Rule 497(d)
Registration No. 33-69760
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DELAFIELD FUND, INC. FIFTH AVENUE, NEW YORK, NY 10020
(212) 830-5220
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PROSPECTUS
May 1, 1997
Delafield Fund, Inc. (the "Fund") is an open-end, diversified management
investment company. The Fund's investment objectives are to seek long-term
preservation of capital (sufficient growth to outpace inflation over an extended
period of time) and growth of capital. The Fund will seek to achieve these
objectives by investing primarily in the equity securities of domestic companies
which, based on the research of the Delafield Asset Management Division of Reich
& Tang Asset Management L.P. (the "Manager"), are considered to be undervalued
or to represent special situations that the Manager believes can increase in
value regardless of general economic trends or the condition of the stock market
generally. There can be no assurance that the Fund will achieve its objectives.
The Delafield Asset Management Division of Reich & Tang Asset Management
L.P. acts as Manager of the Fund and Reich & Tang Distributors L.P. acts as
Distributor of the Fund's shares. Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Distributors L.P. is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1997, containing additional and more detailed information about the
Fund (the "Statement of Additional Information"), has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference into
this Prospectus. It is available without charge and can be obtained by either
writing or calling the Fund at the address or telephone number set forth above.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus should be read and retained by investors for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
TABLE OF FEES AND EXPENSES
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .80%
12b-1 Fees - After Fee Waiver .05%
Other Expenses .44%
Administration Fees .21% ______
Total Fund Operating Expenses - After Fee Waivers 1.29%
<S> <C> <C> <C> <C>
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
You would pay the following on a $1,000
investment, assuming 5% annual return and
redemption at the end of each period: $13 $41 $71 $156
The foregoing table is to assist you in understanding the various costs and
expenses that an investor in the Fund will bear directly or indirectly. For a
further discussion of these fees, see "The Manager" and "Distribution and
Service Plan" herein. The Manager and the Distributor may, at their discretion,
waive all or a portion of their fees. The maximum 12b-1 Fees would have been
.25% of average daily net assets, absent fee waivers. In addition, absent fee
waivers, Total Operating Expenses would have been 1.49%.
THE FIGURES REFLECTED IN THIS EXAMPLE SHOULD NOT BE CONSIDERED AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN ABOVE.
</TABLE>
FINANCIAL HIGHLIGHTS
The following financial highlights of Delafield Fund, Inc. have been audited by
McGladrey & Pullen LLP, Independent Certified Public Accountants, whose report
thereon appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
Year Period from Year November 19, 1993
Ended October 1, 1995 to Ended (Inception) to
December 31, 1996 December 31, 1995 September 30, 1995 September 30, 1994
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........ $ 12.26 $ 11.95 $ 10.82 $ 10.00
--------- ---------- ---------- ---------
Income from investment operations:
Net investment income................... .16 .05 .13 .07
Net realized and unrealized
gains (losses) on investments......... 3.07 .50 1.99 .82
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Total from investment operations............ 3.23 .55 2.12 .89
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Less distributions:
Dividends from net investment income.... ( .16) ( .05) ( .13) ( .07)
Distributions from net
realized gains on investments......... ( 1.84) ( .18) ( .86) --
In excess of net realized gain.......... -- ( .01) -- --
--------- ---------- ---------- ----------
Total distributions......................... ( 2.00) ( .24) ( .99) ( .07)
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Net asset value, end of period.............. $ 13.49 $ 12.26 $ 11.95 $ 10.82
========= ========== ========== ==========
Total Return................................ 26.35% 4.62%(a) 20.05% 8.93%(a)
========= ========== ========== ==========
Ratios/Supplemental Data
Net assets, end of period (000)............. $ 61,279 $ 45,730 $ 42,316 $ 9,658
Ratios to average net assets:
Expenses................................ 1.29%(b)(d) 1.67%*(b)(d) 1.65%(b) 1.78%*(b)
Net investment income................... 1.18%(b) 1.57%*(b) 1.35%(b) 0.96%*(b)
Portfolio turnover rate..................... 75.54 20.49 70.36 42.84
Average commission rate paid (per share).... $ .0378(c) $ .0343(c) -- --
</TABLE>
* Annualized
(a) Not Annualized
(b) Net of investment management, administration and shareholder servicing fees
waived equivalent to .20%, .20%, .71% and 1.12%, respectively, of average
net assets.
(c) Required by regulations issued in 1995.
(d) Includes expenses paid indirectly, equivalent to .01% and .07%,
respectively, of average net assets.
<PAGE>
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INTRODUCTION
Delafield Fund, Inc. (the "Fund") is a diversified, open end management
investment company organized as a Maryland corporation on October 12, 1993, that
seeks to provide its investors with long term preservation of capital
(sufficient growth to outpace inflation over an extended period of time) and
growth of capital. The Fund seeks to achieve its objectives by investing
principally in the equity securities of domestic companies which, based on the
research of the Delafield Asset Management Division of Reich & Tang Asset
Management L.P. (the "Manager") are considered to be undervalued or to represent
special situations (i.e., companies undergoing change that might cause their
market value to grow at a rate faster than the market generally). There can be
no assurance that the Fund will achieve its objectives. This is a summary of the
Fund's fundamental investment policies which are set forth in full under
"Investment Objectives, Policies and Risks" herein and in the Statement of
Additional Information and may not be changed without approval of a majority of
the Fund's outstanding shares.
The Fund's shares are distributed through Reich & Tang Distributors L.P. (the
"Distributors"), with whom the Fund has entered into a Distribution Agreement
and a Shareholder Servicing Agreement pursuant to the Fund's plan adopted under
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). (See "Distribution and Service Plan").
On any day on which the New York Stock Exchange, Inc. is open for trading ("Fund
Business Day"), investors may initiate purchases and redemptions of shares of
the Fund's common stock at their net asset value, which will be determined
daily. (See "Purchase of Shares" "Redemption of Shares" and "Net Asset Value"
herein.) The minimum initial investment is $5,000, except that the minimum
initial investment for an Individual Retirement Account is $250. There is no
minimum for subsequent investments. The Fund currently intends to pay dividends,
if any, semi-annually. Net capital gains, if any, will be distributed at least
annually, and in no event later than within 60 days after the end of the Fund's
fiscal year. All dividends and distributions of capital gains are automatically
invested in additional shares of the Fund unless a shareholder has elected by
written notice to the Fund to receive either of such distributions in cash. (See
"Dividends, Distributions and Taxes" herein).
The Fund intends to invest principally in the equity securities of domestic
companies. Investment in the Fund should be made with an understanding of the
risks which an investment in equity securities may entail. In particular, common
stocks represent residual ownership interest in the issuer and are entitled to
the income and increase in the value of the assets and business of the entity
after all its obligations, including preferred stock dividends, are satisfied.
Common stocks fluctuate in price in response to many factors including
historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, and investor perceptions of market
liquidity. See "Investment Objectives, Policies and Risks" herein and the
Statement of Additional Information for a discussion of the special risk factors
affecting equity securities and the other investment policies of the Fund,
including investments in lower rated debt securities.
INVESTMENT OBJECTIVES,
POLICIES AND RISKS
The investment objectives of the Fund are to seek long-term preservation of
capital (sufficient growth to outpace inflation over an extended period of time)
and growth of capital. The Fund will seek to achieve these objectives by
investing primarily in the equity securities of domestic companies which, based
on the research of the Delafield Asset Management Division of Reich & Tang Asset
Management L.P. (the "Manager"), are considered to be undervalued or to
represent special situations (i.e., companies undergoing change that might cause
their market value to grow at a rate faster than the market generally). The
Fund's investment objectives are fundamental policies and may not be changed
without shareholder approval.
There obviously can be no assurance that the Fund's investment objectives will
be achieved. The nature of the Fund's investment objectives and
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policies may involve a somewhat greater degree of short-term risk than would be
present under other investment approaches.
The Fund will under normal circumstances have substantially all of its assets
(i.e., more than 65%) invested in a diversified portfolio of equity securities,
including common stocks, securities convertible into common stocks or rights or
warrants to subscribe for or purchase common stocks. For a discussion of the
risks of investing in convertible securities, see "Convertible Securities" and
"Risks of Investing in Lower Rated Securities" below.
The Fund at times may also invest less than 35% of its total assets in debt
securities and preferred stocks offering a significant opportunity for price
appreciation. For a discussion of the risks of investing in these securities,
see "Risks of Investing in Lower Rated Securities" below.
The Fund may take a defensive position when the Manager has determined that
adverse business or financial conditions warrant such a defensive position and
invest temporarily without limit in rated or unrated debt securities or
preferred stocks or in money market instruments. Money market instruments for
this purpose include obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (including such obligations subject to
repurchase agreements), commercial paper rated in the highest grade by any
nationally recognized rating agency, and certificates of deposit and bankers'
acceptances issued by domestic banks having total assets in excess of one
billion dollars. A repurchase agreement is an instrument under which an investor
(e.g., the Fund) purchases a U.S. Government security from a vendor, with an
agreement by the vendor to repurchase the security at the same price, plus
interest at a specified rate. Repurchase agreements may be entered into with
member banks of the Federal Reserve System or "primary dealers" (as designated
by the Federal Reserve Bank of New York) in U.S. Government securities.
Repurchase agreements usually have a short duration, often less than one week.
In the event that a vendor defaulted on its repurchase obligation, the Fund
might suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If the vendor becomes bankrupt,
the Fund might be delayed, or may incur costs or possible losses of principal
and income, in selling the collateral.
Within this basic framework, the policy of the Fund will emphasize flexibility
in arranging its portfolio to seek the desired results. The Fund's investment
philosophy is that of investment in equity securities of companies which, based
on fundamental research, the management of the Fund believes to be undervalued.
The Manager believes that the philosophy of the management of the portfolio
companies is very important and, therefore, intends to invest in companies that
are managed for the benefit of their shareholders and not by managements that
believe that the most important measure of a company's success is its size. In
addition, companies generating free cash flow, which is defined as earnings,
depreciation, and deferred income tax in excess of need for capital expenditures
and dividends, will be considered attractive because such funds can be used to
pay down debt, retire shares, acquire other businesses or increase the dividend.
Investment securities will be assessed upon their earning power, stated asset
value and off the balance sheet values, such as natural resources and timber
properties. Critical factors that will be considered in the selection of
securities will include the values of individual securities relative to other
investment alternatives, trends in the determinants of corporate profits,
corporate cash flow, balance sheet changes, management capability and practices,
and the economic and political outlook. Although the balance sheet of a company
is important to the Manager's analysis, the Fund may invest in financially
troubled companies if the Manager has reason to believe that the underlying
assets are worth far more than the market price of the shares. Generally
speaking, disposal of a security will be based upon factors such as (i)
increases in the valuation of the security which the Fund believes reflect
earnings growth too far in advance, (ii) changes in the relative opportunities
offered by various securities, and (iii) actual or potential deterioration of
the issuers' earning power
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which the Fund believes may adversely affect the price of its securities.
Portfolio turnover will be influenced by sound investment practices, the Fund's
investment objective, and the need of funds for the redemption of the Fund's
shares.
The Fund will not seek to realize profits by anticipating short-term market
movements and intends to purchase securities for long-term capital appreciation
under ordinary circumstances. The rate of portfolio turnover will not be a
limiting factor when the investment adviser deems changes to be appropriate. In
addition, in order to qualify as a regulated investment company, less than 30%
of the Fund's gross income must be derived from the sale or other disposition of
stock, securities or certain other investments held for less than 3 months.
Although increased portfolio turnover may increase the likelihood of additional
capital gains for the Fund, the Fund expects to satisfy the 30% income test.
The Fund's investment policies indicated below (unlike its investment objective)
are not fundamental and may be changed by the Fund's Board of Directors without
shareholder approval.
Foreign Securities
Although the Fund will invest primarily in domestic securities, both listed and
unlisted, and has no present intention of investing any significant portion of
its assets in foreign securities, it reserves the right to invest in foreign
securities if purchase thereof at the time of purchase would not cause more than
15% of the value of the Fund's total assets to be invested in foreign
securities. Investments in foreign securities involve certain risk
considerations which are not typically associated with investments in domestic
securities. These considerations include changes in exchange rates and exchange
control regulation, political and social instability, expropriation, less liquid
markets and less available information than is generally the case in the United
States, less government supervision of exchanges and brokers and issuers, lack
of uniform accounting and auditing standards, foreign withholding taxes and
greater price volatility. See "Foreign Securities" in the Statement of
Additional Information.
Convertible Securities
The Fund may invest in convertible securities which may include corporate notes
or preferred stock but are ordinarily a long-term debt obligation of the issuer
convertible at a stated exchange rate into common stock of the issuer. As with
all debt securities, the market value of convertible securities tends to decline
as interest rates increase and, conversely, to increase as interest rates
decline. Convertible securities generally offer lower interest or dividend
yields than non-convertible securities of similar quality. However, when the
market price of the common stock underlying a convertible security exceeds the
conversion price, the price of the convertible security tends to reflect the
value of the underlying common stock. As the market price of the underlying
common stock declines, the convertible security tends to trade increasingly on a
yield basis, and thus may not depreciate to the same extent as the underlying
common stock. Convertible securities rank senior to common stocks on an issuer's
capital structure and are consequently of higher quality and entail less risk
than the issuer's common stock, although the extent to which such risk is
reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security.
The Fund may invest in convertible securities when it appears to the Manager
that it may not be prudent to be fully invested in common stocks. In evaluating
a convertible security, the Manager places primary emphasis on the
attractiveness of the underlying common stock and the potential for capital
appreciation through conversion. See "Convertible Securities" in the Statement
of Additional Information.
Risks of Investing in
Lower Rated Securities
The Fund may purchase convertible securities, debt securities, or preferred
stock considered by the Manager to be consistent with the Fund's investment
objectives regardless of whether or not the security is rated. Lower rated
securities (BBB or lower by Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies ("S&P") or
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Baa or lower by Moody's Investor Services, Inc. ("Moody's") and comparable
unrated securities, collectively commonly known as "junk bonds", have special
risks associated with them. The market for these securities may not be as liquid
as the market for higher rated securities, which may result in depressed prices
for the Fund upon the disposal of such lower rated securities. There is no
established secondary market for many of these securities. The Manager cannot
anticipate whether these securities could be sold other than to institutional
investors. There is frequently no secondary market for the resale of those debt
obligations that are in default. The limited market for these securities may
affect the amount actually realized by the Fund upon such sale. Such sale may
result in a loss to the Fund. There are certain risks involved in applying
credit ratings as a method of evaluating lower rated securities. For example,
while credit rating agencies evaluate the safety of principal and interest
payments, they do not evaluate the market risk of the securities and the
securities may decrease in value as a result of credit developments. See
"Description of Ratings" herein for a definition of the various ratings assigned
by S&P and Moody's.
These lower rated securities tend to offer higher yields than higher rated
securities with the same maturities because the creditworthiness of the obligors
of lower rated securities may not have been as strong as that of other issuers.
Since there is a general perception that there are greater risks associated with
the lower rated securities, if any, in the Fund, the yields and prices of such
securities tend to fluctuate more with changes in the perceived quality of the
credit of their obligors. In addition, the market value of these lower rated
securities may fluctuate more than the market value of higher rated securities
since lower rated securities tend to reflect short-term market developments to a
greater extent than higher rated securities, which fluctuate primarily in
response to the general level of interest rates, assuming that there has been no
change in the fundamental credit quality of such securities. These lower rated
securities are also more sensitive to adverse economic changes and events
affecting specific issuers than are higher rated securities. Periods of economic
uncertainty can be expected to result in increased market price volatility of
the lower rated securities. These lower rated securities may also be directly
and adversely affected by variables such as interest rates, unemployment rates,
inflation rates and real growth in the economy and may be more susceptible to
variables such as adverse publicity and negative investor perception than more
highly rated securities, particularly in a limited secondary market. Lower rated
securities generally involve greater risks of loss of income and principal than
higher rated securities. The obligors of lower rated securities possess less
creditworthy characteristics than the obligors of higher rated securities, as is
evidenced by those securities that have experienced a downgrading in rating or
that are in default. The evaluation of the price of such securities is highly
speculative and volatile. As such, these evaluations are very sensitive to the
latest available public information relating to developments concerning such
securities. See "Risks of Investing in Lower Rated Securities" in the Statement
of Additional Information.
Warrants
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. In the event the
underlying security does not sufficiently appreciate in value during the period
when the warrant may be exercised so as to provide an attractive investment for
the Fund, the warrant will expire and the Fund will suffer a loss on the price
it paid for the warrant. The Fund will not, however, purchase any warrant if, as
a result of such purchase, 5% or more of the Fund's total assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
value of the Fund's total assets, may be warrants which are not listed on the
New York or American Stock Exchange. Warrants acquired by the Fund in units or
attached to securities may be deemed to be without value. See "Warrants" in the
Statement of Additional Information.
Short Sales
The Fund may make short sales of securities. A short sale is a transaction in
which the Fund sells a
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security it does not own in anticipation that the market price of that security
will decline. The Fund expects to make short sales both to obtain capital gains
from anticipated declines in securities and as a form of hedging to offset
potential declines in long positions in the same or similar securities. The
short sale of a security is considered a speculative investment technique. When
the Fund makes a short sale, it must borrow the security sold short and deliver
it to the broker-dealer through which it made the short sale in order to satisfy
its obligation to deliver the security upon conclusion of the sale. The Fund may
have to pay a fee to borrow particular securities and is often obligated to pay
over any payments received on such borrowed securities. The Fund's obligation to
replace the borrowed security will be secured by collateral deposited with the
broker-dealer, usually cash, U.S. Government securities or other liquid high
grade debt obligations. The Fund will also be required to deposit in a
segregated account established and maintained with the Fund's Custodian, liquid
assets such as cash, U.S. Government securities or other liquid high grade debt
obligations, to the extent, if any, necessary so that the value of both
collateral deposits in the aggregate is at all times equal to the greater of the
price at which the security is sold short or 100% of the current market value of
the security sold short. Depending on arrangements made with the broker-dealer
from which it borrowed the security regarding payment over of any payments
received by the Fund on such security, the Fund may not receive any payments
(including interest) on its collateral deposited with such broker-dealer. If the
price of the security sold short increases between the time of the short sale
and the time the Fund replaces the borrowed security, the Fund will incur a
loss, and, conversely, if the price declines, the Fund will realize a capital
gain; provided, however, any gain will be decreased, and any loss increased, by
the transaction costs described above. Although the Fund's gain is limited to
the price at which it sold the security short, its potential loss is
theoretically unlimited. The market value of the securities sold short of any
one issuer will not exceed either 5% of the Fund's total assets or 5% of such
issuer's voting securities. The Fund will not make a short sale, if, after
giving effect to such sale, the market value of all securities sold short
exceeds 20% of the value of its assets or the Fund's aggregate short sales
"against the box" without respect to such limitations. In this type of short
sale, at the time of the sale, the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the security.
Restricted Securities
The Fund may invest in restricted securities and in other assets having no ready
market if such purchases at the time thereof would not cause more than 15% of
the value of the Fund's net assets to be invested in all such restricted or not
readily marketable assets. Restricted securities may be sold only in privately
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 promulgated under such Act. Where registration is required, the Fund
may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than the price that
prevailed when it decided to sell. Restricted securities will be valued in such
manner as the Board of Directors of the Fund in good faith deems appropriate to
reflect their fair market value.
Corporate Reorganizations
The Fund may invest in securities for which a tender or exchange offer has been
made or announced and in securities of companies for which a merger,
consolidation, liquidation or similar reorganization proposal has been announced
if, in the judgment of the Manager, there is a reasonable prospect of capital
appreciation significantly greater than the added portfolio turnover expenses
inherent in the short term nature of such transactions. The principal risk is
that such offers or proposals may not be consummated within the time and under
the terms contemplated at the time of the investment, in which case, unless such
offers or proposals are replaced by equivalent or increased offers or proposals
which are consummated, the Fund may
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sustain a loss. For further information on such investments, see "Corporate
Reorganizations" in the Statement of Additional Information.
Investment in Small,
Unseasoned Companies
The Fund may invest up to 5% of its total assets in small, less well known
companies, which (including predecessors) have operated less than three years.
The securities of such companies may have limited liquidity. The Fund will not
invest more than 5% of its total assets in securities of issuers which together
with their predecessors have a record of less than three years of continuous
operations.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which may not be changed
without the approval of the Fund's shareholders. Briefly, these restrictions
provide that the Fund may not:
1. Purchase the securities of any one issuer, other than the U.S.
Government or any of its agencies or instrumentalities, if immediately
after such purchase more than 5% of the value of its total assets would be
invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the
value of the Fund's total assets may be invested without regard to such 5%
and 10% limitations;
2. Invest more than 25% of the value of its total assets in any particular
industry;
3. Purchase securities on margin, but it may obtain such short-term credits
from banks as may be necessary for the clearance of purchases and sales of
securities;
4. Make loans of its assets to any person, except for the purchase of debt
securities and repurchase agreements as discussed under "Investment
Objectives, Policies and Risks" herein;
5. Borrow money except for (i) the short-term credits from banks referred
to in paragraph 3 above and (ii) borrowings from banks for temporary or
emergency purposes, including the meeting of redemption requests which
might require the untimely disposition of securities. Borrowing in the
aggregate may not exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of the Fund's total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made. Outstanding borrowings in
excess of 5% of the value of the Fund's total assets will be repaid before
any subsequent investments are made;
6. Mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings mentioned in paragraph
5 above;
7. Purchase the securities of other investment companies, except (i) 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 and (ii) further except as permitted
by Section 12(d) of the 1940 Act; and
8. Act as an underwriter of securities of other issuers, except that the
Fund may acquire restricted or not readily marketable securities under
circumstances where, if such securities were sold, the Fund might be deemed
to be an underwriter for purposes of the Securities Act of 1933. The Fund
will not, however, invest more than 15% of the value of its net assets in
restricted securities and not readily marketable securities.
If a percentage restriction is adhered to at the time an investment is made, a
later change in percentage resulting from changes in the value of the Fund's
portfolio securities will not be considered a violation of the Fund's policies
or restrictions.
THE MANAGER
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed the Delafield Asset
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Management Division of Reich & Tang Asset Management L.P. (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 full-time to the affairs
of the Fund. The Statement of Additional Information contains general background
information regarding each director and principal officer of the Fund.
The Manager is a Delaware limited partnership with its principal office at 600
Fifth Avenue, New York, New York 10020. As of March 31, 1997, the Manager was
investment manager, adviser or supervisor with respect to assets aggregating in
excess of $9.6 billion. The Manager acts as manager or administrator of 15 other
registered investment companies and also advises pension trusts, profit-sharing
trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner
and owner of a 99.5% interest in the Manager. Reich & Tang Asset Management,
Inc. (a wholly-owned subsidiary of NEICLP) is the sole general partner and owner
of the remaining .5% interest of the Manager. New England Investment Companies,
Inc. ("NEIC"), a Massachusetts corporation, serves as the sole general partner
of NEICLP. Reich & Tang Asset Management L.P. succeeded NEICLP as the Manager of
the Fund.
J. Dennis Delafield and Vincent Sellecchia of the Fund are primarily responsible
for the day-to-day management of the Fund's portfolio. Mr. Delafield is
Chairman, Chief Executive Officer and Director of the Fund and is Managing
Director of the Reich & Tang Capital Management Group, a division of the
Manager, with which he has been associated since September 1993. From December
1991 to September 1993, Mr. Delafield, acting as investment adviser, was a
Managing Director of Reich & Tang L.P. and an officer of Reich & Tang, Inc.; and
from October 1979 to December 1991, was President and Director of Delafield
Asset Management, Inc. Mr. Sellecchia is President of the Fund and Vice
President of the Reich & Tang Capital Management Group, a division of the
Manager, with which he has been associated since September 1993. From December
1991 to September 1993, Mr. Sellecchia, acting as investment adviser, was Vice
President of Reich & Tang L.P. and an officer of Reich & Tang, Inc.; and from
October 1980 to December 1991 was Vice President, Director of Investment
Analysis for Delafield Asset Management, Inc. The Fund's Annual Report contains
information regarding the Fund's performance and will be provided, without
charge, upon request.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Manager remains an indirect
wholly-owned subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its
sole general partner, is now an indirect subsidiary of MetLife. Also, MetLife
New England Holdings, Inc., a wholly-owned subsidiary of MetLife, owns 51% of
the outstanding limited partnership interest of NEICLP and may be deemed a
"controlling person" of the Manager. Reich & Tang, Inc. owns approximately 16%
of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $142.2 billion at
March 31, 1996. It 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, which exceeded $1.2 trillion at March 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset
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categories through twelve subsidiaries, divisions and affiliates offering a wide
array of investment styles and products to institutional clients. Its business
units include, AEW Capital Management, L.P., Back Bay Advisors, L.P., Graystone
Partners, L.P., Harris Associates, L.P., Jurika & Voyles, L.P., Loomis, Sayles &
Co., L.P., MC Management, L.P., New England Funds, L.P., New England Funds
Management, L.P., Reich & Tang Asset Management L.P., Vaughan-Nelson,
Scarborough & McConnell L.P. and Westpeak Investment Advisors, L.P. These
affiliates in the aggregate are investment advisors or managers to 43 other
registered investment companies.
The merger between The New England and MetLife resulted in an "assignment" of
the Investment Management Contract relating to the Fund. Under the 1940 Act,
such an assignment caused the automatic termination of this agreement. On
November 28, 1995 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 Investment Management Contract effective August 30, 1996,
which has a term which extends to July 31, 1998 and may be continued in force
thereafter for successive twelve-month periods beginning each August 1, provided
that such continuance is specifically approved annually by majority vote of the
Fund's outstanding voting securities or by its Board of Directors, and in either
case by a majority of the directors who are not parties to the Investment
Management Contract or interested persons of any such party, by votes cast in
person at a meeting called for the purpose of voting on such matter.
The Investment Management Contract was approved by a majority of the
shareholders of the Fund on March 13, 1996 and contains the same terms and
conditions governing the Manager's investment management responsibilities as the
Fund's previous Investment Management Contract with the Manager, except as to
the date of execution and termination.
The merger and the change in control of the Manager has not had any impact upon
the Manager's performance of its responsibilities and obligations under the
Investment Management Contract.
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. Under the Investment Management Contract, the Manager receives from
the Fund a fee equal to .80% per annum of the Fund's average daily net assets
for managing the Fund's investment portfolio and performing related services.
The fee received by the Manager under the Investment Management Contract is
higher than the fee paid by most investment companies. The Manager, at its
discretion, may voluntarily waive all or a portion of the management fee.
Pursuant to an Administrative Services Contract for the Fund, the Manager
performs clerical, accounting supervision and office service functions for the
Fund and provides the Fund with personnel to (i) supervise the performance of
bookkeeping and related services by Investors Fiduciary Trust Company, the
Fund's bookkeeping agent, (ii) prepare reports to and filings with regulatory
authorities, and (iii) perform such other services as the Fund may from time to
time request of the Manager. The personnel rendering such services may be
employees of the Manager or its affiliates. The Manager, at its discretion, may
voluntarily waive all or a portion of the administrative services fee. For its
services under the Administrative Services Contract, the Manager receives a fee
equal to .21% per annum of the Fund's average daily net assets. Any portion of
the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares. See "Distribution and Service
Plan" herein.
In addition, Reich & Tang Distributors L.P., the Distributor, can receive a
servicing fee up to .25% per annum of the average daily net assets of the shares
of the Fund under the Shareholder Servicing Agreement. The fees are accrued
daily and paid monthly.
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DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on October 12, 1993. The authorized
capital stock of the Fund consists of twenty billion shares of common stock
having a par value of one-tenth of one cent ($.001) per share. The Fund
currently has only one portfolio. The Fund's Articles of Incorporation provide
for the creation of separate classes of the Fund's outstanding common stock.
Except as noted below, each share when issued has equal dividend, distribution
and liquidation rights within the series for which it was issued, and each
fractional share has rights in proportion to the percentage it 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
affected series. There are no conversion or preemptive rights in connection with
any shares of the Fund. All shares when issued in accordance with the terms of
the offering will be fully paid and non-assessable. Shares of the Fund are
redeemable at net asset value, at the option of the shareholders.
Under its Articles of Incorporation the Fund has the right to redeem, for cash,
shares of common stock owned by any shareholder to the extent that, and at such
times as, the Fund's Board of Directors determines to be necessary or
appropriate to prevent any concentration of share 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, and,
in that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. The Fund's By-Laws provide the
holders of one-third of the outstanding shares of the Fund present at a meeting
in person or by proxy will constitute a quorum for the transaction of business
at all meetings.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Securities and Exchange
Commission has required that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by Rule 12b-1. The Fund's Board of Directors has adopted a
Distribution and Service Plan (the "Plan") and, pursuant to the Plan, the Fund
and Reich & Tang Distributors L.P. (the "Distributor") have entered into a
Distribution Agreement and a Shareholder Servicing Agreement.
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P. and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares and, for nominal consideration and as agent for the Fund, will
solicit 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 is permitted to
receive payments from the Fund (i) to permit it to make payments to
participating organizations, with which it has written agreements and whose
clients or customers are shareholders of the Fund (each a "Participating
Organization"), for providing personal shareholder services and for the
maintenance of shareholder accounts and (ii) to reimburse it for its costs in
the provision of these services by it to Fund shareholders up to .25% per annum
of the Fund's average daily net assets (the "Shareholder Servicing Fee").
The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for preparation, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
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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 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. In addition to the use of the Shareholder
Servicing Fee, the Distributor may also make payments from time to time from its
own resources and past profits, for the purposes enumerated 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.
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. However, in the opinion of the
Manager based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution would result in loss to shareholders or change
in the Fund's net asset value. In addition, state securities laws on this issue
may differ from the interpretations of Federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
PURCHASE OF SHARES
Shares of the Fund that are purchased through broker-dealers are offered at a
price based on the current net asset value of such shares which is next computed
upon receipt of the purchase order by the broker-dealer.
The minimum for an initial investment is $5,000, except that the minimum initial
investment for an Individual Retirement Account is $250. There is no minimum for
subsequent investments. All purchase payments will be invested in full and
fractional shares. The Fund or the Distributor is authorized to reject any
purchase order.
For each shareholder of record, the Fund's transfer agent, Reich & Tang Services
L.P. ("Transfer Agent"), as the shareholder's agent, establishes an open account
to which all shares purchased are credited, together with any dividends and
capital gain distributions which are paid in additional shares. See "Dividends,
Distributions and Taxes" herein. Although most shareholders elect not to receive
stock certificates, certificates for full shares can be obtained on specific
written request to the Transfer Agent. No certificates are issued for fractional
shares.
If an investor purchases or redeems shares of the Fund through an investment
dealer, bank or other institution, that institution may impose charges for its
services; these charges would reduce the investor's yield or return. An investor
may purchase or redeem shares of the Fund directly from the Fund's Distributor
or its Transfer Agent without any such charges.
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New Shareholders
Mail
To purchase shares of the Fund send a check made payable to "Delafield Fund,
Inc." and a completed subscription order form to the Fund at the following
address:
Delafield Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
Checks are accepted subject to collection at full face value in United States
currency.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of money
among banks, an investor should first telephone the Fund at 212-830-5220 (within
New York State) or at 800-221-3079 (outside New York State) to obtain a new
account number. The investor should then instruct a member commercial bank to
wire funds to:
Investors Fiduciary Trust Company
Reich & Tang Funds
ABA #101003621
DDA #890752-953-8
For Delafield Fund, Inc.
Account of (Investor's Name)
Fund Account # 819-
SS#/Tax ID#
Then promptly complete and mail the subscription order form. There may be a
charge by your bank for transmitting the money by bank wire. The Fund does not
charge investors in the Fund for the receipt of wire transfers. If you are
planning to wire funds, it is suggested that you instruct your bank early in the
day so the wire transfer can be accomplished the same day. Payment in the form
of a "bank wire" received prior to 4 p.m., New York City time, on a Fund
Business Day will be treated as a Federal Funds payment received on that day.
Personal Delivery
Deliver a check made payable to "Delafield Fund, Inc.", along with a completed
subscription order form to:
Reich & Tang Funds
600 Fifth Avenue - 9th Floor
New York, New York 10020
Present Shareholders
Subsequent purchases can be made by personal delivery or bank wire, as indicated
above, or by mailing a check made payable to "Delafield Fund, Inc." at:
Delafield Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
The shareholder's account number should be clearly indicated.
Certain Participating Organizations may utilize the FundSERV mutual funds
clearinghouse system to purchase and redeem shares.
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, or by
having 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.
13
REDEMPTION OF SHARES
Shareholders may make a redemption in any amount by sending a written
request to the Fund, accompanied by any certificate that may have been issued to
the shareholder, addressed to:
Delafield Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
Upon receipt by the Fund of a redemption request in proper form, shares of the
Fund will be redeemed at their next determined net asset value. See "Net Asset
Value" herein.
The request must specify the name of the Fund, the dollar amount or number of
shares to be redeemed, and the account number. The request must be signed in
exactly the same way the account is registered (if there is more than one owner
of the shares, all must sign) and, if any certificates are included in the
request, presentation of such certificates properly endorsed. In all cases, all
the signatures on a redemption request and/or certificates must be signature
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
(guarantees by notaries public are not acceptable). Further documentation, such
as copies of corporate resolutions and instruments of authority may be requested
from corporations, administrators, executors, personal representatives, trustees
or custodians to evidence the authority of the person or entity making the
redemption request.
Checks for redemption proceeds normally will be mailed within seven days, but
will not be mailed until all checks (including a certified or cashier's check)
in payment for the purchase of the shares to be redeemed have been cleared,
which could take up to 15 days after investment. Unless other instructions are
given in proper form, a check for the proceeds of a redemption will be sent to
the shareholder's address of record and generally will be mailed within seven
days after receipt of the request.
The Fund may suspend the right of redemption and postpone the date of payment
for more than seven days during any period when (i) trading on the New York
Stock Exchange is restricted or the Exchange is closed, other than customary
weekend and holiday closings, (ii) the Securities and Exchange Commission has by
order permitted such suspension or (iii) an emergency, as defined by rules of
the Securities and Exchange Commission, exists making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.
To minimize expenses, the Fund reserves the right to redeem upon not less than
45 days notice all shares of the Fund in an account (other than an Individual
Retirement Account) which has a value below $500 caused by reason of a
redemption by a shareholder of shares of the Fund; provided, however, a
shareholder's shares may not be redeemed if written objection to the redemption
is received by the Fund within 30 days after the date on which notice of the
redemption is received by the shareholder. Shareholders will be allowed to make
additional investments prior to the date fixed for redemption to avoid
liquidation of the account. In lieu of the right to redeem all shares, the Fund
may impose a monthly service charge of $10 on such accounts.
Systematic Withdrawal Plan
Any shareholder who owns shares of the Fund with an aggregate value of $10,000
or more may establish a Systematic Withdrawal Plan under which he offers to sell
to the Fund at net asset value the number of full and fractional shares which
will produce the monthly or quarterly payments specified (minimum $50 per
payment). Depending on the amounts withdrawn, systematic withdrawals may deplete
the investor's principal. Investors contemplating participation in this plan
should consult their tax advisers.
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<PAGE>
Shareholders wishing to utilize this plan may do so by completing an application
which may be obtained by writing or calling the Fund. No additional charge to
the shareholder is made for this service.
Telephone Redemption Privilege
The Fund accepts telephone requests for redemption from shareholders who elect
this option. Telephone requests for redemption may not exceed the sum of $25,000
per request per day. The proceeds of a telephone redemption will be sent to the
shareholder at his address or to his bank account as set forth in the
subscription order form or in a subsequent signature guaranteed written
authorization. The Fund may accept telephone redemption instructions from any
person with respect to accounts of shareholders who elect this service, and thus
shareholders risk possible loss of dividends 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. The failure by the Fund to employ such reasonable procedures may
cause the Fund to be liable for any losses incurred by investors due to
telephone redemptions based upon unauthorized or fraudulent instructions. The
telephone redemption option may be modified or discontinued at any time upon 60
days written notice to shareholders.
RETIREMENT PLANS
The Fund has available a form of individual retirement account ("IRA") for
investment in the Fund's shares. Any individual can contribute to an IRA equal
to the lesser of $2,000 annually ($2,250 in a spousal account) or 100% of earned
income; such investment must be made in cash. However, the deductibility of an
individual's IRA contribution may be reduced or eliminated if the individual or,
in the case of a married individual, either the individual or the individual's
spouse, is an active participant in an employer-sponsored retirement plan. Thus,
in the case of an active participant, the deduction will not be available for an
individual with adjusted gross income above $25,000 or, a married couple filing
a joint return with adjusted gross income above $40,000. Special rules apply in
the case of married individuals living together who file separate returns. The
minimum investment required to open an IRA is $250. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances.
As a result of the enactment of the Small Business, Health Insurance and
Welfare Reform Acts of 1996 (the " `96 Act"), certain of the foregoing
provisions have been amended. Pertinent provisions of the `96 Act are described
below:
Generally. Five year averaging will not apply to distributions after
December 31, 1999. Ten year averaging has been preserved in very limited
circumstances.
IRAs. Beginning January 1, 1997, a non-working spouse may be eligible to
establish an IRA and contribute up to $2,000, provided the combined income of
both spouses is at least equal to the amount contributed by both spouses to
IRAs.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "Section 401(k) plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
Persons desiring information concerning investments by IRAs and other retirement
plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
Shareholders of the Fund are entitled to exchange some or all of their shares in
the Fund for Class B shares of either the Daily Tax Free Income Fund, Inc. or
the Short Term Income Fund, Inc. (U.S. Government Portfolio), each of which are
other investment companies which retain Reich & Tang Asset Management L.P. as
investment adviser or manager. 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. The Fund will provide
shareholders with 60 days written notice prior to any modification or
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<PAGE>
discontinuance of the exchange privilege. An exchange of shares in the Fund
pursuant to the exchange privilege is, in effect, a redemption of Fund shares
(at net asset value) followed by the purchase of shares of the investment
company into which the exchange is made (at net asset value) and may result in a
shareholder realizing a taxable gain or loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to frequency of
exchanges. The minimum amount for an exchange is $1,000, except that
shareholders who are establishing a new account with an investment company
through the exchange privilege must insure 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. The exchange privilege is
available to shareholders resident in any state in which shares of the
investment company being acquired may legally be sold. Before making an
exchange, the investor should review the current prospectus of the investment
company into which the exchange is being made. Prospectuses may be obtained by
contacting the Distributor at the address or telephone number listed on the
cover of this Prospectus.
Instructions for exchange may be made in writing to the Transfer Agent at the
appropriate address listed herein or, for shareholders who have elected that
option, by telephone. The Fund reserves the right to reject any exchange
request.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of common stock of the Fund having an aggregate net
asset value as of the payment date of such dividend or distribution equal to the
cash amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the shareholder makes
no election the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Dividends will normally be paid semi-annually. Capital gains
distributions, if any, will be made at least annually, and in no event later
than 60 days after the end of the Fund's fiscal year. There is no fixed dividend
rate, and there can be no assurance that the Fund will pay any dividends or
realize any capital gains.
The Fund intends to continue to qualify for and elect special treatment
applicable to a "regulated investment company" under the Internal Revenue Code
of 1986, as amended. To qualify as a regulated investment company, the Fund must
meet certain complex tests concerning its investments and distributions. For
each year the Fund qualifies as a regulated investment company, the Fund will
not be subject to federal income tax on income distributed to its shareholders
in the form of dividends or capital gain distributions. Additionally, the Fund
will not be subject to a federal excise tax if the Fund distributes at least 98%
of its ordinary income and 98% of its capital gain income to its shareholders.
Dividends out of net ordinary income and distributions of net short-term capital
gains are taxable to the recipient shareholders as ordinary income and are
eligible, in the case of corporate shareholders, for the dividends-received
deduction to the extent that the Fund's income is derived from qualifying
dividends received by the Fund from domestic corporations. A corporation's
dividends-received deduction will be disallowed unless the corporation holds
shares in the Fund at least 46 days. Furthermore, a corporation's
dividends-received deduction will be disallowed to the extent a corporation's
investment in shares of the Fund is financed with indebtedness.
The excess of net long-term capital gains over the net short-term capital losses
realized and distributed
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<PAGE>
by the Fund to its shareholders as capital gains distributions are taxable
to the shareholders as long-term capital gains, irrespective of the length of
time a shareholder may have held his stock. Such long-term capital gains
distributions are not eligible for the dividends-received deduction referred to
above. If a shareholder held shares six months or less and during that period
received a distribution taxable to such shareholder as long-term capital gain,
any loss realized on the sale of such shares during such six-month period would
be a long-term capital loss to the extent of such distribution.
Any dividend or distribution received by a shareholder on shares of the Fund
shortly after the purchase of such shares by such shareholder will have the
effect of reducing the net asset value of such shares by the amount of such
dividend or distribution. Furthermore, such dividend or distribution, although
in effect a return of capital, is subject to applicable taxes to the extent that
the investor is subject to such taxes regardless of the length of time the
investor may have held the stock.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In connection with
this withholding requirement, a shareholder will be asked to certify on his
application that the social security or tax identification number provided is
correct and that the shareholder is not subject to 31% backup withholding for
previous underreporting to the IRS.
NET ASSET VALUE
The Fund determines the net asset value per share of the Fund as of 4:00 p.m.,
New York City time, by dividing the value of the Fund's net assets (i.e., the
value of its securities and other assets less its liabilities, including
expenses payable or accrued but excluding capital stock and surplus) by the
number of shares outstanding at the time the determination is made. The Fund
determines its net asset value on each Fund Business Day. Fund Business Day for
this purpose means weekdays (Monday through Friday) except customary national
business holidays and Good Friday. Purchases and redemptions will be effected at
the time of determination of net asset value next following the receipt of any
purchase or redemption order in proper form. See "Purchase of Shares" and
"Redemption of Shares" herein.
Portfolio securities for which market quotations are readily available are
valued at market value. All other investment assets of the Fund are valued in
such manner as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair value.
GENERAL INFORMATION
Performance
From time to time the Fund may distribute sales literature or publish
advertisements containing "total return" quotations for the Fund. The Manager
may also include general language in such advertisements or information
furnished to present or prospective shareholders regarding the Manager's
investment performance. Such sales literature or advertisements will disclose
the Fund's average annual compounded total return for the Fund's last one year
period, five year period and the period since the Fund's inception, and may
include total return information for other periods. The Fund's total return for
each period is computed, through use of a formula prescribed by the Securities
and Exchange Commission, by finding the average annual compounded rates of
return over the period that would equate an assumed initial amount invested to
the value of the investment at the end of the period. For purposes of computing
total return, income dividends and capital gains distributions paid on shares of
the Fund are assumed to have been reinvested when received.
The Fund may also from time to time include in advertisement the ranking of
those performance figures relative to such figures for groups of mutual funds
categorized by nationally recognized ranking agencies. The performance of the
Fund may also be compared to recognized indices, including, but not limited to,
the Standard & Poor's 500.
Shareholder Meetings
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is
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<PAGE>
because the By-Laws of the Fund provide for annual meetings only (a) for the
election of directors as required by the 1940 Act, (b) for approval of revised
investment advisory agreements with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution plan as required
in the 1940 Act with respect to particular class or series of stock, and (d)
upon the written request of holders of shares entitled to cast not less than 10%
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, any registration of the Fund with the
Securities and Exchange Commission or any state, or as the Directors may
consider necessary or desirable. Each Director serves until the next meeting of
shareholders called for the purpose of considering the election or re-election
of such Director or of a successor to such Director, and until the election and
qualification of his or her successor, elected at such meeting, or until such
Director sooner dies, resigns, retires or is removed by the vote of the
shareholders.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services L.P., 600 Fifth Avenue, New York, New York 10020, is the transfer agent
and dividend agent for the shares of the Fund. The Fund's custodian and transfer
agent do not assist in, and is not responsible for investment decisions
involving assets of the Fund.
Information for Shareholders
All shareholder inquiries should be directed to Delafield Fund, Inc., 600
Fifth Avenue, New York, New York 10020 (telephone: 212-830-5220 or outside New
York State 800-221-3079).
The Fund will send to all its shareholders semi-annual unaudited and annual
audited reports, including a list of investment securities held.
For further information with respect to the Fund and the shares offered hereby,
reference is made to the Fund's Registration Statement filed with the Securities
and Exchange Commission, including the exhibits thereto. The Registration
Statement and the exhibits thereto may be examined at the Securities and
Exchange Commission and copies thereof may be obtained upon payment of certain
duplicating fees.
18
<PAGE>
DESCRIPTION OF RATINGS
Investor Services, Inc. ("Moody's")
Aaa: Bonds which are rated Aaa are judged to be 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 fluctuations 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.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Unrated: Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1) An application for rating was not received or accepted.
2) The issue or issuer belongs to a group of securities that are not rated as a
matter of policy.
3) There is a lack of essential data pertaining to the issue or issuer.
4) The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa-1,
A-1, Baa-1 and B-1.
Standard & Poor's Rating Services, a division of the McGraw-Hill Companies
("S&P")
AAA: Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay
19
<PAGE>
principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in the highest rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of this obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, they are
outweighed by large uncertainties of major risk exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is being
paid.
D: Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
20
<PAGE>
TABLE OF CONTENTS
Table of Fees and Expenses.............................
Financial Highlights...................................
Introduction...........................................
Investment Objectives, Policies and Risks..............
Foreign Securities.................................. DELAFIELD
Convertible Securities.............................. FUND, INC.
Risks of Investing in Lower Rated Securities........
Warrants............................................
Short Sales.........................................
Restricted Securities...............................
Corporate Reorganizations........................... PROSPECTUS
Investment in Small, Unseasoned Companies........... May 1, 1997
Investment Restrictions................................
The Manager............................................
Description of Common Stock............................
Distribution and Service Plan..........................
Purchase of Shares.....................................
New Shareholders....................................
Present Shareholders................................
Electronic Funds Transfers (EFT), Pre-authorized
Credit and Direct Deposit Privilege..............
Redemption of Shares...................................
Systematic Withdrawal Plan..........................
Telephone Redemption Privilege......................
Retirement Plans.......................................
Exchange Privilege.....................................
Dividends, Distributions and Taxes.....................
Net Asset Value........................................
General Information ...................................
Performance.........................................
Shareholder Meetings................................
Custodian and Transfer Agent........................
Information for Shareholders .......................
Description of Ratings.................................
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information and representation may not be relied upon as
authorized by the Fund, its Manager, Distributor or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of any offer
to buy any of the securities offered hereby in any state to any person to whom
it is unlawful to make such offer in such state.
<PAGE>
Account Number 819- Date
DELAFIELD FUND, INC. 819
Do not use for IRA plans. Special forms are available from the Fund.
1. INITIAL INVESTMENT
[] Check enclosed for $ [] I have telephoned the Fund to make wire arrangements.
(see instructions on reverse). My initial investment
wire is $
2. REGISTRATION
[] Individual (and Joint Registrant, if any)
- -------------------------------------------------------------------------------
Print Registrant's name Social Security number
- -------------------------------------------------------------------------------
Right of survivorship, unless tenancy in common is indicated
[] This indemnification number is for the first name at left
[] This indemnification number is for the second name at left
[] Gift to Minors
- -------------------------------------------------------------------------------
Custodian's Name (only one permited) as custodian for Minor's Social Security
Number
- --------------------------------------------------------------------------------
Minor's Name (only one permitted) under the state [] Uniform Gift to Minor's Act
[] Uniform Transfer to Minors
Act
[] Corporations, Partnerships, Trusts and Others
- --------------------------------------------------------------------------------
Name of Corporation or Other Entity Tax Identification Number
3. PRIMARY ADDRESS SEASONAL ADDRESS
- --------------------------------------------------------------------------------
Number and Street Number and Street
- --------------------------------------------------------------------------------
City State Zip Code City State Zip Code
----------------------------------------
From To
Your Statement will automatically be mailed to this address for the time period
indicated.
4. SHAREHOLDER PRIVILEGES
[] A. Telephone/Expedited Redemption Privilege (see explanation in prospectus)
The Fund and/or the Transfer Agent is hereby authorized to honor verbal
instructions from any person for the redemption of any and all Fund shares held
in the undersigned's account provided the proceeds are transmitted only to the
address of record or to the bank account indicated below. PROCEEDS FROM SHARES
REDEEMED BY PHONE ARE LIMITED TO A $25,000 MAXIMUM PER TRANSACTION AND WILL BE
MADE PAYABLE ONLY TO THE REGISTERED OWNERS AND MAILED TO THE ADDRESS OF RECORDS
UNLESS WIRED TO THE BANK ACCOUNT YOU DESIGNATE BELOW. Enclose a specimen copy of
your personal check (marked "VOID") for the account listed below.
- -------------------------------------------------------------------------------
Name of Commercial Bank Account Number
- -------------------------------------------------------------------------------
ABA# (Bank Routing Number) Name of Account
- -------------------------------------------------------------------------------
Address and Branch of Bank
Please Turn Over
<PAGE>
[] B.Telephone Exchange Privilege (see explanation in prospectus)
The Fund and the Transfer Agent are each hereby authorized to honor verbal
instructions from any person representing himself or herself to be the
undersigned for the exchange of any and all Fund shares held in the
undersigned's account to an account of identical registration in any other Reich
& Tang, Inc. managed fund, as specified in the accompanying prospectus, provided
such shares are available for sale in the undersigned's state of residence. The
undersigned agrees that prior to giving any telephone exchange instructions, the
undersigned shall obtain the then current prospectus of the fund into which the
exchange is to be made. Absent negligence by the Fund or the Transfer Agent,
neither the Fund nor the Transfer Agent shall have any liability for acting in
accordance with any unauthorized verbal instructions. The records of the
Transfer Agentor the Fund with respect to such instructions shall be binding.
[] C. Dividend and Capital Gains Distribution Options (as specified in
prospectus)
Please check one: Please check one:
[] Dividend Reinvestment [] Capital Gains Reinvestment
[] Dividend Withdrawal [] Capital Gains Withdrawal
[] D. Systematic Withdrawal Plan*
I would like a :
[] Monthly [] Quarterly remittance of $ (please specify amount, must be $50 or
more).
*Note: Must have minimum amount of $10,000 per prospectus and dividends and
capital gains options must be reinvested.
5. SIGNATURE
I (We) am (are) of legal age in the state of my residence and wish to purchase
shares of the Fund as described in the current prospectus(a copy of which
I(we)have received). By the execution of the application, the undersigned
represents and warrants that the investor has full right, power and authority to
make this investment and the undersigned is (are) duly authorized to sign this
application and to purchase or redeem shares of the Fund on behalf of the
investor. I(we) hereby appoint Investors Fiduciary Trust Company as agent to
receive dividends and distribution for automatic reinvestment in additional
shares of the Fund.
Taxpayer identification number certification (Check appropriate box, if
applicable)
Under penalties of perjury, I certify:
[] That the number shown on this form is my correct taxpayer identification
number and that I am not subject to backup withholding because (a) I have not
been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends or (b) the Internal Revenue Service has
notified me that I am no longer subject to backup withholding.
[] That I have not provided a taxpayer identification number because I have not
been issued a number, but I have applied for one or will do so in the near
future.
- -------------------------------------------- ------ ---------------------------
Individual/Investor/Custodian Representative Date Joint Registrant,if any
- ------------------------------------- ----- ----------------------------------
Corporate Officer/Partner/Trustee,etc. Date Title
INITIAL INVESTMENT AND MAILING INSTRUCTIONS
If you wish to mail your investments, complete the application and mail it with
your check, payable to the Fund at:
Delafield Fund, Inc.
Reich & Tang Servicing
600 Fifth Avenue, 9th Floor
New York, NY 10020
If you are wiring funds, call the Fund at (212)830-5220 or 1-800-221-3079 to
obtain an account number. Then instruct your commercial bank to wire in Federal
Funds to:
Investors Fiduciary Trust Company
ABA 101003621
Reich & Tang Services L.P.
A/C# 890752-953-8
For New A/C# 819-
Name of
Then complete the subscription order form and mail it to:
Reich & Tang Servicing
600 Fifth Avenue, 9th Floor
New York, NY 10020
If desired, the application and/or payments may be delivered by hand to:
Delafield Fund, Inc.
Reich & Tang Servicing
600 Fifth Avenue, 9th Floor
New York, NY 10020
FOR DELAFIELD FUND, INC. USE ONLY
- ----------------------------------- -----------------------------------
Dealer Name Location
- ----------------------------------
Representative Name
If you have any questions about filling out this application, please telephone
the Fund at (212) 830-5220 or outside New York State, toll free at
1-800-221-3079. (Fund #819).
<PAGE>
REICH & TANG ASSET MANAGEMENT L.P.
600 Fifth Avenue
New York, NY 10020-2302
June 19, 1997
VIA EDGAR TRANSMISSION
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Delafield Fund, Inc.
Registration Statement No. 4
File No. 33-69760
Dear Sir or Madam:
On behalf of Delafield Fund, Inc. and pusuant to Rule 497(d) under the
Securities Act of 1933, transmitted herewith is a copy of the final Prospectus
which became effective April 30, 1997.
Pursuant to Rule 497(g), this Prospectus has been marked with the registration
number and rule number in the upper right hand corner.
Very truly yours,
Leigh DeLuca
ENCLOSURES
CC: Delafield Fund, Inc.
Battle Fowler LLP
