As filed with the Securities and Exchange Commission on June 17 , 1998
Registration No. 33-69760
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. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes)
DELAFIELD 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) 830-5220
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 R. ROSELLA, ESQ.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
It is proposed that this filing will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
The Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1997 on February 27, 1998.
<PAGE>
DELAFIELD FUND, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
Part A
Item No. Prospectus Heading
1. Cover Page. . . . . . . . . . . . .Cover Page
2. Synopsis. . . . . . . . . . . . . .Table of Fees and Expenses;
Introduction
3. Condensed Financial
Information . . . . . . . . . . . .Financial Highlights
4. General Description
of Registrant . . . . . . . . . . .Introduction; Investment Objectives,
Policies and Risks; Investment
Restrictions
5. Management of the Fund. . . . . . .The Manager; General Information
5A. Management's Discussion
of Fund Performance . . . . . . . .The Manager
6. Capital Stock and
Other Securities. . . . . . . . . .Description of Common Stock; General
Information; Dividends,
Distributions and Taxes
7. Purchase of Securities
Being Offered . . . . . . . . . . .Distribution and Service Plan;
Purchase of Shares; Net Asset Value
8. Redemption or Repurchase. . . . . .Purchase of Shares; Redemption of
Shares
9. Legal Proceedings . . . . . . . . .Not Applicable
<PAGE>
Part B Caption in Statement of
Item No. Additional Information
10. Cover Page. . . . . . . . . . . . .Cover Page
11. Table of Contents . . . . . . . . .Table of Contents
12. General Information
and History . . . . . . . . . . . .Not Applicable
13. Investment Objectives,
Policies and Risks. . . . . . . . .Investment Objectives, Policies and
Risks; Investment Restrictions
14. Management of the Fund . . . .The Manager
15. Control Persons and Principal
Holders of Securities . . . . . . .The Manager
16. Investment Advisory
and Other Services. . . . . . . . .The Manager; Distribution and
Service Plan; Custodian and
Transfer Agent
17. Brokerage Allocation . . . . . . . Portfolio Transactions
18. Capital Stock and
Other Securities. . . . . . . . . .Description of Common Stock
19. Purchase, Redemption and Pricing
of Securities Being Offered . . . .Purchase of Shares; Redemption of
Shares; Net Asset Value
20. Tax Status. . . . . . . . . . . . .Dividends, Distributions and Taxes
21. Underwriters. . . . . . . . . . . .Distribution and Service Plan
22. Calculation of
Performance Data. . . . . . . . . . Performance
23. Financial Statements. . . . . . . .Independent Auditors' Report;
Financial Statements.
<PAGE>
Subject to Completion dated June 17, 1998
- - --------------------------------------------------------------------------------
DELAFIELD FUND, INC. 600 FIFTH AVENUE,
NEW YORK, NY 10020
(212) 830-5220
================================================================================
PROSPECTUS
CLASS A SHARES
[August 15, 1998]
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 Class A shares of the Fund are available to corporate, institutional and
individual investors ("Institutional Investors") and either are sold directly to
Institutional Investors or are sold through financial intermediaries that do not
receive compensation from the Manager or Distributor.
The Delafield Asset Management Division of Reich & Tang Asset Management L.P.
acts as Manager of the Fund and Reich & Tang Distributors, Inc. acts as
Distributor of the Fund's shares. Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Distributors, Inc. 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 Class A shares of the Fund. A Statement of
Additional Information dated [August 15, 1998], has been filed with the
Securities and Exchange Commission ("the SEC") 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. The SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other reports and
information regarding the Fund which have been filed electronically with the
SEC.
Class A shares in the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not 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.
- - -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT BEING OFFERED VIA THE
INTERNET TO RESIDENTS OF PARTICULAR STATES .
- - -------------------------------------------------------------------------------
Information contained herein issubject to completion or amendment. A
registration statement relating to these securities has been filed with the
securities and exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration becomes effective.
This prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any state.
1
<PAGE>
TABLE OF FEES AND EXPENSES
Annual Fund Operating Expenses
(as a percentage of average net assets) Class A Shares
Management Fees [.80%]
12b-1 Fees None
Other Expenses [.44%]
Administration Fees [.21%]
Total Fund Operating Expenses [1.24%]
Example 1 year 3 years 5 years 10 years
- - ------- ------ ------- ------- --------
You would pay the following on a $1000
investment, assuming 5% annual return
(cumulative through the end of each year): [$13] [$39] [$68] [$150]
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. Also,
financial intermediaries may impose fees in connection with the purchase and
redemption procedures offered to investors by such organizations. The expenses
shown are at the levels anticipated for the current year. For a further
discussion of these fees, see "The Manager" and "Distribution and Service Plan"
herein.
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.
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FINANCIAL HIGHLIGHTS
The following financial highlights of Class A shares of Delafield Fund, Inc.
have been audited by McGladrey & Pullen LLP, Independent Certified Public
Accountants, whose report thereon is incorporated by reference in the Statement
of Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Year Period from Year November 19, 1993
Ended Ended October 1, 1995 to Ended (Inception) to
December 31, 1997 December 31, 1996 December 31, 1995 September 30, 1995 September 30, 1994
----------------- ----------------- ----------------- ------------------ ------------------
Per Share Operating Performance:
(for a share outstanding throughout
the period)
Net asset value, beginning of period $ 13.49 $ 12.26 $ 11.95 $ 10.82 $ 10.00
---------- --------- ---------- ----------- ------
Income from investment operations:
Net investment income .21 .16 .05 .13 .07
Net realized and unrealized
gains (losses) on investments 2.42 3.07 .50 1.99 .82
--------- ----------- -------- --------- ------
Total from investment operations 2.63 3.23 .55 2.12 .89
--------- ----------- --------- --------- ---------
Less distributions:
Dividends from net investment income ( .21) ( .16) ( .05) ( .13) ( .07)
Distributions from net realized gains
on investments............... ( 1.03) ( 1.84) ( .18) ( .86) --
In excess of net realized gain... -- -- ( .01) -- --
-------- --------- --------- --------- ------
Total distributions.............. ( 1.24) ( 2.00) ( .24) ( .99) ( .07)
--------- ---------- --------- ---------- ---------
Net asset value, end of period... $ 14.88 $ 13.49 $ 12.26 $ 11.95 $ 10.82
========= ========== ========= ========== =========
Total Return..................... 19.66% 26.35% 4.62%(a) 20.05% 8.93%(a)
========= ========== ========= ========== =========
Ratios/Supplemental Data
Net assets, end of period(000)... $146,624 $ 61,279 $ 45,730 $ 42,316 $ 9,658
Ratios to average net assets:
Expenses, net of waived fees..... 1.29% 1.29% 1.67%* 1.65% 1.78%*
Net investment income............ 1.64% 1.18% 1.57%* 1.35% 0.96%*
Management, administration and shareholder
servicing fees waived....... .20% .20% .20%* .71% 1.12%
Expenses paid indirectly......... -- .01% .07%* -- --
Portfolio turnover rate.......... 55.43% 75.54% 20.49% 70.36% 42.84%
Average commission rate paid (per share) (b) $ .0305 $ .0378 $ .0343 -- --
*........Annualized
(a)......Not annualized
(b)......Required by regulations issued in 1995.
</TABLE>
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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, Inc. (the
"Distributor"), with whom the Fund has entered into a Distribution 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" herein.) The Fund issues other classes of shares that may have different
expenses which may affect performance. Investors may call the telephone number
listed on the cover page of this prospectus to obtain more information
concerning the other classes available to them.
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 Class A 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 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.
4
<PAGE>
There obviously can be no assurance that the Fund's investment objectives will
be achieved. The nature of the Fund's investment objectives and 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
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<PAGE>
advance, (ii) changes in the relative opportunities offered by various
securities, and (iii) actual or potential deterioration of the issuers' earning
power 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.
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 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 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" in the Statement of Additional
Information 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
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<PAGE>
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 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
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<PAGE>
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 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;
8
<PAGE>
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 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., 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, 1998, the Manager was
investment manager, adviser or supervisor with respect to assets aggregating in
excess of $11.51 billion. The Manager acts as manager or administrator of 17
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
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
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Companies") due to a change in name of NEICOP, replaces NEICOP as the limited
partner and owner of a 99.5% interest in the Manager. The recent name change
of NEICLP did not result in a change in control of the manager and has no
impact upon the Manager's performance of its responsibilities and obligations.
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"). Also, 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.
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 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. 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.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 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 its the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. 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 Partnership, 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.
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
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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.
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.
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. Generally, all shares will be voted in the aggregate, except if
voting by class is required by law or the matter involved affects only one
class, in which case shares will be voted separately by class. 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
11
<PAGE>
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 SEC 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 the Distributor have entered
into a Distribution Agreement.
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.
The Plan provides that 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.
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. 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 for any
fiscal year under the Investment Management Contract 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, Inc. ("Transfer
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<PAGE>
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.
New Shareholders
Mail
To purchase Class A 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 #8907529554
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.
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
13
<PAGE>
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, a copy of a voided check 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.
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 SEC has by order permitted such
suspension or (iii) an emergency, as defined by rules of the SEC, 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.
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<PAGE>
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.
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. In general, an individual can make an annual
contribution to an IRA in an amount equal to the lesser of $2000 or 100% of the
individual's earned income. In addition, in the case of a married couple filing
a joint return, annual IRA contributions of up to $2000 can generally be made
for each spouse, as long as the combined compensation of both spouses is at
least equal to the contributed amounts. IRA contribution can, in general, be
made to either regular deductible IRAs, regular non-deductible IRAs or
non-deductible Roth IRAs, a new type of IRA established by the Taxpayer Relief
Act of 1997. Contributions to a Roth IRA are not deductible, but qualified
distributions from a Roth IRA are not includable in income or subject to the
additional ten-percent tax on early withdrawals. A "qualified distribution" is a
distribution that is made after the end of the five taxable year period
beginning with the first taxable year in which the individual made a
contribution to a Roth IRA, and which is made on or after the date in which the
individual attains a 59 1/2, on or after the death of the individual or is
attributable to the disability of the individual, or is a distribution for
specified first-time home buyer expenses.
Contributions to regular deductible IRAs and Roth IRAs may be limited based on
adjusted gross income levels. The ability of a person who is an active
participant in an employer sponsored retirement plan to make deductible
contributions to a regular IRA is phased out based on the individual's adjusted
gross incomes. For 1998, the phase out occurs over a range of adjusted gross
incomes from $50,000 to $60,000 on a joint return and $30,000 to $40,000 on a
single return. The phase out range for a married individual who is not an active
participant but whose spouse is an active participant is between $150,000 and
$160,000.
The maximum annual contribution that can be made to a Roth IRA is also subject
to phase out rules that apply to married individuals filing joint returns when
adjusted gross income is between $150,000 and $160,000 and to single individuals
when adjusted gross income is between $95,000 and $110,000.
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<PAGE>
For both regular deductible IRAs and Roth IRAs, the phase out range for married
individuals filing separate returns is from $0 to $10,000
The minimum investment required to open an IRA is $250. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances including first-time home buyer expenses, and in the case of
regular IRAs, certain education expenses.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "Section 401(k) plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
Persons desiring information concerning investments by IRAs and other retirement
plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
Shareholders of the Fund are entitled to exchange some or all of a class of
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
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. Each class of shares is exchanged
at its respective net asset value. 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 Fund shares of the same class 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.
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<PAGE>
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 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 each class of the Fund as
of 4:00 p.m., New York City time, by dividing the value of the Fund's net assets
of a 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 number of shares outstanding for such class 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
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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 on behalf of
each class and computed separately for each class of shares. The performance for
each class of shares may vary due to variations in expenses of each class of
shares. 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 SEC, 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 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 SEC 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.
Year 2000 Issue
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 significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have 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.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services, Inc., 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 are not responsible for investment
decisions involving assets of the Fund.
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<PAGE>
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.
The Fund maintains a web site (http://www.delafieldfund.com) which contains this
Prospectus and other information about the Fund and its shares. 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 SEC, including the
exhibits thereto. The Registration Statement and the exhibits thereto may be
examined at the SEC and copies thereof may be obtained upon payment of certain
duplicating fees.
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<PAGE>
TABLE OF CONTENTS
Table of Fees and Expenses............................
Financial Highlights..................................
Introduction..........................................
Investment Objectives, Policies and Risks.............
Foreign Securities.................................
Convertible Securities.............................
Risks of Investing in Lower Rated Securities.......
Warrants...........................................
Short Sales........................................ DELAFIELD
Restricted Securities..............................
Corporate Reorganizations.......................... FUND, INC.
Investment in Small, Unseasoned Companies..........
Investment Restrictions...............................
The Manager........................................... CLASS A SHARES
Description of Common Stock...........................
Distribution and Service Plan......................... PROSPECTUS
Purchase of Shares.................................... [August 15, 1998]
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...............................
Year 2000 Issue....................................
Custodian and Transfer Agent.......................
Information for Shareholders ......................
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.
20
<PAGE>
Subject to Completion dated June 17, 1998
- - --------------------------------------------------------------------------------
DELAFIELD FUND, INC. 600 FIFTH AVENUE,
NEW YORK, NY 10020
(212) 830-5220
================================================================================
PROSPECTUS
CLASS B SHARES
[August 15, 1998]
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 Class B shares of the Fund are subject to a service fee pursuant to the
Fund's Rule 12b-1 Distribution and Service Plan ("12b-1 Plan") and are sold
through financial intermediaries who provide servicing to Class B shareholders
for which they receive compensation from the Manager or the Distributor.
The Delafield Asset Management Division of Reich & Tang Asset Management L.P.
acts as Manager of the Fund and Reich & Tang Distributors, Inc. acts as
Distributor of the Fund's shares. Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Distributors, Inc. 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 Class B shares of the Fund. A Statement of
Additional Information dated [August 15, 1998], has been filed with the
Securities and Exchange Commission ("the SEC") 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. The SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other reports and
information regarding the Fund which have been filed electronically with the
SEC.
Class B shares in the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not 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.
- - -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT BEING OFFERED VIA THE
INTERNET TO RESIDENTS OF PARTICULAR STATES.
- - -------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
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TABLE OF FEES AND EXPENSES
Annual Fund Operating Expenses
(as a percentage of average net assets)
Class B Shares
Management Fees [.80%]
12b-1 Fees [.25%]
Other Expenses [.44%]
Administration Fees [.21%]
Total Fund Operating Expenses - [1.29%]
Example 1 year 3 years 5 years 10 years
- - ------- ------ ------- ------- --------
You would pay the following on a $1000
investment, assuming 5% annual return
(cumulative through the end of each year): [$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. Also,
financial intermediaries may impart fees in connection with the purchase and
redemption procedures offered to investors by such organizations. The expenses
shown are at the levels anticipated for the current year. For a further
discussion of these fees, see "The Manager" and "Distribution and Service Plan"
herein. The Distributor has voluntarily waived a portion of its 12b-1 Fees. The
maximum 12b-1 Fees would have been .25% of average daily net assets, absent fee
waivers.
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.
2
<PAGE>
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, Inc. (the
"Distributor"), 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" herein.) The Fund issues other classes of
shares that may have different expenses which may affect performance. Investors
may call the telephone number listed on the cover page of this Prospectus to
obtain more information concerning the other classes available to them.
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 Class B 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 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
3
<PAGE>
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 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)
4
<PAGE>
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 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.
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 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 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" in the Statement of Additional
Information for a definition of the various ratings assigned by S&P and Moody's.
5
<PAGE>
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 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
6
<PAGE>
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 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,
7
<PAGE>
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 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., 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, 1998, the Manager was
investment manager, adviser or supervisor with respect to assets aggregating in
excess of $11.51 billion. The Manager acts as manager or administrator of 17
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
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
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Companies, Inc. ("NEIC"). Subsequently, effective March 31, 1998, Nvest
Companies, L.P. ("Nvest Companies") due to a change in name of NEICOP, replaces
NEICOP as the limited partner and owner of a 99.5% interest in the Manager. The
recent name change of NEICLP did not result in a change in control of the
manager and has no impact upon the Manager's performance of its responsibilities
and obligations.
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"). Also, 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.
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 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. 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.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 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 its the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. 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 Partnership, 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.
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,
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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.
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 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.
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. Generally, all shares will be voted in the aggregate, except if
voting by class is required by law or the matter involved affects only one
class, in which case shares will be voted separately by class. 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.
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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 SEC 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 the Distributor have entered
into a Distribution Agreement and a Shareholder Servicing Agreement.
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.
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
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<PAGE>
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, Inc. ("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.
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,
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<PAGE>
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, a copy of a voided check 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.
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
13
<PAGE>
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 SEC has by order permitted such
suspension or (iii) an emergency, as defined by rules of the SEC, 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.
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. In general, an individual can make an annual
contribution to an IRA in an amount equal to the lesser of $2000 or 100% of the
individual's earned income. In addition, in the case of a married couple filing
a joint return, annual IRA contributions of up to $2000 can generally be made
for each spouse, as long as the combined compensation of both spouses is at
least equal to the contributed amounts. IRA contribution can, in general, be
made to either regular deductible IRAs, regular non-deductible IRAs or
non-deductible Roth IRAs, a new type of IRA established by the Taxpayer Relief
Act of 1997. Contributions to a Roth IRA are not
14
<PAGE>
deductible, but qualified distributions from a Roth IRA are not includable in
income or subject to the additional ten-percent tax on early withdrawals. A
"qualified distribution" is a distribution that is made after the end of the
five taxable year period beginning with the first taxable year in which the
individual made a contribution to a Roth IRA, and which is made on or after the
date in which the individual attains a 59 1/2, on or after the death of the
individual or is attributable to the disability of the individual, or is a
distribution for specified first-time home buyer expenses.
Contributions to regular deductible IRAs and Roth IRAs may be limited based on
adjusted gross income levels. The ability of a person who is an active
participant in an employer sponsored retirement plan to make deductible
contributions to a regular IRA is phased out based on the individual's adjusted
gross incomes. For 1998, the phase out occurs over a range of adjusted gross
incomes from $50,000 to $60,000 on a joint return and $30,000 to $40,000 on a
single return. The phase out range for a married individual who is not an active
participant but whose spouse is an active participant is between $150,000 and
$160,000.
The maximum annual contribution that can be made to a Roth IRA is also subject
to phase out rules that apply to married individuals filing joint returns when
adjusted gross income is between $150,000 and $160,000 and to single individuals
when adjusted gross income is between $95,000 and $110,000.
For both regular deductible IRAs and Roth IRAs, the phase out range for married
individuals filing separate returns is from $0 to $10,000
The minimum investment required to open an IRA is $250. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances including first-time home buyer expenses, and in the case of
regular IRAs, certain education expenses.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "Section 401(k) plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
Persons desiring information concerning investments by IRAs and other retirement
plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
Shareholders of the Fund are entitled to exchange some or all of a Class of
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
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. Each Class of shares is exchanged
at its respective net asset value. 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
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<PAGE>
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 Fund shares of the same class 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 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
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<PAGE>
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 each class of the Fund as
of 4:00 p.m., New York City time, by dividing the value of the Fund's net assets
of a 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 number of shares outstanding for such class 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, on behalf of
each class and computed separately for each class of shares. The performance for
each class of shares may vary due to variations in expenses of each class of
shares. 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 SEC, 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 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 SEC 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
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<PAGE>
such meeting, or until such Director sooner dies, resigns, retires or is removed
by the vote of the shareholders.
Year 2000 Issue
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 significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have material impact of 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.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services, Inc., 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 are 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.
The Fund maintains a web site (http://www.delafieldfund.com) which contains this
Prospectus and other information about the Fund and its shares. 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 SEC, including the
exhibits thereto. The Registration Statement and the exhibits thereto may be
examined at the SEC and copies thereof may be obtained upon payment of certain
duplicating fees.
18
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TABLE OF CONTENTS
Table of Fees and Expenses............................2
Introduction..........................................3
Investment Objectives, Policies and Risks.............3
Foreign Securities.................................5
Convertible Securities.............................5
Risks of Investing in Lower Rated Securities.......5 DELAFIELD
Warrants...........................................6
Short Sales........................................6 FUND, INC.
Restricted Securities..............................7
Corporate Reorganizations..........................7 CLASS B SHARES
Investment in Small, Unseasoned Companies..........7
Investment Restrictions...............................7 PROSPECTUS
The Manager...........................................8
Description of Common Stock...........................10 [August 15, 1998]
Distribution and Service Plan.........................11
Purchase of Shares....................................12
New Shareholders...................................12
Present Shareholders...............................13
Electronic Funds Transfers (EFT), Pre-authorized
Credit and Direct Deposit Privilege.............13
Redemption of Shares..................................13
Systematic Withdrawal Plan.........................14
Telephone Redemption Privilege.....................14
Retirement Plans......................................14
Exchange Privilege....................................15
Dividends, Distributions and Taxes....................16
Net Asset Value.......................................17
General Information ..................................17
Performance........................................17
Shareholder Meetings...............................17
Year 2000 Issue....................................18
Custodian and Transfer Agent.......................18
Information for Shareholders ......................18
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.
19
<PAGE>
Subject to completion dated June 17, 1998.
- - --------------------------------------------------------------------------------
DELAFIELD FUND, INC. 600 FIFTH AVENUE,
NEW YORK, NY 10020
(212) 830-5220
================================================================================
PROSPECTUS
CLASS C SHARES
[August 15, 1998]
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 Class C shares of the Fund are available to qualified retirement plan
clients of financial intermediaries ("Retirement Plan Investors") and are
subject to a service fee pursuant to the Fund's 12b-1 Plan and either are sold
directly to Retirement Plan Investors or are sold through financial
intermediaries who provide servicing to Class C shareholders for which they
receive compensation from the Manager or Distributor.
The Delafield Asset Management Division of Reich & Tang Asset Management L.P.
acts as Manager of the Fund and Reich & Tang Distributors, Inc. acts as
Distributor of the Fund's shares. Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Distributors, Inc. 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 Class C shares of the Fund. A Statement of
Additional Information dated [August 15, 1998,] has been filed with the
Securities and Exchange Commission ("the SEC") 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. The SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other reports and
information regarding the Fund which have been filed electronically with the
SEC.
Class C shares in the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not 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.
- - -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT BEING OFFERED VIA THE
INTERNET TO RESIDENTS OF PARTICULAR STATES.
- - -------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1
<PAGE>
TABLE OF FEES AND EXPENSES
Annual Fund Operating Expenses
(as a percentage of average net assets)
Class C Shares
Management Fees [.80%]
12b-1 Fees [.25%]
Other Expenses [.44%]
Administration Fees [.21%]
Total Fund Operating Expenses [1.29%]
Example 1 year 3 years 5 years 10 years
- - ------- ------ ------- ------- --------
You would pay the following on a $1000
investment, assuming 5% annual return
(cumulative through the end of each year): [$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. Also,
financial intermediaries may impart fees in connection with the purchase and
redemption procedures offered to investors by such organizations. The expenses
shown are at the levels anticipated for the current year. For a further
discussion of these fees, see "The Manager" and "Distribution and Service Plan"
herein. The Distributor has voluntarily waived a portion of its 12b-1 Fees. The
maximum 12b-1 Fees would have been .25% of average daily net assets, absent fee
waivers.
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.
2
<PAGE>
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, Inc. (the
"Distributor"), 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" herein.) The Fund issues other classes of
shares that may have different expenses which may affect performance. Investors
may call the telephone number listed on the cover page of this Prospectus to
obtain more information concerning the other classes available to them.
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 Class C 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 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
3
<PAGE>
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 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)
4
<PAGE>
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 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.
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 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 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" in the Statement of Additional
Information for a definition of the various ratings assigned by S&P and Moody's.
5
<PAGE>
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 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
6
<PAGE>
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 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,
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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 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., 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, 1998, the Manager was
investment manager, adviser or supervisor with respect to assets aggregating in
excess of $11.51 billion. The Manager acts as manager or administrator of 17
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
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
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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, replaces NEICOP as the limited
partner and owner of a 99.5% interest in the Manager. The recent name change of
NEICLP did not result in a change in control of the manager and has no impact
upon the Manager's performance of its responsibilities and obligations.
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"). Also, 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.
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 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. 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.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 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 its the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. 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 Partnership, 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.
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,
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<PAGE>
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.
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 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.
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. Generally, all shares will be voted in the aggregate, except if
voting by class is required by law or the matter involved affects only one
class, in which case shares will be voted separately by class. 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.
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<PAGE>
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 SEC 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 the Distributor have entered
into a Distribution Agreement and a Shareholder Servicing Agreement.
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.
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 financial intermediaries whose qualified retirement plan clients may
purchase Class C shares of the Fund have contracted with the Distributor to
perform certain sub-transfer agent accounting services for the Retirement Plan
Investors. In consideration of the provisions of these sub-transfer agency
accounting services, the financial intermediaries will receive sub-transfer
agency fees from the Distributor or its affiliate, the Fund's transfer agent. As
a result of the payment of the sub-transfer agency accounting fees to these
financial intermediaries relating to qualified
11
<PAGE>
retirement plan services, Class C shares will have higher transfer agency
charges than the other classes of the Fund.
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, Inc. ("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.
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#
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<PAGE>
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, a copy of a voided check 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.
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,
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<PAGE>
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 SEC has by order permitted such
suspension or (iii) an emergency, as defined by rules of the SEC, 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.
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
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<PAGE>
The Fund has available a form of individual retirement account ("IRA") for
investment in the Fund's shares. In general, an individual can make an annual
contribution to an IRA in an amount equal to the lesser of $2000 or 100% of the
individual's earned income. In addition, in the case of a married couple filing
a joint return, annual IRA contributions of up to $2000 can generally be made
for each spouse, as long as the combined compensation of both spouses is at
least equal to the contributed amounts. IRA contribution can, in general, be
made to either regular deductible IRAs, regular non-deductible IRAs or
non-deductible Roth IRAs, a new type of IRA established by the Taxpayer Relief
Act of 1997. Contributions to a Roth IRA are not deductible, but qualified
distributions from a Roth IRA are not includable in income or subject to the
additional ten-percent tax on early withdrawals. A "qualified distribution" is a
distribution that is made after the end of the five taxable year period
beginning with the first taxable year in which the individual made a
contribution to a Roth IRA, and which is made on or after the date in which the
individual attains a 59 1/2, on or after the death of the individual or is
attributable to the disability of the individual, or is a distribution for
specified first-time home buyer expenses.
Contributions to regular deductible IRAs and Roth IRAs may be limited based on
adjusted gross income levels. The ability of a person who is an active
participant in an employer sponsored retirement plan to make deductible
contributions to a regular IRA is phased out based on the individual's adjusted
gross incomes. For 1998, the phase out occurs over a range of adjusted gross
incomes from $50,000 to $60,000 on a joint return and $30,000 to $40,000 on a
single return. The phase out range for a married individual who is not an active
participant but whose spouse is an active participant is between $150,000 and
$160,000.
The maximum annual contribution that can be made to a Roth IRA is also subject
to phase out rules that apply to married individuals filing joint returns when
adjusted gross income is between $150,000 and $160,000 and to single individuals
when adjusted gross income is between $95,000 and $110,000.
For both regular deductible IRAs and Roth IRAs, the phase out range for married
individuals filing separate returns is from $0 to $10,000
The minimum investment required to open an IRA is $250. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances including first-time home buyer expenses, and in the case of
regular IRAs, certain education expenses.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "Section 401(k) plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
Persons desiring information concerning investments by IRAs and other retirement
plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
Shareholders of the Fund are entitled to exchange some or all of a Class of
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
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
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<PAGE>
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. Each Class of shares is exchanged
at its respective net asset value. 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 Fund shares of the same class 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 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
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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 each class of the Fund as
of 4:00 p.m., New York City time, by dividing the value of the Fund's net assets
of a 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 number of shares outstanding for such class 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, on behalf of
each class and computed separately for each class of shares. The performance for
each class of shares may vary due to variations in expenses of each class of
shares. 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 SEC, 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 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
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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 SEC 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.
Year 2000 Issue
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 significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have material impact of 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.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services, Inc., 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 are 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.
The Fund maintains a web site (http://www.delafieldfund.com) which contains this
Prospectus and other information about the Fund and its shares. 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 SEC, including the
exhibits thereto. The Registration Statement and the exhibits thereto may be
examined at the SEC and copies thereof may be obtained upon payment of certain
duplicating fees.
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TABLE OF CONTENTS
Table of Fees and Expenses............................2
Introduction..........................................3
Investment Objectives, Policies and Risks.............3
Foreign Securities.................................5
Convertible Securities.............................5
Risks of Investing in Lower Rated Securities.......5
Warrants...........................................6 DELAFIELD
Short Sales........................................6
Restricted Securities..............................7 FUND, INC.
Corporate Reorganizations..........................7
Investment in Small, Unseasoned Companies..........7
Investment Restrictions...............................7 CLASS C SHARES
The Manager...........................................8
Description of Common Stock...........................10 PROSPECTUS
Distribution and Service Plan.........................11 [August 15, 1998]
Purchase of Shares....................................12
New Shareholders...................................12
Present Shareholders...............................13
Electronic Funds Transfers (EFT), Pre-authorized
Credit and Direct Deposit Privilege.............13
Redemption of Shares..................................13
Systematic Withdrawal Plan.........................14
Telephone Redemption Privilege.....................14
Retirement Plans......................................14
Exchange Privilege....................................15
Dividends, Distributions and Taxes....................16
Net Asset Value.......................................17
General Information ..................................17
Performance........................................17
Shareholder Meetings...............................17
Year 2000 Issue....................................18
Custodian and Transfer Agent.......................18
Information for Shareholders ......................18
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.
19
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- - --------------------------------------------------------------------------------
DELAFIELD 600 Fifth Avenue, New York, NY 10020
FUND, INC. (212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
[August 15, 1998]
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.
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Fund's
prospectus dated [August 15, 1998] (the "Prospectus"). This Statement of
Additional Information contains additional and more detailed information than
that set forth in the Prospectus and should be read in conjunction with the
Prospectus, additional copies of which may be obtained without charge by either
writing or telephoning the Fund at the address or telephone number set forth
above.
Table of Contents
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Objectives,
Policies and Risks........................................2 Manager.................................................5
Common Stock............................................2 Expense Limitation...................................6
Warrants................................................2 Management of the Fund..................................7
Foreign Securities......................................2 Compensation Table......................................8
Convertible Securities................................. 2 Counsel and Auditors....................................8
Corporate Reorganizations...............................2 Distribution and Service Plan...........................9
Repurchase Agreements...................................3 The Glass-Steagall Act.................................10
Risks of Investing in Lower.............................3 Description of Common Stock............................10
Rated Securities.....................................4 Custodian Transfer Agent...............................11
Other Matters...........................................4 Financial Statements...................................11
Investment Restrictions.......................................4 Performance............................................11
Portfolio Transactions........................................4 Net Asset Value........................................12
Purchase of Shares and Redemption of Shares...................5 Description of Ratings.................................13
</TABLE>
- - --------------------------------------------------------------------------------
1
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
As stated in the Prospectus, 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 (i.e., companies undergoing change that might
cause their market value to grow at a rate faster than the market generally).
Common Stock
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 that an investment in equity securities may entail. In particular, common
stocks represent the 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 of the issuer's 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.
Warrants
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. Warrants may be
considered more speculative than certain other types of investment in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to the expiration date.
Foreign Securities
Investments may be made in both domestic and foreign companies. While the Fund
has no present intention to invest any significant portion of its assets in
foreign securities, it reserves the right to invest not more than 15% of the
value of its total assets (at the time of purchase and after giving effect
thereto) in the securities of foreign issuers and obligors.
Investments in foreign companies involve certain considerations which are not
typically associated with investing in domestic companies. An investment may be
affected by changes in currency rates and in exchange control regulations. There
may be less publicly available information about a foreign company than about a
domestic company. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic companies. Foreign stock markets have substantially less
volume than the New York Stock Exchange and securities of some foreign companies
may be less liquid and more volatile than securities of comparable domestic
companies. There is generally less government regulation of stock exchanges,
brokers and listed companies in foreign countries than in the United States. In
addition, with respect to certain foreign countries, there is a possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments which could affect investments in those countries.
Individual foreign economies may differ favorably or unfavorably from the United
States' economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
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.
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 reorganization proposal has been announced if, in
the judgment of the Manager, there is reasonable prospect of capital
appreciation significantly greater than the brokerage and other transaction
expenses involved. The primary risk of such investments is that if the
contemplated transaction is
2
<PAGE>
abandoned, revised, delayed or becomes subject to unanticipated uncertainties,
the market price of the securities may decline below the purchase price paid by
the Fund.
In general, securities which are the subject of such an offer or proposal sell
at a premium to their historic market price immediately prior to the
announcement of the offer or proposal. However, the increased market price of
such securities may also discount what the stated or appraised value of the
security would be if the contemplated transaction were approved or consummated.
Such investments may be advantageous when the discount significantly overstates
the risk of the contingencies involved; significantly undervalues the
securities, assets or cash to be received by shareholders of the prospective
portfolio company as a result of the contemplated transaction; or fails
adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Manager which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offerer as well as the dynamics of the business
climate when the offer or proposal is in process.
In making such investments, the Fund will not violate any of its diversification
requirements or investment restrictions (see below, "Investment Restrictions")
including the requirement that, except for the investment of up to 25% of its
total assets in any one company or industry, not more than 5% of its total
assets may be invested in the securities of any one issuer. Since such
investments are ordinarily short-term in nature, they will tend to increase the
turnover ratio of the Fund thereby increasing its brokerage and other
transaction expenses as well as make it more difficult for the Fund to meet the
tests for favorable tax treatment as a "Regulated Investment Company" specified
by the Internal Revenue Code (see the Prospectus, "Dividends, Distributions and
Taxes"). The Manager intends to select investments of the type described which,
in its view, have a reasonable prospect of capital appreciation which is
significant in relation to both the risk involved and the potential of available
alternate investments as well as monitor the effect of such investments on the
tax qualification tests of the Internal Revenue Code.
Repurchase Agreements
When the Fund enters into a repurchase agreement, the Fund requires the
continual maintenance of collateral (to be held by the Fund's custodian in a
segregated account) in an amount equal to, or in excess of, the vendor's
repurchase agreement commitment. The underlying securities are ordinarily U.S.
Treasury or other government obligations or high quality money market
instruments. In the event that a vendor defaults on its repurchase obligation,
the Fund might suffer a loss to the extent that the proceeds from the sale of
the collateral are 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. 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.
Risks of Investing in Lower Rated Securities
The Fund may invest less than 35% of its total assets in lower rated securities
(Baa by Moody's Investor Services, Inc. ("Moody's") or BBB by Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies ("S&P") and comparable
unrated securities, collectively commonly known as "junk bonds") to the extent
described in the Prospectus. No minimum rating standard is required by the Fund.
These lower rated securities are considered speculative and, while generally
providing greater income than investments in higher rated securities, will
involve greater risk of principal and income (including the possibility of
default or bankruptcy of the issuers of such securities) and may involve greater
volatility of price (especially during periods of economic uncertainty or
change) than securities in the higher rating categories and because yields vary
over time, no specific level of income can ever be assured. These lower rated
securities generally tend to reflect economic changes (and the outlook for
economic growth) short-term corporate and industry developments and the market's
perception of their credit quality (especially during times of adverse
publicity) to a greater extent than higher rated securities which react
primarily to fluctuations in the general level of interest rates (although these
lower rated securities are also affected by changes in interest rates). In the
past, economic downturns or an increase in interest rates have, under certain
circumstances, caused a higher incidence of default by the issuers of these
securities and may do so in the future, especially in the case of highly
leveraged issuers. The prices for these securities may be affected by
legislative and regulatory developments. For example, federal rules require that
savings and loan associations gradually reduce their holdings of securities. An
effect of such legislation may be to depress the prices of outstanding lower
rated securities. In addition, investment in these lower rated securities may
involve greater liquidity and valuation risks than those for investment grade
securities. To the extent there is no established secondary market for these
securities, there could be thin trading of such securities which could adversely
impact the Board of Directors' ability to accurately value such securities and
the Fund's assets. Furthermore, the liquidity of these lower rated securities
may be affected by the market's perception of their credit quality. Therefore,
the Manager's judgment may at times play a greater role in valuing these
securities than in the case of investment grade securities, and it also may be
more difficult during times of certain adverse market conditions to dispose of
these lower rated securities to meet redemption requests or to respond to
changes in the market.
3
<PAGE>
While the Manager may refer to ratings issued by established credit rating
agencies, it is not the Fund's policy to rely exclusively on ratings issued by
these rating agencies, but rather to supplement such ratings with the Manager's
own independent and ongoing review of credit quality. To the extent the Fund
invests in these lower rated securities, the achievement of its investment
objectives may be more dependent on the Manager's own credit analysis than in
the case of a fund investing in investment grade securities.
Other Matters
In addition, for purposes of complying with the securities regulations of
certain states, the Fund has adopted the following additional investment
restrictions, which may be changed by the Fund's Board of Directors without
shareholder approval. The Fund may not purchase or retain the securities of any
issuer if the officers or directors of the Fund or Reich & Tang Asset
Management, Inc., the general partner of the Manager, own beneficially more than
1/2 of 1% of the securities of an issuer together own beneficially more than 5%
of that issuer.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which are in addition
to those described in the Prospectus. Under the following restrictions, which
may not be changed without the approval of a majority of the Fund's
shareholders, the Fund may not:
1) Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
2) Invest in puts, calls, straddles, spreads or combination thereof;
3) Purchase or acquire commodities or commodity contracts;
4) Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with any permitted borrowing;
5) Participate on a joint or a joint and several basis in any securities
trading account; and
6) Invest in companies for the purpose of exercising control.
PORTFOLIO TRANSACTIONS
The Manager makes the Fund's portfolio decisions and determines the broker to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). When consistent with the
objective of obtaining best execution, brokerage may be directed to persons or
firms supplying investment information to the Manager or portfolio transactions
may be effected by the Manager. Neither the Fund nor the Manager has entered
into agreements or understandings with any brokers regarding the placement of
securities transactions because of research services they provide. To the extent
that such persons or firms supply investment information to the Manager for use
in rendering investment advice to the Fund, such information may be supplied at
no cost to the Manager and, therefore, may have the effect of reducing the
expenses of the Manager in rendering advise to the Fund. While it is impossible
to place an actual dollar value on such investment information, its receipt by
the Manager probably does not reduce the overall expenses of the Manager to any
material extent. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best execution,
the Manager may consider sales of shares of the Fund as a factor in the
selection of brokers to execute portfolio transactions for the Fund.
The investment information provided to the Manager is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the Manager's own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Fund effects securities
transactions are used by the Manager in carrying out its investment management
responsibilities with respect to all its clients' accounts. There may be
occasions where the transaction cost charged by a broker may be greater than
that which another broker may charge if the Manager determines in good faith
that the amount of such transaction cost is reasonable in relation to the value
of brokerage and research services provided by the executing broker.
The Fund may deal in some instances in securities which are not listed on a
national securities exchange but are traded in the over-the-counter market. It
may also purchase listed securities through the third market. Where transactions
are executed in the over-the-counter market or the third market, the Fund will
seek to deal with the primary market makers; but when necessary in order to
obtain best execution, it will utilize the services of others. In all cases the
Fund will attempt to negotiate best execution.
The Distributor may from time to time effect transactions in the Fund's
portfolio securities. In such instances, the placement of orders with the
Distributor would be consistent with the Fund's objective of obtaining best
execution. With respect to orders placed with the Distributor for execution on a
national securities exchange, commissions received must conform to Section
17(e)(2)(A) of the Investment Company Act of 1940 (the "1940 Act"), as amended,
and Rule 17e-1
4
<PAGE>
thereunder, which permit an affiliated person of a registered investment company
(such as the Fund) to receive brokerage commissions from such registered
investment company provided that such commissions are reasonable and fair
compared to commissions received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time. In
addition, pursuant to Section 11(a) of the Securities Exchange Act of 1934, the
Distributor is restricted as to the nature and extent of the brokerage services
it may perform for the Fund. The Securities and Exchange Commission has adopted
rules under Section 11(a) which permit a distributor to a registered investment
company to receive compensation for effecting, on a national securities
exchange, transactions in portfolio securities of such investment company,
including causing such transactions to be transmitted, executed, cleared and
settled and arranging for unaffiliated brokers to execute such transactions. To
the extent permitted by such rules, the Distributor may receive compensation
relating to transactions in portfolio securities of the Fund provided that the
Fund enters into a written agreement, as required by such rules, with the
Distributor authorizing it to retain compensation for such services.
Transactions in portfolio securities placed with the Distributor which are
executed on a national securities exchange must be effected in accordance with
procedures adopted by the Board of Directors of the Fund pursuant to Rule 17e-1.
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.
The portfolio turnover rate for the fiscal year ended December 31, 1996 and
December 31, 1997 was 75.54% and 55.43%, respectively.
PURCHASE OF SHARES AND REDEMPTION OF SHARES
The material relating to the purchase and redemption of shares in the Prospectus
is herein incorporated by reference.
MANAGER
The investment manager for the Fund is the Delafield Asset Management Division
of Reich & Tang Asset Management L.P., a Delaware limited partnership with
principal offices at 600 Fifth Avenue, New York, New York 10020 (the "Manager").
As of March 31, 1998, the Manager was manager, adviser or supervisor with
respect to assets aggregating approximately $11.51 billion. The Manager acts as
manager or administrator of fifteen other investment companies and also advises
pension trust, profit sharing trusts and endowments.
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, replaces
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. The recent name change of NEICLP
did not result in a change in control of the manager and has no impact upon the
Manager's performance of its responsibilities and obligations.
Reich & Tang Asset Management, Inc. is an indirect subsidiary of Metropolitan
Life Insurance Company ("MetLife"). Also, 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.
The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of Reich &
Tang Asset Managment Inc., or employees of the Manager or its affiliates.
MetLife is a mutual life insurance company with assets of $297.6 billion at
December 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 $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. 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 Partnership, Greystone Partners, L.P., Harris Associates,
L.P.,
5
<PAGE>
Jurika & Voyles, L.P., Loomis, Sayles & Company, L.P., New England Funds, L.P.,
New England Investment 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.
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 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 equal to .80% per annum of the Fund's average daily net assets. The fee
received by the Manager under the Investment Management Contract is higher than
the fee paid by most investment companies. The fees are accrued daily and paid
monthly. Any portion of the total fees received by the Manager may be used by
the Manager to provide shareholder services. (See "Distribution and Service
Plan" herein.) For the Fund's fiscal years ended September 30, 1995 and December
31, 1995, the fees payable to the Manager under the Investment Management
Contract were $104,515 of which $33,474 was voluntarily and irrevocably waived
and $86,832, none of which was waived. The Fund's net assets at the close of
business on September 30, 1995 and December 31, 1995, totaled $42,316,267 and
$45,730,034, respectively. For the Fund's fiscal year ended December 31, 1996,
the fee payable to the Manager under the Investment Management Contract was
$419,025. The Fund's net assets at the close of business on December 31, 1996
totaled $61,279,432. For the Fund's fiscal year ended December 31, 1997, the fee
payable to the Manager under the Investment Management Contract was $839,165.
The Fund's net assets at the close of business on December 31, 1997 totaled
$146,623,972.
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 bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping or recordkeeping agent, (ii) prepare reports to
and filings with regulatory authorities, and (iii) perform such other services
as the Fund may from time to time request of the Manager. The personnel
rendering such services may be employees of the Manager, of its affiliates or of
other organizations. 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 from the Fund a fee equal
to .21% per annum of the Fund's average daily net assets. For the Fund's fiscal
years ended September 30, 1995 and December 31, 1995, the fees payable to the
Manager under the Administrative Services Contract were $26,129, all of which
was voluntarily and irrevocably waived and $22,088, none of which was waived.
For the Fund's fiscal year ended December 31, 1996, the fee payable to the
Manager under the Administrative Services Contract was $109,994. For the Fund's
fiscal year ended December 31, 1997, the fee payable to the Manager under the
Administrative Services Contract was $220,281.
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 and the administrative services 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).
Expense Limitation
The Manager has agreed, pursuant to the Investment Management Contract, 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, including 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
6
<PAGE>
costs of other personnel performing services for the Fund who are not officers
of the general partner of the Manager or its affiliates, costs of investor
services, shareholder reports and corporate meetings, Securities and Exchange
Commission 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 payable to the Manager under the Investment
Management Contract and the Administrative Services 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 defined under "Distribution and Service Plan") as discussed
herein, and 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. As a result of the recent passage of the National Securities Markets
Improvement Act of 1996, all state expense limitations have been eliminated at
this time.
MANAGEMENT OF THE FUND
The directors and officers of the Fund, and their principal occupations for the
past five years, are listed below. The address of each such person, unless
otherwise indicated, is 600 Fifth Avenue, New York, New York 10020. Directors
deemed to be "interested persons" of the Fund for the purposes of the 1940 Act
are indicated by an asterisk.
J. DENNIS DELAFIELD,* 62 - Chairman, Chief Executive Officer and a Director of
the Fund, is Managing Director of the Delafield Asset Management Division of the
Manager, with which he has been associated since September 1993. From December
1991 to September 1993, Mr. Delafield, acting as an investment adviser, was a
Managing Director of Reich & Tang L.P. and an officer of Reich & Tang, Inc.;
from October 1979 to December 1991, was President and Director of Delafield
Asset Management, Inc.
VINCENT SELLECCHIA, 46 - President of the Fund, is Managing Director of the
Delafield Asset Management Division of the Manager, with which he has been
associated since September 1993. From December 1991 to September 1993, Mr.
Sellecchia, acting as an investment adviser, was Vice President of Reich & Tang
L.P. and an officer of Reich & Tang, Inc.; from October 1980 to December 1991,
was Vice President, Director of Investment Analysis for Delafield Asset
Management, Inc.
DR. W. GILES MELLON, 67 - Director of the Fund, is a Professor of Business
Administration in the Graduate School of Management, Rutgers University, with
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 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., North Carolina Daily Municipal Income Fund, Inc.,
Pax World Money Market Fund, Inc., Reich & Tang Equity Fund, Inc., Short Term
Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.; Trustee of
Florida Daily Municipal Income Fund, Institutional Daily Income Fund and
Pennsylvania Daily Municipal Income Fund.
ROBERT STRANIERE, 57 - Director of the Fund, is a Member of the New York State
Assembly and has been partner with the Straniere Law Firm since 1981. His
address is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also
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.,
Life Cycle Mutual Funds, Inc., Michigan Daily Tax Free Income Fund, Inc., New
Jersey Daily Municipal Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pax World Money Market Fund, Inc., Reich & Tang Equity Fund, Inc.,
Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.;
Trustee of Florida Daily Municipal Income Fund, Institutional Daily Income Fund
and Pennsylvania Daily Municipal Income Fund.
YUNG WONG, 59 - Director of the Fund, was a Director of Shaw Investment
Management (U.K.) Limited from October 1994 to October 1995, and formerly was a
General Partner of Abacus 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 is also 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., North Carolina
Daily Municipal Income Fund, Inc., Pax World Money Market Fund, Inc., Reich &
Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc.; Trustee of Eclipse Financial Asset Trust, Florida
Daily Municipal Income Fund, Institutional Daily Income Fund and Pennsylvania
Daily Municipal Income Fund.
BERNADETTE N. FINN, 50 - Vice President and Secretary of the Fund, has been Vice
President of the Mutual Funds division of the Manager since September 1993. Ms.
Finn was formerly Vice President and Assistant Secretary of Reich & Tang, Inc.
with which she was associated with from September 1970 to September 1993. Ms.
Finn is also Secretary of Back Bay Funds, Inc., California Daily Tax Free Income
Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc.,
Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund, Michigan
Daily Tax Free
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<PAGE>
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.,
Pennsylvania Daily Municipal Income Fund, Tax Exempt Proceeds Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc.; Vice President and Secretary of
Institutional Daily Income Fund, Pax World Money Market Fund, Inc., Reich & Tang
Equity Fund, Inc. and Short Term Income Fund, Inc.
CYNTHIA L. JERAN, 42 - Vice President of the Fund, is an associate of the
Delafield Asset Management Division of the Manager, with which she has been
affiliated since September 1993. From December 1991 to September 1993, Ms. Jeran
was an associate of the Delafield Asset Management division of the Manager's
predecessor, and from April 1981 through December 1991 was an associate of
Delafield Asset Management, Inc.
RICHARD DE SANCTIS, 41 - Treasurer of the Fund, has been Vice President and
Treasurer of the Manager since September 1993. Mr. De Sanctis was formerly
Controller of Reich & Tang, Inc. from January 1991 to September 1993, Vice
President and Treasurer of Cortland Financial Group, Inc. and Vice President of
Cortland Distributors, Inc. from 1989 to December 1990. Mr. De Sanctis is also
Treasurer of Back Bay Funds, Inc., California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc.,
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, Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc., Tax
Exempt Proceeds Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.; 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. She is also Assistant 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., 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,
Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc. and is Vice President and Assistant Treasurer of
Cortland Trust, Inc.
Directors of the Fund not affiliated with Reich & Tang Asset Management L.P.
receive from the Fund an annual retainer of $1,500 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 Reich & Tang Asset Management L.P. do not receive compensation from the
Fund. See Compensation Table below.
<TABLE>
<CAPTION>
COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Aggregate Compensation Pension or Retirement Total Compensation from
Name of Person, from Registrant for Benefits Accrued as Estimated Annual Fund and Fund Complex
Position Fiscal Year Part of Fund Expenses Benefits upon Retirement Paid to Directors*
W. Giles Mellon, $2,500 0 0 $52,000 (13 Funds)
Director
Robert Straniere, $2,500 0 0 $52,000 (13 Funds)
Director
Yung Wong, $2,500 0 0 $52,000 (13 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending December 31, 1997 (and, with respect to certain of the
funds in the Fund Complex, estimated to be paid during the fiscal year ending
December 31, 1997). 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.
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.
8
<PAGE>
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected as auditors for the Fund.
DISTRIBUTION AND SERVICE PLAN
The material relating to the Distribution and Service Plan is herein
incorporated by reference.
For the Fund's fiscal year ended September 30, 1995, the Fund accrued
shareholder servicing fees of $32,661, all of which was voluntarily, permanently
and irrevocably waived. During such period, the Manager made payments from its
own resources aggregating $13,646 of which $2,065 was spent on sales personnel
and related expenses of the Manager, $1,374 was spent on travel and
entertainment, $9,831 was spent on prospectus and application printing and $376
was spent on miscellaneous expenses. For the Fund's fiscal year ended December
31, 1995, the Fund paid a distribution fee of $5,553 for expenditures pursuant
to the Plan. During such time, the Fund accrued shareholder servicing fees of
$27,135, of which $21,582 was voluntarily, permanently and irrevocably waived,
and the Manager made payments from its own resources aggregating $1,913 of which
$1,348 was spent on sales personnel and related expenses of the Manager, $311
was spent on travel and entertainment, $7 was spent on prospectus and
application printing and $247 was spent on miscellaneous expenses. For the
Fund's fiscal year ended December 31, 1996, the Fund paid a distribution fee of
$24,339 for expenditures pursuant to the Plan. During such time, the Fund
accrued shareholder servicing fees of $130,945, of which $106,606 was
voluntarily and irrevocably waived, and the Manager made payments from its own
resources aggregating $2,802 of which $376 was spent on sales personnel and
related expenses of the Manager, $89 was spent on travel and entertainment,
$2,331 was spent on prospectus and application printing and $5 was spent on
miscellaneous expenses. For the Fund's fiscal year ended December 31, 1997, the
Fund paid a distribution fee of $52,448 for expenditures pursuant to the Plan.
During such time, the Fund accrued shareholder servicing fees of $262,239, of
which $209,791 was voluntarily and irrevocably waived, and the Manager made
payments from its own resources aggregating $37,191 of which $558 was spent on
sales personnel and related expenses of the Manager, $1,099 was spent on travel
and entertainment, $35,404 was spent on prospectus, application and
miscellaneous printing and $130 was spent on miscellaneous expenses.
In accordance with Rule 12b-1, 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.
The Plan provides that it may continue in effect for successive annual periods
provided it is approved by the Fund's shareholders or by the Board of Directors,
including 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
agreements related to the Plan. The Plan was approved by a majority of its
shareholders on November 16, 1993. The continuance of the Plan was most recently
approved by the Board of Directors on July 17, 1997 and shall continue in effect
until October 31, 1998. The Plan further provides that it may be spent by the
Fund for distribution pursuant to the Plan without 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
shareholders.
THE GLASS-STEAGALL ACT
The Glass-Steagall Act limits the ability of a depository institution to become
an underwriter or distributor of securities. However, it is the Fund's position
that banks are not prohibited from acting in other capacities for investment
companies, such as providing administrative and shareholder account maintenance
services and receiving compensation from the Distributor for providing such
services. However, this is an unsettled area of the law and if a determination
contrary to the Fund's position is made by a bank regulatory agency or court
concerning shareholder servicing and administration payments to banks from the
Distributor, any such payments will be terminated and any shares registered in
the banks' names, for their underlying customers, will be re-registered in the
name of the customers at no cost to the Portfolio or its shareholders. In
addition, state securities laws on this issue may differ from the interpretation
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund, which was incorporated on October 12,
1993 in Maryland, 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 will have equal dividend, distribution and liquidation rights within the
series for which it was issued and each fractional share has 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
9
<PAGE>
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.
On May 29, 1998 there were __________ shares of the Fund outstanding. As of May
29, 1998, the amount of shares owned by all officers and directors of the Fund,
as a group, was ____% 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 May 29, 1998:
Nature of
Name and address % of Class Ownership
Charles Schwab and Co. [24.25%] Record
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. [8.38%] Record
One World Financial Center
200 Liberty Street
New York, N.Y. 10281-1003
J. Dennis Delafield [5.65%] Beneficial
c/o Delafield Asset Management
600 Fifth Avenue
New York, N.Y. 10020
Under its 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, 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. 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
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 by the 1940 Act with respect to a 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, 801 Pennsylvania, Kansas City, Missouri 64105
is custodian for its cash and securities. Reich & Tang Services L.P., 600 Fifth
Avenue, New York, New York 10020, is transfer agent and dividend disbursing
agent for the shares of the Fund. The custodian and transfer agent do not assist
in, and are not responsible for, investment decisions involving assets of the
Fund.
FINANCIAL STATEMENTS
The audited financial statements for the Fund for the fiscal year ended December
31, 1997 and the report of McGladrey & Pullen LLP thereon are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
PERFORMANCE
The Fund may from time to time include its yield, total return, and average
annual total return in advertisements or information furnished to present or
prospective shareholders on behalf of each class and computed separately for
each class of shares. The performance of each class of shares may vary due to
variations in expenses of each class of shares. The Manager may also include
performance information in such advertisements or information furnished to
current or prospective shareholders regarding Mr. Delafield's personal
investment performance since 1969 when he began managing investments for clients
with similar objectives as the Fund's and before Mr. Delafield joined the
10
<PAGE>
Manager's predecessor, Reich & Tang L.P., in 1991. The Fund may also from time
to time include in advertisements the ranking of those performance figures
relative to such figures for groups of mutual funds categorized by the Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Morningstar Inc.,
Wiesenberger Investment Company Service, Barron's, Business Week, Changing
Times, Financial World, Forbes, Fortune, Money, Personal Investor, Bank Rate
Monitor, and The Wall Street Journal as having the same investment objectives.
The performance of the Fund may also be compared to the Europe, Australia and
Far East Index, an unmanaged standard foreign securities index monitored by
Capital International, S.A. and to the Standard & Poor's 500 Stock Index and the
Dow Jones Industrial Average, both of which are recognized indices of domestic
stocks' performance.
Average annual total return is a measure of the average annual compounded rate
of return of $1,000 invested at the maximum public offering price over a
specified period, which assumes that any dividends or capital gains
distributions are automatically reinvested in the Fund rather than paid to the
investor in cash. Total return is calculated with the same assumptions and shows
the aggregate return on an investment over a specified period.
The formula for total return used by the Fund includes three steps: (1) adding
to the total number of shares purchased by the hypothetical investment in the
portfolio of $1,000 (assuming the investment is made at a public offering price)
all additional shares that would have been purchased if all dividends and
distributions paid or distributed during the period had been automatically
reinvested; (2) calculating the value of the hypothetical initial investment as
of the end of the period by multiplying the total number of shares owned at the
end of the period by the net asset value per share on the last trading day of
the period; and (3) dividing this account value for the hypothetical investor by
the amount of the initial investment and annualizing the result for periods of
less than one year.
The Fund computes yield by annualizing net investment income per share for a
recent 30-day period and dividing that amount by a Fund share's maximum public
offering price (reduced by any undeclared earned income expected to be paid
shortly as a dividend) on the last trading day of that period. The Fund's yield
will vary from time to time depending upon market conditions, the composition of
the Fund and operating expenses of the Fund.
Total return and yield may be stated with or without giving effect to any
expense limitations in effect for the Fund.
NET ASSET VALUE
The Fund does not determine its net asset value per share on the following
holidays: New Year's Day, President's Day, Martin Luther King Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the New York Stock Exchange on the business
day as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Board of Directors shall determine in
good faith to reflect its fair market value. Readily marketable securities not
listed on the New York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued in like
manner. Portfolio securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Manager to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair market value.
The Fund's Board of Directors has determined that U.S. Government obligations
and other debt instruments having sixty days or less remaining until maturity
are stated at amortized cost. All other investment assets, including restricted
and not readily marketable securities, are valued under procedures established
by and under the general supervision and responsibility of the Fund's Board of
Directors designed to reflect in good faith the fair value of such securities.
11
<PAGE>
DESCRIPTION OF RATINGS*
Moody's Investors Service, 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 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.
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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.
- - ---------------------------------------
* As described by the rating agencies.
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PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(A) Financial Statements
Included in Prospectus:
(1) Table of Fees and Expenses
(2) Financial Highlights
Included in Statement of Additional Information:
(1) Independent Auditor's Report dated January 23, 1998;
(2) Statement of Net Assets dated December 31, 1997 (audited);
(3) Statement of Operations year ended December 31, 1997 (audited);
(4) Statement of Changes in Net Assets years ended December 31, 1997 and
1996 (audited); and
(5) Notes to Financial Statements.
(B) Exhibits
(1) Articles of Incorporation of the Registrant. (Refiled herewith for
EDGAR purposes only.)
(2) By-Laws of the Registrant. (Refiled herewith for EDGAR purposes only.)
(3) Not applicable.
(4) Form of certificate for shares of Common Stock, par value $.001 per
share, of the Registrant. (Refiled herewith for EDGAR purposes only.)
**(5) Form of Investment Management Contract between the Registrant and
Reich & Tang Asset Management L.P.
(6) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc.
(7) Not applicable.
* (8) Form of Custody Agreement between the Registrant and Investors
Fiduciary Trust Company.
* (9) Form of Sub-Transfer Agency Agreement Between Registrant and Investors
Fiduciary Trust Company.
______________________________
* Filed with Post-Effective Amendment No. 2 on Form N-1A to Registration
Statement No. 33-69760 on January 31, 1995, and is incorporated by reference
herein.
** Filed with Post-Effective Amendment No. 4 on Form N-1A to Registration
Statement No. 33-69760 on April 23, 1997, and is incorporated by reference
herein.
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(10) Opinion of Battle Fowler LLP dated November 15, 1993 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 headings
"Dividends, Distributions and Taxes" and "Counsel and Auditors" in the
Prospectus and as to certain federal tax matters. (Refiled herewith
for EDGAR purposes only.)
(11) Consent of Independent Auditors.
(12) Not applicable.
(13) Written assurance of New England Investment Companies L.P. that its
purchase of shares of the registrant was for investment purposes
without any present intention of redeeming or reselling. (Refiled
herewith for EDGAR purposes only.)
(14) Not applicable.
(15.1) Form of Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940.
(15.2) Form of Distribution Agreement between the Registrant and Reich &
Tang Distributors, Inc. filed herein as Exhibit 6.
(15.3) Form of Shareholder Servicing Agreement between the Registrant and
Reich & Tang Distributors, Inc.
(15.4) Form of Administrative Services Agreement between the Registrant and
Reich & Tang Asset Management L.P. (Refiled herewith for EDGAR
purposes only.)
(16) Powers of Attorney.
(17) Financial Data Schedule (for EDGAR purposes only).
(18) 18f-3 Multi-Class Plan.
Item 25. Persons controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class as of May 29, 1998
--------------- ------------------
Common Stock
(par value $.001)
Class A 1,302
Class B 0
Class C 0
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Item 27. Indemnification.
Filed as Item 27 to Form N-1A Registration Statement No. 33-69760 on May
17, 1994 and incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser.
The description of the Delafield Asset Management Division of Reich & Tang
Asset Management L.P. under the caption "The Manager" in the Prospectus and
"Manager" in the Statement of Additional Information constituting parts A and B,
respectively, of the Registration Statement are incorporated herein by
reference. 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 the name
NEICOP, replaces NEICOP as the limited partner and owner of a 99.5% interest in
the manager. Reich & Tang Asset Management, Inc. (a wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining .5%
interest of the Manager. Nvest Corporation (formerly known as New England
Investment Companies Inc.) a Massachusetts corporation, 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. 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 Back Bay Funds, Inc., California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily
Tax Free Income Fund, Inc., 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.,
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 L.P., Reich & Tang Minutus II, L.P., Reich & Tang Equity Partnerships
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,
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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 Nvest
Corporation 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 of Nvest Corporation since September 1993, Vice President of
the Mutual Funds Group of NEICLP from September 1993 until July 1994, and Vice
President of Reich & Tang Mutual Funds since July 1994. Ms. Hysler joined Reich
& Tang, Inc. in May 1977 and served as Secretary from April 1987 until September
1993. Richard E. Smith, III has been a Director of RTAM since July 1994,
President and Chief Operating Officer of the Capital Management Group of NEICLP
from May 1994 until July 1994, President and Chief Operating Officer of the
Reich & Tang Capital Management Group since July 1994, Executive Vice President
and Director of Rhode Island Hospital Trust from March 1993 to May 1994,
President, Chief Executive Officer and Director of USF&G Review Management Corp.
from January 1988 until September 1992. Steven W. Duff has been a Director of
RTAM since October 1994, President and Chief Executive Officer of Reich & Tang
Mutual Funds since August 1994, Senior Vice President of NationsBank from June
1981 until August 1994, Mr. Duff is President and a Director of Back Bay Funds,
Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free
Income Fund, Inc., Daily Tax Free Income Fund, Inc., 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.,
Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.
President and Trustee of Institutional Daily Municipal Income Fund, Pennsylvania
Daily Municipal Income Fund, President and Chief Executive Officer of Tax Exempt
Proceeds Fund, Inc., and Executive Vice President of Reich & Tang Equity Fund,
Inc. Bernadette N. Finn has been Vice President/Compliance of RTAM since July
1994, Vice President of Mutual Funds Division of NEICLP from September 1993
until July 1994, Vice President of Reich & Tang Mutual Funds since July 1994.
Ms. Finn joined Reich & Tang, Inc. in September 1970 and served as Vice
President from September 1982 until May 1987 and as Vice President and Assistant
Secretary from May 1987 until September 1993. Ms. Finn is also Secretary of Back
Bay Funds, Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily
Tax Free Income Fund, Inc., Cortland Trust, Inc., Delafield Fund, Inc., Daily
Tax Free Income Fund, Inc., 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., 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 De Sanctis has been Treasurer of RTAM since July 1994, Assistant
Treasurer of Nvest Corporation since September 1993 and Treasurer of the Mutual
Funds Group of NEICLP from September 1993 until July 1994, Treasurer of the
Reich & Tang Mutual Funds since July 1994. Mr. De Sanctis joined Reich & Tang,
Inc. in December 1990 and served as Controller of Reich & Tang, Inc., from
January 1991 to September 1993. Mr. De Sanctis was Vice President and Treasurer
of Cortland Financial Group, Inc. and Vice President of Cortland Distributors,
Inc. from 1989 to December 1990. Mr. De Sanctis is also Treasurer of Back Bay
Funds, Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free
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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.,
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 NEIC 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 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, in addition she is also Assistant 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., 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, 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 Assistant Treasurer of
Cortland Trust, Inc.
ITEM 29. Principal Underwriters.
(a) Reich & Tang Distributors, Inc. is also distributor for Back Bay Funds,
Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free
Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, 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.
(b) The following are the directors and officers of Reich & Tang
Distributors, Inc. The principal business address of Messrs. Voss, Ryland, and
Wadsworth is 399 Boylston Street, Boston, Massachusetts 02116. For all other
persons, the principal business address is 600 Fifth Avenue, New York, New York
10020.
Positions and Offices
With the General Partner Positions and Offices
Name of the Distributor With Registrant
----- ------------------ ------------------
Peter S. Voss President and Director None
G. Neal Ryland Director None
Edward N. Wadsworth Clerk None
Richard E. Smith III Director None
Peter DeMarco Executive Vice President None
Steven W. Duff Director President and Director
Bernadette N. Finn Vice President - Compliance Secretary
Robert F. Hoerle Managing Director None
Lorraine C. Hysler Secretary None
Richard De Sanctis Vice President and Treasurer Treasurer
Richard I. Weiner Vice President None
Rosanne Holtzer Vice President Assistant Treasurer
(c) Not applicable.
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Item 30. 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 Registrant at 600 Fifth Avenue, New
York, New York 10020, the Registrant's Manager; and at Investors Fiduciary Trust
Company, 801 Pennsylvania, Kansas City, Missouri, 64105, the Registrant's
custodian; and at Reich & Tang Services, Inc., 600 Fifth Avenue, New York, New
York 10020, the Registrant's Transfer Agent and Dividend Disbursing Agent.
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) The Registrant undertakes to call a meeting of the stockholders for
purposes of voting upon the question of removal of a director or
directors, if requested to do so by the holders of at least 10% of the
Fund's outstanding shares, and the Registrant shall assist in
communications with other shareholders.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it has
met all of the requirements for effectiveness of this Post-Effective Amendment
to the Registration Statement pursuant to Rule 485(a) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 17th day of
June, 1998.
DELAFIELD FUND, INC.
By: s/Bernadette N. Finn
Bernadette N. Finn, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
SIGNATURE CAPACITY DATE
(l) Principal Executive
Officer:
s/J. Dennis Delafield
Chairman June 17, 1998
J. Dennis Delafield and Director
(2) Principal Financial and
Accounting Officer:
s/Richard De Sanctis
Treasurer June 17, 1998
Richard De Sanctis
(3) Majority of Directors:
J. Dennis Delafield Director
W. Giles Mellon Director
Yung Wong Director
Robert Straniere Director
s/Bernadette N. Finn
June 17, 1998
Bernadette N. Finn
Attorney-in-Fact*
*Filed as "Other Exhibit" with Registration Statement on Form N-1A to
Registration Statement No. 33-69760 and incorporated by reference herein.
ARTICLES OF INCORPORATION
OF
DELAFIELD FUND, INC.
FIRST: (1) The name of the incorporator is Cristina Paradiso.
(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.
SECOND: The name of the corporation (hereinafter called the "Corporation")
is Delafield Fund, Inc.
THIRD: The purposes for which the Corporation is formed are:
(1) to conduct, operate and carry on the business of an
investment company;
(2) 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 in
respect of any and all such investments of every
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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;
(3) 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;
(4) 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;
(5) 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;
(6) 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;
(7) to carry out all or any part of the
2
<PAGE>
foregoing purposes or objects as principal or agent, or in conjunction
with any other person, firm, association, corporation or other entity,
or as a partner or member of a partnership, syndicate or joint venture
or otherwise, and in any part of the world to the same extent and as
fully as natural persons might or could do;
(8) 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
(9) 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 impliedly by the reasonable construction of
the said law.
FOURTH: The post office address of the principal office of the Corporation
within the State of Maryland is 11 East Chase Street, Baltimore City, Maryland
21202.
FIFTH: The resident agent of the Corporation in the State of Maryland is
The Prentice-Hall Corporation System, Maryland, at 11 East Chase Street,
Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all classes and series
which the Corporation initially has authority to issue is twenty billion
(20,000,000,000) shares of capital stock (par value of One Tenth of One Cent
$.001 per share), amounting in aggregate par value to $20,000,000. All of such
shares are classified as "Common Stock".
(2) 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
3
<PAGE>
terms or conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end management company under the
Investment Company Act of 1940, 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.
(4) Until such time as the Board of Directors shall provide
otherwise in accordance with Section (2) of this Article SIXTH four
billion (4,000,000,000) shares of the authorize shares of stock of the
Corporation shall be allocated to the following class of Common Stock:
Delafield Fund Common Stock. The balance of sixteen billion
(16,000,000,000) shares of such stock may be issued in this class, or
in any new class or classes each comprising such number of shares and
having such designations, limitations and restrictions thereof as
shall be fixed and determined from time to time by resolution or
resolutions providing for the issuance of such stock adopted by the
Board of Directors.
(5) 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".
(6) 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 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):
(a) 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
4
<PAGE>
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.
(b) 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.
(c) 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 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
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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.
(d) 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 of 1940 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
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Series as described in subsection (7) below, only the holders of
shares of the one or more affected Series shall be entitled to
vote.
(e) 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 or 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 of 1940, 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 of 1940.
(f) 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
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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 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.
(g) 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 of 1940, and
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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.
(h) 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 of 1940. Subject to the
applicable provisions of the Investment Company Act of 1940, 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 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 of 1940, 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 of 1940 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
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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.
(i) 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.
(j) Conversion or Exchange Rights. Subject to compliance
with the requirements of the Investment Company Act of 1940, 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.
(7) 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 (5) 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
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Series from time to time established, as the "Classes".
(8) 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:
(a) 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 of 1940.
(b) 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.
(c) As to any matter with respect to which a separate vote
of any Class of a Series is required by the Investment Company
Act of 1940 or by the Maryland General Corporation Law
(including, without limitation, approval of any plan, agreement
or other arrangement referred to in subsection (b) 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 of 1940 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 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.
(9) 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
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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.
(10) 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.
(11) 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.
(12) 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 of the Corporation
until their successors are duly chosen and qualify are J. Dennis Delafield, W.
Giles Mellon, Robert Straniere and Yung Wong.
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.
(1) 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.
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In furtherance and not in limitation of the powers conferred by law, the Board
of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the Corporation;
(b) to issue and sell, from time to time, shares of any class or
series 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 SIXTH hereof or the par value thereof;
(c) 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
(d) 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.
(2) Notwithstanding any provision of the General Corporation Law of the
State of Maryland requiring a greater proportion than a majority of the votes of
all classes or of any class of the Corporation's stock entitled to be cast in
order to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate number of votes
entitled to be cast thereon subject to any applicable requirements of the
Investment Company Act of 1940, as
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from time to time in effect, or rules or orders of the Securities and Exchange
Commission or any successor thereto.
(3) 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.
(4) 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.
(5) 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 position from dealing or contracting with the Corporation,
nor shall any transaction or contract of the Corporation be void or voidable by
reason of the fact that any director, officer or employee or any firm of which
any director,
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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 were not such director, or member, stockholder,
officer or director of such firm or corporation.
(6) 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 parent, subsidiary, partner, or affiliate of such firm or any affiliates of
any such affiliate, or the stockholders, directors, officers, partners 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 directors,
officers, partners or employees of such firm and/or its parents, subsidiaries or
affiliates and that officers of the Corporation may have been, be or become
directors, officers, or employees of such firm, and/or its parents, subsidiaries
or affiliates, and neither such management or advisory, underwriting,
distribution or administration contracts nor any other contract or transaction
between the Corporation and such firm and/or its parents, subsidiaries or
affiliates shall be invalidated or in any way affected thereby, nor shall any
director or officer of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any person for any loss incurred by it or
him under or by reason of such contract or transaction; provided that nothing
herein shall protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office; and provided always that such contract or transaction shall have been on
terms that were not unfair to the Corporation at the time at which it was
entered into.
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NINTH: (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
of 1940, 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.
TENTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation or in any amendment
hereto in the manner now or hereafter prescribed by the laws of the State of
Maryland and all rights conferred upon stockholders herein are granted subject
to this reservation.
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IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporatio n 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/Cristina Paradiso
Cristina Paradiso
Dated: October 6, 1993
BY-LAWS
OF
DELAFIELD 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
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date of the meeting.
Section 4. Special Meetings. Special meetings of stockholders may be called
by the chairman, the president or by the Board of Directors and shall be called
by the secretary upon the written request of holders of shares entitled to cast
not less than twenty-five 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
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such stockholder, but no proxy shall be voted after eleven months from its date,
unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in 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
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a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the 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,
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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 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
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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. 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, except approving the Rule 12b-1 Plan and the Advisory Agreement,
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,
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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 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 Articles of Incorporation or of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the 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
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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.
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
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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 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
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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.
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
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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.
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
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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.
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
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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.
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 name 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
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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.
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.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
DELAFIELD FUND, INC.
The Corporation is authorized to issue 20,000,000,000 Common Shares
Par Value $.001 each
This certifies that ________________________ is the owner of
___________________ fully paid and non-assessable Shares of the above
Corporation transferable only on the books of the Corporation by the holder
hereof in person or by duly authorized Attorney upon surrender of this
Certificate property 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 ____________________________________
DISTRIBUTION AGREEMENT
DELAFIELD FUND, INC.
the "Fund"
600 Fifth Avenue
New York, New York 10020
_________________, 1998
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
We hereby confirm our agreement with you as follows:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of a fee of $1 per year and on the
terms and conditions set forth herein we have agreed that you shall be, for the
period of this agreement, a distributor, as our agent, for the unsold portion of
such number of shares of our common stock, $.001 par value per share, as may be
effectively registered from time to time under the Securities Act of 1933, as
amended (the "1933 Act"). This agreement is being entered into pursuant to the
Distribution and Service Plan (the "Plan") adopted by us in accordance with Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
2. We hereby agree that as of such time when our Board of
Directors reclassifies our shares of stock into a new class(es) subject to a
distribution fee pursuant to the Plan and in accordance with applicable law, we
will pay you a fee up to 1% per annum of our daily net assets for providing or
arranging for others to provide distribution assistance with respect to the
applicable class(es) of our shares. In addition, such fee will be used to pay
the cost of the preparation and printing of brochures and other promotional
materials, mailings to prospective shareholders, advertising and other
promotional activities, including salaries and/or commissions of sales personnel
of yours and other persons, in connection with the distribution of the
applicable class(es) of our shares.
3. We hereby agree that you will act as our agent, and hereby
appoint you our agent, to offer, and to solicit offers to subscribe to, the
unsold balance of shares of our common stock as shall then be effectively
registered under the Act. All subscriptions for shares of our common stock
obtained by you
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shall be directed to us for acceptance and shall not be binding on us until
accepted by us. You shall have no authority to make binding subscriptions on our
behalf. We reserve the right to sell shares of our common stock through other
distributors or directly to investors through subscriptions received by us at
our principal office in New York, New York. The right given to you under this
agreement shall not apply to shares of our common stock issued in connection
with (a) the merger or consolidation of any other investment company with us,
(b) our acquisition, by purchase or otherwise, of all or substantially all of
the assets or stock of any other investment company, or (c) the reinvestment in
shares of our common stock by our stockholders of dividends or other
distributions or any other offering by us of securities to our stockholders.
4. You will use your best efforts to obtain subscriptions to
shares of our common stock upon the terms and conditions contained herein and in
our Prospectus, as in effect from time to time. You will send to us promptly all
subscriptions placed with you. We shall furnish you from time to time, for use
in connection with the offering of shares of our common stock, such other
information with respect to us and shares of our common stock as you may
reasonably request. We shall supply you with such copies of our Registration
Statement and Prospectus, as in effect from time to time, as you may request.
Except as we may authorize in writing, you are not authorized to give any
information or to make any representation that is not contained in the
Registration Statement or Prospectus, as then in effect. You may use employees,
agents and other persons, at your cost and expense, to assist you in carrying
out your obligations hereunder, but no such employee, agent or other person
shall be deemed to be our agent or have any rights under this agreement. You may
sell our shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent.
You will arrange for organizations whose customers or clients are
shareholders of our corporation ("Participating Organizations") to enter into
agreements with you for the performance of shareholder servicing and related
administrative functions not performed by you or the Transfer Agent. Pursuant to
our Shareholder Servicing Agreements (with respect to Class B and Class C shares
of the Fund only), you may make payments to Participating Organizations for
performing shareholder servicing and related administrative functions. Such
payments will be made only pursuant to written agreements approved in form and
substance by our Board of Directors to be entered into by you and the
Participating Organizations. It is recognized that we shall have no obligation
or liability to you or any Participating Organization for any such payments
under the agreements with
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Participating Organizations. Our obligation is solely to make payments to
you under the Shareholder Servicing Agreements (with respect to Class B and
Class C shares of the Fund only) and to the Manager under the Investment
Management Contract and the Administrative Services Contract. All sales of our
shares effected through you will be made in compliance with all applicable
federal securities laws and regulations and the Constitution, rules and
regulations of the National Association of Securities Dealers, Inc. ("NASD").
5. We reserve the right to suspend the offering of shares of
our common stock at any time, in the absolute discretion of our Board of
Directors, and upon notice of such suspension you shall cease to offer shares of
our common stock hereunder.
6. Both of us will cooperate with each other in taking such
action as may be necessary to qualify shares of our common stock for sale under
the securities laws of such states as we may designate, provided, that you shall
not be required to register as a broker-dealer or file a consent to service of
process in any such state where you are not now so registered. Pursuant to the
Investment Management Contract in effect between us and the Manager, we will pay
all fees and expenses of registering shares of our common stock under the Act
and of qualification of shares of our common stock, and to the extent necessary,
our qualification under applicable state securities laws. You will pay all
expenses relating to your broker-dealer qualification.
7. We represent to you that our Registration Statement and
Prospectus have been carefully prepared to date in conformity with the
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Securities and Exchange Commission (the "SEC") thereunder. We represent and
warrant to you, as of the date hereof, that our Registration Statement and
Prospectus contain all statements required to be stated therein in accordance
with the 1933 Act and the 1940 Act and the SEC's rules and regulations
thereunder; that all statements of fact contained therein are or will be true
and correct at the time indicated or the effective date as the case may be; and
that neither our Registration Statement nor our Prospectus, when they shall
become effective or be authorized for use, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of shares
of our common stock. We will from time to time file such amendment or amendments
to our Registration Statement and Prospectus as, in the light of future
development, shall, in the opinion of our counsel, be necessary in order to have
our Registration Statement and Prospectus at all times contain all material
facts required to be stated therein or necessary to make any statements therein
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<PAGE>
not misleading to a purchaser of shares of our common stock. If we shall not
file such amendment or amendments within fifteen days after our receipt of a
written request from you to do so, you may, at your option, terminate this
agreement immediately. We will not file any amendment to our Registration
Statement or Prospectus without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement shall in any way limit our
right to file such amendments to our Registration Statement or Prospectus, of
whatever character, as we may deem advisable, such right being in all respects
absolute and unconditional. We represent and warrant to you that any amendment
to our Registration Statement or Prospectus hereafter filed by us will be
carefully prepared in conformity within the requirements of the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder and will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder; that all statements of fact contained therein will, when
the same shall become effective, be true and correct; and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of our
shares.
8. We agree to indemnify, defend and hold you, and any person
who controls you within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which you or
any such controlling person may incur, under the 1933 Act or the 1940 Act, or
under common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in our Registration Statement or
Prospectus in effect from time to time or arising out of or based upon any
alleged omission to state a material fact required to be stated in either of
them or necessary to make the statements in either of them not misleading;
provided, however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this agreement. Our
agreement to indemnify you and any such controlling person is expressly
conditioned upon our being notified of any action brought against you or any
such controlling person, such notification to be given by letter or by telegram
addressed to us at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days after the summons
or other first legal process shall have been served. The failure so to notify us
of
4
<PAGE>
any such action shall not relieve us from any liability which we may have to the
person against whom such action is brought other than on account of our
indemnity agreement contained in this paragraph 8. We will be entitled to assume
the defense of any suit brought to enforce any such claim, and to retain counsel
of good standing chosen by us and approved by you. In the event we do elect to
assume the defense of any such suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we do
not elect to assume the defense of any such suit, or in case you, in good faith,
do not approve of counsel chosen by us, we will reimburse you or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by you or them. Our indemnification
agreement contained in this paragraph 8 and our representations and warranties
in this agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of you or any controlling person and shall
survive the sale of any shares of our common stock made pursuant to
subscriptions obtained by you. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of any of your controlling persons and their successors and
assigns. We agree promptly to notify you of the commencement of any litigation
or proceeding against us in connection with the issue and sale of any shares of
our common stock.
9. You agree to indemnify, defend and hold us, our several
officers and directors, and any person who controls us within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or directors, or any
such controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York,
5
<PAGE>
and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to us, to our officers or
directors, or to such controlling person other than on account of your indemnity
agreement contained in this paragraph 9.
10. We agree to advise you immediately:
a. of any request by the SEC for amendments to our
Registration Statement or Prospectus or for additional
information,
b. of the issuance by the SEC of any stop order suspending
the effectiveness of our Registration Statement or Prospectus or
the initiation of any proceedings for that purpose,
c. of the happening of any material event which makes untrue
any statement made in our Registration Statement or Prospectus or
which requires the making of a change in either of them in order
to make the statements therein not misleading, and
d. of all action of the SEC with respect to any amendments
to our Registration Statement or Prospectus.
11. This Agreement will become effective on the date hereof
and will remain in effect thereafter for successive twelve-month periods
(computed from each ), provided that such continuation is specifically approved
at least annually by vote of our Board of Directors and of a majority of those
of our directors who are not interested persons (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this agreement. This agreement may be terminated at any
time, without the payment of any penalty, (a) on sixty days' written notice to
you (i) by vote of a majority of our entire Board of Directors, and by a vote of
a majority of our Directors who are not interested persons (as defined in the
1940 Act) and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, or (ii) by vote of a
majority of our outstanding voting securities, as defined in the Act, or (b) by
you on sixty days' written notice to us.
6
<PAGE>
12. This Agreement may not be transferred, assigned, sold or
in any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the SEC thereunder.
13. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, the
right of any of your employees, officers or directors, who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the 1940 Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
DELAFIELD FUND, INC.
By
Accepted: ______________, 1998
REICH & TANG DISTRIBUTORS, INC.
By: ___________________________________
November 15, 1993
Delafield Fund, Inc.
100 Park Avenue
New York, New York 10017
Gentlemen:
We have acted as counsel to Delafield Fund, Inc., a Maryland
corporation (the "Fund"), in connection with the preparation and filing of
Registration Statement No. 33-69760 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 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. 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.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not express any opinion as to the laws of
other states or jurisdictions except as to matters of Federal law and, with
respect to the limited scope of this opinion, Maryland corporate law.
Based upon and subject to 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 when 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 Information, and under the heading "Counsel and Independent
Auditors" in the Statement of Additional Information.
Very truly yours,
BATTLE FOWLER LLP
EXHIBIT 11
McGLADREY & PULLEN L.L.P.
Certified Public Accountants & Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated January 23, 1998, on the
financial statements of Delafield Fund, Inc. referred to therein, which is
incorporated by reference in Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, File No. 33-69760, of Delafield 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 caption "Counsel and Auditors."
/s/McGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
June 17, 1998
New England Investment Companies L.P.
100 Park Avenue
New York, New York 10017
November 9, 1993
Board of Directors of
Delafield Fund, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
I hereby subscribe for 10,000 shares of the Common Stock, $.001 par
value per share, of Delafield Fund, Inc., a Maryland corporation (the
"Corporation"), at $10.00 per share for an aggregate purchase price of $100,000.
My payment in full is confirmed.
I hereby represent and agree that I am purchasing these shares of stock
for investment purposes, for my 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. I further agree that if any of such shares
are redeemed during the period that the deferred organizational expenses of the
Corporation are being amortized, I 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,
NEW ENGLAND INVESTMENT COMPANIES L.P.
By: New England Investment
Companies, Inc.
General Partner
By:s/William Berkowitz
William Berkowitz
Confirmed and Accepted:
DELAFIELD FUND, INC.
By:
DELAFIELD FUND, INC.
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
The Distribution and Service Plan (the "Plan") is adopted by Delafield
Fund, Inc. (the "Fund") in accordance with the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act").
The Plan
1. The Fund and Reich & Tang Distributors, Inc. (the "Distributor"), have
entered into a Distribution Agreement, in a form satisfactory to the Fund's
Board of Directors, under which the Distributor will act as distributor of the
Fund's shares. Pursuant to the Distribution Agreement, the Distributor, as agent
of the Fund, will solicit orders for the purchase of the Fund's shares, provided
that any subscriptions and orders for the purchase of the Fund's shares will not
be binding on the Fund until accepted by the Fund as principal. In addition, the
Distribution Agreement provides that with respect to certain classes of stock of
the Fund, the Distributor will be paid a distribution fee for providing or
arranging for others to provide distribution assistance with respect to the
applicable class(es) of the Fund's shares and for advertising and promotional
materials and the cost thereof.
2. The Fund and the Distributor have entered into a Shareholder Servicing
Agreement (with respect to Class B and
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<PAGE>
Class C shares of the Fund only) in a form satisfactory to the Fund's Board of
Directors, which provides that the Distributor will be paid a service fee for
providing or for arranging for others to provide all personal shareholder
servicing and related maintenance of shareholder account functions not performed
by us or our transfer agent.
3. The Manager may make payments from time to time from its own resources,
which may include the management fees and administrative services fees received
by the Manager from the Fund and from other companies, and past profits for the
following purposes:
(i) to pay the costs of, and to compensate others, including
organizations whose customers or clients are Fund shareholders
("Participating Organizations"), for performing personal shareholder
servicing and related maintenance of shareholder account functions on
behalf of the Class B and Class C shares of the Fund;
(ii) to compensate Participating Organizations for providing
assistance in distributing the Fund's Class B and Class C shares; and
(iii) to pay the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including
salaries and/or commissions of sales personnel of the Distributor and
other persons, in
2
<PAGE>
connection with the distribution of the Fund's Class B and Class C
shares.
The Distributor may also make payments from time to time from its own resources,
which may include the service fee and past profits for the purpose enumerated in
(i) above and may use any distribution fees received with respect to any class
of shares of the Fund for the purposes mentioned in (ii) or (iii) above.
Further, the Distributor may 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 (1) the Manager for any fiscal year under the
Investment Management Contract or the Administrative Services Agreement in
effect for that year or otherwise or (2) to the Distributor under the
Shareholder Servicing Agreement (with respect to Class B and Class C shares of
the Fund only) in effect for that year or otherwise. The Investment Management
Contract will also require the Manager to reimburse the Fund for any amounts by
which the Fund's annual operating expenses, including distribution expenses,
exceed in the aggregate in any fiscal year the limits prescribed by any state in
which the Fund's shares are qualified for sale.
4. The Fund will pay for (i) telecommunications expenses, including the
cost of dedicated lines and CRT terminals, incurred by the Distributor in
carrying out its obligations under the Shareholder Servicing Agreement (with
respect to Class B and Class C shares of the Fund only) and (ii)
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<PAGE>
preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing subscription application
forms for shareholder accounts.
5. Payments by the Distributor or the Manager to Participating
Organizations as set forth herein are subject to compliance by them with the
terms of written agreements in a form satisfactory to the Fund's Board of
Directors to be entered into between the Distributor and the Participating
Organizations.
6. The Fund and the Distributor will prepare and furnish to the Fund's
Board of Directors, at least quarterly, written reports setting forth all
amounts expended for servicing and distribution purposes by the Fund, the
Distributor and the Manager, pursuant to the Plan and identifying the servicing
and distribution activities for which such expenditures were made.
7. The Plan became effective upon approval by (i) a majority of the
outstanding voting securities of the Fund (as defined in the Act), and (ii) a
majority of the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons (as defined in the Act) of the Fund and
who have no direct or indirect financial interest in the operation of the Plan
or in any agreement entered into in connection with the Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on the approval of
the Plan.
8. The Plan will remain in effect until ____________ unless earlier
terminated in accordance with its terms, and
thereafter may continue in effect for successive annual periods if approved each
year in the manner described in clause (ii) of paragraph 7 hereof.
9. The Plan may be amended at any time with the approval of the Board of
Directors of the Fund, provided that (i) any material amendments of the terms of
the Plan will be effective only upon approval as provided in clause (ii) of
paragraph 7 hereof, and (ii) any amendment which increases materially the amount
which may be spent by the Fund pursuant to the Plan will be effective only upon
the additional approval as provided in clause (i) of paragraph 7 hereof.
10. The Plan may be terminated without penalty at any time (i) by a vote of
the majority of the entire Board of Directors of the Fund, and by a vote of a
majority of the Directors of the Fund who are not interested persons (as defined
in the Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan, or (ii) by a
vote of a majority of the outstanding voting securities of the Fund (as defined
in the Act).
SHAREHOLDER SERVICING
AGREEMENT
CLASS B SHARES OF
DELAFIELD FUND, INC.
(the "Fund")
600 Fifth Avenue
New York, New York 10020
__________________, 1998
Reich & Tang Distributors, Inc. ("Distributor")
600 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
We herewith confirm our agreement with you as follows:
1. We hereby employ you, pursuant to the Distribution and
Service Plan, adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below. You will perform, or arrange for others, including organizations
whose customers or clients are shareholders of our corporation (the
"Participating Organizations"), to perform all personal shareholder servicing
and related maintenance of shareholder account functions ("Shareholder
Services") not performed by us or our transfer agent.
2. You will be responsible for the payment of all expenses
incurred by you in rendering the foregoing services, except that we will pay for
(i) telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor and Participating Organizations in
rendering such services, and (ii) preparing, printing and delivering our
Prospectus to existing shareholders and preparing and printing subscription
application forms for shareholder accounts.
3. You may make payments from time to time from your own
resources, including the fee payable hereunder and past profits to compensate
Participating Organizations, for providing Shareholder Services to the Fund.
Payments to Participating Organizations to compensate them for shareholder
services are subject to compliance by them with the terms of written agreements
satisfactory to our Board of Directors to be entered into between the
Distributor and the Participating Organizations. The Distributor will in its
sole discretion determine the amount
1
<PAGE>
of any payments made by the Distributor pursuant to this Agreement, provided,
however, that no such payment will increase the amount which we are required to
pay either to the Distributor under this Agreement or the Distribution Agreement
or to the Manager under the Investment Management Contract, the Administrative
Services Agreement, or otherwise.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. In consideration of your performance, we will pay you a
service fee as defined by Article III, Section 26(b)(9) of the Rules of Fair
Practice, as amended, of the National Association of Securities Dealers, Inc.,
up to an annual rate of one quarter of one percent (0.25%) of the Fund's average
daily net assets to reimburse you for the cost you incur in providing the
services specified herein and to allow you to make payments to Participating
Organizations for providing such services. Your payment will be accrued by us
daily, and will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you shall
request of us in writing. You may waive your right to any payment to which you
are entitled hereunder, provided such waiver is delivered to us in writing.
6. This Agreement will become effective on the date hereof and
will remain in effect thereafter for successive twelve-month periods (computed
from each ), provided that such continuation is specifically approved at least
annually by vote of our Board of Directors and of a majority of those of our
directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, (a) on sixty days' written notice to
you (i) by vote of a majority of our entire Board of Directors, and by a vote of
a majority of our Directors who are not interested persons (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan, or (ii) by vote of a majority
of the outstanding voting securities of the Fund's shares, as defined in the
Act, or (b) by you on sixty days' written notice to us.
2
<PAGE>
7. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission
thereunder.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, the
right of any of your employees, officers or directors, who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DELAFIELD FUND, INC.
By:_______________________
ACCEPTED: , 1998
REICH & TANG DISTRIBUTORS, INC.
By:__________________________
3
<PAGE>
SHAREHOLDER SERVICING
AGREEMENT
CLASS C SHARES OF
DELAFIELD FUND, INC.
(the "Fund")
600 Fifth Avenue
New York, New York 10020
_____________________, 1998
Reich & Tang Distributors, Inc. ("Distributor")
600 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
We herewith confirm our agreement with you as follows:
1. We hereby employ you, pursuant to the Distribution and Service Plan,
adopted by us in accordance with Rule 12b-1 (the "Plan") under the Investment
Company Act of 1940, as amended (the "Act"), to provide the services listed
below. You will perform, or arrange for others, including organizations whose
customers or clients are shareholders of our corporation (the "Participating
Organizations"), to perform all personal shareholder servicing and related
maintenance of shareholder account functions ("Shareholder Services") not
performed by us or our transfer agent.
2. You will be responsible for the payment of all expenses incurred by you
in rendering the foregoing services, except that we will pay for (i)
telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor and Participating Organizations in
rendering such services, and (ii) preparing, printing and delivering our
Prospectus to existing shareholders and preparing and printing subscription
application forms for shareholder accounts.
3. You may make payments from time to time from your own resources,
including the fee payable hereunder and past profits to compensate Participating
Organizations, for providing Shareholder Services to the Fund. Payments to
Participating Organizations to compensate them for shareholder services are
subject to compliance by them with the terms of written agreements satisfactory
to our Board of Directors to be entered into between the Distributor and the
Participating Organizations. The Distributor will in its sole discretion
determine the amount
1
<PAGE>
of any payments made by the Distributor pursuant to this Agreement, provided,
however, that no such payment will increase the amount which we are required to
pay either to the Distributor under this Agreement or the Distribution Agreement
or to the Manager under the Investment Management Contract, the Administrative
Services Agreement, or otherwise.
4. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. In consideration of your performance, we will pay you a service fee as
defined by Article III, Section 26(b)(9) of the Rules of Fair Practice, as
amended, of the National Association of Securities Dealers, Inc., up to an
annual rate of one quarter of one percent (0.25%) of the Fund's average daily
net assets to reimburse you for the cost you incur in providing the services
specified herein and to allow you to make payments to Participating
Organizations for providing such services. Your payment will be accrued by us
daily, and will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you shall
request of us in writing. You may waive your right to any payment to which you
are entitled hereunder, provided such waiver is delivered to us in writing.
6. This Agreement will become effective on the date hereof and will remain
in effect thereafter for successive twelve-month periods (computed from each ),
provided that such continuation is specifically approved at least annually by
vote of our Board of Directors and of a majority of those of our directors who
are not interested persons (as defined in the Act) and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan, cast in person at a meeting called for the purpose of
voting on this Agreement. This Agreement may be terminated at any time, without
the payment of any penalty, (a) on sixty days' written notice to you (i) by vote
of a majority of our entire Board of Directors, and by a vote of a majority of
our Directors who are not interested persons (as defined in the Act) and who
have no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan, or (ii) by vote of a majority of the
outstanding voting securities of the Fund's shares, as defined in the Act, or
(b) by you on sixty days' written notice to us.
2
<PAGE>
7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission thereunder.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, the right of any
of your employees, officers or directors, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the Act, to
engage in any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to another corporation, firm,
individual or association.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DELAFIELD FUND, INC.
By:_______________________
ACCEPTED:______________, 1998
REICH & TANG DISTRIBUTORS, INC.
By:____________________
3
ADMINISTRATIVE SERVICES CONTRACT
DELAFIELD FUND, INC.
the "Fund"
New York, New York
October 1, 1994
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Gentlemen:
On July 22, 1994, New England Investment Companies, L.P.
("NEIC") became the limited partner and owner of a 99.5% interest in a newly
created limited partnership, Reich & Tang Asset Management L.P., a registered
investment adviser under the Investment Advisers Act of 1940. Reich & Tang Asset
Management, Inc. ( wholly-owned subsidiary of NEIC) is the general partner and
owner of the remaining .5% interest of Reich & Tang Asset Management L.P. Reich
& Tang Asset Management L.P. has succeeded NEIC as the Manager of the Fund (the
"Manager"). This transaction does not result in an "assignment" of the
Investment Management Contract with NEIC under the Investment Company Act of
1940, as amended, since there is no change in actual control or management of
the Manager caused by this event.
The Board of Directors has approved the re-execution of the
Administrative Services Contract with the Manager. The re-executed
Administrative Services Contract contains the same terms and conditions
governing the Manager's responsibilities as the previous Administrative Services
Contract except for the dates of execution and the identity of the Manager.
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and
reinvesting our assets in securities of the type, and in accordance with the
limitations, specified in our Articles of Incorporation, By-Laws and
Registration Statement filed with the Securities and Exchange Commission under
the Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to such
extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the documents listed above and will furnish you such
amendments
1
<PAGE>
thereto as may be made from time to time.
2. a. We hereby employ you as our administrator (the
"Administrator") to provide all management and administrative services
reasonably necessary for our operation, other than those services you provide to
us pursuant to the Investment Management Contract. The services to be provided
by you shall include but not be limited to those enumerated on Exhibit A hereto.
The personnel providing these services may be your employees or employees of
your affiliates or of other organizations. You shall make periodic reports to
the Fund's Board of Directors in the performance of your obligations under this
Agreement and the execution of your duties hereunder is subject to the general
control of the Board of Directors.
b. It is understood that you will from time to time
employ, subcontract with or otherwise associate with yourself, entirely at
your expense, such persons as you believe to be particularly fitted to assist
you in the execution of your duties hereunder. While this agreement is in
effect, you or persons affiliated with you, other than us ("your affiliates"),
will provide persons satisfactory to our Board of Directors to be elected or
appointed officers or employees of our corporation. There shall be a president,
a secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
c. You or your affiliates will also provide persons,
who may be our officers, to (i) supervise the performance of bookkeeping and
related services and calculation of net asset value and yield by our bookkeeping
agent, (ii) prepare reports to and the filings with regulatory authorities, and
(iii) perform such clerical, other office and shareholder services for us as we
may from time to time request of you. Such personnel may be your employees or
employees of your affiliates or of other organizations. Notwithstanding the
preceding, you shall not be required to perform any accounting services not
expressly provided for herein. We will pay to you the cost of such personnel for
rendering such services to us at such rates as shall from time to time be agreed
upon between us, provided that we shall not bear or pay any costs in respect of
any services performed for us by officers of Reich & Tang Asset Management,
Inc., your general partner, or officers of your affiliates.
d. You or your affiliates will also furnish us such
administrative and management supervision and assistance and such office
facilities as you may believe appropriate or as we may reasonably request
subject to the requirements of any regulatory authority to which you may be
subject. We will reimburse you for all of our operating costs incurred by you
(in
2
<PAGE>
addition to the personnel reimbursement described in the preceding
subparagraph (c)), including rent, depreciation of equipment and facilities,
interest and amortization of loans financing equipment used by us and all the
expenses incurred by you to conduct our affairs. The amounts of such
reimbursements shall from time to time be agreed upon between us. You or your
affiliates will also pay the expenses of promoting the sale of our shares (other
than the costs of preparing, printing and filing our Registration Statement,
printing copies of the prospectus contained therein and complying with other
applicable regulatory requirements), except to the extent that we are permitted
to bear such expenses under a plan adopted pursuant to Rule 12b-1 under the 1940
Act or a similar rule.
3. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
4. In consideration of the foregoing we will pay you an annual
fee of .20% of the Fund's average daily net assets. Your fee will be accrued by
us daily, and will be payable on the last day of each calendar month for
services performed hereunder during that month or on such other schedule as we
may agree in writing. You may use any portion of this fee for distribution of
our shares, or for making payments to organizations whose customers or clients
are our stockholders. You may waive your right to any fee to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
5. This Agreement will become effective on the date hereof and
shall continue in effect until , 199_ and thereafter for successive twelve-month
periods (computed from each ), provided that such continuation is specifically
approved at least annually by our Board of Directors and by a majority of those
of our directors who are neither party to this Agreement nor, other than by
their service as directors of the corporation, interested persons, as defined in
the 1940 Act, of any such person who is party to this Agreement. This Agreement
may be terminated at any time, without the payment of any penalty, (i) by vote
of a majority of our outstanding voting securities, as defined in the 1940 Act,
or (ii) by a vote of a majority of our entire Board of Directors, on sixty days'
written notice to you, or (iii) by you on sixty days' written notice to us.
3
<PAGE>
6. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
7. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
8. This Agreement shall be construed in accordance with the laws
of the State of New York and the applicable provisions of the 1940
Act.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed
copy hereof.
Very truly yours,
DELAFIELD FUND, INC.
By:______________________
ACCEPTED: October 1, 1994
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC., General Partner
By: _________________________________
4
<PAGE>
Exhibit A
Administration Services To Be Performed
By New England Investment Companies L.P.
Administration Services
1. In conjunction with Fund counsel, prepare and file all
Post-Effective Amendments to the Registration Statement, all
state and federal tax returns and all other required
regulatory filings.
2. In conjunction with Fund counsel, prepare and file all Blue
Sky filings, reports and renewals.
3. Coordinate, but not pay for, required Fidelity Bond and
Directors and Officers Insurance (if any) and monitor their
compliance with Investment Company Act.
4. Coordinate the preparation and distribution of all materials
for Directors, including the agenda for meetings and all
exhibits thereto, and actual and projected quarterly
summaries.
5. Coordinate the activities of the Fund's Manager, Custodian,
Legal Counsel and Independent Accountants.
6. Prepare and file all periodic reports to shareholders and
proxies and provide support for shareholder meetings.
7. Monitor daily and periodic compliance with respect to all
requirements and restrictions of the Investment Company Act,
the Internal Revenue Code and the Prospectus.
8. Monitor daily the Fund's bookkeeping services agent's
calculation of all income and expense accruals, sales and
redemptions of capital shares outstanding.
9. Evaluate expenses, project future expenses, and process
payments of expenses.
10. Monitor and evaluate performance of accounting and accounting
related services by Fund's bookkeeping services agent. Nothing
herein shall be construed to require you to perform any
accounting services not expressly provided for in this
Agreement.
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Dana E. Messina 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 Delafield 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/Robert Straniere
Robert Straniere
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Dana E. Messina 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 Delafield 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/Dr. W. Giles Mellon
Dr. W. Giles Mellon
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Dana E. Messina 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 Delafield 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/Dr. Yung Wong
Dr. Yung Wong
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Dana E. Messina 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 Delafield 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/J. Dennis Delafield
J. Dennis Delafield
<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> 0000912896
<NAME> Delafield Fund, Inc.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 135237528
<INVESTMENTS-AT-VALUE> 147091483
<RECEIVABLES> 1640210
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 7670
<TOTAL-ASSETS> 148739363
<PAYABLE-FOR-SECURITIES> 1702418
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 412973
<TOTAL-LIABILITIES> 2115391
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134762586
<SHARES-COMMON-STOCK> 9853138
<SHARES-COMMON-PRIOR> 4542194
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 146623972
<DIVIDEND-INCOME> 1054948
<INTEREST-INCOME> 2018066
<OTHER-INCOME> 0
<EXPENSES-NET> 1356617
<NET-INVESTMENT-INCOME> 1716397
<REALIZED-GAINS-CURRENT> 9364322
<APPREC-INCREASE-CURRENT> 4562649
<NET-CHANGE-FROM-OPS> 15643368
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1708968
<DISTRIBUTIONS-OF-GAINS> 9359513
<DISTRIBUTIONS-OTHER> 1127
<NUMBER-OF-SHARES-SOLD> 5631514
<NUMBER-OF-SHARES-REDEEMED> 1049645
<SHARES-REINVESTED> 729075
<NET-CHANGE-IN-ASSETS> 85344540
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 839165
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1567333
<AVERAGE-NET-ASSETS> 104895606
<PER-SHARE-NAV-BEGIN> 13.49
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 2.42
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (1.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.88
<EXPENSE-RATIO> 1.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
DELAFIELD FUND, INC.
RULE 18f-3 MULTI-CLASS PLAN
Amendment No. ___
July , 1998
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"), the following sets forth the method for
allocating fees and expenses among each class of shares of the Delafield Fund,
Inc. (the "Company" or "Multi-Class Fund"), sponsored by Reich & Tang Asset
Management, L.P. In addition, this Rule 18f-3 Multi-Class Plan (the "Plan") sets
forth the shareholder servicing arrangements, distribution arrangements,
conversion features, exchange privileges and other shareholder services of each
class of shares in the Multi-Class Fund.
The Company is an open-end series investment company
registered under the 1940 Act and the shares of which are registered on Form
N-1A under the Securities Act of 1933 (Reg. No. 33- ). This Plan was originally
approved by the Board of Directors on July 17, 1997. Upon the effective date of
this Amendment, the Company hereby elects to offer multiple classes of pursuant
to the provisions of this Amendment.
This Amendment serves to create three classes of shares. Class A shares are
to be held by institutional investors, including all existing shareholders.
Class B shares are to be held by retail investors, sold through financial
intermediaries. Class C shares are to be held by 401(k) Plan account customers.
II. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Company shall
allocate to each class of shares (i) any fees and expenses incurred by the
Company in connection with the distribution of such class of shares under a
distribution and service plan adopted for such class of shares pursuant to Rule
12b-1, and (ii) any fees and expenses incurred by the Company under a
shareholder servicing plan in connection with the provision of shareholder
services to the holders of such class of shares. In addition, pursuant to Rule
18f-3, the Company may allocate the following fees and expenses to a particular
class of shares:
(i) transfer agent fees and related expenses identified by the
transfer agent as being attributable to such class of shares;
1
<PAGE>
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses,
reports, and proxies to current shareholders of such class of
shares or to regulatory agencies with respect to such class of
shares;
(iii)blue sky registration or qualification fees incurred by such
class of shares;
(iv) Securities and Exchange Commission registration fees incurred by
such class of shares;
(v) the expense of administrative services and personnel (including,
but not limited to, those of a fund accountant, or divided paying
agent charged with calculating net asset values or determining or
paying dividends 1 ) as required to support the shareholders of
such class of shares;
(vi) litigation or other legal expenses relating solely to such class
of shares;
(vii)fees of the Company's Directors incurred as a result of issues
relating to such class of shares; and
(viii) independent accountants' fees relating solely to such class of
shares.
The initial determination of the class expenses that will be allocated by
the Company to a particular class of shares and any subsequent changes thereto
will be reviewed by the Board of Directors and approved by a vote of the
Directors of the Company, including a majority of the Directors who are not
interested persons of the Company.
Income, realized and unrealized capital gains and losses, and any expenses
of the Multi-Class Fund not allocated to a particular class of the Fund pursuant
to this Plan shall be allocated to each class of the Fund on the basis of the
net asset value of that class in relation to the net asset value of the Fund.
III. Class Arrangements.
The following summarizes the Rule 12b-1 distribution fees,
shareholder servicing fees, exchange privileges and other shareholder services
applicable to each class of
- - -------- 1. Rule 18f-3 requires that services related to the management of the
portfolio's assets, such as custodial fees, be borne by the fund and not by
class.
2
<PAGE>
shares of the Multi-Class Fund. Additional details
regarding such fees and services are set forth in the Fund's current Prospectus
and Statement of Additional Information.
A. Class A Shares - (for Institutional Investors)
1. Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: None.
6. Conversion Features: None.
7. Exchange Privileges: None
8. Other Incidental Shareholder Services: As provided in
the Prospectus.
B. Class B Shares - (for Retail Investors of Financial Intermediaries)
1. Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: Up to .25%
per annum of average daily net assets.
6. Conversion Features: None.
7. Exchange Privileges: None
8. Other Incidental Shareholder Services: As provided
in the Prospectus.
C. Class C - (for 401(k) Plan accounts)
3
<PAGE>
1. Maximum Initial Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fees: None.
4. Rule 12b-1 Distribution Fees: None.
5. Rule 12b-1 Shareholder Servicing Fees: Up to .25 per
annum of the average daily net assets.
6. Sub-Accounting/Transfer Agent Fee: .15% per annum of
the average daily net assets.
7. Conversion Features: None.
8. Exchange Privileges: None.
9. Other Incidental Shareholder Services: As provided
in the Prospectus.
IV. Board Review.
The Board of Directors of the Company shall review this Plan
as frequently as it deems necessary. Prior to any material amendments to this
Plan, the Company's Board of Directors, including a majority of the Directors
that are not interested persons of the Company, shall find that the Plan, as
proposed to be amended (including any proposed amendments to the method of
allocating class and/or fund expenses) is in the best interest of each class of
shares of a Multi-Class Fund individually and the Fund as a whole. In
considering whether to approve any proposed amendment(s) to the Plan, the
Directors of the Company shall request and evaluate such information as they
consider reasonably necessary to evaluate the proposed amendment(s) to the
Plan.
In making its initial determination to approve this Plan, the
Board focused on, among other things, the relationship between or among the
classes and examined potential conflicts of interest between classes regarding
the allocation of fees, services, waivers and reimbursement of expenses, and
voting rights. The Board evaluated the level of services provided to each class
and the cost of those services to ensure that the services are appropriate and
the allocation of expenses is reasonable. In approving any subsequent amendments
to this Plan, the Board shall focus on and evaluate such factors as well as any
others deemed necessary by the Board.
