Organizations are responsible for instituting procedures to insure
that purchase orders by their respective clients are processed expeditiously.
INITIAL PURCHASE OF CHASE VISTA SELECT CLASS A SHARES
Investors may obtain a current prospectus and the order form necessary to open
an account by telephoning the Chase Vista Service Center at 1-800-34-VISTA.
MAIL
To purchase shares of the "Chase Vista Select shares" send a check made payable
to "Vista Select Shares of New Jersey Daily Municipal Income Fund, Inc." along
with a completed subscription order form to:
New Jersey Daily Municipal Income Fund, Inc.
P.O. Box 419392
Kansas City, Missouri 64141-6392
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member bank of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on a non-member bank may take
substantially longer to convert into Federal Funds and to be invested in Fund
shares. An investor's subscription will not be accepted until the Fund receives
Federal Funds.
BANK WIRE
To purchase shares of the Chase Vista Select shares using the wire system for
transmittal of money among banks, investors should first telephone the Fund at
1-800-34-VISTA to obtain a new account number. The investor should then instruct
a member commercial bank to wire the money immediately to:
DST Systems, Inc.
ABA #1010-0362-1
CHASE VISTA FUNDS
DDA #751-1-629
For New Jersey Daily Municipal Income Fund, Inc.
Account of
26
<PAGE>
Fund Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order form.
Investors planning to wire funds should instruct their bank early in the day so
the wire transfer can be accomplished before 12 noon, New York City time, on
that same day. There may be a charge by the investor's bank for transmitting the
money by bank wire, and there also may be a charge for use of Federal Funds. The
Fund does not charge investors in the Fund for its receipt of wire transfers.
Payment in the form of a "bank wire" received prior to 12 noon, New York City
time, on a Fund Business Day will be treated as a Federal Funds payment received
on that day.
SUBSEQUENT PURCHASES OF CHASE VISTA SELECT SHARES
Subsequent purchases can be made either by bank wire or by mailing a check to:
Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392
There is a $100 minimum for each subsequent purchase. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription order form on file with the Fund is still applicable, a
shareholder may re-open an account without filing a new subscription order form
at any time during the year the shareholder's account is closed or during the
following calendar year.
REDEMPTION OF CHASE VISTA SELECT SHARES
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class upon receipt by the Fund's transfer agent of the redemption order (and any
supporting documentation which it may require). Normally, payment for redeemed
shares is made on the same Fund Business Day after the redemption is effected,
provided the redemption request is received prior to 12 noon, New York City
time. However, redemption payments will not be effected unless the check
(including a certified or cashier's check) used for investment has been cleared
for payment by the investor's bank, which could take up to 15 days after
investment. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature. It should be signed and guaranteed by
an eligible guarantor institution which includes a domestic bank, a domestic
savings and loan institution, a domestic credit union, a member bank of the
Federal Reserve system or a member firm of a national securities exchange,
pursuant to the Fund's transfer agent's standards and procedures.
WRITTEN REQUESTS
Shareholders may make a redemption in any amount by sending a written request to
the Fund addressed to:
Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392
All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.
CHECKS
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $500 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which
27
<PAGE>
the check clears. Checks provided by the Fund may not be certified. Fund shares
purchased by check may not be redeemed by check until the check has cleared,
which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. Checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment will not be honored.
Since the dollar value of the account changes daily, the total value of the
account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a post-dated check. The
Fund reserves the right to terminate or modify the check redemption procedure at
any time or to impose additional fees following notification to the Fund's
shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution or other evidence of authorization in accordance
with the Fund's normal practices. Individuals and joint tenants are not required
to furnish any supporting documentation. Appropriate authorization forms will be
sent by the Fund or its agents to corporations and other shareholders who select
this option. As soon as the authorization forms are filed in good order with the
Fund's agent bank, it will provide the shareholder with a supply of checks.
TELEPHONE
The Fund accepts telephone requests for redemption from shareholders who elect
this option on their subscription order form. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or to their bank
accounts, both as set forth in the subscription order form or in a subsequent
written authorization. However, all telephone redemption instructions in excess
of $25,000 will be wired directly to such previously designated bank account.
The Fund may accept telephone redemption instructions from any person with
respect to accounts of shareholders who elect this service and thus such
shareholders risk possible loss of principal and interest in the event of a
telephone redemption not authorized by them. To provide evidence of telephone
instructions, for Chase Vista Select Shares, the transfer agent will record
telephone conversations with shareholders. The Fund will employ reasonable
procedures to confirm that telephone redemption instructions are genuine, and
will require that shareholders electing such option provide a form of personal
identification. Failure by the Fund to employ such reasonable procedures may
cause the Fund to be liable for the losses incurred by investors due to
unauthorized or fraudulent telephone redemptions.
A shareholder making a telephone withdrawal should call the Fund at
1-800-34-VISTA, and state: (i) the name of the shareholder appearing on the
Fund's records; (ii) the shareholder's account number with the Fund; (iii) the
amount to be withdrawn; (iv) whether such amount is to be forwarded to the
shareholder's designated bank account or address; and (v) the name of the person
requesting the redemption. Usually the proceeds are sent to the designated bank
account or address on the same Fund Business Day the redemption is effected,
provided the redemption request is received before 12 noon, New York City time.
Proceeds are sent the next Fund Business Day if the redemption request is
received after 12 noon, New York City time. The Fund reserves the right to
terminate or modify the telephone redemption service in whole or in part at any
time and will notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written
28
<PAGE>
notice of a proposed mandatory redemption will be given at least 30 days in
advance to any shareholder whose account is to be redeemed or the Fund may
impose a monthly service charge of $10 on such accounts. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization. The Participating Organization
will be responsible for notifying the Participant Investor of the proposed
mandatory redemption. During the notice period, a shareholder or Participating
Organization who receives such a notice may avoid mandatory redemption by
purchasing sufficient additional shares to increase his total net asset value to
the minimum amount.
IX. TAXATION OF THE FUND
FEDERAL INCOME TAXES
The Fund has elected to qualify under the Code as a "regulated investment
company" that distributes "exempt-interest dividends". The Fund intends to
continue to qualify for regulated investment company status so long as such
qualification is in the best interests of its shareholders. Such qualification
relieves the Fund of liability for Federal income taxes to the extent its
earnings are distributed in accordance with the applicable provisions of the
Code.
The Fund's policy is to distribute as dividends each year 100% and in no event
less than 90% of its tax-exempt interest income, net of certain deductions.
Exempt-interest dividends, as defined in the Code, are dividends or any part
thereof (other than capital gain dividends) paid by the Fund that are
attributable to interest on obligations, the interest on which is exempt from
regular Federal income tax, and designated by the Fund as exempt-interest
dividends in a written notice mailed to the Fund's shareholders not later than
60 days after the close of its taxable year. The percentage of the total
dividends paid by the Fund during any taxable year that qualifies as
exempt-interest dividends will be the same for all shareholders receiving
dividends during the year.
Exempt-interest dividends are to be treated by the Fund's shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code.
However, a shareholder is advised to consult his tax advisors with respect to
whether exempt-interest dividends retain the exclusion under Section 103 of the
Code if such shareholder will be treated as a "substantial user" or "related
person" under Section 147(a) of the Code with respect to some or all of the
"private activity" bonds, if any, held by the Fund. If a shareholder receives an
exempt-interest dividend with respect to any share and such share has been held
for six months or less, then any loss on the sale or exchange of such share will
be disallowed to the extent of the amount of such exempt-interest dividend. The
Code provides that interest on indebtedness incurred, or continued, to purchase
or carry certain tax-exempt securities, such as shares of the Fund, is not
deductible. Therefore, among other consequences, a certain proportion of
interest on indebtedness incurred, or continued, to purchase or carry securities
on margin may not be deductible during the period an investor holds shares of
the Fund. For Social Security recipients, interest on tax-exempt bonds,
including exempt-interest dividends paid by the Fund, is added to adjusted gross
income for purposes of computing the amount of social security benefits
includible in gross income. The amount of tax-exempt interest received,
including exempt-interest dividends will have to be disclosed on the
shareholders' Federal income tax returns. Taxpayers are required to include as
an item of tax preference for purposes of the Federal alternative minimum tax
all tax-exempt interest on "private activity" bonds (generally, a bond issue in
which more than 10% of the proceeds are used in a non-governmental trade or
business, other than Section 501(c)(3) bonds) issued after August 7, 1986. Thus,
this provision will apply to the portion of the exempt-interest dividends from
the Fund's assets that are attributable to such post-August 7, 1986 less any
deductions (not allowable in a computing Federal Income Tax) which would have
been allowable if such interest were includable in gross income private activity
bonds, if any of such bonds are acquired by the Fund. Corporations are required
to increase their alternative minimum taxable income for purposes of calculating
their alternative minimum tax liability by 75% of the amount by which the
adjusted current earnings (which will include tax-exempt interest) of the
corporation exceeds the alternative minimum taxable income (determined without
this item). In addition, in certain cases, Subchapter S corporations with
accumulated earnings and profits from Subchapter C years are subject to a
minimum tax on excess "passive investment income" which includes tax-exempt
interest.
Although not intended, it is possible that the Fund may realize short-term or
long-term capital gains or losses from its portfolio transactions. The Fund may
also realize short-term or long-term capital gains upon the maturity or
disposition of securities acquired at discounts resulting from market
fluctuations. Short-term capital gains are taxable to shareholders as ordinary
income when they are distributed. Any net capital gains (the excess of net
realized long-term capital gain over net realized short-term capital loss) will
be distributed annually to the Fund's shareholders. The Fund will have no tax
liability with respect to distributed net capital gains and the distributions
will be taxable to shareholders as long-term capital gains regardless of how
long the shareholders have held Fund shares. However, Fund shareholders who at
the time of such a net capital gain distribution have not held their Fund shares
for more than 6 months, and who subsequently dispose of those shares at a loss,
are required to treat such loss as a long-term capital loss to the extent of the
net capital gain distribution. Distributions of net capital gain will be
designated as a "capital gain dividend" in a written notice mailed to the Fund's
shareholders not later than 60 days after the close of the Fund's taxable year.
Capital gains realized by corporations are generally taxed at the same rate as
ordinary income. Generally, capital gains are taxable at a maximum rate of 20%
to non-corporate shareholders who have a holding period of more than 12 months.
Corresponding maximum rate and holding period rules apply with respect to
capital gains distributed by the Fund without regard to the length of time
shares have been held by the holder.
29
<PAGE>
The Fund intends to distribute at least 90% of its investment company taxable
income (taxable income subject to certain adjustments exclusive of the excess of
net long-term capital gain over net short-term capital loss) for each taxable
year. The Fund will be subject to Federal income tax on any undistributed
investment company taxable income. To the extent such income is distributed it
will be taxable to shareholders as ordinary income. Expenses paid or incurred by
the Fund will be allocated between tax-exempt and taxable income in the same
proportion as the amount of the Fund's tax-exempt income bears to the total of
such exempt income and its gross income (excluding from gross income the excess
of capital gains over capital losses). If the Fund does not distribute at least
98% of its ordinary income and 98% of its capital gain net income for a taxable
year, the Fund will be subject to a nondeductible 4% excise tax on the excess of
such amounts over the amounts actually distributed.
If a shareholder fails to provide the Fund with a current taxpayer
identification number, the Fund is generally required to withhold 31% of taxable
interest, dividend payments, and proceeds from the redemption of shares of the
Fund.
Dividends and distributions to shareholders are treated in the same manner for
Federal income tax purposes whether received in cash or reinvested in additional
shares of the Fund.
With respect to the variable rate demand instruments, including Participation
Certificates therein, the Fund has obtained and is relying on the opinion of
Battle Fowler LLP, counsel to the Fund, that it will be treated for Federal
income tax purposes as the owner of an interest in the underlying Municipal
Obligations and the interest thereon will be exempt from regular Federal income
taxes to the Fund to the same extent as interest on the underlying Municipal
Obligation. Counsel has pointed out that the Internal Revenue Service has
announced that it will not ordinarily issue advance rulings on the question of
ownership of securities or participation interests therein subject to a put and,
as a result, the Internal Revenue Service can reach a conclusion different from
that reached by counsel.
From time to time, proposals have been introduced before Congress to restrict or
eliminate the Federal income tax exemption for interest on Municipal
Obligations. If such a proposal is introduced and enacted in the future, the
ability of the Fund to pay exempt-interest dividends will be adversely affected
and the Fund will reevaluate its investment objective and policies and consider
changes in the structure.
In South Carolina v. Baker, the United States Supreme Court held that the
Federal government may constitutionally require states to register bonds they
issue and may subject the interest on such bonds to Federal tax if not
registered, and that there is no constitutional prohibition against the Federal
government's taxing the interest earned on state or other municipal bonds. The
Supreme Court decision affirms the authority of the Federal government to
regulate and control bonds such as Municipal Obligations and to tax the interest
on such bonds in the future. The decision does not, however, affect the current
exemption from regular income taxation of the interest earned on the Municipal
Obligations in accordance with Section 103 of the Code.
NEW JERSEY INCOME TAXES
The designation of all or a portion of a dividend paid by the Fund as an
"exempt-interest dividend" under the Code does not necessarily result in the
exemption of such amount from tax under the laws of any state or local taxing
authority.
The Fund intends to be a "qualified investment fund" within the meaning of the
New Jersey gross income tax. The primary criteria for constituting a "qualified
investment fund" are: (i) such fund is an investment company registered with the
SEC which, for the calendar year in which the distribution is paid, has no
investments other than interest bearing obligations, obligations issued at a
discount, and cash and cash items, including receivables and financial options,
futures, forward contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond indexes
related thereto and (ii) at the close of each quarter of the taxable year, such
fund has not less than 80% of the aggregate principal amount of all of its
investments, excluding financial options, futures, forward contracts, or other
similar financial instruments relating to interest-bearing obligations,
obligations issued at a discount or bond indexes related thereto to the extent
such instruments are authorized under the regulated investment company rules
under the Code, cash and cash items, which cash items shall include receivables,
in New Jersey Municipal Obligations, Territorial Municipal Obligations and
certain other specified securities. Additionally, a qualified investment fund
must comply with its reporting obligations under New Jersey law with respect to
qualified investment funds. In the opinion of Sills Cummis Radin Tischman
Epstein & Gross, P.A., special New Jersey tax counsel to the Fund, assuming that
the Fund constitutes a qualified investment fund, (a)
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<PAGE>
distributions paid by the Fund to a New Jersey resident individual shareholder
will not be subject to the New Jersey gross income tax to the extent that the
distributions are attributable to income received as interest on or gain from
New Jersey Municipal Obligations or Territorial Municipal Obligations, and (b)
gain from the sale of shares in the Fund by a New Jersey resident individual
shareholder is not be subject to New Jersey gross income tax.
Shareholders are urged to consult their tax advisers with respect to the
treatment of distributions from the Fund and ownership of shares of the Fund in
their own States and localities.
X. UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e., $1.00)
and as agent for the Fund, solicits orders for the purchase of the Fund's
shares, provided that any subscriptions and orders are not binding on the Fund
until accepted by the Fund as principal.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. In the opinion of the Manager,
however, based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution will result in loss to shareholders or change in
the Fund's net asset value. In addition, state securities laws on this issue may
differ from the interpretations of Federal law expressed herein and banks and
financial institutions may be required to register ad dealers pursuant to state
law.
XI. CALCULATION OF PERFORMANCE DATA
The Fund calculates a seven-day yield quotation using a standard method
prescribed by the rules of the SEC. Under that method, the Fund's yield figure,
which is based on a chosen seven-day period, is computed as follows: the Fund's
return for the seven-day period is obtained by dividing the net change in the
value of a hypothetical account having a balance of one share at the beginning
of the period by the value of such account at the beginning of the period
(expected to always be $1.00). This is multiplied by (365/7) with the resulting
annualized figure carried to the nearest hundredth of one percent. For purposes
of the foregoing computation, the determination of the net change in account
value during the seven-day period reflects (i) dividends declared on the
original share and on any additional shares, including the value of any
additional shares purchased with dividends paid on the original share, and (ii)
fees charged to all shareholder accounts. Realized capital gains or losses and
unrealized appreciation or depreciation of the Fund's portfolio securities are
not included in the computation. Therefore, annualized yields may be different
from effective yields quoted for the same period.
The Fund's "effective yield" for each Class is obtained by adjusting its
"current yield" to give effect to the compounding nature of the Fund's
portfolio, as follows: the unannualized base period return is compounded and
brought out to the nearest one hundredth of one percent by adding one to the
base period return, raising the sum to a power equal to 365 divided by 7, and
subtracting one from the result, i.e., effective yield = [(base period return +
1)365/7] - 1.
Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day. The Fund's yield for any given period is not an indication, or
representation by the Fund, of future yields or rates of return on the Fund's
shares, and may not provide a basis for comparison with bank deposits or other
investments that pay a fixed yield for a stated period of time. Investors who
purchase the Fund's shares directly may realize a higher yield than Participant
Investors because they will not be subject to any fees or charges that may be
imposed by Participating Organizations.
The Fund may from time to time advertise its tax equivalent current yield. The
tax equivalent yield for each Class is computed based upon a 30-day (or one
month) period ended on the date of the most recent balance sheet included in
this Statement of Additional Information. It is computed by dividing that
portion of the yield of the Fund (as computed pursuant to the formulae
previously discussed) which is tax exempt by one minus a stated income tax rate
and adding the quotient to that portion, if any, of the yield of the Fund that
is not tax exempt. The tax equivalent yield for the Fund may also fluctuate
daily and does not provide a basis for determining future yields.
The Fund may from time to time advertise a tax equivalent effective yield table
which shows the yield that an investor needs to receive from a taxable
investment in order to equal a tax-free yield from the Fund. This is calculated
by
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<PAGE>
dividing that portion of the Fund's effective yield that is tax-exempt by 1
minus a stated income tax rate and adding the quotient to that portion, if any,
of the Fund's effective yield that is not tax-exempt. See "Taxable Equivalent
Yield Table" herein.
The Fund's Class A shares' yield for the seven day period ended December 31,
1998 was 2.88%, which is equivalent to an effective yield of 2.92%. The Fund's
Class B shares' yield for the seven day period ended December 31, 1998 was
3.08%, which is equivalent to an effective yield of 3.13%.
XII. FINANCIAL STATEMENTS
The audited financial statements for the Fund for the fiscal year ended October
31, 1998 and the report therein of McGladrey & Pullen, LLP, are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
32
<PAGE>
DESCRIPTION OF RATINGS*
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S TWO HIGHEST MUNICIPAL BOND
RATINGS:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, or fluctuation of protective elements
may be of greater amplitude, or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
CON. ( ... ) Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (i) earnings of projects under construction, (ii) earnings of
projects unseasoned in operating experience, (iii) rentals which begin when
facilities are completed, or (iv) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S TWO HIGHEST RATINGS OF STATE
AND MUNICIPAL NOTES AND OTHER SHORT-TERM LOANS:
Moody's ratings for state and municipal notes and other short-term loans will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in bond risk
are of lesser importance in the short run. Symbols used will be as follows:
MIG-1: Loans bearing this designation are of the best quality, enjoying strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing, or both.
MIG-2: Loans bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.
DESCRIPTION OF STANDARD & POOR'S RATING SERVICES TWO HIGHEST DEBT RATINGS:
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only to a small degree.
PLUS ( + ) OR MINUS ( - ): The AA rating may be modified by the addition of a
plus or minus sign to show relative standing within the AA rating category.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.
Standard & Poor's does not provide ratings for state and municipal notes.
DESCRIPTION OF STANDARD & POOR'S RATING SERVICES TWO HIGHEST COMMERCIAL PAPER
RATINGS:
A: Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 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 either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S TWO HIGHEST COMMERCIAL PAPER
RATINGS:
Moody's employs the following designations, both judged to be investment grade,
to indicate the relative repayment capacity of rated issues: Prime-1, highest
quality; Prime-2, higher quality.
* As described by the rating agencies.
33
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<TABLE>
<CAPTION>
CORPORATE TAXABLE EQUIVALENT YIELD TABLE
- --------------------------------------------------------------------------------
1. If Your Taxable Income Bracket Is . . .
- ----------------- ------------ ------------ ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corporate 0- 50,001- 75,001- 100,001- 335,001- 10,000,001- 15,000,001- 18,333,334-
Return 50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 and over
- -----------------------------------------------------------------------------------------------------------------------------------
2. Then Your Combined Income Tax Bracket Is . . .
- -----------------------------------------------------------------------------------------------------------------------------------
Federal
Tax Rate 15.00% 25.00% 34.00% 39.00% 34.00% 35.00% 38.00% 35.00%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
State
Tax Rate 7.25% 7.25% 7.25% 7.25% 7.25% 7.25% 7.25% 7.25%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
Combined
Marginal 21.16% 30.44% 38.79% 43.42% 38.79% 39.71% 42.50% 39.71%
Tax Rate
- -----------------------------------------------------------------------------------------------------------------------------------
3. Now Compare Your Tax Free Income Yields With Taxable Income Yields
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Exempt
Yield
- ----------------- -----------------------------------------------------------------------------------------------------------------
2.00% 2.54% 2.88% 3.27% 3.53% 3.27% 3.32% 3.48% 3.32%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
2.50% 3.17% 3.59% 4.08% 4.42% 4.08% 4.15% 4.35% 4.15%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
3.00% 3.81% 4.31% 4.90% 5.30% 4.90% 4.98% 5.22% 4.98%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
3.50% 4.44% 5.03% 5.72% 6.16% 5.72% 5.81% 6.09% 5.81%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
4.00% 5.07% 5.75% 6.53% 7.07% 6.53% 6.63% 6.96% 6.63%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
4.50% 5.71% 6.47% 7.35% 7.95% 7.35% 7.46% 7.83% 7.46%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
5.00% 6.34% 7.19% 8.17% 8.84% 8.17% 8.29% 8.69% 8.29%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
5.50% 6.98% 7.91% 8.98% 9.72% 8.98% 9.12% 9.56% 9.12%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
6.00% 7.61% 8.63% 9.80% 10.60% 9.80% 9.95% 10.43% 9.95%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
6.50% 8.24% 8.34% 10.62% 10.49% 10.62% 10.78% 11.30% 10.78%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
7.00% 8.88% 10.06% 11.44% 12.37% 11.44% 10.61% 12.17% 10.61%
- ----------------- ------------ ------------ ------------ -------------- ------------- -------------- --------------- --------------
</TABLE>
To use this chart, find the applicable level of taxable income based on your tax
filing status in section one. Then read down to section two to determine your
combined tax bracket and, in section three, to see the equivalent taxable yields
for each of the tax free income yields given.
34
<PAGE>
<TABLE>
<CAPTION>
TAXABLE EQUIVALENT YIELD TABLE
- --------------------------------------------------------------------------------
1. If Your Taxable Income Bracket Is . . .
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single $0- $20,001 - $20,751 - -- $35,001- $40,001- $62,451- $75,001- $130,251- $283,150
Return $20,000 $25,750 $35,000 -- $40,000 $62,450 $75,000 $130,250 $283,150 and over
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- -------------------------------------------
Joint $0- $20,001- $43,051 - $50,001 - $70,001- $80,001- $104,051- $150,001- $158,551- $283,150
Return $20,000 $43,050 $50,000 $70,000 $80,000 $104,050 $150,000 $158,550 $283,150 and over
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- -------------------------------------------
2. Then Your Combined Income Tax Bracket Is . . .
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- -------------------------------------------
Federal
Tax Rate 15.00% 15.00% 28.00% 28.00% 28.00% 28.00% 31.00% 31.00% 36.00% 39.60%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- -------------------------------------------
State
Tax Rate 1.40% 1.75% 1.75% 2.45% 3.50% 5.53% 5.53% 6.37% 6.37% 6.37%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- -------------------------------------------
Combined
Marginal
Tax Rate 16.19% 16.49% 29.26% 29.76% 30.52% 31.98% 34.81% 35.40% 40.08% 43.45%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
3. Now Compare Your Tax Free Income Yields With Taxable Income Yields
- ------------------ -----------------------------------------------------------------------------------------------------------------
Tax Exempt Equivalent Taxable Investment Yield
Yield Requires to Match Tax Exempt Yield
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
2.00% 2.39% 2.39% 2.83% 2.85% 2.88% 2.94% 3.07% 3.10% 3.34% 3.54%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
2.50% 2.98% 2.99% 3.53% 3.56% 3.60% 3.68% 3.84% 3.87% 4.17% 4.42%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
3.00% 3.58% 3.59% 4.24% 4.27% 4.32% 4.41% 4.60% 4.64% 5.01% 5.30%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
3.50% 4.18% 4.19% 4.95% 4.98% 5.04% 5.15% 5.37% 5.42% 5.84% 6.19%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
4.00% 4.77% 4.79% 5.65% 5.70% 5.76% 5.88% 6.14% 6.19% 6.68% 7.07%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
4.50% 5.37% 5.39% 6.36% 6.41% 6.48% 6.62% 6.90% 6.97% 7.51% 7.96%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
5.00% 5.97% 5.99% 7.07% 7.12% 7.20% 7.35% 7.67% 7.74% 8.34% 8.84%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
5.50% 6.56% 6.59% 7.77% 7.83% 7.92% 8.09% 8.44% 8.51% 9.18% 9.73%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
6.00% 7.16% 7.18% 8.48% 8.54% 8.64% 8.82% 9.20% 9.29% 10.01% 10.61%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
6.50% 7.76% 7.78% 9.19% 9.25% 9.36% 9.56% 9.97% 10.06% 10.85% 11.49%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
7.00% 8.35% 8.38% 9.90% 9.97% 10.07% 10.29% 10.74% 10.84% 11.68% 12.38%
- --------------- ----------- ----------- ------------ ----------- ----------- ----------- ----------------------- -------------------
</TABLE>
To use this chart, find the applicable level of taxable income based on your tax
filing status in section one. Then read down to section two to determine your
combined tax bracket and, in section three, to see the equivalent taxable yields
for each of the tax free income yields given.
- --------------------------------------------------------------------------------
35
<PAGE>
PART C - OTHER INFORMATION
ITEM 23 Exhibits.
(a) Amended Articles of Incorporation of the Registrant, filed with the
Maryland State Department of Assessments and Taxation on October 11, 1990
(originally filed as Exhibit 1 to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A and re-filed herein for Edgar purposes
only).
(a.1)Articles of Amendment of the Registrant, filed with the Maryland State
Department of Assessments and Taxation on January 12, 1994.
(b) By-laws of the Registrant (originally filed as Exhibit 2 to the initial
Registration Statement on Form N-1A and re-filed herein for Edgar purposes
only).
(c) Form of certificate for shares of Common Stock, par value $.001 per share,
of the Registrant (originally filed as Exhibit 1 to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A and re-filed herein for
Edgar purposes only).
(d) Investment Management Contract between the Registrant and Reich & Tang
Asset Management L.P. (filed as Exhibit 5 to Post Effective Amendment No. 7
to the Registration Statement on Form N-1A on February 27, 1997, and
incorporated herein by reference).
(e) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc.. (filed as Exhibit 6 to Post Effective Amendment No. 8
to the Registration Statement on Form N-1A on February 27, 1998, and
incorporated herein by reference).
(f) Not applicable.
(g) Custody Agreement between the Registrant and Investors Fiduciary Trust
Company (originally filed as Exhibit 8 to Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A and re-filed herein for Edgar
purposes only).
(h) Form of Shareholder Servicing Agreement between the Registrant and Reich &
Tang Distributors, Inc. (filed as Exhibit 15.3 to Post Effective Amendment
No. 8 to the Registration Statement on Form N-1A on February 27, 1998, and
incorporated herein by reference).
(i) Opinion of Messrs. Battle Fowler LLP, as to the legality of the securities
being registered, including their consent to the filing thereof and to the
use of their name under the heading "Federal Income Taxes" in the
Prospectus (originally filed as Exhibit 1 to Pre-Effective Amendment No. 1
to the Registration Statement on Form N-1A and re-filed herein for Edgar
purposes only).
(i.1)Opinion of Sills Cummis Radin Tischman Epstein & Gross, P.A., as to New
Jersey law, including their consent to the filing thereof and to the use of
their name under the heading "New Jersey Income Taxes" in the Prospectus
(originally filed as Exhibit 1 to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A and re-filed herein for Edgar purposes
only).
(j) Consent of Independent Auditors.
(k) Audited Financial Statements for the fiscal year ended October 31, 1998
(filed with Annual Report).
(l) Written assurance of Reich & Tang, Inc. that its purchase of shares of the
Registrant was for investment purposes without any present intention of
redeeming or reselling (originally filed as Exhibit 1 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A re-filed herein
for Edgar purposes only).
(m) Form of Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (filed as Exhibit 15.1 to Post Effective
Amendment No. 8 to the Registration Statement on Form N-1A on February 27,
1998, and incorporated herein by reference).
(m.1)Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc. (see exhibit (e) above).
(m.2)Administrative Services Contract between the Registrant and Reich & Tang
Asset Management L.P. (filed as Exhibit 15.4 to Post Effective Amendment
No. 7 to the Registration Statement on Form N-1A on February 27, 1998, and
incorporated herein by reference).
(n) Financial Data Schedule (for EDGAR filing only).
C-1
<PAGE>
(o) Not applicable.
(p) Powers of Attorney (originally filed as Exhibit 1 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A and refilled
herein for Edgar purposes only).
Item 24. Persons Controlled by or Under Common Control with Registrant.
None.
Item 25. Indemnification.
Registrant incorporates herein by reference to the Registrant's response to Item
27 of Pre-Effective Amendment No. 1 of this Registration Statement filed with
the Commission on October 26, 1990.
Item 26. Business and Other Connections of Investment Adviser.
The description of the Reich & Tang Asset Management L.P. ("RTAMLP") under the
caption "Management and Investment Management Contract" in the Prospectus and
"Management and Management Contract" in the Statement of Additional Information
constituting parts A and B, respectively, of the Registration Statement are
incorporated herein by reference.
The Registrant's investment adviser, Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Asset Management L.P.'s investment
advisory clients include California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Florida Daily Municipal Income Fund, Georgia Daily
Municipal Income Fund, Inc., Institutional Daily Income Fund, Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., Pax World Money Market Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Short Term Income Fund, Inc., Tax
Exempt Proceeds Fund, Inc., and Virginia Daily Municipal Income Fund, Inc.,
registered investment companies whose addresses are 600 Fifth Avenue, New York,
New York 10020, which invest principally in money market instruments; Delafield
Fund, Inc. and Reich & Tang Equity Fund, Inc. are registered investment
companies whose address is 600 Fifth Avenue, New York, New York 10020, which
invests principally in equity securities. In addition, RTAMLP is the sole
general partner of Alpha Associates L.P., August Associates L.P., Reich & Tang
Minutus I, L.P., Reich & Tang Minutus II, L.P., Reich & Tang Equity Partners
L.P., Reich & Tang Micro Cap L.P., Reich & Tang Concentrated Portfolio L.P. and
Tucek Partners L.P., private investment partnerships organized as limited
partnerships.
Peter S. Voss, President, Chief Executive Officer and a Director of Nvest
Corporation (Formerly New England Investment Companies, Inc.) since October
1992, Chairman of the Board of Nvest Corporation since December 1992, Group
Executive Vice President, Bank of America, responsible for the global asset
management private banking businesses, from April 1992 to October 1992,
Executive Vice President of Security Pacific Bank, and Chief Executive Officer
of Security Pacific Hoare Govett Companies a wholly-owned subsidiary of Security
Pacific Corporation, from April 1988 to April 1992, Director of The New England
since March 1993, Chairman of the Board of Directors of Nvest Corporation's
subsidiaries other than Loomis, Sayles & Company, L.P. ("Loomis") and Back Bay
Advisors, L.P. ("Back Bay"), where he serves as a Director, and Chairman of the
Board of Trustees of all of the mutual funds in the TNE Fund Group and the
Zenith Funds. G. Neal Ryland, Executive Vice President, Treasurer and Chief
Financial Officer since July 1993, Executive Vice President and Chief Financial
Officer of The Boston Company, a diversified financial services company, from
March 1989 until July 1993, from September 1985 to December 1988, Mr. Ryland was
employed by Kenner Parker Toys, Inc. as Senior Vice President and Chief
Financial Officer. Edward N. Wadsworth, Executive Vice President, General
Counsel, Clerk and Secretary of Nvest Corporation since December 1989, Senior
Vice President and Associate General Counsel of The New England from 1984 until
December 1992, and Secretary of Westpeak and Draycott and the Treasurer of Nvest
Corporation. Lorraine C. Hysler has been Secretary of RTAM since July 1994,
Assistant Secretary since September 1993, Vice President of the Mutual Funds
Group of NEICLP from September 1993until July 1994, and Vice President of Reich
& Tang Mutual Funds since July 1994. Ms. Hysler joined Reich & Tang, Inc. in May
1977 and served as Secretary from April 1987 until September 1993. Richard E.
Smith, III has been a Director of RTAM since July 1994, President and Chief
Operating Officer of the Capital Management Group of NEICLP from May 1994 until
July 1994, President and Chief Operating Officer of the Reich & Tang Capital
Management Group since July 1994, Executive Vice President and Director of Rhode
Island Hospital Trust from March 1993 to May 1994, President, Chief Executive
Officer and Director of USF&G Review Management Corp. from January 1988 until
September 1992. Steven W. Duff has been a Director of RTAM since October 1994,
President and Chief Executive Officer of Reich & Tang Mutual Funds since August
1994, Senior Vice President of NationsBank from June 1981 until August 1994, Mr.
Duff is President and a Director of Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey
Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund,
Inc., Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund,
Inc. President and Trustee of Institutional
C-2
<PAGE>
Daily Municipal Income Fund, Pennsylvania Daily Municipal Income Fund, President
and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc., and Executive
Vice President of Reich & Tang Equity Fund, Inc. Bernadette N. Finn has been
Vice President/Compliance of RTAM since July 1994, Vice President of Mutual
Funds Division of NEICLP from September 1993 until July 1994, Vice President of
Reich & Tang Mutual Funds since July 1994. Ms. Finn joined Reich & Tang, Inc. in
September 1970 and served as Vice President from September 1982 until May 1987
and as Vice President and Assistant Secretary from May 1987 until September
1993. Ms. Finn is also Secretary of Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland
Trust, Inc., Delafield Fund, Inc., Daily Tax Free Income Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Funds,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Tax Exempt
Proceeds Fund, Inc., and Virginia Daily Municipal Income Fund, Inc. a Vice
President and Secretary of Reich & Tang Equity Fund, Inc., and Short Term Income
Fund, Inc. Richard DeSanctis has been Treasurer of RTAM since July 1994,
Assistant Treasurer since September 1993 and Treasurer of the Mutual Funds Group
of NEICLP from September 1993 until July 1994, Treasurer of the Reich & Tang
Mutual Funds since July 1994. Mr. DeSanctis joined Reich & Tang, Inc. in
December 1990 and served as Controller of Reich & Tang, Inc., from January 1991
to September 1993. Mr. DeSanctis was Vice President and Treasurer of Cortland
Financial Group, Inc. and Vice President of Cortland Distributors, Inc. from
1989 to December 1990. Mr. DeSanctis is also Treasurer of Back Bay Funds, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang
Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc., and is Vice President and
Treasurer of Cortland Trust, Inc. Richard I. Weiner has been Vice President of
RTAM since July 1994, has been Vice President of Nvest Corporation since
September 1993, Vice President of the Capital Management Group of NEIC from
September 1993 until July 1994, Vice President of Reich & Tang Asset Management
L.P. Capital Management Group since July 1994. Mr. Weiner joined Reich & Tang,
Inc. in August 1970 and has served as a Vice President since September 1982.
Rosanne D. Holtzer has been Vice President of the Mutual Funds division of the
Manager since December 1997. Ms. Holtzer was formerly Manager of Fund Accounting
for the Manager with which she was associated with from June 1986. She is also
Assistant Treasurer of Back Bay Funds, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida
Daily Municipal Income Fund, Institutional Daily Income Fund, Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia
Daily Municipal Income Fund, Inc. and is Vice President and Assistant Treasurer
of Cortland Trust, Inc.
Item 27. Principal Underwriters.
(a) Reich & Tang Distributors, Inc. is also distributor for Connecticut
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal
Income Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity
Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc.
(b) The following are the directors and officers of Reich & Tang Distributors,
Inc. The principal business address of Messrs. Voss, Ryland, and Wadsworth is
399 Boylston Street, Boston, Massachusetts 02116. For all other persons, the
principal business address is 600 Fifth Avenue, New York, New York 10022.
<TABLE>
<CAPTION>
<S> <C> <C>
Positions and Offices Positions and Offices
Name of the Distributor With Registrant
Peter S. Voss ....... Director None
G. Neal Ryland ...... Director None
Edward N. Wadsworth . Executive Officer None
Richard E. Smith III President & Director None
Steven W. Duff ...... Director President and Director
Bernadette N. Finn .. Vice President Secretary
Lorraine C. Hysler .. Secretary None
Richard De Sanctis .. Treasurer Treasurer
Richard I. Weiner ... Vice President None
Peter DeMarco ....... Executive Vice President None
</TABLE>
C-3
<PAGE>
(c) Not applicable.
Item 28. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained in the physical possession of the Registrant at 600
Fifth Avenue, New York, New York 10020, the Registrants Manager, and at
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, Registrant's custodian and transfer agent.
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has met all of the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and State of New York, on February 26, 1999.
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
By:
Bernadette N. Finn
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Capacity Date
(1) Principal Executive Officer
/s/ Steven Duff
President and
Steven Duff Director February 26, 1999
(2) Principal Financial and
Accounting Officer
/s/ Richard De Sanctis
Richard De Sanctis Treasurer February 26, 1999
(3) Majority of Directors
W. Giles Mellon Director
Robert Straniere Director
Yung Wong Director
By:/s/ Bernadette N. Finn February 26, 1999
Bernadette N. Finn
Attorney-in-Fact*
* Powers of Attorney (originally filed as an Exhibit with Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A dated October
26, 1990 and re-filed herein for Edgar purposes only).
AMENDED ARTICLES OF INCORPORATION
OF
NEW JERSEY DAILY TAX FREE INCOME FUND, INC.
FIRST: The Amended Articles of Incorporation as set forth herein below are
made prior to the first meeting of the Board of Directors.
SECOND: (1) The name of the incorporator is Rachelle I. Rehner.
(2) The incorporator's post office address is 280 Park Avenue,
New York, New York 10017.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in these
Articles of Incorporation under the General Corporation Law of the
State of Maryland.
THIRD: The name of the corporation (hereinafter called the "Corporation")
is New Jersey Daily Municipal Income Fund, Inc.
FOURTH: The purposes for which the Corporation is formed are:
(a) to conduct, operate and carry on the business of an investment
company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise dispose of notes, bills, bonds, debentures and other negotiable
or non-negotiable instruments, obligations and evidences of indebtedness
issued or guaranteed as to principal and interest by the United States
Government, or any agency or instrumentality thereof, any State or local
government, or any agency or instrumentality thereof, or any other
securities of any kind issued by any corporation or other issuer organized
under the laws of the United States or any State, territory or possession
thereof or any foreign country or any subdivision thereof or otherwise, to
pay for the same in cash or by the issue of stock, including treasury
stock, bonds and notes of the Corporation or otherwise; and to exercise any
and all rights, powers and privileges of ownership or interest
<PAGE>
in respect of any and all such investments of every kind and description,
including and without limitation, the right to consent and otherwise act
with respect thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any said investments;
(c) to conduct research and investigations in respect of securities,
organizations, business and general business and financial conditions in
the United States of America and elsewhere for the purpose of obtaining
information pertinent to the investment and employment of the assets of the
Corporation and to procure any and all of the foregoing to be done by
others as independent contractors and to pay compensation therefor;
(d) to borrow money or otherwise obtain credit and to secure the same
by mortgaging, pledging or otherwise subjecting as security the assets of
the Corporation, and to endorse, guarantee or undertake the performance of
any obligation, contract or engagement of any other person, firm,
association or corporation;
(e) to issue, sell, distribute, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal
in, shares of stock of the Corporation, including shares of stock of the
Corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of shares
of stock of the Corporation, any funds or property of the Corporation,
whether capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the State of Maryland and by these
Articles of Incorporation;
(f) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within
and without the State of Maryland, in any and all States of the United
States of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies, possessions, agencies,
or instrumentalities of the United States of America and of foreign
governments;
(g) to carry out all or any part of the foregoing purposes or objects
as principal or agent, or in conjunction with any other person, firm,
association, corporation or other entity, or as a
2
<PAGE>
partner or member of a partnership, syndicate or joint venture or
otherwise, and in any part of the world to the same extent and as fully as
natural persons might or could do;
(h) to have and exercise all of the powers and privileges conferred by
the laws of the State of Maryland upon corporations formed under the laws
of such State; and
(i) to do any and all such further acts and things and to exercise any
and all such further powers and privileges as may be necessary, incidental,
relative, conducive, appropriate or desirable for the foregoing purposes.
The enumeration herein of the objects and purposes of the Corporation shall
be construed as powers as well as objects and purposes and shall not be deemed
to exclude by inference any powers, objects or purposes which the Corporation is
empowered to exercise, whether expressly by force of the laws of the State of
Maryland now or hereafter in effect, or implied by the reasonable construction
of the said law.
FIFTH: The post office address of the principal office of the Corporation
within the State of Maryland is 1123 North Eutaw Street, Baltimore, Maryland
21201.
The resident agent of the Corporation in the State of Maryland is The
Prentice-Hall Corporation System, Maryland, at 1123 North Eutaw Street,
Baltimore, Maryland 21201.
SIXTH: (1)(a) The total number of shares of stock of all classes which the
Corporation shall have authority to issue is twenty billion (20,000,000,000),
all of which stock shall have a par value of One Tenth of One Cent ($.001) per
share. The aggregate par value of all authorized shares of stock of the
Corporation is Twenty Million Dollars ($20,000,000).
(b) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end investment company under the Investment
Company Act of 1940, the Board of Directors of the Corporation is authorized,
without the approval of the holders of any outstanding shares, to increase or
decrease the aggregate number of shares of stock that the Corporation shall have
authority to issue, but the aggregate number of shares may not be decreased by
the Board of Directors below the aggregate number of shares then outstanding.
(2)(a) The Board of Directors of the Corporation is authorized to
classify or to reclassify, from time to time, any unissued shares of stock of
the Corporation, whether
3
<PAGE>
now or hereafter authorized, by setting, changing or eliminating the preference,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, and qualifications or terms and conditions of or rights to require
redemption of the stock and, pursuant to such classification or
reclassification, to increase or decrease the number of authorized shares of any
class, but the number of shares of any class shall not be reduced by the Board
of Directors below the number of shares thereof then outstanding.
(b) Without limiting the generality of the foregoing, the
dividends and distributions of investment income and capital gains with respect
to the stock of the Corporation, and with respect to each class that hereafter
may be created, shall be in such amount as may be declared from time to time by
the Board of Directors, and such dividends and distributions may vary from class
to class to such extent and for such purposes as the Board of Directors may deem
appropriate, including but not limited to, the purpose of complying with
requirements of regulatory or legislative authorities.
(3) Until such time as the Board of Directors shall provide
otherwise in accordance with section (2) of this Article SIXTH, all of the
authorized shares of stock of the Corporation are designated as Common Stock.
Such shares and the holders thereof shall be subject to the following
provisions:
(a) As more fully set forth hereafter, the assets and liabilities
and the income and expenses of each class of the Corporation's stock shall be
determined separately and, accordingly, the net asset value, the dividends
payable to holders, and the amounts distributable in the event of dissolution of
the Corporation to holders of shares of the Corporation's stock may vary from
class to class. Except for these differences and certain other differences
hereafter set forth, each class of the Corporation's stock shall have the same
preference, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of and
rights to require redemption.
(b) All consideration received by the Corporation for the issue
or sale of shares of a class of the Corporation's stock, together with all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any
4
<PAGE>
reinvestment of such proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that class.
(c) The assets belonging to a class of the Corporation's stock
shall be charged with the liabilities of the Corporation with respect to that
class and with that class's share of the liabilities of the Corporation not
attributable to any particular class, in the latter case in the proportion that
the net asset value of that class bears to the net asset value of all classes of
the Corporation's stock as determined in accordance with Article TENTH of these
Articles of Incorporation. The determination of the Board of Directors shall be
conclusive as to the allocation of liabilities, including accrued expenses and
reserves, and assets to a particular class or classes.
(d) Each holder of stock of the Corporation, upon request to the
Corporation (accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer, if any certificates have been issued
to represent such shares) shall be entitled to require the Corporation to
redeem, to the extent that the Corporation may lawfully effect such redemption
under the laws of the State of Maryland, all or any part of the shares of stock
standing in the name of such holder on the books of the Corporation at a price
per share equal to the net asset value per share computed in accordance with
Article TENTH hereof.
(e)(i) The term "Minimum Amount" when used herein shall mean One
Thousand Dollars ($1,000) unless otherwise fixed by the Board of Directors from
time to time, provided that the Minimum Amount may not in any event exceed
Twenty-Five Thousand Dollars ($25,000). The Board of Directors may establish
differing Minimum Amounts for each class of the Corporation's stock and for
holders of shares of each class of stock based on such criteria as the Board of
Directors may deem appropriate.
(ii) If the net asset value of the shares of a class of the
Corporation's stock held by a stockholder shall be less than the Minimum Amount
then in effect with respect to shares of that class or with respect to shares of
that class held by the stockholders in the same category as that stockholder,
the Corporation may redeem all of those shares, upon notice given in accordance
with paragraph (iv) of this subsection (e), to the extent that the Corporation
may lawfully effect such redemption under the laws of the State of Maryland.
(iii) The Corporation shall be entitled but not required to
redeem shares of stock from any stockholder or stockholders, to the extent and
at such times as the Board of Directors shall, in its absolute discretion,
determine to be necessary or advisable to prevent the Corporation from
qualifying as a "personal holding company", within the meaning of the
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Internal Revenue Code of 1986, as amended from time to time. Notice shall be
given in accordance with paragraph (iv) of this subsection (e).
(iv) The notice referred to in paragraphs (ii) and (iii) of this
subsection (e) shall be in writing personally delivered or deposited in the
mail, at least thirty days (or such other number of days as may be specified
from time to time by the Board of Directors) prior to such redemption. If
mailed, the notice shall be addressed to the stockholder at his or her post
office address as shown on the books of the Corporation, and sent by certified
or registered mail, postage prepaid. The price for shares acquired by the
Corporation pursuant to this subsection (e) shall be an amount equal to the net
asset value of such shares, computed in accordance with Article TENTH hereof.
(f) Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by the Corporation
within seven business days of such surrender out of the funds legally available
therefor, provided that the Corporation may suspend the right of the holders of
stock of the Corporation to redeem shares of stock and may postpone the right of
such holders to receive payment for any shares when permitted or required to do
so by applicable statutes or regulations. Payment of the aggregate of such price
may be made in cash or, at the option of the Corporation, wholly or partly in
such portfolio securities of the Corporation as the Corporation shall elect.
(g) The right of any holder of stock of the Corporation redeemed
by the Corporation as provided in subsection (d) or (e) of this section (3) to
receive dividends thereon and all other rights of such holder with respect to
such shares shall terminate at the time as of which the purchase or redemption
price of such shares is determined, except the right of such holder to receive
(i) the redemption price of such shares from the Corporation or its designated
agent and (ii) any dividend or distribution to which such holder has previously
become entitled as the record holder of such shares on the record date for such
dividend or distribution. If shares of stock are redeemed by the Corporation
pursuant to subsection (e) of this section (3) and certificates representing the
redeemed shares have been issued, the redemption price need not be paid by the
Corporation until the certificates have been received by the Corporation or its
agent duly endorsed for transfer.
(h) The Corporation shall be entitled to purchase shares of its
stock, to the extent that the Corporation may lawfully effect such purchase
under the laws of the State of Maryland, upon such terms and conditions and for
such consideration as the Board of Directors shall deem advisable, by
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agreement with the stockholder at a price not exceeding the net asset value per
share computed in accordance with Article TENTH hereof.
(i) The net asset value of each share of a class of the
Corporation's stock issued and sold or redeemed or purchased at net asset value
shall be the net asset value per share of the shares of that class determined in
accordance with Article TENTH hereof based on the assets belonging to that class
less the liabilities charged to that class.
(j) In the absence of any specification as to the purpose for
which shares of stock of the Corporation are redeemed or purchased by it, all
shares so redeemed or purchased shall be deemed to be retired in the sense
contemplated by the laws of the State of Maryland and the number of the
authorized shares of stock of the Corporation shall not be reduced by the number
of any shares redeemed or purchased by it.
(k) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or cash or both, as may be declared from
time to time by the Board of Directors, acting in its sole discretion, with
respect to such class, provided that dividends or distributions shall be paid on
shares of a class of stock only out of lawfully available assets belonging to
that class.
(l) For the purpose of allowing the net asset value per share of
a class of the Corporation's stock to remain constant, the Corporation shall be
entitled to declare, pay and credit as dividends daily the net income (which may
include or give effect to realized or unrealized gains and losses, as determined
in accordance with the Corporation's accounting and portfolio valuation
policies) of the Corporation allocated to that class. If the amount so
determined for any day is negative, the Corporation shall be entitled, without
the payment of monetary compensation but in consideration of the interest of the
Corporation and its stockholders in maintaining a constant net asset value per
share of the class, to redeem pro rata from all the stockholders of record of
shares of the class at the time of such redemption (in proportion to their
respective holdings thereof) such number of outstanding shares of the class, or
fractions thereof, as shall be required to permit the net asset value per share
of the class to remain constant.
(m) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a class of the Corporation's stock shall be
entitled to receive, as a class, out of the assets of the Corporation available
for distribution to stockholders, the assets belonging to that class. The assets
so distributable to the stockholders of a class shall be distributed among such
stockholders in proportion to the number
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of shares of that class held by them and recorded on the books of the
Corporation. In the event that there are any assets available for distribution
that are not attributable to any particular class of stock, such assets shall be
allocated to all classes in proportion to the net asset value of the respective
classes and then distributed to the holders of stock of each class in proportion
to the net asset value of the shares of that class held by the respective
holders.
(n) On each matter submitted to a vote of the stockholders, each
holder of a share of stock shall be entitled to one vote for each such share
standing in such holder's name on the books of the Corporation irrespective of
the class thereof; provided, however, that to the extent class voting is
required by the Investment Company Act of 1940 or regulations thereunder, as
from time to time amended, or the laws of the State of Maryland as to any such
matter, those requirements shall apply.
(o) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole shares, including without
limitation, the right to vote, the right to receive dividends and distributions,
and the right to participate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing fractional shares.
(4) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any and all of
the shares of stock of the Corporation, whether now or hereafter authorized, may
be issued, or may be reissued or transferred if the same have been reacquired
and have treasury status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine, without first
offering same, or any thereof, to any said holder.
(5) All persons who shall acquire stock or other securities of
the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.
SEVENTH: The number of directors of the Corporation, until such number
shall be increased pursuant to the By-Laws of the Corporation, shall be two. The
number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The names of the persons who shall act as directors
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of the Corporation until the first annual meeting or until their successors are
duly chosen and qualified are William Craven and Dana E. Messina.
EIGHTH: The following provisions are inserted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the Board of
Directors and stockholders.
(a) The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors which shall have and may exercise
all powers of the Corporation except those powers which are by law, by these
Articles of Incorporation or by the By-Laws conferred upon or reserved to the
stockholders. In furtherance and not in limitation of the powers conferred by
law, the Board of Directors shall have the power:
(i) to make, alter and repeal the By-Laws of the Corporation;
(ii) to issue and sell, from time to time, shares of any class of
the Corporation's stock in such amounts and on such terms and conditions, and
for such amount and kind of consideration, as the Board of Directors shall
determine, provided that the consideration per share to be received by the
Corporation shall be not less than the greater of the net asset value per share
of that class of stock at such time computed in accordance with Article TENTH
hereof or the par value thereof;
(iii) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves for working
capital or for any other proper purpose or purposes, and to reduce, abolish or
add to any such reserve or reserves from time to time as said Board of Directors
may deem to be in the best interests of the Corporation; and to determine in its
discretion what part of the assets of the Corporation available for dividends in
excess of such reserve or reserves shall be declared in dividends and paid to
the stockholders of the Corporation; and
(iv) from time to time to determine to what extent and at what
times and places and under what conditions and regulations the accounts, books
and records of the Corporation, or any of them, shall be open to the inspection
of the stockholders; and no stockholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred by the laws
of the State of Maryland, unless and until authorized to do so by resolution of
the Board of Directors or of the stockholders of the Corporation.
(b) Notwithstanding any provision of the General Corporation Law
of the State of Maryland requiring a
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greater proportion than a majority of the votes of all classes or of any class
of the Corporation's stock entitled to be cast in order to take or authorize any
action, any such action may be taken or authorized upon the concurrence of a
majority of the aggregate number of votes entitled to be cast thereon subject to
any applicable requirements of the Investment Company Act of 1940, as from time
to time in effect, or rules or orders of the Securities and Exchange Commission
or any successor thereto.
(c) Except as may otherwise be expressly provided by applicable
statutes or regulatory requirements, the presence in person or by proxy of the
holders of one-third of the shares of stock of the Corporation entitled to vote
shall constitute a quorum at any meeting of the stockholders.
(d) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment owned or held by the Corporation, as to the
market value or fair value of any investment or fair value of any other asset of
the Corporation, as to the allocation of any asset of the Corporation to a
particular class or classes of the Corporation's stock, as to the charging of
any liability of the Corporation to a particular class or classes of the
Corporation's stock, as to the number of shares of the Corporation outstanding,
as to the estimated expense to the Corporation in connection with purchases of
its shares, as to the ability to liquidate investments in orderly fashion, or as
to any other matters relating to the issue, sale, purchase and/or other
acquisition or disposition of investments or shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation and all holders
of its shares, past, present and future, and shares of the Corporation are
issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(e) Except to the extent prohibited by the Investment Company Act
of 1940, as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, officer or employee of the Corporation
shall not be disqualified by his or her position from dealing or contracting
with the Corporation, nor shall any transaction or
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contract of the Corporation be void or voidable by reason of the fact that any
director, officer or employee or any firm of which any director, officer or
employee is a member or any corporation of which any director, officer or
employee is a stockholder, officer or director, is in any way interested in such
transaction or contract; provided that in case a director, or a firm or
corporation of which a director is a member, stockholder, officer or director,
is so interested, such fact shall be disclosed to or shall have been known by
the Board of Directors or a majority thereof; and any director of the
Corporation who is so interested, or who is a member, stockholder, officer or
director of such firm or corporation, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize any such transaction or contract, with like
force and effect as if he or she were not such director, or member, stockholder,
officer or director of such firm or corporation.
(f) Specifically and without limitation of the foregoing
subsection (e) but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution and
administration contracts and other contracts, and may otherwise do business,
with Reich & Tang L.P. and any subsidiary or affiliate of such partnership or
any affiliates of any such affiliate, or the partners, officers and employees
thereof, and may deal freely with one another notwithstanding that the Board of
Directors of the Corporation may be composed in part of partners, officers or
employees of such partnership and/or its subsidiaries or affiliates and that
officers of the Corporation may have been, be or become partners, directors,
officers, or employees of such firm, and/or its subsidiaries or affiliates, and
neither such management or advisory, underwriting, distribution or
administration contracts nor any other contract or transaction between the
Corporation and such partnership and/or its subsidiaries or affiliates shall be
invalidated or in any way affected thereby, nor shall any director or officer of
the Corporation be liable to the Corporation or to any stockholder or creditor
thereof or to any person for any loss incurred by it or such stockholder under
or by reason of such contract or transaction; provided that nothing herein shall
protect any director or officer of the Corporation against any liability to the
Corporation or to its security holders to which such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office; and provided always that such contract or transaction shall have
been on terms that were not unfair to the Corporation at the time at which it
was entered into.
NINTH: Subject to the requirements of the Investment Company Act of 1940
and rules promulgated thereunder, as from
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time to time amended, to the maximum extent permitted by the General Corporation
Law of the State of Maryland as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served another
corporation, partnership, joint venture, trust or other enterprise in one or
more of such capacities.
TENTH: For the purpose of the computation of net asset value referred to in
these Articles of Incorporation, the following rules shall apply:
(a) The net asset value of each share of a class of the Corporation's
stock issued or sold at its net asset value shall be the net asset value per
share of that class when next determined as provided in paragraph (d) of this
Article TENTH following acceptance by the Corporation of the subscription or
other agreement with respect to the issue or sale of such share.
(b) The net asset value of each share of a class of the Corporation's
stock redeemed by the Corporation at the request of its holder shall be the net
asset value per share of that class when next determined as provided in
paragraph (d) of this Article TENTH following the time the Corporation receives
a request for redemption of such share in good order with all appropriate
documentation, including stock certificates, if any, duly endorsed for transfer.
(c) The net asset value of each share of a class of the Corporation's
stock purchased or redeemed by it otherwise than upon request for redemption by
its holder shall be the net asset value per share of that class of the
Corporation's stock when next determined as provided in paragraph (d) of this
Article TENTH following the Corporation's determination or agreement to purchase
or redeem such share, the expiration of any notice period fulfillment of any
other conditions precedent to such purchase or redemption, or such lower price
per share as may be specified in the agreement, if any, with the stockholder for
the purchase or redemption of such stockholder's shares.
(d) The net asset value of a share of a class of the Corporation's
stock as at the time of a particular determination shall be the quotient
obtained by dividing the value at such time of the net asset of that class
(i.e., the value of the assets belonging to that class less the liabilities
charged to that class exclusive of capital stock and surplus) by the total
number of shares of that class outstanding at such time, all determined and
computed as provided in the Corporation's By-Laws or by or pursuant to the
direction of the Board of Directors.
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(e) The Corporation shall determine the net asset value per share of a
class of its stock on such days and at such times as prescribed by the rules and
regulations of the Securities and Exchange Commission or any successor thereto.
The Corporation may also determine such net asset value at other times.
(f) The Corporation may suspend the determination of the net asset
value of a class of its stock during any period when it may suspend the right of
the holders of shares of that class to require the Corporation to redeem their
shares.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Amended Articles of Incorporation or in
any amendment hereto in the manner now or hereafter prescribed by the laws of
the State of Maryland, and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Amended Articles of Incorporation for
the purpose of forming the corporation described herein pursuant to the General
Corporation law of the State of Maryland and does hereby acknowledge that said
adoption and signing are her act.
/s/ Rachelle I. Rehner
Rachelle I. Rehner
Dated: October 10, 1990
ARTICLES OF AMENDMENT
OF
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
New Jersey Daily Municipal Income Fund, Inc., a Maryland Corporation having
its principal office in the State of Maryland in the City of Baltimore
(hereinafter called the "Corporation"), the total number of shares of stock of
all classes and series which the Corporation presently has authority to issue is
20,000,000,000 shares of capital stock (par value $.001 per share), amounting in
aggregate par value to $20,000,000, certifies to the Department of Assessments
and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended as follows:
1. Article SIXTH of the charter of the Corporation is hereby amended by
striking out Article FIFTH and inserting in lieu thereof the following:
SIXTH: "(a) The total number of shares of stock of all classes and series which
the Corporation has authority to issue is 20,000,000,000 shares of capital stock
(par value $.001 per share), amounting in aggregate par value to $20,000,000.
All of such shares are classified as "Common Stock". The Board of Directors may
classify or reclassify any unissued shares of capital stock (whether or not such
shares have been previously classified or reclassified) from time to time by
setting or changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such shares of stock.
(b) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act, the Board of
Directors shall have the power and authority, without the approval of the
holders of any outstanding shares, to increase or decrease the number of shares
of capital stock or the number of shares of capital stock of any class or series
that the Corporation has authority to issue.
(c) Any series of Common Stock shall be referred to herein individually as
a "Series" and collectively, together with any further series from time to time
established, as the "Series".
(d) The following is a description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of any
additional Series of Common Stock of the Corporation (unless provided otherwise
by the Board of Directors with respect to any such additional Series at the time
it is established and designated):
<PAGE>
(1) Asset Belonging to Series. All consideration received by the
Corporation from the issue or sale of shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any investment or reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the books
of account of the Corporation. Such consideration, assets, income, earnings,
profits and proceeds, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred to collectively as
"assets belonging to" that Series. In the event that there are any assets,
income, earnings, profits or proceeds which are not readily identifiable as
belonging to any particular Series (collectively, "General Items"), such General
Items shall be allocated by or under the supervision of the Board of Directors
to and among any one or more of the Series established and designated from time
to time in such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General Items so allocated to a
particular Series shall belong to that Series. Each such allocation by the Board
of Directors shall be conclusive and binding for all purposes.
(2) Liabilities of Series. The assets belonging to each particular Series
shall be charged with the liabilities of the Corporation in respect of that
Series and all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as pertaining to any particular
Series, shall be allocated and charged by or under the supervision of the Board
of Directors to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged to a Series are
herein referred to collectively as "liabilities of" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by or under the
supervision of the Board of Directors shall be conclusive and binding for all
purposes.
(3) Dividends and Distributions. Dividends and capital gains distributions
on shares of a particular Series may be paid with such frequency, in such form
and in such amount as the Board of Directors may
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determine by resolution adopted from time to time, or pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the Board
of Directors may determine, after providing for actual and accrued liabilities
of that Series. All dividends on shares of a particular Series shall be paid
only out of the income belonging to that Series and all capital gains
distributions on shares of a particular Series shall be paid only out of the
capital gains belonging to that Series. All dividends and distributions on
shares of a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of shares of that Series held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure, the Board of Directors may determine that no
dividend or distribution shall be payable on shares as to which the
stockholder's purchase order and/or payment have not been received by the time
or times established by the Board of Directors under such program or procedure.
Dividends and distributions may be paid in cash, property or additional
shares of the same or another Series, or a combination thereof, as determined by
the Board of Directors or pursuant to any program that the Board of Directors
may have in effect at the time for the election by stockholders of the form in
which dividends or distributions are to be paid. Any such dividend or
distribution paid in shares shall be paid at the current net asset value
thereof.
(4) Voting. On each matter submitted to a vote of the stockholders, each
holder of shares shall be entitled to one vote for each share standing in his
name on the books of the Corporation, irrespective of the Series thereof, and
all shares of all Series shall vote as a single class ("Single Class Voting");
provided, however, that (i) as to any matter with respect to which a separate
vote of any Series is required by the Investment Company Act or by the Maryland
General Corporation Law, such requirement as to a separate vote by that Series
shall apply in lieu of Single Class Voting; (ii) in the event that the separate
vote requirement referred to in clause (i) above applies with respect to one or
more Series, then, subject to clause (iii) below, the shares of all other Series
shall vote as a single class; and (iii) as to any matter which does not affect
the interest of a particular Series, including liquidation of another Series as
described in subsection (7) below, only the holders of shares of the one or more
affected Series shall be entitled to vote.
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(5) Redemption by Stockholders. Each holder of shares of a particular
Series shall have the right at such times as may be permitted by the Corporation
to require the Corporation to redeem all or any part of his shares of that
Series, at a redemption price per share equal to the net asset value per share
of that Series next determined after the shares are properly tendered for
redemption, less such redemption fee or sales charge, if any, as may be
established from time to time by the Board of Directors in its sole discretion.
Payment of the redemption price shall be in cash; provided, however, that if the
Board of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may, to the extent and in the manner permitted by the Investment
Company Act, make payment wholly or partly in securities or other assets
belonging to the Series of which the shares being redeemed are a part, at the
value of such securities or assets used in such determination of net asset
value.
Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation within such
period from surrender as may be required under the Investment Company Act and
the rules and regulations thereunder. Notwithstanding the foregoing, the
Corporation may postpone payment of the redemption price and may suspend the
right of the holders of shares of any Series to require the Corporation to
redeem shares of that Series during any period or at any time when and to the
extent permissible under the Investment Company Act.
(6) Redemption by Corporation. The Board of Directors may cause the
Corporation to redeem at their net asset value the shares of any Series held in
an account having, because of redemptions or exchanges, a net asset value on the
date of the notice of redemption less than the Minimum Amount, as defined below,
in that Series specified by the Board of Directors from time to time in its sole
discretion, provided that at least 30 days prior written notice of the proposed
redemption has been given to the holder of any such account by first class mail,
postage prepaid, at the address contained in the books and records of the
Corporation and such holder has been given an opportunity to purchase the
required value of additional shares.
(i) the term "Minimum Amount" when used herein shall mean One Thousand
Dollars ($1,000) unless otherwise fixed by the Board of Directors from time to
time, provided that the Minimum
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Amount may not in any event exceed Twenty-Five Thousand Dollars ($25,000). The
Board of Directors may establish differing Minimum Amounts for each class and
series of the Corporation's stock and for holders of shares of each such class
and series of stock based on such criteria as the Board of Directors may deem
appropriate.
(ii) the Corporation shall be entitled but not required to redeem shares of
stock from any stockholder or stockholders, as provided in this subsection (6),
to the extent and at such times as the Board of Directors shall, in its absolute
discretion, determine to be necessary or advisable to prevent the Corporation
from qualifying as a "personal holding company", within the meaning of the
Internal Revenue Code of 1986, as amended from time to time.
(7) Liquidation. In the event of the liquidation of a particular Series,
the stockholders of the Series that is being liquidated shall be entitled to
receive, as a class, when and as declared by the Board of Directors, the excess
of the assets belonging to that Series over the liabilities of that Series. The
holders of shares of any particular Series shall not be entitled thereby to any
distribution upon liquidation of any other Series. The assets so distributable
to the stockholders of any particular Series shall be distributed among such
stockholders in proportion to the number of shares of that Series held by them
and recorded on the books of the Corporation. The liquidation of any particular
Series in which there are shares then outstanding may be authorized by vote of a
majority of the Board of Directors then in office, subject to the approval of a
majority of the outstanding voting securities of that Series, as defined in the
Investment Company Act, and without the vote of the holders of shares of any
other Series. The liquidation of a particular Series may be accomplished, in
whole or in part, by the transfer of assets of such Series to another Series or
by the exchange of shares of Series for the shares of another Series.
(8) Net Asset Value Per Share. The net asset value per share of any Series
shall be the quotient obtained by dividing the value of the net assets of that
Series (being the value of the assets belonging to that Series less the
liabilities of that Series) by the total number of shares of that Series
outstanding, all as determined by or under the direction of the Board of
Directors in accordance with generally accepted accounting principles and the
Investment Company Act. Subject to the applicable provisions of the Investment
Company Act, the Board of Directors, in its sole discretion, may prescribe and
shall set forth in the By-Laws of the Corporation or in a duly adopted
resolution of the Board of Directors such bases and times for determining the
value of the assets belonging to, and the net asset value per share of
outstanding
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shares of, each Series, or the net income attributable to such shares, as the
Board of Directors deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland General
Corporation Law and the Investment Company Act, to determine which item shall be
treated as income and which items as capital and whether any item of expense
shall be charged to income or capital. Each such determination and allocation
shall be conclusive and binding for all purposes.
The Board of Directors may determine to maintain the net asset value per
share of any Series at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the Investment Company Act
for the continuing declaration of income attributable to that Series as
dividends and for the handling of any losses attributable to that Series. Such
procedures may provide that in the event of any loss, each stockholder shall be
deemed to have contributed to the capital of the Corporation attributable to
that Series his pro rata portion of the total number of shares required to be
canceled in order to permit the net asset value per share of that Series to be
maintained, after reflecting such loss, at the designated constant dollar
amount. Each stockholder of the Corporation shall be deemed to have agreed, by
his investment in any Series with respect to which the Board of Directors shall
have adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(9) Equality. All shares of each particular Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities of that Series), and each share of any particular Series shall be
equal to each other share of that Series. The Board of Directors may from time
to time divide or combine the shares of any particular Series into a greater or
lesser number of shares of that Series without thereby changing the
proportionate interest in the assets belonging to that Series or in any way
affecting the rights of holders of shares of any other Series.
(10) Conversion or Exchange Rights. Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors shall have
the authority to provide that holders of shares of any Series shall have the
right to convert or exchange said shares into shares of one or more other Series
of shares in accordance with such requirements and procedures as may be
established by the Board of Directors.
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(e) The Board of Directors may, from time to time and without stockholder
action, classify shares of a particular Series into one or more additional
classes of that Series, the voting, dividend, liquidation and other rights of
which shall differ from the classes of common stock of that Series to the extent
provided in Articles Supplementary for such additional class, such Articles to
be filed for record with the appropriate authorities of the State of Maryland.
Each class so created shall consist, until further changed, of the lesser of (x)
the number of shares classified in Section (c) of this Article SIXTH or (y) the
number of shares that could be issued by issuing all of the shares of that
Series currently or hereafter classified less the total number of shares of all
classes of such Series then issued and outstanding. Any class of a Series of
Common Stock shall be referred to herein individually as a "Class" and
collectively, together with any further class or classes of such Series from
time to time established, as the "Classes".
(f) All Classes of a particular Series of Common Stock of the Corporation
shall represent the same interest in the Corporation and have identical voting,
dividend, liquidation and other rights with any other shares of Common Stock of
that Series; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(1) Any class of shares may be subject to such sales loads, contingent
deferred sales charges, Rule 12b-1 fees, administrative fees, service fees,
or other fees, however designated, in such amounts as may be established by
the Board of Directors from time to time in accordance with the Investment
Company Act.
(2) Expenses related solely to a particular Class of a Series
(including, without limitation, distribution expenses under a Rule 12b-1
plan and administrative expenses under an administration or service
agreement, plan or other arrangement, however designated) shall be borne by
that Class and shall be appropriately reflected (in the manner determined
by the Board of Directors) in the net asset value, dividends, distributions
and liquidation rights of the shares of that Class.
(3) As to any matter with respect to which a separate vote of any
Class of a Series is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation, approval
of any plan, agreement or other arrangement referred to in subsection (2)
above), such requirement as to a separate vote by that Class shall apply in
lieu of Single Class Voting, and if permitted by the Investment Company Act
or the Maryland General Corporation Law, the Classes of more than one
Series shall vote together as a single class on any such matter which shall
have the same effect on each such
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Class. As to any matter which does not affect the interest of a particular
Class of a Series, only the holders of shares of the affected Classes of
that Series shall be entitled to vote.
(g) The Corporation may issue and sell fractions of shares of capital
stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the
words "share" or "shares" are used in the charter or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
(h) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
(i) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any
such shares which the Corporation shall issue or propose to issue; and any
and all of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same
have been reacquired and have treasury status, by the Board of Directors to
such persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said
holder.
(j) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended."
2. Article EIGHTH subsection (a)(ii) of the charter of the Corporation is
hereby amended by striking out the language on line two which states "of any
class of the Corporation's stock" and inserting in lieu thereof the following:
"of any class or series of the Corporation's stock"
3. Article EIGHTH subsection (a)(ii) of the charter of the Coporation is
hereby amended by changing the reference to Article TENTH in line eight to
Article SIXTH.
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4. The charter of the Corporation is hereby amended by striking out Article
NINTH and inserting in lieu thereof the following:
EIGHTH: "(1) The Corporation shall indemnify (i) its currently acting
and former directors and officers, whether serving the Corporation or at
its request any other entity, to the fullest extent required or permitted
by the General Laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures and to the fullest
extent permitted by law, and (ii) other employees and agents to such extent
as shall be authorized by the Board of Directors or the By-Laws and as
permitted by law. Nothing contained herein shall be construed to protect
any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. The
foregoing rights of indemnification shall not be exclusive of any other
rights to which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing
such provisions or such indemnification arrangements as may be permitted by
law. No amendment of the charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act,
no director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. No amendment of the charter
of the Corporation or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to directors and officers
hereunder with respect to any act or omission occurring prior to such
amendment or repeal."
5. The charter of the Corporation is hereby amended by striking out Article
TENTH (as the language therein is already contained in new Article SIXTH of
these Articles of Amendment).
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SECOND: The amendments of the charter of the Corporation as herein set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation.
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IN WITNESS WHEREOF, New Jersey Daily Municipal Income Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its
President or one of its Vice Presidents and attested by its Secretary or one of
its Assistant Secretaries, on December , 1993.
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
By: /s/ William Berkowitz
William Berkowitz
President
Attest:
/s/ Bernadette N. Finn
Bernadette N. Finn
Secretary
<PAGE>
THE UNDERSIGNED, President of NEW JERSEY DAILY MUNICIPAL INCOME FUND,
INC., who executed on behalf of said corporation, the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Amendment to
be the corporate act of said corporation and further certifies that, to the best
of his knowledge, information, and in all material respects, under the penalties
of perjury.
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
By:
William Berkowitz
President
BY-LAWS
OF
NEW JERSEY DAILY TAX FREE INCOME FUND, INC.
a Maryland corporation
ARTICLE I
Offices
Section 1. PRINCIPAL OFFICE IN MARYLAND. The Corporation shall have a
principal office in the City of Baltimore, State of Maryland.
Section 2. OTHER OFFICES. The Corporation may have offices also at such
other places within and without the State of Maryland as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE II
Meetings Of Stockholders
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held at such
place, either within the State of Maryland or at such other place within the
United States, as shall be fixed from time to time by the Board of Directors.
Section 2. ANNUAL MEETINGS. The Corporation shall not be required to hold
an annual meeting of its stockholders in any year in which none of the following
is required to be acted on by the holders of any class or series of stock under
the Investment Company Act of 1940: (a) election of the directors, (b) approval
of the Corporation's investment advisory agreement with respect to a particular
class or series; (c) ratification of the selection of independent public
accountants; and (d) approval of the Corporation's distribution agreement with
respect to a particular class or series. In the event that the Corporation shall
be required to hold an annual meeting of stockholders by the Investment Company
Act of 1940, such meeting of stockholders shall be held on a date fixed from
time to time by the Board of Directors not less than ninety nor more than one
hundred twenty days following the end of such fiscal year of the Corporation.
Section 3. NOTICE OF ANNUAL MEETING. Written or printed notice of an annual
meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than ninety days
before the date of the meeting.
<PAGE>
Section 4. SPECIAL MEETINGS. Special meetings of stockholders may be called
by the chairman, the president or by the Board of Directors and shall be called
by the secretary upon the written request of holders of shares entitled to cast
not less than twenty-five percent of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. In the case of such request for a
special meeting, upon payment by such stockholders to the Corporation of the
estimated reasonable cost of preparing and mailing a notice of such meeting, the
secretary shall give the notice of such meeting. The secretary shall not be
required to call a special meeting to consider any matter which is substantially
the same as a matter acted upon at any special meeting of stockholders held
within the preceding twelve months unless requested to do so by the holders of
shares entitled to cast not less than a majority of all votes entitled to be
cast at such meeting.
Section 5. NOTICE OF SPECIAL MEETING. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice
thereof.
Section 7. QUORUM. Except as may otherwise be expressly provided by
applicable statutes or regulations, the holders of one-third of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business.
Section 8. VOTING. When a quorum is present at any meeting, the affirmative
vote of a majority of the votes cast shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
Investment Company Act of 1940, as from time to time in effect, or other
statutes or rules or orders of the Securities and Exchange Commission or any
successor thereto or of the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. PROXIES. Each stockholder shall at every meeting of stockholders
be entitled to one vote in person or by proxy for each share of the stock having
voting power held by such stockholder, but no proxy shall be voted after eleven
months from its date, unless otherwise provided in the proxy.
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Section 10. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date which shall be
not more than ninety days and, in the case of a meeting of stockholders, not
less than ten days prior to the date on which the particular action requiring
such determination of stockholders is to be taken. In lieu of fixing a record
date, the Board of Directors may provide that the stock transfer books shall be
closed for a stated period, but not to exceed, in any case, twenty days. If the
stock transfer books are closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ten days immediately preceding such meeting. If no record
date is fixed and the stock transfer books are not closed for the determination
of stockholders: (1) the record date for the determination of stockholders
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day on which notice of the meeting of stockholders is
mailed or the day thirty days before the meeting, whichever is the closer date
to the meeting; and (2) the record date for the determination of stockholders
entitled to receive payment of a dividend or an allotment of any rights shall be
at the close of business on the day on which the resolution of the Board of
Directors, declaring the dividend or allotment of rights, is adopted, provided
that the payment or allotment date shall not be more than ninety days after the
date of the adoption of such resolution.
Section 11. INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his or her
ability. The inspectors, if any, shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and
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tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting or any stockholder, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by him or her or them and execute a
certificate of any fact found by him or her or them.
Section 12. INFORMAL ACTION BY STOCKHOLDERS. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board Of Directors
Section 1. NUMBER OF DIRECTORS. The number of directors shall be fixed at
no less than two nor more than twenty. Within the limits specified above, the
number of directors shall be fixed from time to time by the Board of Directors,
but the tenure of office of a director in office at the time of any decrease in
the number of directors shall not be affected as a result thereof. The directors
shall be elected to hold office at the annual meeting of stockholders, except as
provided in Section 2 of this Article, and each director shall hold office until
the next annual meeting of stockholders or until his successor is elected and
qualified. Any director may resign at any time upon written notice to the
Corporation. Any director may be removed, either with or without cause, at any
meeting of stockholders duly called and at which a quorum is present by the
affirmative vote of the majority of the votes entitled to be cast thereon, and
the vacancy in the Board of Directors caused by such removal may be filled by
the stockholders at the time of such removal. Directors need not be
stockholders.
Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any vacancy occurring
in the Board of Directors for any cause, including an increase in the number of
directors, may be filled by the stockholders or by a majority of the remaining
members of the Board of Directors even if such majority is less than a quorum.
So long as the Corporation is a registered investment
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company under the Investment Company Act of 1940, vacancies in the Board of
Directors may be filled by a majority of the remaining members of the Board of
Directors only if, immediately after filing any such vacancy, at least
two-thirds of the directors then holding office shall have been elected to such
office at a meeting of stockholders. A director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until the next
annual meeting of stockholders or until his successor is elected and qualifies.
Section 3. POWERS. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors which shall exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Articles of Incorporation or by these By-Laws conferred
upon or reserved to the stockholders.
Section 4. ANNUAL MEETING. The first meeting of each newly elected Board of
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders and at the place thereof. No notice of such meeting to
the directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not so held,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 5. OTHER MEETINGS. The Board of Directors of the Corporation or any
committee thereof may hold meetings, both regular and special, either within or
without the State of Maryland. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by the chairman, the president or by two or more directors. Notice
of special meetings of the Board of Directors shall be given by the secretary to
each director at least three days before the meeting if by mail or at least 24
hours before the meeting if given in person or by telephone or by telegraph. The
notice need not specify the business to be transacted.
Section 6. QUORUM AND VOTING. At meetings of the Board of Directors, two of
the directors in office at the time, but in no event less than one-third of the
entire Board of Directors, shall constitute a quorum for the transaction of
business. When required pursuant to Section 15(c) under the Investment Company
Act of 1940 or Rule 12b-1 thereunder a quorum shall also require the presence in
person of a majority of directors who are not parties to a contract or agreement
to be voted upon or interested persons of any such party. The action of a
majority of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
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If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. COMMITTEES. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, appoint from among its members an
executive committee and other committees of the Board of Directors, each
committee to be composed of two or more of the directors of the Corporation. The
Board of Directors may, to the extent provided in the resolution, delegate to
such committees, in the intervals between meetings of the Board of Directors,
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, except the power to declare dividends,
to issue stock, to recommend to stockholders any action requiring stockholders'
approval, to amend the By-Laws or to approve any merger or share exchange which
does not require stockholders' approval. Such committee or committees shall have
the name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Board of Directors designates one or more
directors as alternate members of any committee, who may replace an absent or
disqualified member at any meeting of the committee, the members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a majority of the
members or alternate members of such committee shall constitute a quorum for the
transaction of business and the act of a majority of the members or alternate
members present at any meeting at which a quorum is present shall be the act of
the committee.
Section 8. MINUTES OF COMMITTEE MEETINGS. The committees shall keep regular
minutes of their proceedings.
Section 9. INFORMAL ACTION BY BOARD OF DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
Section 10. MEETINGS BY CONFERENCE TELEPHONE. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications
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equipment by means of which all persons participating in the meeting can hear
each other at the same time and such participation shall constitute presence in
person at such meeting.
Section 11. FEES AND EXPENSES. The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. GENERAL. Notices to directors and stockholders mailed to them at
their post office addresses appearing on the books of the Corporation shall be
deemed to be given at the time when deposited in the United States mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes, of the Article of Incorporation or of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V
Officers
Section 1. GENERAL. The officers of the Corporation shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chairman of the Board of Directors, a president, a
secretary and a treasurer. The Board of Directors may also choose such vice
presidents and additional officers or assistant officers as it may deem
advisable. Any number of offices, except the offices of president and vice
president, may be held by the same person. No officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument is
required by law to be executed, acknowledged or verified by two or more
officers.
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Section 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it desires who shall hold their offices for
such terms and shall exercise such power and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 3. TENURE OF OFFICERS. The officers of the Corporation shall hold
office at the pleasure of the Board of Directors. Each officer shall hold his or
her office until his or her successor is elected and qualifies or until his or
her earlier resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors when, in its
judgment, the best interests of the Corporation will be served thereby. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the Board of
Directors shall be the chief executive officer of the Corporation, shall preside
at all meetings of the stockholders and of the Board of Directors, shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The chairman shall execute on behalf of the Corporation, and may affix
the seal or cause the seal to be affixed to, all instruments requiring such
execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. PRESIDENT. The president shall, in the absence of the chairman
of the Board of Directors, preside at all meetings of the stockholders or of the
Board of Directors. The president shall have general and active management of
the business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The president shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 6. VICE PRESIDENTS. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the power of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice
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presidents and, in that event, the duties and powers of the president shall
descend to the vice presidents in the specified order of seniority.
Section 7. SECRETARY. The secretary shall act under the direction of the
president. Subject to the direction of the president, the secretary shall attend
all meetings of the Board of Directors and all meetings of stockholders and
record the proceedings in a book to be kept for that purpose and shall perform
like duties for the committees designated by the Board of Directors when
required. The secretary shall give, or cause to be given, notice of all meetings
of stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the president or the Board of
Directors. The secretary shall keep in safe custody the seal of the Corporation
and shall affix the seal or cause it to be affixed to any instrument requiring
it.
Section 8. ASSISTANT SECRETARIES. The assistant secretaries in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.
Section 9. TREASURER. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The treasurer shall disburse the funds of the Corporation as may be
ordered by the president or the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the president and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his or her transactions as treasurer and of the financial
condition of the Corporation.
Section 10. ASSISTANT TREASURERS. The assistant treasurers in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.
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ARTICLE VI
Certificates of Stock
Section 1. GENERAL. Every holder of stock of the Corporation who has made
full payment of the consideration for such stock shall be entitled upon request
to have a certificate, signed by, or in the name of the Corporation by, the
president or a vice president and countersigned by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the Corporation,
certifying the number and class of whole shares of stock owned by such holder in
the Corporation.
Section 2. FRACTIONAL SHARE INTERESTS OR SCRIP. The Corporation may, but
shall not be obliged to, issue fractions of a share of stock, arrange for the
disposition of fractional interests by those entitled thereto, pay in cash the
fair value of fractions of a share of stock as of the time when those entitled
to receive such fractions are determined, or issue scrip or other evidence of
ownership which shall entitle the holder to receive a certificate for a full
share of stock upon the surrender of such scrip or other evidence of ownership
aggregating a full share. Fractional shares of stock shall have proportionately
to the respective fractions represented thereby all the rights of whole shares,
including the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation, excluding,
however, the right to receive a stock certificate representing such fractional
shares. The Board of Directors may cause such scrip or evidence of ownership to
be issued subject to the condition that it shall become void if not exchanged
for certificates representing full shares of stock before a specified date or
subject to the condition that the shares of stock for which such scrip or
evidence of ownership is exchangeable may be sold by the Corporation and the
proceeds thereof distributed to the holders of such scrip or evidence of
ownership, or subject to any other reasonable conditions which the Board of
Director shall deem advisable, including provision for forfeiture of such
proceeds to the Corporation if not claimed within a period of not less than
three years after the date of the original issuance of scrip certificates.
Section 3. SIGNATURES ON CERTIFICATES. Any of or all the signatures on a
certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he or she were such officer at the date of issue. The seal of the
Corporation or a facsimile thereof may, but need not, be affixed to certificates
of stock.
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Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. TRANSFER OF SHARES. Upon request by the registered owner of
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 6. REGISTERED OWNERS. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including, redemption, voting and dividends,
and the Corporation shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Maryland.
ARTICLE VII
Miscellaneous
Section 1. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for repairing or maintaining any property of
the Corporation, or for the purchase of additional property, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
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<PAGE>
Section 2. DIVIDENDS. Dividends upon the stock of the Corporation may,
subject to the provisions of the Articles of Incorporation and of the provisions
of applicable law, be declared by the Board of Directors at any time. Dividends
may be paid in cash, in property or in shares of the Corporation's stock,
subject to the provisions of the Articles of Incorporation and of applicable
law.
Section 3. CAPITAL GAINS DISTRIBUTIONS. The amount and number of capital
gains distributions paid to the stockholders during each fiscal year shall be
determined by the Board of Directors. Each such payment shall be accompanied by
a statement as to the source of such payment, to the extent required by law.
Section 4. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 6. SEAL. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words, "Corporate Seal,
Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.
Section 7. FILING OF BY-LAWS. A certified copy of the By-Laws, including
all amendments, shall be kept at the principal office of the Corporation in the
State of Maryland.
Section 8. ANNUAL REPORT. The books of account of the Corporation shall be
examined by an independent firm of public accountants at the close of each
annual fiscal period of the Corporation and at such other times, if any, as may
be directed by the Board of Directors of the Corporation. Within one hundred and
twenty days of the close of each annual fiscal period a report based upon such
examination at the close of that fiscal period shall be mailed to each
stockholder of the Corporation of record at the close of such annual fiscal
period, unless the Board of Directors shall set another record date, at his
address as the same appears on the books of the Corporation. Each such report
shall contain such information as is required to be set forth therein by the
Investment Company Act of 1940 and the rules and regulations promulgated by the
Securities and Exchange Commission thereunder. Such report shall also be
submitted at the annual meeting of the stockholders and filed within twenty days
thereafter at the principal office of the Corporation in the State of Maryland.
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<PAGE>
Section 9. STOCK LEDGER. The Corporation shall maintain at its principal
office outside of the State of Maryland an original or duplicate stock ledger
containing the names and addresses of all stockholders and the number of shares
of stock hold by each stockholder. Such stock ledger may be in written form or
in any other form capable of being converted into written form within a
reasonable time for visual inspection.
Section 10. RATIFICATION OF ACCOUNTANTS BY STOCKHOLDERS. At every annual
meeting of the stockholders of the Corporation otherwise called there shall be
submitted for ratification or rejection the 0name of the firm of independent
public accountants which has been selected for the current fiscal year in which
such annual meeting is held by a majority of those members of the Board of
Directors who are not investment advisers of, or interested person (as defined
in the Investment Company Act of 1940) of, an investment adviser of, or officers
or employees of, the Corporation.
Section 11. CUSTODIAN. All securities and similar investments owned by the
Corporation shall be held by a custodian which shall be either a trust company
or a national bank of good standing, having a capital surplus and undivided
profits aggregating not less than two million dollars ($2,000,000), or a member
firm of the New York Stock Exchange, Inc. The terms of custody of such
securities and cash shall include such provisions required to be contained
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
Upon the resignation or inability to serve of any such custodian the
Corporation shall (a) use its best efforts to obtain a successor custodian, (b)
require the cash and securities of the Corporation held by the custodian to be
delivered directly to the successor custodian, and (c) in the event that no
successor custodian can be found, submit to the stockholders of the Corporation,
before permitting delivery of such cash and securities to anyone other than a
successor custodian, the question whether the Corporation shall be dissolved or
shall function without a custodian; provided, however, that nothing herein
contained shall prevent the termination of any agreement between the Corporation
and any such custodian by the affirmative vote of the holders of a majority of
all the stock of the Corporation at the time outstanding and entitled to vote.
Upon its resignation or inability to serve and pending action by the Corporation
as set forth in this section, the custodian may deliver any assets of the
Corporation held by it to a qualified bank or trust company in the City of New
York, or to a member firm of the New York Stock Exchange, Inc. selected by it,
such assets to be held subject to the terms of custody which governed such
retiring custodian.
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<PAGE>
Section 12. INVESTMENT ADVISERS. The Corporation may enter into one or more
management or advisory, underwriting, distribution or administration contract
with any person, firm, partnership, association or corporation but such contract
or contracts shall continue in effect only so long as such continuance is
specifically approved annually by a majority of the Board of Directors or by
vote of the holders of a majority of the voting securities of the Corporation,
and in either case by vote of 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 cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII
Amendments
The Board of Directors shall have the power, by a majority vote of the
entire Board of Directors at any meeting thereof, to make, alter and repeal
By-Laws of the Corporation.
[GRAPHIC OMITTED]
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
THIS CERTIFIES THAT [ SPECIMEN ] IS THE OWNER OF [ ]
FULLY PAID AND NON-ASSESABLE SHARES OF THE ABOVE CORPORATION TRANSFERABLE ONLY
ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEROF IN PERSON OR BY DULY
AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND TO BE SEALED WITH THE SEAL OF THE
CORPORATION.
DATED [ ]
CUSTODY AGREEMENT
Agreement made as of this ______ day of ________________ between New
Jersey Daily Municipal Income Fund, Inc., a corporation organized and existing
under the laws of the State of Maryland, having its principal office and place
of business at _______________ (hereinafter called the "Fund"), and The Bank of
New York, a corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New York, New York
10015 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual premises hereinafter set forth the
Fund and the Custodian agree as follows:
Article I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include any person, whether or
not such person is an Officer or employee of the Fund, duly authorized by the
Board of Directors 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.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
<PAGE>
3. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to the Custodian
which is actually received by the Custodian and signed on behalf of the Fund by
any two Officers.
4. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
5. "Covered Call Option" shall mean an exchange trade option entitling the
holder, upon timely exercise any payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
6. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
7. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
8. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing
agency registered with the Securities and Exchange Commission, its successor or
successors and its nominee or nominees. The term "Depository" shall further mean
and include any other person authorized to act as a depository under the
Investment Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a resolution of the
Fund's board of Directors specifically approving deposits therein by the
Custodian.
9. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S. Treasury Bills,
U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar certificates of deposit, during a specified month at an agreed
upon price.
<PAGE>
10. "Futures Contract" shall mean a Financial Futures Contract and/or Stock
Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
12. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between and Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
13. "Money Market Security" shall be deemed to include, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as
to interest and principal by the government of the United States or agencies or
instrumentalities thereof, any tax bond or revenue anticipation note issued by
any state or municipal government or public authority, commercial paper,
certificates of deposit and bankers' acceptances, repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of such
securities normally requires settlement in federal funds on the same day as such
purchase or sale.
14. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency
registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
15. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, the Controller, an Assistant Secretary,
any assistant Treasurer, and any other person or persons, whether or not any
such other person is an officer of the Fund, duly authorized by the Board of
Directors of the Fund to execute any Certificate, instruction, notice or other
instrument on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix B or such other Certificate as may be received by the Custodian from
time to time.
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<PAGE>
16. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
17. "Oral Instructions" shall mean verbal instructions actually received
the Custodian from an Authorized Person or from a person reasonably believed by
the Custodian to be an Authorized Person.
18. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
20. "Security" shall be deemed to include, without limitation, Money Market
Securities, Call Options, Put Options, Stock Index Options, Stock Index Futures
Contracts, Stock Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, common stocks
and other securities having characteristics similar to common stocks, preferred
stocks, debt obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds, revenue
bonds and industrial bonds and industrial development bonds), bonds, debentures,
notes, mortgages or other obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
21. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
22. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the
Fund.
4
<PAGE>
23. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
24. "Stock Index Option" shall mean an exchange traded option entitling the
holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
25. "Shares" shall mean the shares of capital stock of the Fund, each of
which is in the case of a Fund having Series allocated to particular Series.
26. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonably degree of certainty the identity of the sender of
such communication.
Article II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
the Securities and moneys at any time owned by the Fund during the period of
this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees to
perform the duties thereof as hereinafter set forth.
Article III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or
5
<PAGE>
cause to be delivered to the Custodian all Securities and all moneys owned by
it, at any time during the period of this Agreement, and shall specify with
respect to such Securities and money the Series to which the same are
specifically allocated. The Custodian shall segregate, keep and maintain the
assets of the Series separate and apart. The Custodian will not be responsible
for any Securities and moneys not actually received by it. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where such credits
have been previously made and moneys are not finally collected. The Fund shall
deliver to the Custodian a certified resolution of the Board of Directors of the
Fund, substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of Securities specifically
allocated to a Series in the Depository, the Fund shall deliver to the Custodian
a certified resolution of the Board of Directors of the Fund, substantially in
the form of Exhibit B hereto, approving, authorizing and instructing the
Custodian on a continuous and ongoing basis until instructed to the contrary by
a Certificate actually received by the Custodian to deposit in the Depository
all Securities specifically allocated to such Series eligible for deposit
therein, and to utilize the Depository to the extent possible with respect to
such Securities in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or representative capacity. Prior to the
Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options for a Series as provided
in this Agreement, the Custodian shall have received a certified resolution of
the Fund's Board of Directors, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a continuous and
on-going basis, until instructed to the contrary by a Certificate actually
received by the Custodian, to accept, utilize and act in accordance with such
confirmations as provided in this Agreement with respect to such Series.
6
<PAGE>
2. The Custodian shall establish and maintain separate accounts, in the name of
each Series, and shall credit to the separate account for each Series all moneys
received by it for the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be disbursed by the Custodian
only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and address of the
person to whom the payment is to be made, the Series account from which payment
is to be made, the Series account from which payment is to be made, and the
purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day the Custodian shall
furnish the Fund with confirmations and a summary, on a per Series basis, of all
transfers to or from the account of the Fund for a Series, either hereunder or
with any co-custodian or sub-custodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to the account of
the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on per Series basis, of the Securities and
moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository any
7
<PAGE>
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such Securities
specifically allocated to a Series which are not held in the Book-Entry System
or in the Depository in a separate account in the name of such Series physically
segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such Securities
which are called, but only if either (i) the Custodian receives a written notice
of such call, or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be amended at any
time by the Custodian without the prior notification or consent of the Fund;
(c) Present for payment and collect the amount payable upon all Securities
which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the Federal Income Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of a Series, all rights
and similar securities issued with respect to any Securities held by the
Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian, directly
or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any Securities held by the Custodian
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<PAGE>
hereunder for the Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian hereunder for the Series
specified in such Certificate in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise of any
conversion privilege and receive and hold hereunder specifically allocated to
such Series any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian hereunder for the Series
specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series specified
in such Certificate, and take such other steps as shall be stated in such
Certificate to be for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recaptalization of the
Fund; and
(e) Present for payment and collect the amount payable upon Securities not
described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain possession of any instrument or certificate
representing any Futures Contract, any Option, or any Futures Contract Option
until after it shall have determined, or shall have received a Certificate from
the Fund stating, that any such instruments or certificates are available. The
Fund shall deliver to the Custodian such a Certificate no later than the
business day preceding the availability of any such instrument or certificate.
Prior to such availability, the Custodian shall comply with Section 17f of the
Investment Company Act of 1940, as amended, in connection with the purchase,
sale, settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing out upon its receipt from a broker,
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dealer, or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any nominee of
the Custodian) as custodian for the Fund, provided, however that notwithstanding
the foregoing, payments to or deliveries from the Margin Account, and payments
with respect to Securities to which a Margin Account relates, shall be made in
accordance with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the Custodian
shall, notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for which
such instruments or such certificates are available only against the delivery to
the Custodian of such instrument or such certificate, and delivery any Futures
Contract, Option or Futures Contract Option for which such instruments or such
certificates are available only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
Article IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver to the custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase: (a) the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the Securities; (c) the
number of shares or the principal amount purchased and accrued interest, if any;
(d) the date of purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the name of the person from whom or the broker
through whom the purchase was made, and the name of the clearing broker, if any;
and (h) the name of the broker to whom payment is to be
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made. The Custodian shall, upon receipt of Securities purchased by or for the
Fund, pay to the broker specified in the Certificate out of the moneys held for
the account of such Series the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale of
any Option, Futures Contract, Futures Contract Option, or any Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and (ii)
with respect to each sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such sale:
(a) the Series to which such Securities were specifically allocated; (b) the
name of the issuer and the title of the Security; (c) the number of shares or
principal amount sold, and accrued interest, if any; (d) the date of sale; (e)
the sale price per unit; (f) the total amount payable to the Fund upon such
sale; (g) the name of the broker through whom or the person to whom the sale was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to whom the Securities are to be delivered. The Custodian shall deliver
the Securities specifically allocated to such Series to the broker specified in
the Certificate upon the total amount payable to the Fund upon such sale,
provided that the same conorms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
Article V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund shall
deliver to the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated; (b)
the type of Option (put or call); (c) the name of the issuer and the title and
number of shares subject to such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of Stock Index
Options purchased; (d) the expiration date; (e) the exercise price; (f) the
dates of purchase and settlement; (g) the total amount payable by the Fund in
connection with such purchase; (h) the name of the Clearing Member through whom
such Option was purchased; and (i) the name of the broker to whom payment is to
be made The Custodian shall pay upon receipt of a Clearing Member's statement
confirming the
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purchase of such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account of the series to
which such Option is to be specifically allocated, the total amount payable upon
such purchase to the Clearing Member through whom the purchase was made,
provided that the same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased by the fund pursuant to
paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such Option or, in the
case of a Stock Index Option, the stock index to which such Option relates and
the number of Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom the sale was
made. The Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such option against
payment to the Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a certificate specifying with respect to such Call Option: (a) the series to
which such Call Option was specifically allocated; (b) the name of the issuer
and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise per
share; (f) the total amount to be paid by the Fund upon such exercise; and (g)
the name of the Clearing Member through whom such Call Option was exercised. The
Custodian shall, upon receipt of the Securities underlying the Call Option which
was exercised, pay out of the moneys held for the account of the Series to which
such Call Option was specifically allocated the total amount payable to the
Clearing Member through whom the Call Option was exercised, provided that the
same conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof,
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the Fund shall deliver to the custodian a Certificate specifying with respect to
such Put Option; (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares subject
to the Put Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount to be paid to
the Fund upon such exercise; and (g) the name of the Clearing Member through
whom such Put Option was Exercised. The Custodian shall, upon receipt of the
amount payable upon the exercise of the Put Option, deliver or direct the
depository to deliver the Securities specifically allocated to such Series,
provided the same conforms to the amount payable to the fund as set forth in
such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with the respect to such Stock Index
Option: (a) the Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call); (c) the number of
Options being exercised; (d) the stock index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be received
by the Fund in connection with such exercise; and (h) the Clearing Member from
whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Covered
Call Option: (a) the Series for which such Covered Call Option was written; (b)
the name of the issuer and the title and number of shares for which the covered
Call Option was written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the date
such Covered Call Option was written; and (g) the name of the Clearing Member
through whom the premium is to be received. The custodian shall deliver or cause
to be delivered, in exchange for receipt of the premium specified in the
Certificate with respect to such Covered Call Option, such receipts as are
required in accordance with the customs prevailing among Clearing members
dealing in Covered Call options and shall impose, or direct the Depository to
impose, upon the underlying Securities specified in the Certificate specifically
allocated to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any receipts for
Securities in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
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<PAGE>
7. Whenever a Covered Call Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery Upon the return and/or cancellation of any receipts delivered
pursuant to paragraph 6 of this Article, the Custodian shall deliver, or direct
the Depository to deliver, the underlying Securities as specified in the
Certificate against payment of the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to such Put Option; (a)
the Series for which such Put Option was written; (b) the name of the issuer and
the title and number of shares for which the Put Option is written and which
underlie the same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Put Option is written; (g)
the name of the Clearing Member through whom the premium is to be received and
to whom a Put Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for such Series;
and (i) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited in the Collateral Account for such
Series. The Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described in the preceding
paragraph is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Put Option was written; (b)
the name of the issuer and title and number of
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<PAGE>
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by the
Fund upon such delivery; (e) the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be withdrawn from the
Collateral Account for such Series and (f) the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written; (b)
whether such Stock Index Option is a put or a call; (c) the number of options
written; (d) the stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the Clearing Member through whom such Option
was written; (h) the premium to be received by the Fund; (i) the amount of such
and/or the amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; (j) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Collateral Account for such
Series; and (k) the amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in a Margin Account,
and the name in which such account is to be or has been established. The
Custodian shall, upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with the customs
prevailing amount Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2) make the
deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index
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<PAGE>
Option was written; (b) such information as may be necessary to identify the
Stock Index Option being exercised; (c) the Clearing Member through whom such
Stock Index Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (f) the amount of cash and/or amount and kind of
securities, if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account for such Series. Upon the return
and/or cancellation of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was specifically
allocated to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs, 6, 8, or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the type of Option (put or call); (h) the date of
such purchase; (i) the name of the Clearing Member to whom to the premium is to
be paid; and (j) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Collateral Account, a specified Margin Account, or
the Senior Security Account for such Series. Upon the Custodian's payment of the
premium and the return and/or cancellation of any receipt issued pursuant to
paragraphs 6, 8 or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the Custodian shall remove,
or direct the Depository to remove, the previously imposed restrictions on the
Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing Transaction
with respect to, any Option purchased or written by the Fund and described in
this Article, the Custodian shall delete such Option from the statements
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delivered to the Fund pursuant to Paragraph 3 Article III herein, and upon the
return and/or cancellation of any receipts issued by the Custodian, shall make
such withdrawals from the Collateral Account, and the Margin Account and/or the
Senior Security Account as may be specified in a Certificate received in
connection with such expiration, exercise, or consummation.
Article VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Futures
Contract, (or with respect to any number of identical Futures Contract(s)): (a)
the Series for which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying stock index or financial
instrument); (c) the number of identical Futures Contracts entered into; (d) the
delivery or settlement date of the Futures Contract(s); (e) the date the Futures
Contract(s) was (were) entered into and the maturity date; (f) whether the Fund
is buying (going long) or selling (going short) on such Futures Contract(s); (g)
the amount of cash and/or the amount and kind of Securities, if any, to be
deposited in the Senior Security Account for such Series; (h) the name of the
broker, dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be paid
and the name of the broker, dealer, or futures commission merchant to whom such
amount is to be paid. The Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and conditions of the Margin Account
Agreement. The Custodian shall make payment out of the moneys specifically
allocated to such Series of the fee or commission, if any, specified in the
Certificate and deposit in the Senior Security Account for such Series the
amount of cash and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar payment required to be made
by the Fund to a broker, dealer, or futures commission merchant with respect to
an outstanding Futures Contract, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
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(b). Any variation margin payment or similar payment from a broker, dealer,
or futures commission merchant to the Fund with respect to an outstanding
Futures Contract, shall be received and dealt with by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Fund until delivery or settlement is made on such Futures Contract, the
Fund shall deliver to the Custodian a Certificate specifying: (a) the Futures
Contract and the Series to which the same relates; (b) with respect to a Stock
Index Futures Contract, the total cash settlement amount to be paid or received,
and with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The Custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
Article VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund,
the Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to such
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Futures Contract Option: (a) the Series to which such Option is
specifically allocated; (b) the type of Futures Contract Option (put or call);
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract Option
purchased; (d) the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the amount of premium to be paid by the Fund upon
such purchase; (h) the name of the broker or futures commission merchant through
whom such option was purchased; and (i) the name of the broker, or futures
commission merchant, to whom payment is to be made. The Custodian shall pay out
of the moneys specifically allocated to such Series, the total amount to be paid
upon such purchase to the broker or futures commissions merchant through whom
the purchase was made, provided that the same conforms to the amount set forth
in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the
Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) Series to
which such Futures Contract Option was specifically allocated; (b) the type of
Future Contract Option (put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker of futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allo-
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cated to such Series, the payments, if any, and the deposits, if any, into the
Senior Security Account as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
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6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the Fund upon such
exercise; (f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such Series, if any. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the deposits,
if any, into the Senior Security Account as specified in the Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to a
previously written Futures Contract Option described in this Article in order to
liquidate its position as a writer of such Futures Contract Option, the fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to which such Option
is specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; the (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing transaction
with respect to any Futures Contract Option written or purchased by the Fund and
described in this Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund
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pursuant to paragraph 3 of Article III herein and, (b) make such withdrawals
from and/or in the case of an exercise such deposits into the Senior Security
Account as may be specified in a Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a Futures
Contract Option described in this Article shall be subject to Article VI hereof.
Article VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a) the Series for
which such short sale was made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (d) the dates of the sale and settlement; (e) the
sale price per unit; (f) the total amount credited to the Fund upon such sale,
if any; (g) the amount of cash and/or the amount and kind of securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as Custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the Series for which such transaction is being made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or the principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase
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<PAGE>
price per unit; (f) the net total amount payable to the Fund upon such
closing-out; (g) the net total amount payable to the broker upon such
closing-out; (h) the amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Senior Security
Account; and (j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out, and the return and/or cancellation of the
receipts, if any, issued by the Custodian with respect to the short sale being
closed-out, pay out of the moneys held for the account of the Fund to the broker
the net total amount payable to the broker, and make the withdrawals from the
Margin Account and the Senior Security Account, as the same are specified in the
Certificate.
Article IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions, or
Written Instructions specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in connection
with such Reverse Repurchase Agreement and specifically allocated to such
Series; (c) the broker or dealer through or with whom the Reverse Repurchase
Agreement is entered; (d) the amount and kind of Securities to be delivered by
the Fund to such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in a Senior
Security Account for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to the
Fund specified in the Certificate, Oral Instructions, or Written Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Senior Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Arti-
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cle, the Fund shall promptly deliver a Certificate or, in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions, or Written Instructions to the Custodian specifying: (a) the
Reverse Repurchase Agreement being terminated and the Series for which same was
entered; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
and specifically allocated to such Series in connection with such termination;
(d) the date of termination; (e) the name of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities to be withdrawn from the
Senior Securities Account for such Series. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund specified in the
Certificate, Oral Instructions, or Written Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Senior Security Account,
specified in such Certificate, Oral Instructions, or Written Instructions.
Article X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated
to a Series held by the Custodian hereunder, the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with respect to each such
loan: (a) the Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities; (c) the number of
shares of the principal amount loaned; (d) the date of loan delivery; (e) the
total amount to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the premium, if any,
separately identified; and (f) the name of the broker, dealer, or financial
instruction to which the loan was made. The Custodian shall deliver the
securities thus designated to the broker, dealer or financial instruction to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York Clearing House funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
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2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the Series to which the loaned Securities are specifically allocated; (b)
the name of the issuer and the title of the Securities to be returned; (c) the
number of shares or the principal amount to be returned; (d) the date of
termination; (e) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (f) the name of the broker, dealer, or
financial instruction from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
Article XI
CONCERNING MARGIN ACCOUNTS,
SENIOR SECURITY ACCOUNTS,
AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made, and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no obligation to
make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account to
the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
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3. Amounts received by the Custodian as payment or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in and
to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money of securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which cash
and or Securities are maintained a Collateral Account for any Series, the
Custodian shall furnish the Fund with a Statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall furnish to the Custodian
a Certificate or Written Instructions specifying the then market value of the
Securities described in such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with respect to any
outstanding Put Option guarantee letter or similar document, the Fund shall
promptly specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
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Article XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the
Board of Directors of the Fund, certified by the Secretary or any Assistant
Secretary, either (i) setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
dividends and distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions, Written Instructions or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to payment
shall be determined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions,
Written Instructions or Certificate, as the case may be, the Custodian shall pay
out of the moneys held for the account of each Series the total amount payable
to the Dividend Agent, and any sub-dividend agent or co-dividend agent of the
Fund with respect to such Series.
Article XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the
Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale of
such Shares and specifically allocated to the separate account in the name of
such Series.
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2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the separate account in the name of the Series for which
such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian
to make payment out of the money held by the Custodian hereunder in connection
with a redemption of Shares, it shall furnishing to the Custodian a Certificate
specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys in
separate account of the Series of the Shares being redeemed.
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Article XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf
of any Series which results in an overdraft because the moneys held by the
Custodian in the separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically allocated to
such Series, as set forth in a Certificate, Oral Instructions, or Written
Instructions or which results in an overdraft in separate account of such Series
for some other reason, or if the Fund is for any other reason indebted to the
Custodian with respect to a Series (except a borrowing for investment or for
temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of this
Article), such overdraft or indebtedness shall deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear interest
from the date incurred at a rate per annum (based on a 360-day year for the
actual number of days involved) equal to 1/2% over Custodian's prime commercial
lending rate in effect from time to time, such rate to be adjusted on the
effective date of any change in such prime commercial lending rate but in no
event to be less than 6% per annum. In addition, the Fund hereby agrees that the
Custodian shall have a continuing lien and security interest in and to any
property specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is then
in the Custodian's possession or control or in possession or control of any
third party acting in the Custodian's behalf. The Fund authorizes the Custodian,
in its sole discretion, any time to charge any such overdraft or indebtedness
together with interest due thereon against any balance of account standing to
such Series' credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank; (c) the
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amount and terms of the borrowing, which may be set forth by incorporating any
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement; (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable; (f) the total
amount payable to the Fund on the borrowing date; (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities; and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformity with the Investment Company Act of 1940 and the Fund's prospectus.
The Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described in this
paragraph. 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. In event that
the Fund fails to specify in a Certificate the Series, the name of the issuer,
the title and number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under obligation to deliver any Securities.
Article XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, either hereunder or under any Margin
Account Agreement, except for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may, with respect to questions
of law arising hereunder or under any Margin Account Agreement, apply for
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and obtain the advice and opinion of counsel to the Fund or of its own counsel,
at the expense of the Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willfully misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall be
under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold, or written
by or for the Fund, the legality of the purchase, sale or writing thereof, or
the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the propriety
of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by the Fund;
(d) The legality of any borrowing by the Fund using Securities as
collateral;
(e) The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to see to it that any cash collateral
delivered to it by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the Fund is
adequate collateral for the Fund against any loss it might sustain as a result
of such loan. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by if for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
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(f) The sufficiency or value of any amounts of money and/or Securities held
in any Margin Account, Senior Security Account, Exempt Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty to see that any broker, dealer, futures commission
merchant or Clearing Member makes payment to the Fund of any variation margin
payment or similar payment which the Fund may be entitled to receive from such
broker, dealer, futures commissions merchant or Clearing Member, to see that any
payment received by the Custodian from any broker, dealer, futures, commission
merchant or Clearing Member is the amount the Fund is entitled to receive, or to
notify the Fund of the Custodian's receipt or non-receipt or non-receipt of any
such payment.
3. The Custodian shall not be liable for, or considered to be the Custodian
of, any money, whether or not represented by any check, draft, or other
instrument for the payment of money, received by it on behalf of the Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing the Fund's interest at the Book-Entry
System or the Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of an 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 of reimbursement of
its costs and expenses in connection with any such action.
6. The Custodian may appoint one or more banking institutions as Depository
or Depositories, as Sub-Custodian or Sub-Custodians, or as Co-Custodian or
Co-Custodians including, but not limited to, banking institutions located in
foreign countries, of Securities and moneys at any time owned by the Fund, upon
such terms and conditions as may be approved in a Certificate or contained in an
agreement executed by the Custodian, the Fund and the appointed institution.
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7. The Custodian shall not be under any duty or obligation (a) to ascertain
whether any Securities at any time delivered to, or held by it, for the account
of the Fund and specifically allocated to a Series are such as properly may be
held by the Fund or such Series under the provisions of its then current
prospectus, or (b) to ascertain whether any transactions by the Fund, whether or
not involving the Custodian, are such transactions as may properly be engaged in
by the Fund.
8. The Custodian shall be entitled to received and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may discharge such compensation and any expenses with respect to a series
incurred by the Custodian in the performance of its duties pursuant to such
agreement against any money specifically allocated to such Series. Unless and
until the Fund instructs the Custodian by a Certificate to apportion any loss,
damage, liability or expense among the Series in specified manner, the Custodian
shall also be entitled to charge against any money held by it for the account of
a Series such Series' pro rata share (based on such Series net asset value at
the time of the charge to the aggregate net asset value of all Series at that
time) of the amount of any loss, damage, liability or expense, including counsel
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement. The expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred in settling
outside of New York City transaction involving the purchase and sale of
Securities of the Fund.
9. The Custodian shall be entitled to rely upon any Certificate, notice or
other instrument in writing received by the Custodian and reasonably believed by
the Custodian to be a Certificate. The Custodian shall be entitled to rely upon
Oral Instructions and any Written Instructions actually received by the
Custodian hereinabove provided for. The Fund agrees to forward to the Custodian
a Certificate or facsimiles thereof confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof is
received by the Custodian, whether by hand delivery, telecopier or other similar
device, or otherwise, by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian. The Fund agrees
that the fact that such confirming instructions are not received by the
Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by
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the Fund. The Fund agrees that the Custodian shall incur no liability to the
Fund in acting upon Oral Instructions or Written Instructions given to the
Custodian hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person.
10. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
11. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies.
12. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
the Depository, or O.C.C., and with such reports on its own system of internal
accounting control as the Fund may reasonably request from time to time.
13. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorneys' fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of this Article XIII as part of any check redemption privilege
program of the Fund, except for any such liability, claim, loss and demand
arising out of the Custodian's own negligence or willful misconduct.
14. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and
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<PAGE>
receipts with respect to such Securities, and arrange for payments to be made by
the Custodian in accordance with the customs prevailing from time to time among
brokers or dealers in such Securities.
15. The Custodian shall have no duties or responsibilities whatsoever
except such duties as are specifically set forth in this Agreement, and no
covenant or obligation shall be implied in this Agreement against the Custodian.
Article XVI
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution of the Board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of the Board of Directors of the Fund, certified by the
Secretary or any Assistant Secretary, designating a successor custodian or
custodians. 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 $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian
in accordance with the preceding paragraph, the Fund shall upon the date
specified in the notice of termination of this Agreement and upon the delivery
by
35
<PAGE>
the Custodian 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 its own custodian 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 to hold such Securities hereunder in accordance with this
Agreement.
Article XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificates shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. 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 90
Washington Street, New York, New York 10015, or at such other place as the
Custodian may from time to time designate in writing.
36
<PAGE>
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
5. This Agreement 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 approved by a resolution of the Board of Directors of the Fund.
6. 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 written consent
the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of New York.
8. This Agreement may 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.
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate Officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CHARLES BURTON* PETER F. OLBERG BATTLE FOWLER LLP
ROBERT J. DE ANGELIS RICHARD L. O'TOOLE 280 PARK AVENUE
CARL A. DE BRITO EDWARD L. PECK* NEW YORK, N.Y. 10017
MARTIN L. EDELMAN* DOUGLAS A. RAELSON (212) 856-7000 GEORGE GORDON BATTLE
ESTEBAN A. FERRER MICHAEL R. ROSELLA _______ (1897-1949)
GERALD J. FIELDS* MICHAEL J. SALTSER* TELEX 127053 LUDLOW S. FOWLER
DAVID FLEISCHER* ALVIN J. SARTER TELECOPIER (212) 986-5135 (1924-1961)
ROBERT W. GELFMAN* RAPHAEL G. SCOBEY CABLE ADDRESS COUNSELLOR ________
THOMAS V. GLYNN NORMAN SEIDENFELD WRITER'S DIRECT DIAL NUMBER
CHARLES J. HAMILTON, JR. ERIC W. SHAW HYMAN L. BATTLE, JR.
RANDALL A. HUFFMAN ANN SHIPLEY DAVID D. GRIFFIN
CHARLES L. JAFFIN* DEAN A. STIFFLE THEODORE W. KHEEL
W. BRUCE JOHNSON SETH J. TAFFAE COUNSEL
THOMAS E. KRUGER* JOHN N. TURITZIN
JONATHAN M. LEHR* MARY ANN VILLARI
MICHAEL J. MALONE ROBERT J. WERTHEIMER
LAWRENCE MITTMAN PAUL S. WOLANSKY
DONALD C. MOSS JORDAN E. YARETT
</TABLE>
* A PROFESSIONAL CORPORATION
October 26, 1990
New Jersey Daily Municipal
Income Fund, Inc.
100 Park Avenue
New York, New York 10017
Gentlemen:
We have acted as counsel to New Jersey Daily Municipal Income Fund,
Inc., a Maryland corporation (the "Fund"), in connection with the preparation
and filing of Registration Statement No. 33-36317 on Form N-1A and all
amendments thereto (the "Registration Statement") covering shares of Common
Stock, par value $.001 per share, of the Fund.
We have examined copies of the Amended Articles of Incorporation and
By-Laws of the Fund, the Registration Statement, and such other corporate
records, proceedings and documents, including the consent of the Board of
Directors and the minutes of the meeting of the Board of Directors of the Fund,
as we have deemed necessary for the purpose of this opinion. We have also
examined such other documents, papers, statutes and authorities as we deemed
necessary to form a basis for the opinion hereinafter expressed. In our
examination of such material, we have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to us. As to
various questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.
Based upon the foregoing, we are of the opinion that the shares of
Common Stock, par value $.001 per share, of the Fund, to be issued in accordance
with the terms of the offering, as set forth in the Prospectus and Statement of
Additional Information included as part of the Registration Statement, and in
accordance with applicable state securities laws, when so issued and paid for,
will constitute validly authorized and legally issued shares of Common Stock,
fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Registration Statement
under the heading "Federal Income Taxes" in the Prospectus and in the Statement
of Additional Information, and under the heading "Counsel and Auditors" in the
Statement of Additional Information.
Very truly yours,
/s/ Battle Fowler
<TABLE>
<CAPTION>
SILLS CUMMIS ZUCKERMAN RADIN TISCHMAN EPSTEIN & GROSS
A PROFESSIONAL CORPORATION
ARTHUR J. SILLS (1917-1962) ONE RIVERFRONT PLAZA
NEWARK, NEW JERSEY 07102-5400
(201) 643-7000
FAX: (201) 643-6500
<S> <C> <C> <C> <C>
CLIVE S. CUMMIS STEVEN M. GOLDMAN JAMES M. HIRSCHHORN BETH S. ROSE
STEVEN S. RADIN CECIL J. BANKS LINDSAY H. LEW SCOTT N. RUBIN
HERBERT L. ZUCKERMAN KENNETH F. CETTLE WILLIAM B. KORMAN SHALOM D. STONE
MICHAEL B. TISCHMAN ALAN E. SHERMAN NOEL D. HUMPHREYS FREDERIC M. TUDOR
MORTON S. BUNIS ROBERT J. ALTER PATRICIA M. KERINS ADAM S. HENSCHEL
STANLEY TANNENBAUM IRA A. ROSENBERG ___________ MICHAEL P. EINBINDER (delta) LESLIE A. ADELMAN
BARRY M. EPSTEIN ROBERT CRANE GERALD A. GREENBERGER DAVID N. LAMAR+
STEVEN E. GROSS MARC S. KLEIN PETER B. FALLON KENNETH L.MOSKOWITZ
THOMAS J. DEMSKI PHILIP R. SELLINGER MARTIN J. MILITA, JR. BENNET SUSSER
JEFFREY H. NEWMAN ROBERT S. BURRICKU 250 PARK AVENUE MARK S. OLINSKY JODI S. BRODSKY
LAWRENCE S. HORN THOMAS S. NOVAK NEW YORK, NY 10177-0040 SHERI K. SIEGELBAUM ROBERT W. BURKE
CHARLES J. WALSH JERRY GENBERG (212) 349-7600 ALAN J. COHEN DAVID M. FREEMAN
JEFFREY J. GREENBAUM STUART M. FEINBLATT ROSEMARIE E. MATERA SCOTT T. GRUBER
BARRY L. SHAPIRO MARGARET F. BLACK HOWARD S. YARUSSU LINDA B. LEWINTER
SIMON LEVIN ROBERT M. AXELROD ___________ ALAN C. BELL ANTHONY J. MONACO
STEPHEN J. MOSES MICHAEL E. DONOVAN RONALD C. RAK ROY B. OSER
THEODORE L. ABELES ROBERT J. FETTWEIS L. DEW KANESHIRO JAMES L. PLOSIA
WILLIAM S. GREENBERG BRIAN S. COVEN 17 GORDON'S ALLEY FRANK N. D'AMBRA FRANK J. TANZOLA
GERALD SPAN TRENT S. DICKEY ATLANTIC CITY, NJ 06401-7406 RICHARD J. SAPINSKI JACQUELYN J. BURT
JEFFREY BARTON CAHN WILLIAM M. RUSSELL (609) 344-2800 GLENN E. DAVIS JAY A. SOLED
JERALD D. BARANOFF JOHN T. CONNOR, JR. * KAREN L. JORDAN LEONARD A.LABARBIERA
HARRY F. GOLDBERGb JOSEPH L. BUCKLEY ____________ SUSAN M. HENDRICKSON BRUCE SCHOENBERG
LEE ALAN ADLERSTEIN KATHLEEN BURNS VICTOR H. BOYAJIAN STEVEN S. KATZ
NOAH BRONKESH DAVID J. RABINOWITZ 301 CARNEGIE CENTER JOANNE JORDAN DOWD PHILIP A. BRAMSON
ROBERT M. BECKER STANLEY U. NORTH, III CN5320 STEVEN R. ROWLAND CHRISTOPHER P. GENGARO
LESTER ARON JAMES D. TOLL PRINCETON, NJ 06543-5320 PHILIP R. WHITE LINDA B. KATZ
(609) 967-1200 KAREN SILPE MILLSTONE RICHARD S. SCHKOLNICK
OF COUNSEL LORI G. SINGER STACEY H. SNYDER
David Beck GEORGE F. NEWTON DAVID TOLMAN
Theodore I. Botter ____________ BRIAN L. WAMSLEY BRIAN K. VALENTINE
Victor Futter ERIC D. MANN ANDREA WARD
Dena L. Wolf STEPHEN B. MCNALLY TED ZANGARI
STUART M. BROWN GIUFFRE M. HOLLINGSWORTH
MARK E. DUCKSTEIN ROBERT P. KRAMER
b NY & PA BARS ONLY (DELTA) NY, KY & OH
U NY BAR ONLY BARS ONLY WRITER=S DIRECT DIAL NUMBER:
+ PA BAR ONLY (201) 643-
* NY & DC BARS ONLY PLEASE REPLY TO:
</TABLE>
October 26, 1990
Newark
New Jersey Daily Municipal income Fund,Inc.
c/o Reich & Tang L.P.
100 Park Avenue
New York, New York 10017
Re: New Jersey Daily Municipal Income Fund, Inc.
Gentlemen:
You have requested our opinion as to certain New Jersey income tax
issues relating to the above-captioned fund (the "Fund"). Our opinion relates
solely to the New Jersey tax matters described herein.
In rendering our opinion, we have examined and, with your permission,
relied upon, among other things, (1) the information contained in the Form N-1A
respecting the Fund, as filed with the Securities and Exchange Commission on
October 26, 1990 (the "Registration Statement"), and (2) your letter of
representations of even date addressed to this firm.
In addition, with your permission we have assumed that the Fund will
constitute a "qualified investment fund" as defined in the New Jersey Gross
Income Tax Act (the "Act") and that the Fund will comply with its reporting
obligations under New Jersey law with respect to qualified investment funds.
<PAGE>
Except as otherwise defined herein, capitalized terms used in this
opinion shall have the respective meanings ascribed to them in the Registration
Statement.
Based on the foregoing, under existing New Jersey law applicable to
individuals who are New Jersey residents, we are of the opinion that:
1. Distributions paid by the Fund to a New Jersey resident individual
shareholder will not be subject to the New Jersey gross income tax to the extent
that the distributions are attributable to income received as interest on or
gain from New Jersey Municipal Obligations or Territorial Municipal Obligations.
2. Gain from the sale of shares in the Fund by a New Jersey resident
individual shareholder will not be subject to the New Jersey gross income tax.
We hereby consent to the filing of this opinion as an exhibit to a
Registration Statement under the Securities Act of 1933 and the Investment
Company Act of 1940 covering the Fund's shares, and to the reference to our firm
in such Registration Statement and the Prospectus included therein.
Very truly yours,
/s/ Sills Cummis Zuckerman Radin
Tischman Epstein & Gross
EXHIBIT J
McGLADREY & PULLEN, L.L.P.
Certified Public Accountants & Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated December 4, 1998, on the
financial statements referred to therein in Post-Effective Amendment No. 10 to
the Registration Statement on Form N-1A File No. 33-36317 of New Jersey Daily
Municipal Income Fund, Inc., as filed with the Securities and Exchange
Commission.
We also consent to the reference to our Firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the captions "Counsel and Auditors" and "Financial Statements".
/s/McGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
Fenruary 22, 1999
October 23, 1990
Board of Directors of
New Jersey Daily Municipal
Income Fund, Inc.
Gentlemen:
We hereby subscribe for 100,000 shares of the Common Stock,
$.001 par value per share, of New Jersey Daily Municipal Income Fund, Inc. a
Maryland corporation (the "Corporation"), at $1.00 per share for an aggregate
purchase price of $100,000. Our payment in full is confirmed.
We hereby represent and agree that we are purchasing these
shares of stock for investment purposes, for our own account and risk and not
with a view to any sale, division or other distribution thereof within the
meaning of the Securities Act of 1933 as amended, nor with any present intention
of distributing or selling such shares. We further agree that if any of such
shares are redeemed during the period that the deferred organizational expenses
of the Corporation are being amortized, we will reimburse the Corporation the
then unamortized organizational expenses in the same ratio as the number of
shares redeemed bears to the number of such shares held at the time of
redemption.
Very truly yours,
REICH & TANG L.P.
By: Reich & Tang, Inc.,
General Partner
By: /s/Bernadette N. Finn
Confirmed and Accepted:
NEW JERSEY DAILY MUNICIPAL
INCOME FUND, INC.
By: /s/ Warren J. Craven
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000866782
<NAME> New Jersey Daily Tax Municipal Income Fund, Inc.
<SERIES>
<NUMBER> 1
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 167729945
<INVESTMENTS-AT-VALUE> 167729945
<RECEIVABLES> 1512790
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1692242735
<PAYABLE-FOR-SECURITIES> 30000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 430463
<TOTAL-LIABILITIES> 730463
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 168528313
<SHARES-COMMON-STOCK> 168528313
<SHARES-COMMON-PRIOR> 217860207
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16041)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 168512272
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8307582
<OTHER-INCOME> 0
<EXPENSES-NET> 2022835
<NET-INVESTMENT-INCOME> 6284747
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6284747
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6284747
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 539797335
<NUMBER-OF-SHARES-REDEEMED> 595394841
<SHARES-REINVESTED> 6265612
<NET-CHANGE-IN-ASSETS> (49331894)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16041)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 723784
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2023805
<AVERAGE-NET-ASSETS> 241924137
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000866782
<NAME> New Jersey Daily Tax Municipal Income Fund, Inc.
<SERIES>
<NUMBER> 2
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 167729945
<INVESTMENTS-AT-VALUE> 167729945
<RECEIVABLES> 1512790
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 169242735
<PAYABLE-FOR-SECURITIES> 300000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 430463
<TOTAL-LIABILITIES> 730463
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 168528313
<SHARES-COMMON-STOCK> 168528313
<SHARES-COMMON-PRIOR> 217860207
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16041)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 168512272
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8307582
<OTHER-INCOME> 0
<EXPENSES-NET> 2022835
<NET-INVESTMENT-INCOME> 6284747
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6284747
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6284747
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 539797335
<NUMBER-OF-SHARES-REDEEMED> 595394841
<SHARES-REINVESTED> 6265612
<NET-CHANGE-IN-ASSETS> (49331894)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16041)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 723784
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2023805
<AVERAGE-NET-ASSETS> 241924137
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Robert Straniere whose signature
appears below, constitutes and appoints William J. Craven and Bernadette N.
Finn, and each of them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf, in any and all
capacities, the Registration Statement on Form N-1A, and any and all amendments
thereto (including pre-effective amendments) filed by New Jersey Daily Municipal
Income Fund, Inc. (the "Fund") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorney and agent shall do or cause
to be done by virtue hereof.
/s/ Robert Straniere
Robert Straniere
Director
Dated:
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that William Berkowitz whose signature
appears below, constitutes and appoints William J. Craven and Bernadette N.
Finn, and each of them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf, in any and all
capacities, the Registration Statement on Form N-1A, and any and all amendments
thereto (including pre-effective amendments) filed by New Jersey Daily Municipal
Income Fund, Inc. (the "Fund") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ William Berkowitz
William Berkowitz
Director
Dated:
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Dr. W. Giles Mellon whose
signature appears below, constitutes and appoints William J. Craven and
Bernadette N. Finn, and each of them, with full power of substitution, as his
true and lawful attorney and agent to execute in his name and on his behalf, in
any and all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including pre-effective amendments) filed by New Jersey
Daily Municipal Income Fund, Inc. (the "Fund") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, and any and all other instruments
which such attorney and agent deems necessary or advisable to enable the Fund to
comply with the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, the rules, regulations and requirements and requirements of
the Securities and Exchange Commission, and the securities or Blue Sky laws of
any state or other jurisdiction; and the undersigned hereby ratifies and
confirms as his own act and deed any and all that such attorney and agent shall
do or cause to be done by virtue hereof.
/s/ W. Giles Mellon
Dr. W. Giles Mellon
Director
Dated:
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Dr. Yung Wong whose signature
appears below, constitutes and appoints William J. Craven and Bernadette N.
Finn, and each of them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf, in any and all
capacities, the Registration Statement on Form N-1A, and any and all amendments
thereto (including pre-effective amendments) filed by New Jersey Daily Municipal
Income Fund, Inc. (the AFund@) with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorney and agent shall do or cause
to be done by virtue hereof.
/s/ Yung Wong
Dr. Yung Wong
Director
Dated:
