SHORT TERM INCOME FUND, INC.
IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you are aware, the Short Term Income Fund is managed and advised by Reich &
Tang Asset Management L.P. (the "Manager"). The parent company of the Manager,
New England Investment Companies, Inc., is majority-owned by New England Mutual
Life Insurance Company, which proposes to merge with Metropolitan Life Insurance
Company sometime after the end of the 1995 year. As a shareholder in the Short
Term Income Fund, you are invited to vote on a proposal in connection with this
merger. Specifically, you are being asked to approve or disapprove a new
management/investment advisory agreement with the Manager since the above
transaction, in accordance with applicable regulations, would automatically
terminate the existing management/investment advisory agreement between the
Manager and Short Term Income Fund. What does this mean to you as a shareholder?
It is important to note that the management fee and the management and
investment advisory services to be performed under the new agreement are the
same as those under the current agreement. The other terms of the agreement are
the same in all material respects to the existing agreement. There are no
changes contemplated in the management or operations of the Manager relating to
the Short Term Income Fund, the personnel managing the Fund, or the shareholder
or other business activities of the Fund. The Board of Directors has determined
that the new agreement would be in the best interest of the Fund and its
shareholders. Accordingly, the Board of Directors of the Short Term Income Fund
approved the new agreement and voted to recommend it to shareholders for
approval. We encourage you to vote promptly no matter how many shares you own.
Timely votes save money and avoid follow-up mailings. Your cooperation as we go
through the process of the transition is greatly appreciated. We are confident
that the combining of these firms will result in a structure that will better
service your needs. Thanking you, in advance, for your patience and support.
Very truly yours,
Short Term Income Fund, Inc.
SHORT TERM INCOME FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 1, 1996
600 Fifth Avenue
New York, New York 10020
(800) 676-6779
A Special Meeting of Shareholders of Short Term Income Fund, Inc. (the
"Corporation") will be held at 9:00 a.m. on March 1, 1996 at the offices of the
Corporation at 600 Fifth Avenue, New York, New York for the following purposes,
all of which are more fully described in the accompanying Proxy Statement dated
December 18, 1995. To approve or disapprove a new Investment Management Contract
to be effective upon the merger of New England Mutual Life Insurance Company
into Metropolitan Life Insurance Company, such Contract to be identical to the
Investment Management Contract in effect for the Corporation immediately prior
to such merger (see page 4 of the attached Proxy Statement); To elect four
directors of the Corporation, each to hold office until his successor is duly
elected and qualified; To ratify or reject the selection of Messrs. McGladrey &
Pullen LLP as independent accountants of the Corporation for its fiscal year
ending August 31, 1996; To approve or disapprove a change in the Corporation's
fundamental investment restrictions to permit the Money Market Portfolio (as
hereinafter defined) to purchase certain private placements; and To transact
such other business as may properly come before the meeting. Only shareholders
of record at the close of business on December 8, 1995 are entitled to notice
of, and to vote at, the meeting. By Order of the Board of Directors BERNADETTE
N. FINN, Secretary
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY BALLOT, DATE AND
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. WE ASK FOR YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
PROXY STATEMENT PAGE
Introduction 4
Approval or Disapproval of a New Investment Management
Contract to be Effective at the Time of the Merger 5
Election of Directors 7
Ratification or Rejection of Selection of Independent Accountants 11
Approval or Disapproval of a Change to the Corporation's Fundamental
Investment Restrictions to Permit the Purchase
Certain Private Placements 11
Information Regarding the Manager 12
Allocation of Portfolio Brokerage 16
Other Matters 17
Exhibit A (Investment Management Contract Between the Corporation and
Reich & Tang Asset Management L.P.) 18
Exhibit B (Table of Fees for all Funds Advised by the Manager) 22
SHORT TERM INCOME FUND, INC.
600 FIFTH AVENUE
NEW YORK, NEW YORK 10020
PROXY STATEMENT INTRODUCTION This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Short Term Income Fund,
Inc. (the "Corporation") for use at a Special Meeting of Shareholders to be held
at the offices of the Corporation at 600 Fifth Avenue, New York, New York on
March 1, 1996 at 9 A.M. Such solicitation will be made primarily by the mailing
of this statement and the materials accompanying it. Supplemental solicitations
may be made by mail, telephone, or personal interviews by officers and
representatives of the Corporation. The expenses in connection with preparing
and mailing this statement and the material accompanying it, and of such
supplemental solicitations, will be borne by The New England and Metropolitan
Life (each as hereinafter defined). This Proxy Statement and the accompanying
Proxy are first being sent to shareholders on or about December 20, 1995. The
Corporation's most recent annual and semi-annual reports are available upon
request. The outstanding voting stock of the Corporation as of the close of
business on December 8, 1995 consisted of 901,792,583 shares of Common Stock of
the Money Market Portfolio and 613,646,304 shares of Common Stock of the U.S.
Government Portfolio (the Money Market Portfolio and the U.S. Government
Portfolio are together referred to herein as the "Portfolios"), each whole share
being entitled to one vote and each fraction of a share being entitled to a
proportionate fraction of a vote. Only shareholders of record at the close of
business on December 8, 1995 are entitled to vote at the meeting. Any
shareholder may revoke his proxy at any time prior to its exercise by a written
notification of such revocation, which must be signed, include the shareholder's
name and account number, be addressed to the Secretary of the Corporation at its
principal executive office, 600 Fifth Avenue, New York, New York 10020, and be
received prior to the meeting to be effective, or by signing another proxy of a
later date, or by personally casting his vote at the meeting of shareholders.
Among the purposes of this Special Meeting of the Shareholders of the
Corporation is the approval of the Merger (the "Merger") of New England Mutual
Life Insurance Company ("The New England") into Metropolitan Life Insurance
Company ("Metropolitan Life"). The Merger is being treated, for purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"), as a change of
control of New England Investment Companies, L.P. ("NEIC"), the limited partner
and owner of the 99.5% limited partnership interest in Reich & Tang Asset
Management L.P. (the Corporation's "Manager"). Reich & Tang Asset Management,
Inc. (a wholly-owned subsidiary of NEIC) is the general partner and owner of the
remaining 0.5% interest of the Manager. Under the 1940 Act, such a change of
control constitutes an "assignment" (as defined in the 1940 Act) of the
Investment Management Contract between the Manager and the Corporation, as well
as various other investment advisory agreements under which NEIC and its
subsidiary firms serve as advisers or sub-advisers to certain other mutual
funds, and results in the automatic termination of each of those agreements
including the Investment Management Contract between the Corporation and the
Manager, effective at the time of the Merger. The Directors have approved, and
recommend that the shareholders of the Corporation approve, a new investment
management contract. This proposed new contract will be in substance identical
to the contract in effect immediately prior to the Merger, and will take effect
at the time of the Merger. As a result, the Manager will continue to perform
investment management services for the Corporation after the Merger, on the same
terms as are in effect immediately before the Merger. In addition to the above,
the other purposes for this Special Meeting of Shareholders include: (i) the
election of directors; (ii) the ratification of the selection of independent
accountants; and (iii) the approval of a change in the Corporation's fundamental
investment restrictions to permit the Money Market Portfolio to purchase certain
private placements. One third of the outstanding shares of the Corporation,
represented in person or by proxy, shall be required to constitute a quorum at
the meeting although more than one third of the outstanding shares may be
required to be present to approve a particular issue. Any signed proxy will be
voted in favor of the proposals unless a choice is indicated to vote against or
to abstain from voting on that proposal. An abstention on any proposal will have
the same legal effect as a vote against such proposal. If a quorum is not
present at the meeting, or if a quorum is present but sufficient votes to
approve any of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the meeting to permit further solicitation
of proxies. In determining whether to adjourn the meeting, the following factors
may be considered: the nature of the proposals that are the subject of the
meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the meeting in person or by proxy. A shareholder vote may be
taken on one or more of the proposals in this proxy statement prior to any
adjournment if sufficient votes have been received for approval. The proposals
are considered "non-discretionary" and brokers that are record or nominee
holders of shares of the Corporation who have received no instructions from
their clients do not have discretion to vote on these matters. Absent voting by
the particular beneficial owners of such shares, such "broker non-voters" will
not be considered as votes cast in determining the outcome of the proposals. As
of December 19, 1995, the following persons or entities owned as much as 5% of
the indicated Portfolio's outstanding shares: Nature of Name & Address % of
Class Ownership U.S. Government Portfolio - Class B Mount Sinai Services 7901
Broadway Elmhurst Hospital Office Center Elmhurst, NY 11373 8.15% Record &
Beneficial As of December 19, 1995, the officers or directors of the
Corporation, collectively, beneficially owned, directly or indirectly (including
the power to vote or to dispose of any shares), less than 1% of the shares of
the Corporation's total outstanding shares of either the Money Market Portfolio
or the U.S. Government Portfolio. PROPOSAL 1. APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT MANAGEMENT CONTRACT TO BE EFFECTIVE AT THE TIME OF THE MERGER The
Directors of the Corporation unanimously recommend that the shareholders of each
Portfolio vote to approve a new investment management contract for the
Corporation, on behalf of each of the Portfolios, to be effective at the time of
the Merger. The new investment management contract will be substantially
identical to the existing investment management contract in effect for the
Corporation immediately prior to the time of the Merger. As explained above, the
Merger is being treated, for purposes of the 1940 Act, as a change in control of
NEIC and its subsidiary firms including the Manager, Reich & Tang Asset
Management L.P., that serve as advisers or sub-advisers to various mutual funds
including the Corporation. The 1940 Act provides that such a change in control
constitutes an "assignment" of these advisory and sub-advisory agreements under
which NEIC, the Manager and these related subsidiary firms provide advisory
services to the various mutual funds including the Corporation. The 1940 Act
further provides that such an "assignment" will result in the automatic
termination of each of those agreements, at the time of the Merger. The Merger.
In August of 1995, The New England and Metropolitan Life entered into an
agreement providing for the Merger of the two companies (the "Merger
Agreement"). Metropolitan Life will be the surviving company following the
Merger. Both The New England and Metropolitan Life are mutual insurance
companies. The Merger will result in the insurance policyholders of The New
England becoming policyholders of Metropolitan Life. The policyholders of The
New England will not receive any other payment, property or consideration in
connection with the Merger. The Merger will not be effected unless it is
approved by the requisite vote of the policyholders of both The New England and
Metropolitan Life. The Merger also requires approval by various government
regulatory agencies. In addition, consummation of the Merger is subject to
fulfillment of a number of other conditions, although the parties may waive some
or all of these conditions. There is no assurance that the Merger will in fact
be consummated. In addition, because it is impossible to predict with certainty
when the necessary regulatory approvals will be obtained and the other
conditions to the Merger be fulfilled, it is not known, as of the date of this
Proxy Statement, when the Merger will occur. The parties currently expect,
however, that the Merger will not occur until after the end of 1995. NEIC is
organized as a limited partnership. NEIC's sole general partner, New England
Investment Companies, Inc. ("NEIC Inc."), is a wholly-owned subsidiary of The
New England. As a result of the Merger, NEIC Inc. would become a direct or
indirect wholly-owned subsidiary of Metropolitan Life. The New England also owns
a majority of the outstanding limited partnership interests of NEIC. The Merger
would result in Metropolitan Life becoming the owner (directly or through a
wholly-owned subsidiary) of these limited partnership interests. The Merger
Agreement provides that, following the consummation of the Merger, Metropolitan
Life shall have the right to designate a majority of the board of directors of
NEIC Inc. Under the Merger Agreement, The New England and Metropolitan Life
agree that they will use their best efforts to satisfy the conditions of Section
15(f) of the 1940 Act. Section 15(f) provides that an investment adviser to a
registered investment company (such as the Corporation), and affiliated persons
of such investment adviser, may receive any amount or benefit in connection with
the sale of securities of, or a sale of any other interest in, such investment
adviser which results in an assignment of an investment advisory contract with
such investment company, if for a period of 3 years after the time of such
action, at least 75% of the board of such investment company are not interested
persons of such company's investment adviser or predecessor investment adviser,
and there is not imposed an unfair burden on such investment company as a result
of such transaction or any express or implied terms, conditions, or
understandings applicable thereto. Satisfaction of condition (1) above is not
expected to require any changes in the current composition of the Corporation's
Board of Directors. Information About Metropolitan Life. Metropolitan Life was
incorporated under the laws of New York in 1866 and since 1868 has been engaged
in the life insurance business under its present name. By the early 1900s, it
had become the largest life insurance company in the United States and is
currently the second largest life insurance company in the United States in
terms of total assets. Metropolitan Life's assets as of June 30, 1995 were over
$130 billion, and its adjusted capital as of that date exceeded $8 billion.
Subsidiaries of Metropolitan Life manage over $25 billion of assets for mutual
funds, institutional and other investment advisory clients. Directors'
Recommendation. The Directors unanimously recommend that shareholders approve
the new investment management contract between the Manager and the Corporation,
on behalf of each of the Portfolios, to be effective at the time of the Merger.
The new investment management contract will be substantially identical to the
investment management contract in effect immediately before the Merger which is
described on page 14 of this Proxy Statement. (The only difference will be that
the new investment management contract will be dated the date of the Merger and
will be in effect initially for a period of two years and from year to year
thereafter provided that its continuance is approved in accordance with the
terms of the contract and the applicable provisions of the 1940 Act.) In coming
to the recommendation set forth above, the Directors reviewed extensive
information about the Corporation, the Manager, NEIC and Metropolitan Life. The
Directors noted that, for purposes of the 1940 Act, the Merger constitutes a
change in control of NEIC and the Manager as well as NEIC's other subsidiaries
that act as advisers or sub-advisers for various other mutual funds. Although
the Merger is being treated as a change in control of NEIC and of the various
advisers and sub-advisers that are affiliated with NEIC, including the Manager,
the Merger is not expected to result in any change in the personnel, operations
or financial condition of NEIC or of such advisers or sub-advisers, including
the Manager. NEIC has indicated that each adviser and sub-adviser affiliated
with NEIC, including the Manager, will continue to be independently managed, as
has historically been the case. Thus, the Merger is not expected to result in
any changes in the investment approaches or styles of the advisers and
sub-advisers, including the Manger. The Directors accordingly concluded that it
is appropriate and desirable for the Corporation to continue, after the Merger,
the same investment management arrangements as is in effect immediately before
the Merger. Under the 1940 Act, such continuation requires, in the case of the
Corporation, the approval of each Portfolio's shareholders, by vote of the
lesser of (1) 67% of the shares of that Portfolio represented at the Meeting, if
more than 50% of the shares of that Portfolio are represented at the Meeting, or
(2) more than 50% of the outstanding shares of the Portfolio. In order that each
Portfolio may continue to receive investment management services following the
Merger, on the same basis as before the Merger, the Directors unanimously
recommend that shareholders of each Portfolio vote in favor of Proposal 1. If
the shareholders of either Portfolio do not approve Proposal 1, the investment
management contract relating to that Portfolio will terminate at the time of the
Merger although the Manager will continue to manage the Portfolios, and the
Portfolio will consider such alternative actions as are in the best interest of
that Portfolio. PROPOSAL 2. ELECTION OF DIRECTORS At the meeting, four directors
are to be elected, each to hold office until his successor has been elected and
has qualified. Drs. Mellon and Wong and Mr. Straniere were elected to the Board
and the Audit and Nominating Committees and have served as such since 1980 and
1984, respectively. Mr. Duff was elected by the Board of Directors to serve as
President and Director of the Corporation in October, 1994. All such persons
have consented to be named in this Proxy Statement and to serve as directors of
the Corporation if elected. The Board of Directors, which met four times during
the Corporation's fiscal year ended August 31, 1995, has no compensation
committee. Each director attended at least 75% of the board meetings held. The
Corporation has an Audit Committee of the Board of Directors, comprised of Drs.
Mellon and Wong and Mr. Straniere who are not "interested persons" of the
Corporation within the meaning of Section 2(a)(19) of the 1940 Act. The Audit
Committee meets annually to review the Corporation's financial statements with
the independent accountants and to report on its findings to the Board of
Directors. In addition, pursuant to a Distribution and Service Plan adopted by
the Corporation in accordance with the provisions of Rule 12b-1 under the
Investment Company Act of 1940, the Corporation has a Nominating Committee of
the Board of Directors comprised of Drs. Mellon and Wong and Mr. Straniere, to
whose discretion the selection and nomination of directors who are not
"interested persons" of the Corporation is committed. The Nominating Committee
met once with regard to the fiscal year ended August 31, 1995 regarding the
nomination of Mr. Duff. The Nominating Committee currently does not consider
nominees recommended by shareholders. The election of each director requires the
approval of a majority present at the meeting in person or by proxy. The
following is a list of the members of the Board of Directors, any other
positions each may now hold with the Corporation, the principal occupation of
each Director during the past five years and the nature, amount and percentage
of shares held by each in the Corporation. Amount and Nature of Beneficial
Principal Occupation Ownership at Name and Age During Preceding Five Years
12/19/95 % of Shares Steven W. Duff* 42 President and Director of the
Corporation and President of the Mutual Funds Division of the Manager since
September 1994. Mr. Duff was formerly Director of Mutual Fund Administration of
NationsBanc, with which he was associated from 1981 to August 1994. Mr. Duff is
also President and a Director of 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. and North Carolina Daily
Municipal Income Fund, Inc.; President and Trustee of Florida Daily Municipal
Income Fund, Institutional Daily Income Fund, and Pennsylvania Daily Municipal
Income Fund; President of Cortland Trust, Inc., Reich & Tang Government
Securities Trust and Tax Exempt Proceeds Fund, Inc.; and Executive Vice
President of Reich & Tang Equity Fund, Inc. [-0-] [-0-]
W. Giles Mellon
64
64
Director of the Corporation since its formation in 1979; Professor of Business
Administration in the Graduate School of Management, Rutgers University, with
which he has been associated since 1966. Dr. Mellon is also a Director of
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., and Reich & Tang Equity Fund,
Inc.; and a Trustee of Florida Daily Municipal Income Fund, Institutional Daily
Income Fund, Pennsylvania Daily Municipal Income Fund and Reich & Tang
Government Securities Trust. 1,569.88** [-0-]
Robert Straniere
53
Director of the Corporation since 1984; Member of New York State Assembly;
Partner, The Straniere Law Firm since 1981; Director of California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc. and Reich & Tang Equity Fund, Inc.; Trustee of
Florida Daily Municipal Income Fund, Institutional Daily Income Fund,
Pennsylvania Daily Municipal Income Fund and Reich & Tang Government Securities
Trust; and Director of Life Cycle Mutual Funds, Inc. [-0-] [-0-]
Dr. Yung Wong
56
Director of the Corporation since its formation in 1979; Director of Shaw
Investment Management (HK) Limited from 1994 to September, 1995; formerly
General Partner of Abacus Partners Limited Partnership (a general partner of a
venture capital investment firm) from 1984 to 1994; Director of California Daily
Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily
Tax Free Income Fund, Inc., Delafield Fund, Inc., Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc. and Reich & Tang Equity Fund, Inc.; and Trustee of
Florida Daily Municipal Income Fund, Institutional Daily Income Fund,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Government Securities
Trust and Eclipse Financial Asset Trust.
[-0-]
[-0-]
The address of each director and officer of the Corporation is 600 Fifth Avenue,
New York, New York 10020. In addition to Mr. Duff, who has served as President
of the Corporation since September, 1994, the officers of the Corporation are:
Dana E. Messina, 38, Vice President of the Corporation. Ms. Messina is an
Executive Vice President of the Manager since January, 1995 and has been
associated with the Manager and its predecessors in various capacities since
December, 1980. She is also an officer of other investment companies advised by
the Manager.
Lesley M. Jones, 47, Vice President of the Corporation. Ms. Jones is a Senior
Vice President of the Manager since September, 1993 and has been associated with
the Manager and its predecessors in various capacities since April, 1973. She is
also an officer of other investment companies advised by the Manager. Bernadette
N. Finn, 47, Vice President and Secretary of the Corporation. Ms. Finn is a Vice
President of the Manager since September, 1993 and has been associated with the
Manager and its predecessors in various capacities since September, 1970. She is
also an officer of other investment companies advised by the Manager. Molly
Flewharty, 44, Vice President of the Corporation. Ms. Flewharty is Vice
President of the Manager since September, 1993 and has been associated with the
Manager and its predecessors in various capacities since December, 1977. She is
also an officer of other investment companies advised by the Manager. Richard De
Sanctis, 39, Treasurer of the Corporation since October 1992. Mr. De Sanctis is
Treasurer of the Manager and its predecessors since December, 1990 and is an
officer of other investment companies advised by the Manager. The Corporation
paid an aggregate remuneration of $256,649 to its directors and to certain
employees of the Manager with respect to its fiscal year ended August 31, 1995,
consisting of $42,000 in aggregate directors' fees to the three disinterested
directors, and salaries and benefits aggregating $214,649 paid to certain
employees of the Manager pursuant to the terms of the Investment Management
Contract.
(1)
(2)
(3)
(4)
(5)
Name of
Person,
Position
Aggregate Compensation
From
Corporation
Pension or Retirement Benefits Accrued As Part of Fund Expenses
Estimated Annual Benefits Upon Retirement
Total Compensation From Corporation and Corporation Complex Paid to Directors*
Steven W. Duff, Director
0
0
0
0
W. Giles Mellon, Director
$14,000
0
0
$51,500
(13 Funds)
Robert Straniere, Director
$14,000
0
0
$51,500
(13 Funds)
Yung Wong, Director
$14,000
0
0
$51,500
(13 Funds)
* The total compensation paid to such persons by the Corporation and Corporation
Complex for the fiscal year ending August 31, 1995 (and, with respect to certain
of the funds in the Corporation Complex, estimated to be paid during the fiscal
year ending August 31, 1995). The parenthetical number represents the number of
investment companies (including the Corporation ) from which such person
receives compensation that are considered part of the same Corporation Complex
as the Corporation, because, among other things, they have a common investment
advisor.
PROPOSAL 3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends that the shareholders ratify the selection of
Messrs. McGladrey & Pullen LLP, independent public accountants, to audit the
accounts of the Corporation for the fiscal year ending August 31, 1996. Messrs.
McGladrey & Pullen LLP have audited the accounts of the Corporation since its
inception and do not have any direct financial interest or any material indirect
financial interest in the Corporation. A representative of Messrs. McGladrey &
Pullen LLP is not expected to be present at the shareholders' meeting. If the
shareholders do not ratify the Board's recommendation, the Board will submit
another proposal to the shareholders with a recommendation for independent
public accountants.
The ratification of selection of Independent Accountants requires the approval
of a majority present at the meeting in person or by proxy.
PROPOSAL 4. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE CORPORATION'S
FUNDAMENTAL INVESTMENT RESTRICTIONS TO PERMIT THE PURCHASE OF CERTAIN PRIVATE
PLACEMENTS
The Corporation currently operates under an investment restriction that
prohibits the Manager from purchasing any "restricted securities" for either the
Money Market Portfolio or the U.S. Government Portfolio. This restriction is
"fundamental" and therefore may only be changed by a vote of the shareholders of
each of the Portfolios. The Manager has recommended to the Directors that this
investment restriction be modified to permit the Money Market Portfolio to
purchase certain privately placed short-term securities that are utilized by
corporate issuers in a manner similar to commercial paper but, unlike commercial
paper are exempt from registration under Section 4(2) of the Securities Act of
1933 (hereinafter referred to as "4(2) paper"). This 4(2) paper is "technically
restricted" but, in the Manager's opinion is not illiquid. The Directors have
determined that the Manager's recommendation is in the best interest of the
Corporation and its shareholders and are recommending that the shareholders of
each Portfolio vote to approve this proposed change. Historically, the
Securities and Exchange Commission (the "SEC") has taken the position that
restricted, privately placed securities are illiquid, and therefore 4(2) paper
has been considered to be illiquid. The SEC has recently reconsidered this issue
and has stated that a fund's board of directors may determine that 4(2) paper is
liquid as long as certain conditions are met. These conditions are: (i) the
paper must not be in default; (ii) it must be rated by at least two nationally
recognized statistical rating organizations in one of the two highest rating
categories or if unrated the board must determine that it is of acceptable
credit quality; and (iii) the board must consider the trading market of the
specific security. Generally, the risks of investing in illiquid securities
include the exposure to greater risks or costs. A fund may not be able to sell
less marketable or illiquid instruments when the adviser considers it desirable
to do so or may have to sell them at a price lower than could be obtained if
they were more marketable. These factors may have an adverse impact on net asset
value. Less marketable and illiquid securities may be more difficult to value
due to the unavailability of reliable market quotations. Also, the sale of less
marketable securities may require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
more marketable securities. The Board of Directors, in making its determination,
considered certain factors, including that this 4(2) paper has become
increasingly used by corporate issuers and currently comprises approximately 50%
of the commercial paper market and that the expansion of the money market fund
industry has helped to create a large, actively traded market for 4(2) paper
that performs substantially the same in the commercial paper market. The Board
of Directors of the Corporation has determined that this 4(2) paper satisfying
all of the conditions set forth above will be liquid and, subject to shareholder
approval of this proposal, may be purchased by the Manager for the Money Market
Portfolio. Currently, each Portfolio may not invest in illiquid securities of
more than 10% of the value of its net assets. Accordingly, if shareholders
approve this proposal 4, the Corporation will modify investment restriction (c)
(5) in the current statement of additional information to exclude 4(2) paper
from this restriction. The proposed restriction will read as follows: "...the
Fund may not...(5) purchase restricted securities or purchase securities on
margin provided, however, with respect to the Money Market Portfolio restricted
securities shall not include privately placed securities that are exempt from
registration under Section 4(2) of the Securities Act of 1933 that the Directors
have determined to be liquid." INFORMATION REGARDING THE MANAGER The Manager for
the Corporation is Reich & Tang Asset Management L.P., a Delaware limited
partnership with principal offices at 600 Fifth Avenue, New York, New York
10020. The Manager was at August 31, 1995 manager, adviser or supervisor with
respect to assets aggregating approximately $7.9 billion. The Manager acts as
manager of fifteen other investment companies and also advises pension trusts,
profit sharing trusts and endowments. In addition to the Corporation, the
Manager's advisory clients include, among others, 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, 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.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Reich
& Tang Government Securities Trust and Tax Exempt Proceeds Fund, Inc. Attached
as Exhibit B is a Table of Fees for all funds advised by the Manager. The
Manager also advises pension trusts, profit-sharing trusts and endowments. Peter
S. Voss (49), G. Neal Ryland (54), Steven W. Duff (42) and Richard E. Smith, III
(45) are directors of Reich & Tang Asset Management, Inc. the general partner of
the Manager. Mr. Voss is President of Reich & Tang Asset Management, Inc. The
address of Messrs. Voss and Ryland is 399 Boylston Street, Boston Massachusetts
02116. Mr. Duff is President of the Mutual Fund Group of the Manager. Mr. Smith
is President of the Capital Management Group of the Manager. Their address is
600 Fifth Avenue, New York, New York 10020. NEIC Inc. is a holding company
offering a broad array of investment styles across a wide range of asset
categories through ten investment advisory/management affiliates and two
distribution subsidiaries which include, in addition to the Manager, Loomis,
Sayles & Company, L.P., Copley Real Estate Advisors, Inc., Back Bay Advisors,
L.P., Marlborough Capital Advisors, L.P., Westpeak Investment Advisors, L.P.,
Draycott Partners, Ltd., TNE Investment Services, L.P., New England Investment
Associates, Inc., an affiliate, Capital Growth Management Limited Partnership,
and Harris Associates. These affiliates in the aggregate are investment advisors
or managers to over 42 other registered investment companies. Pursuant to the
Investment Management Contract for each Portfolio, the Manager manages each
Portfolio'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 Corporation. The Manager provides persons satisfactory to the
Board of Directors of the Corporation to serve as officers of the Corporation.
Such officers, as well as certain other employees and directors of the
Corporation, may be directors or officers of Reich & Tang Asset Management,
Inc., the sole general partner of the Manager, or employees of the Manager or
its affiliates. The Investment Management Contract with the Manager's
predecessor was approved by the Board of Directors, including a majority of the
Directors who are not interested persons (as defined in the Act) of the
Corporation or the Manager and by the shareholders of each Portfolio at a
special meeting of shareholders, effective September 15, 1993. The re-execution
of the Investment Management Contract with the Manager was approved by the Board
of Directors, including a majority of the directors who are not interested
persons of the Corporation or Manager, effective October 1, 1994. The Investment
Management Contract for each Portfolio has a term which extends to April 30,
1996 and may be continued in force thereafter for successive twelve-month
periods beginning each May 1, provided that such continuance is specifically
approved annually by majority vote of the Corporation'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 each Portfolio on sixty days' written
notice when authorized either (1) by majority vote of its outstanding voting
shares or (2) by a vote of a majority of its Board of Directors or (3) 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, (i) the Money
Market Portfolio will pay an annual management fee of .30% of the Portfolio's
average daily net assets not in excess of $750 million, plus .29% of such assets
in excess of $750 million but not in excess of $1 billion, plus .28% of such
assets in excess of $1 billion but not in excess $1.5 billion, plus .27% of such
assets in excess of $1.5 billion and (ii) the U.S. Government Portfolio will pay
an annual management fee of .275% of the Portfolio's average daily net assets
not in excess of $250 million, plus .25% of such assets in excess of $250
million. The Manager, at its discretion, may voluntarily waive all or a portion
of the management fee. 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 and for distribution of the Corporation's shares. Pursuant
to an Administrative Services Contract with the Corporation, the Manager also
performs clerical, accounting supervision, office service and related functions
for the Corporation and provides the Corporation with personnel to (i) supervise
the performance of bookkeeping related services by Investors Fiduciary Trust
Company, the Corporation's bookkeeping agent, (ii) prepare reports to and
filings with regulatory authorities, and (iii) perform such other services as
the Corporation 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 Board of Directors has approved a change in the
Administration Services Contract that ceases all reimbursements to the Manager
and increases the Administration Fee payable to the Manager by 0.01% of the
Corporation's average daily net assets. For its services under the
Administrative Services Contract, the Manager will receive (after such increase)
from the Corporation an annual fee equal to .21% of each Portfolio's average
daily net assets not in excess of $1.25 billion, plus .20% of such assets in
excess of $1.25 billion but not in excess of $1.5 billion, plus .19% of such
assets in excess of $1.5 billion. Prior to such change, the Corporation paid the
Manager for such personnel and for rendering such services at rates which were
agreed upon by the Corporation and the Manager, provided that the Corporation
did not pay for services performed by any such persons who were also officers of
the general partner of the Manager. It was intended that such rates would be the
actual costs of the Manager. Under the Administrative Services Contract, the
Corporation may reimburse the Manager for all of the Corporation's operating
costs (in addition to the personnel reimbursement), including rent, depreciation
of equipment and facilities, interest and amortization of loans financing
equipment used by the Corporation and all the expenses incurred to conduct the
Corporation's affairs. The amounts of such reimbursements are to be agreed upon
between the Corporation and the Manager. No such reimbursements were made. 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 Corporation's shares. There can
be no assurance that such fees will be waived in the future. Investment
management fees and operating expenses which are attributable to both Classes of
a Portfolio will be allocated daily to each Class share based on the percentage
of outstanding shares at the end of the day. Additional shareholder services
provided by Participating Organizations to Class A shareholders pursuant to the
Plan shall be compensated by the Distributor from its shareholder servicing fee,
and the Manager from its management fee. Expenses incurred in the distribution
of Class B shares shall be paid by the Manager. Expense Limitation. The Manager
has agreed, pursuant to the Investment Management Contract, to reimburse the
Corporation 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 Corporation's shares are
qualified for sale. For the purpose of this obligation to reimburse expenses,
the Corporation'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 Corporation for its excess expenses
as described above, the Corporation has, under the Investment Management
Contract, confirmed its obligation for payment of all its other expenses,
including all operating expenses, taxes, brokerage fees and commissions,
commitment fees, certain insurance premiums, interest charges and expenses of
the custodian, transfer agent and dividend disbursing agent's fees,
telecommunications expenses, auditing and legal expenses, bookkeeping agent
fees, costs of forming the corporation and maintaining corporate existence,
compensation of Directors, officers and employees of the Corporation and costs
of other personnel performing services for the Corporation who are not officers
of the Manager or its affiliates, costs of investor services, shareholders'
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 Corporation's prospectus for delivery to
existing shareholders and of printing application forms for shareholder
accounts, and the fees and reimbursements payable to the Manager under the
Investment Management Contract and the Administrative Services Contract and the
Distributor under the Shareholder Servicing Agreement. The Corporation may from
time to time hire its own employees or contract to have management services
performed by third parties (including Participating Organizations) as discussed
herein, and the management of the Corporation intends to do so whenever it
appears advantageous to the Corporation. The Corporation's expenses for
employees and for such services are among the expenses subject to the expense
limitation described above. The following fees were paid to the predecessor
investment managers under the previous Investment Management Contracts or the
Manager under the current Investment Management Contract. For the Corporation's
fiscal year ended August 31, 1993, Reich & Tang L.P. received investment
management fees of $2,796,430 and $1,728,354 from the Money Market Portfolio and
the U.S. Government Portfolio, respectively. For the Corporation's fiscal year
ended August 31, 1994, Reich & Tang L.P. and its successor, NEIC, received
investment management fees totaling $3,479,792 and $1,383,715 from the Money
Market Portfolio and the U.S. Government Portfolio, respectively. For the
Corporation's fiscal year ended August 31, 1994, Reich & Tang L.P. and its
successor, NEICLP, received administration fees in the aggregate of $2,360,565
and $1,056,972 from the Money Market Portfolio and the U.S. Government
Portfolio, respectively. For the Fund's fiscal year ended August 31, 1995, NEIC
and the Manager received investment management fees totaling $1,459,899 and
$1,717,027 from the Money Market Portfolio and the U.S. Government Portfolio,
respectively. For the fiscal year ended August 31, 1995, the Manager received
administration fees in the aggregate of $ 1,602,115 and $1,323,622 from the
Money Market Portfolio and the U. S. Government Portfolio, respectively. No
reimbursements were payable to the Corporation by the predecessor managers
pursuant to the 1% expense limitation described above with respect to the fiscal
years ended August 31, 1993, August 31, 1994 and August 31, 1995. The Manager
now acts as investment manager or adviser for other persons and entities and may
under the Investment Management Contract act as investment manager or adviser to
other registered investment companies. At present, the Manager is investment
manager to fifteen other registered investment companies. Distribution and
Service Plan. Pursuant to Rule 12b-1 under the Act, the Securities and Exchange
Commission has required that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by the Rule. The Corporation's Board of Directors has adopted a
distribution and service plan (the "Plan") and, pursuant to the Plan, the
Corporation and the Manager have entered into a Distribution Agreement and a
Shareholder Servicing Agreement with Reich & Tang Distributors L.P. (the
"Distributor") as distributor of the Corporation's shares. Because the Merger
will be considered to result in the assignment of the Corporation's Distribution
Agreement with the Distributor, causing those agreements to terminate upon the
Merger, the Board of Directors of the Corporation approved a new Distribution
Agreement with Reich & Tang Distributors L.P. for the Corporation to take effect
if a new Investment Management Agreement is approved by shareholders of the
Corporation and upon consummation of the Merger. The new Distribution Agreement
would replace the current Distribution Agreement with the Distributor and would
be identical to those agreements, except for the dates of execution and
effectiveness. Reich & Tang Asset Management, Inc. serves as the sole general
partner for both Reich & Tang Asset Management L.P. and Reich & Tang
Distributors L.P. Reich & Tang Asset Management L.P. serves as the sole limited
partner of the Distributor. The Distributor's address is 600 Fifth Avenue, New
York, New York 10020. Under the Distribution Agreement, the Distributor, for
nominal consideration and as agent for the Corporation, will solicit orders for
the purchase of the Corporation's shares, provided that any subscriptions and
orders will not be binding on the Corporation until accepted by the Corporation
as principal. Under each Plan, the Portfolios and the Distributor will enter a
Shareholder Servicing Agreement with respect to the Class A shares. Under the
Shareholder Servicing Agreement, the Distributor receives from each Portfolio a
service fee equal to .25% per annum of each Portfolio's Class A shares average
daily net assets (the "Service Fee") for providing, with respect only to the
Class A shares, personal shareholder services and for the maintenance of
shareholder accounts. The Service Fee is accrued daily and paid monthly and any
portion of the Service Fee may be deemed to be used by the Distributor for
payments to Participating Organizations with respect to servicing their clients
or customers who are shareholders of the Corporation. The Plan provides, with
respect to Class A shares, 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 Corporation; (ii) to compensate
certain Participating Organizations for providing assistance in distributing the
Corporation's shares; and (iii) to pay the costs of printing and distributing
the Corporation's prospectus to prospective investors, and to defray the cost of
the preparation and printing of brochures and other promotional materials,
mailings to prospective stockholders, advertising, and other promotional
activities, including the salaries and/or commissions of sales personnel in
connection with the distribution of the Corporation's shares. The Distributor
may also make payments from time to time from its own resources, which may
include the Service Fee with respect to Class A shares and past profits for the
purpose enumerated in (i) above. The Distributor will determine the amount of
such payments made pursuant to the Plan, provided that such payments will not
increase the amount which each Portfolio is required to pay to the Manager and
the Distributor for any fiscal year under either the Investment Management
Contract in effect for that year, the Administrative Services Contract in effect
for that year or under the Shareholder Servicing Agreement in effect for that
year. The following information applies only to the Class A shares of the
Portfolios. For the fiscal year ended August 31, 1995, the Corporation paid a
Service Fee for expenditures pursuant to the Plan in amounts aggregating
$1,533,545 with respect to the Money Market Portfolio and $1,065,325 with
respect to the U.S. Government Portfolio. During such period, the Manager and
Distributor made payments pursuant to the Plan to or on behalf of Participating
Organizations of $3,100,084 with respect to the Money Market Portfolio and $
2,501,431 with respect to the U.S. Government Portfolio. The excess of such
payments over the total payments the predecessor managers and Distributor
received from the Corporation represents distribution and servicing expenses
funded by the Manager's predecessors and Distributor from their own resources
including the management fee. ALLOCATION OF PORTFOLIO BROKERAGE The
Corporation's purchases and sales of securities usually are principal
transactions. Portfolio securities are generally purchased directly from the
issuer or from an underwriter or market maker for the securities. There usually
are no brokerage commissions paid for such purchases and the Corporation at
present does not anticipate paying brokerage commissions. Should the Corporation
pay a brokerage commission on a particular transaction, the Corporation would
seek to effect the transaction at the most favorable available combination of
best execution and lowest commission. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price. No portfolio transactions are executed
with the Manager, or with an affiliate of the Manager, acting either as
principal or as paid broker. The frequency of transactions and their allocation
to various dealers is determined by the Manager in its best judgment and in a
manner deemed in the best interest of shareholders of the Corporation. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. Investment decisions for the Corporation will be made
independently from those for any other accounts or investment companies that may
be or become advised or managed by the Manager or its affiliates. If, however,
the Corporation and other investment companies or accounts advised or managed by
the Manager are contemporaneously engaged in the purchase or sale of the same
security, the transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely affect the price
paid or received by the Corporation or the size of the position obtainable for
the Corporation. In addition, when purchases or sales of the same security for
the Corporation and for other investment companies managed by the Manager occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchasers or
sellers. OTHER MATTERS As a Maryland corporation, the Corporation is not
required, and does not intend, to hold regular annual meetings. Shareholders who
wish to present proposals at any future shareholder meeting must present such
proposals to the Board at a reasonable time prior to the solicitation of any
shareholder proxy. The management does not know of any matters to be present at
this Special Meeting of Shareholders other than those mentioned in this Proxy
Statement. If any of the persons listed above is unavailable for election as a
director, an event not now anticipated, or if any other matters properly come
before the meeting, the shares represented by proxies will be voted with respect
thereto in accordance with the best judgment of the person or persons voting the
proxies.
By Order of the Board of Directors
BERNADETTE N. FINN, Secretary
December ____, 1995
EXHIBIT A (INVESTMENT MANAGEMENT CONTRACT BETWEEN THE CORPORATION AND REICH &
TANG ASSET MANAGEMENT, L.P.) INVESTMENT MANAGEMENT CONTRACT SHORT TERM INCOME
FUND, INC. the "Fund" Money Market Portfolio U.S. Government Portfolio the
"Portfolios"
New York, New York
1994
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022
Gentlemen:
We herewith confirm our agreement with you as follows:
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 thereto as may be made from time to time. (a) We
hereby employ you to manage the investment and reinvestment of our assets of our
Portfolios as above specified, and, without limiting the generality of the
foregoing, to provide the investment management services specified below.
Subject to the general control of our Board of Directors, you will make
decisions with respect to all purchases and sales of the portfolio securities of
the Portfolios. To carry out such decisions, you are hereby authorized, as our
agent and attorney-in-fact for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio securities you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such purchases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions. You will report to our Board of
Directors at each meeting thereof all changes in our portfolios since your prior
report, and will also keep us in touch with important developments affecting our
portfolios and, on your initiative, will furnish us from time to time with such
information as you may believe appropriate for this purpose, whether concerning
the individual entities whose securities are included in our portfolios, the
activities in which such entities engage, Federal income tax policies applicable
to our investments, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such statistical and analytical
information with respect to our portfolio securities as you may believe
appropriate or as we may reasonably request. In making such purchases and sales
of our portfolio securities, you will comply with the policies set from time to
time by our Board of Directors as well as the limitations imposed by our
Articles of Incorporation and by the provisions of the Internal Revenue Code and
the 1940 Act relating to regulated investment companies and the limitations
contained in the Registration Statement. 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. You or your affiliates
will also furnish us, at your own expense, such investment advisory supervision
and assistance 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. You and 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.
We agree, subject to the limitations described below, to be responsible for, and
hereby assume the obligation for payment of, all our expenses, including: (a)
brokerage and commission expenses, (b) Federal, state or local taxes, including
issue and transfer taxes incurred by or levied on us, (c) commitment fees and
certain insurance premiums, (d) interest charges on borrowings, (e) charges and
expenses of our custodian, (f) charges, expenses and payments relating to the
issuance, redemption, transfer and dividend disbursing functions for us, (g)
recurring and nonrecurring legal and accounting expenses, including those of the
bookkeeping agent, (h) telecommunications expenses, (i) the costs of organizing
and maintaining our existence as a corporation, (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affiliates, and costs of other personnel providing
clerical, accounting supervision and other office services to us as we may
request, (k) costs of stockholder services including, charges and expenses of
persons providing confirmations of transactions in our shares, periodic
statements to stockholders, and recordkeeping and stockholders' services, (l)
costs of stockholders' reports, proxy solicitations, and corporate meetings, (m)
fees and expenses of registering our shares under the appropriate Federal
securities laws and of qualifying such shares under applicable state securities
laws, including expenses attendant upon the initial registration and
qualification of such shares and attendant upon renewals of, or amendments to,
those registrations and qualifications, (n) expenses of preparing, printing and
delivering our prospectus to existing shareholders and of printing shareholder
application forms for shareholder accounts, (o) payment of the fees and expenses
provided for herein, under the Administrative Services Agreement and, with
respect to the Class A Shares of each Portfolio only, pursuant to the
Shareholder Servicing Agreement and Distribution Agreement, and (p) any other
distribution or promotional expenses contemplated by an effective plan adopted
by us pursuant to Rule 12b-1 under the Act. Our obligation for the foregoing
expenses is limited by your agreement to be responsible, while this Agreement is
in effect, for any amount by which the annual operating expenses for each
Portfolio (excluding taxes, brokerage, interest and extraordinary expenses)
exceed the limits on investment company expenses prescribed by any state in
which the shares for such Portfolio are qualified for sale. 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. In consideration of the foregoing the Portfolios will pay you
a fee at the annual rate of (i) .30% of the Money Market Portfolio's average
daily net assets not in excess of $750 million, plus .29% of such assets in
excess of $750 million but not in excess of $1 billion, plus .28% of such assets
in excess of $1 billion but not in excess of $1.5 billion, plus .27% of such
assets in excess of $1.5 billion and (ii) .275% of the U.S. Government
Portfolio's average daily net assets not in excess of $250 million, plus .25% of
such assets in excess of $250 million. 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 you shall request of us
in writing. You may use any portion of this fee for distribution of our shares,
or for making servicing payments to organizations whose customers or clients are
our shareholders. You may waive your right to any fee to which you are entitled
hereunder, provided such waiver is delivered to us in writing. Any reimbursement
of our expenses, to which we may become entitled pursuant to paragraph 3 hereof,
will be paid to us at the same time as we pay you. 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 or by a majority vote of the holders of the
outstanding voting securities of each respective Portfolio voting separately, as
defined in the 1940 Act and the rules thereunder, and, in either case, 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.
Upon the effectiveness of this Agreement, it shall supersede all previous
Agreements between us covering the subject matter hereof. With respect to each
Portfolio, this Agreement may be terminated at any time, without the payment of
any penalty, (i) by vote of a majority of the outstanding voting securities of
each respective Portfolio voting separately, as defined in the 1940 Act and the
rules thereunder, or (ii) by a vote of a majority of our entire Board of
Directors, on sixty days' written notice to you, or by you on sixty days'
written notice to us. 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.
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 employees or the officers and directors of Reich & Tang Asset Management,
Inc., your general partner, 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 any other 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,
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
U.S. Government Portfolio
By:
ACCEPTED: , 1996
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT INC.,
General Partner
By: ___________________________
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER)
FUND NAME
FEES
NET ASSETS (IN MILLIONS) AT
11-30-95
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
Management Fee
.30% of average daily net assets up to $750 million
.29% of average daily net assets in excess of $750 million up to $1
billion .28% of average daily net assets in excess of $1 billion up to
$1.5 billion .27% of average daily net assets in excess of $1.5 billion
895.3
U.S. Government Portfolio
Management Fee
.275% of average daily net assets up to $250 million
.25% of average daily net assets in excess of $250 million
610.4
Each Portfolio
Administrative Services Fee
.21% of average daily net assets up to $1.25 billion
.20% of average daily net assets in excess of $1.25 billion up to $1.5
billion .19% of average daily net assets in excess of $1.5 billion
STIF 895.3
STIG 610.4
Shareholder Servicing and Distribution Plan Fee (Class A only) .25% of average
daily net assets
STIF (A) 671.3
STIG (A) 504.4
Management Fee
.325% of average daily net assets up to $750 million
.30% of average daily net assets in excess of $750 million
626.7
DAILY TAX FEE INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets up to $1.25 million
.20% of average daily net assets in excess of $1.25 million up to
$1.5 billion
.19% in excess of $1.5 billion
626.7
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 453.4
REICH & TANG EQUITY FUND, INC.
Management Fee
.80% of average daily net assets
109.5
Administrative Services Fee
.21% of average daily net assets
Management Fee
.80% of average daily net assets
DELAFIELD FUND, INC.
Administrative Services Fee
.21% of average daily net assets
44.0
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
103.2
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
Management Fee
.30% of average daily net assets
NEW YORK DAILY TAX FEE
INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
263.1
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
Management Fee
.35% of average daily net assets
REICH & TANG GOVERNMENT SECURITIES TRUST
Administrative Services Fee
.21% of average daily net assets
.7
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
Management Fee
.30% of average daily net assets
CALIFORNIA DAILY TAX FEE INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
159.3
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
Management Fee
.30% of average daily net assets
MICHIGAN DAILY TAX FREE
INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
59.7
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
TAX EXEMPT PROCEEDS
FUND, INC.
All Inclusive Management Fee*
.40% of average daily net assets up to $250 million
.35% of average daily net assets in excess of $250 million up to
$500 million
.30% of average daily net assets in excess of $500 million
265.4
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
135.1
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
CORTLAND TRUST, INC.
All Portfolios
All Inclusive Management Fee
.80% of the first $500 million .775% of the next $500 million .75% of
the next $500 million .735% in excess of $1.5 billion
1,884.4
Distribution Fee
.25% of average daily net assets
1,503.3
Distribution Fee (Live Oak Shares)
.20% of average daily net assets
381.1
Management Fee
.40% of average daily net assets
NORTH CAROLINA DAILY
MUNICIPAL INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
171.8
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
Management Fee
.40% of average daily net assets
PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
Administrative Services Fee
.21% of average daily net assets
.20% of average daily net assets in excess of $1.25 billion up to 1.5 billion
.19 of average daily net assets in excess of $1.5 billion
41.0
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
Management Fee
.40% of average daily net assets
FLORIDA DAILY MUNICIPAL FUND
Administrative Services Fee
.21% of average daily net assets
40.6
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 19.9
INSTITUTIONAL DAILY INCOME FUND
Investment Management Fee
.08% of average daily net assets
All Portfolios
Administrative Services Fee
.05% of average daily net assets
350.8
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 271.7
PH2-1
* Such person is an "interested person" of the Corporation within the meaning of
Section 2(a) (19) of the 1940 Act.
** Short Term U.S. Government Portfolio
* Management Contract requires the Manager, not the Fund to bear all other fund
expenses; therefore, the fee payable under the Management Contract is the only
expense of the Fund.
