Schedule 14A Information required in proxy statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or Section 240.14a-12
Cortland Trust, Inc.
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(Name of Registrant as Specified in its Charter)
Jules Buchwald
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check appropriate box:
[x] $125 per Exchange Act Rule 20a-1(c)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j) (3) [ ] Fee computed on table below per Exchange Act Rules 14a-6(j)(4)
and 0-11
1. Title of each class of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
- - - --------------------------------------------------------------------------------
4. Proposed maximum value of transaction
<PAGE>
Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid.
- - - --------------------------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
- - - --------------------------------------------------------------------------------
3. Filing Party:
- - - --------------------------------------------------------------------------------
4. Date Filed:
- - - --------------------------------------------------------------------------------
<PAGE>
PRELIMINARY PROXY SOLICITATION MATERIAL
For the information of the Securities and Exchange Commission
CORTLAND
IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you know, the Cortland Trust, Inc. ("Cortland") money market funds
are managed by Reich & Tang Asset Management L.P. (the "Manager"), who also
serves as investment adviser. 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.
As a shareholder in a Cortland Money Market 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 agreements between the Manager and Cortland.
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 agreements are the
same as those under the current agreements. The other terms of the agreements
are the same in all material respects to the existing agreements. There are no
changes contemplated in the objectives or policies of the Funds, the management
or operations of the Manager relating to Cortland and its Funds, the personnel
managing the Funds, or the shareholder or other business activities of the
Funds.
The Board of Directors of Cortland has determined that the new
agreements would be in the best interests of the Funds and their shareholders.
Accordingly, the Board of Directors of Cortland approved the new agreements and
voted to recommend them to shareholders for approval.
The special shareholder meeting also provides an opportunity to
request approval of a fundamental investment restriction that is described in
the proxy statement.
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,
CORTLAND TRUST, INC.
<PAGE>
PRELIMINARY PROXY SOLICITATION MATERIAL
For the information of the Securities and Exchange Commission
LIVE OAK
IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you may know, the Live Oak shares of the Cortland Trust, Inc. money
market funds are managed by Reich & Tang Asset Management L.P. (the "Manager"),
who also serves as investment adviser. 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.
As a shareholder, 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 agreements between the
Manager and the Funds.
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 agreements are the
same as those under the current agreements. The other terms of the agreements
are the same in all material respects to the existing agreements. There are no
changes contemplated in the objectives or policies of the Funds, the management
or operations of the Manager, the personnel managing the Funds, or the
shareholder or other business activities of the Funds.
The Board of Directors has determined that the new agreements would be
in the best interests of the Funds and their shareholders. Accordingly, the
Board of Directors approved the new agreements and voted to recommend them to
shareholders for approval.
The special shareholder meeting also provides an opportunity to
request approval of a fundamental investment restriction that is described in
the proxy statement.
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,
Reich & Tang Asset Management L.P.
<PAGE>
PRELIMINARY PROXY SOLICITATION MATERIAL
For the information of the Securities and Exchange Commission
CORTLAND TRUST, INC.
600 Fifth Avenue
New York, New York 10020
NOTICE OF SPECIAL MEETING
To the Shareholders of CORTLAND TRUST, INC.:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Cortland Trust, Inc. (the "Company") will be held at the offices
of Reich & Tang Asset Management L.P., 600 Fifth Avenue, New York, New York on
Monday, February 26, 1996 at 9:00 a.m. Eastern time, for the purposes of voting
on the proposals set forth below, as well as for the transaction of such other
business as may be properly brought before the Meeting. The proposals are
discussed in detail in the accompanying Proxy Statement dated , 1995.
Proposal I: To approve or disapprove, as to the three investment
portfolios of the Company (the "Funds"), proposed new
Management/Investment Advisory Agreements between the Company and
Reich & Tang Asset Management L.P. (the "Manager"), to be effective
upon the merger of New England Mutual Life Insurance Company into
Metropolitan Life Insurance Company, substantially identical to the
Management/Investment Advisory Agreements in effect immediately prior
to such merger; and
Proposal II: To approve or disapprove, as to each of the
Company's Funds, a fundamental investment restriction concerning the
issuance of senior securities.
The Directors have fixed the close of business on November 29, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or at any adjournments thereof. The enclosed proxy is
being solicited on behalf of the Directors.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE
FILL IN, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. IT IS MOST
IMPORTANT AND IN YOUR INTEREST FOR YOU TO SIGN YOUR PROXY CARD AND RETURN IT.
THE PROXY IS REVOCABLE AT ANY TIME BEFORE ITS USE.
Bernadette N. Finn
Secretary
, 1995
P.S. A postage paid return envelope is enclosed for your convenience so that
you may return your proxy card as soon as possible.
<PAGE>
PROXY STATEMENT
Dated , 1995
CORTLAND TRUST, INC.
600 Fifth Avenue
New York, New York 10020
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
February 26, 1996
9:00 a.m. Eastern Time
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cortland Trust, Inc. (the "Company") for
use at a Special Meeting of Shareholders to be held at 9:00 a.m. Eastern time on
Monday, February 26, 1996 (the "Meeting") and at any adjournments thereof. This
Proxy Statement was first mailed to shareholders on or about
, 1995. Even though you sign and return the accompanying proxy, you
may revoke it by giving written notice of such revocation to the Secretary of
the Company prior to the Meeting or by delivering a subsequently dated proxy or
by attending and voting at the Meeting in person. The Company expects to solicit
proxies principally by mail, but the Company or agents appointed by the Company
may also solicit proxies by telephone, telegraph or personal interview. The
costs of the Meeting, including the solicitation of proxies, will be borne by
Metropolitan Life Insurance Company and New England Mutual Life Insurance
Company.
Summary of Proposal I. The first purpose of the Meeting is to approve
or disapprove, as to each of the Company's Funds, a new Management/Investment
Advisory Agreement between the Company and Reich & Tang Asset Management L.P.
(the "Manager") (collectively, hereinafter referred to as the "Proposed
Agreements"). Your consideration of a new Management/Investment Advisory
Agreement, with respect to your Fund, is necessitated by reason of an agreement
providing for the merger (the "Merger") of New England Mutual Life Insurance
Company ("The New England") into Metropolitan Life Insurance Company
("Metropolitan Life"). Under the terms of each Fund's current
Management/Investment Advisory Agreement (collectively, hereinafter referred to
as the "Current Agreements"), and as required by the Investment Company Act of
1940, as amended (the "1940 Act"), the Current Agreements automatically
terminate upon their assignment. As more fully described in Proposal I, the
consummation of the Merger will be considered to be an assignment of each Fund's
Current Agreement, thereby causing its termination. Thus, in order for each Fund
to continue to receive management and investment advisory services from the
Manager after the assignment, it is necessary that a new Management/Investment
Advisory Agreement be approved by the shareholders of each Fund.
The Directors of the Company have approved a new Management/Investment
Advisory Agreement for each Fund based on the understanding that the Merger will
not result in any change in the relationship between the Company and the
Manager, the investment objectives or policies of the Funds, the management or
operations of the Manager relating to the Funds, the personnel managing the
Funds, or the shareholder services or other business activities of the Funds.
For each Fund, the Manager's responsibilities and fees under the Proposed
Agreements are identical to its responsibilities and fees under the Current
Agreements.
Summary of Proposal II. The second purpose of the Meeting is to
approve or disapprove, as to each of the Company's Funds, a fundamental
investment restriction concerning the issuance of senior securities. Your
consideration of a fundamental investment restriction concerning the issuance of
senior securities is necessitated in order to comply with 1940 Act requirements
concerning the issuance of senior securities and augment the disclosure in the
Company's prospectuses and statements of additional information with respect to
certain current investment practices which may be considered the issuance of
senior securities.
General Information. The Company is a Maryland corporation whose
shares are divided into three series portfolios (the "Funds"), each of which
represents shares of common stock in a separate investment portfolio with its
own investment objectives and policies. The Funds are designated as the Cortland
General Money Market Fund, the U.S. Government Fund and the Municipal Money
Market Fund. The Cortland General Money Market Fund consists of three classes:
the Pilgrim General Money Market Fund Class, the Cortland General Money Market
Fund Class and the Live Oak General Money Market Fund Class. The U.S. Government
Fund consists of two classes: the U.S. Government Fund Class and the Live Oak
U.S. Government Fund Class. The Municipal Money Market Fund consists of two
classes: the Municipal Money Market Fund Class and the Live Oak Municipal Money
Market Fund Class. The Board of Directors has fixed the close of business on
November 29, 1995, as the record date for the determination of the shareholders
entitled to notice of and to vote at the Meeting or at any adjournments thereof.
As of the record date, there were ______________ shares of common stock of the
Company outstanding, comprised of _________________ shares of the Cortland
General Money Market Fund, _____________ shares of the U.S. Government Fund and
____________ shares of the Municipal Money Market Fund. Each share is entitled
to one vote on each matter to come before the Meeting. To the best of the
knowledge of the Company, no person beneficially owned more than 5% of its
outstanding shares on the record date. As of the record date, the officers and
directors of the Company, collectively, beneficially owned, directly or
indirectly (including the power to vote or to dispose of any shares), less than
1% of the shares of any Fund's total outstanding shares.
The affirmative vote of a "majority of the outstanding voting
securities" of each Fund is required for the approval of the Proposed Agreement
applicable to the Fund (Proposal I) and for the approval of a fundamental
investment restriction concerning the Fund's issuance of senior securities
(Proposal II). For purposes of this requirement, a "majority of the outstanding
voting securities" of each Fund has the meaning assigned to that term in the
1940 Act, i.e. (i) 67% or more of the shares of such Fund present at the Meeting
if more than 50% of the outstanding shares of such Fund are represented at the
Meeting in person or by proxy, or (ii) more than 50% of the outstanding shares
of such Fund, whichever is less.
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 for one or more of the Funds on one or
more of the Proposals in this proxy statement prior to any adjournment if
sufficient votes have been received for approval. If a shareholder abstains from
voting as to any matter, then the shares held by such shareholder shall be
deemed present at the Meeting for purposes of determining a quorum and for
purposes of calculating the vote with respect to such matter, but shall not be
deemed to have been voted in favor of such matter. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on a matter, then the
shares covered by such non-vote shall be deemed present at the Meeting for
purposes of determining a quorum but shall not be deemed represented at the
Meeting for purposes of calculating the vote with respect to such matter.
The persons named in the accompanying proxy will vote the number of
shares represented thereby as directed in the proxy or, in the absence of such
direction FOR approval of a Fund's Proposed Agreement (Proposal I) and FOR
approval of a Fund's fundamental investment restriction concerning the issuance
of senior securities (Proposal II).
PROPOSAL I
APPROVAL OR DISAPPROVAL OF NEW
MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS
CURRENT MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS
The Manager. Reich & Tang Asset Management L.P. (the "Manager"), 600 Fifth
Avenue, New York, NY 10020, presently serves as the Company's manager and as
each Fund's investment adviser pursuant to Management/Investment Advisory
Agreements dated October 10, 1994 with respect to each Fund. See also
"Information Regarding the Manager."
The Current Agreements. Under the Current Agreements, as the Company's
manager, the Manager: (a) supervises and manages all aspects of the Company's
operations and the operations of each of the Company's three Funds; (b)
furnishes the Company with such office space, heat, light, utilities, equipment
and personnel as may be necessary for the proper operation of the Funds and the
Company's principal executive office; (c) monitors the performance by all other
persons furnishing services to the Company on behalf of each Fund and the
shareholders thereof and periodically reports on such performance to the Board
of Directors; (d) investigates, selects and conducts relationships on behalf of
the Company with custodians, depositories, accountants, attorneys, underwriters,
brokers and dealers, insurers, banks, printers and other service providers and
entities performing services to the Funds and their shareholders; (e) furnishes
the Funds with all necessary accounting services; and (f) reviews and supervises
the preparation of all financial, tax and other reports and regulatory filings.
The expenses of furnishing the foregoing are borne by the Manager. See also the
discussion under "Expenses".
Pursuant to the terms of the Current Agreements, the Manager, as each
Fund's investment adviser: (a) provides the Company with certain executive,
administrative and clerical services as are deemed advisable by the Board of
Directors; (b) arranges, but does not pay for, the periodic updating of
prospectuses and statements of additional information and supplements thereto,
proxy materials, tax returns, reports to each Fund's shareholders and reports to
and filings with the Securities and Exchange Commission and state Blue Sky
authorities; (c) provides the Board of Directors on a regular basis with
financial reports and analyses of the Funds' operations and the operation of
comparable investment companies; (d) obtains and evaluates pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally or any
of the Funds and whether concerning the individual issuers whose securities are
included in the portfolios of the Company's three Funds; (e) determines which
issuers and securities shall be represented in the Funds' portfolios and
regularly reports thereon to the Company's Board of Directors; (f) formulates
and implements continuing programs for the purchases and sales of securities for
the Funds; and (g) takes, on behalf of the Funds, all actions which appear to be
necessary to carry into effect such purchase and sale programs, including the
placing of orders for the purchase and sale of portfolio securities. Any
investment program undertaken by the Manager will at all times be subject to the
policies and control of the Board of Directors.
In consideration of the services to be provided by the Manager and the
expenses to be borne by the Manager under the Current Agreements, the Manager
receives annual fees from each of the Funds, calculated daily and paid monthly,
of 0.80% of the first $500 million of the Company's average daily net assets,
0.775% of the average daily net assets of the Company in excess of $500 million
but less than $1 billion, 0.75% of the average daily net assets of the Company
in excess of $1 billion but less than $1.5 billion, plus 0.725% of the Company's
average daily net assets in excess of $1.5 billion. During the fiscal year ended
March 31, 1995, the Company paid the Manager $7,063,419, $1,686,218 and
$1,755,183, respectively, under the Current Agreements with the Cortland General
Money Market Fund, the U.S. Government Fund and the Municipal Money Market Fund.
During such year, the Manager reduced its fees to the U.S. Government Fund by
$17,874. The Company's comprehensive fee is higher than most other money market
mutual funds which do not offer services that the Company offers. However, most
other funds bear certain expenses that are borne by the Manager. See also the
discussion under "Expenses".
The Current Agreements were originally approved by the Board of
Directors of the Company, including a majority of the Directors who are not
parties to such Current Agreements or "interested persons" of any such party,
for an initial term expiring on September 15, 1995. Each Current Agreement was
approved for continuance by the Board of Directors of the Company on August 29,
1995 and will continue in effect from year to year if it is specifically
approved at least annually by the Board of Directors and by the affirmative vote
of a majority of the Directors who are not parties to such Current Agreement or
"interested persons" of any such party by votes cast in person at a meeting
called for such purpose. The Funds or the Manager may terminate the Current
Agreements on 60 days' written notice without penalty. Each Current Agreement
terminates automatically in the event of its "assignment", as defined in the
1940 Act. The Manager shall not be liable to the Funds or to their shareholders
for any act or omission by the Manager for any loss sustained by a Fund or its
shareholders except in the case of the Manager's willful misfeasance, bad faith,
gross negligence or reckless disregard of duty, except that in providing
shareholder account record services, the Manager is liable to the Funds or to
their shareholders for any error caused by the Manager or its employees'
negligence, bad faith or willful misconduct. The Company's (Funds) right to use
the name "Cortland" in its name in any form or combination may terminate upon
termination of the Manager as the Company's (Funds') investment manager.
Expenses. Pursuant to the Current Agreements, the Manager furnishes,
without cost to the Company, the services of the President, Secretary and one or
more Vice Presidents of the Company and such other personnel as are required for
the proper conduct of the Funds' affairs and to carry out their obligations
under the Current Agreements. The Manager maintains at its expense and without
cost to the Funds, a trading function in order to carry out its obligations to
place orders for the purchase and sale of portfolio securities for the Funds.
The Manager, on behalf of its affiliate, Reich & Tang Distributors L.P. (the
"Distributor"), pays out of the management fees from each of the Funds and
payments under plans of distribution the expenses of printing and distributing
prospectuses and statements of additional information and any other promotional
or sales literature used by the Distributor or furnished by the Distributor to
purchasers or dealers in connection with the public offering of the Funds'
shares, the expenses of advertising in connection with such public offering and
all legal expenses in connection with the foregoing.
Except as set forth below, the Manager pays all expenses of the Funds,
including, without limitation: the charges and expenses of any registrar, any
custodian or depository appointed by the Company for the safekeeping of its
cash, portfolio securities and other property, and any stock transfer, dividend
or accounting agent or agents appointed by the Company; all fees payable by the
Company to federal, state or other governmental agencies; the costs and expenses
of engraving or printing certificates representing shares of the Company (the
Company does not issue share certificates at the present time); all costs and
expenses in connection with the registration and maintenance of registration of
the Funds and their shares with the Securities and Exchange Commission and
various states and other jurisdictions (including filing fees, legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Company and supplements thereto to the Company's shareholders
and to potential shareholders of the Funds; all expenses of the shareholders'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Funds' shares;
routine fees and expenses of legal counsel and of independent accountants, in
connection with any matter relating to the Company; postage; insurance premiums
on property or personnel (including officers and directors) of the Company which
inure to its benefit; and all other charges and costs of the Funds' operations
unless otherwise explicitly assumed by the Company. The Company is responsible
for payment of the following expenses not borne by the Manager: (a) the fees of
the Directors who are not "interested persons" of the Company, as defined by the
1940 Act, and travel and related expenses of the Directors for attendance at
meetings, (b) interest, taxes and brokerage commissions (which can be expected
to be insignificant), (c) extraordinary expenses, if any, including, but not
limited to, legal claims and liabilities and litigation costs and any
indemnification related thereto, (d) any shareholder service or distribution fee
payable by the Company under a plan of distribution, and (e) membership dues of
any industry association.
Expenses which are attributable to any of the Company's Funds are
charged against the income of such Fund in determining net income for dividend
purposes. Expenses of the Company which are not directly attributable to the
operations of any single Fund are allocated among the Funds based upon the
relative net assets of each Fund.
The Manager has agreed to reduce its aggregate fees for any fiscal year, or
to reimburse each Fund, to the extent required so that the amount of the
ordinary expenses of each Fund (excluding brokerage commissions, interest, taxes
and extraordinary expenses such as litigation costs) paid or incurred by any of
the Funds do not exceed the expense limitations applicable to the Funds imposed
by the securities laws or regulations of those states or jurisdictions in which
such Fund's shares are registered or qualified for sale. Currently, the most
restrictive of such expense limitations would require the Manager to reduce its
respective fees to the extent required so that ordinary expenses of a Fund
(excluding interest, taxes, brokerage commissions and extraordinary expenses)
for any fiscal year do not exceed 2 1/2% of the first $30 million of the Fund's
average daily net assets, plus 2% of the next $70 million of the Fund's average
daily net assets, plus 1 1/2% of the Fund's average daily net assets in excess
of $100 million. Expense reductions under state securities laws are unlikely
because most of the expenses of the Company can be expected to be borne by the
Manager.
PROPOSED MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS
The Merger. As of August 16, 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 the
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 will 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. New England
Investment Companies L.P. ("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 in NEIC. The Merger would result in Metropolitan Life becoming the
owner (directly or through a wholly-owned subsidiary) of this limited
partnership interest in NEIC. 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 Company), 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
(1) for 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
(ii) 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 Company'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 1900's, 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.
Assignment of the Current Agreements. As required by the 1940 Act, the
Current Agreements for each Fund provide for their automatic termination upon
their "assignment". The Merger is being treated, for purposes of the 1940 Act,
as a change of control of NEIC and its subsidiary and affiliate firms that serve
as managers/investment advisers of the Funds. Under the 1940 Act, such a change
of control constitutes as "assignment" (as defined in the 1940 Act) of the
agreements under which those firms serve as managers/investment advisers to the
Funds, and results in the automatic termination of those agreements, effective
at the time of the Merger. At the present time, it is anticipated that the
Merger and, thus, the assignment will take place no earlier than the first
calendar quarter of 1996. Should the Proposed Agreements not be approved and the
Merger not consummated, each Fund's Current Agreements would remain in effect as
described below. In order for each Fund to continue to receive the services now
provided by the Manager after the Merger is consummated, it will be necessary
for the Company, on behalf of its Funds, to enter into the Proposed Agreements
to become effective upon the consummation of the Merger and the corresponding
termination of the Funds' Current Agreements pursuant to their terms as required
by the 1940 Act.
If the Merger is not consummated for any reason (including the
disapproval of the Proposed Agreements by the Funds' shareholders), the Current
Agreements for each Fund would continue in full force and effect from year to
year, provided such continuance is approved at least annually by the Board of
Directors of the Company or by vote of the shareholders of the Fund and, in
either case, by a majority of the Directors of the Company who are not parties
to the Current Agreements or "interested persons" within the meaning of the 1940
Act of any such party (the "Disinterested Directors").
The Proposed Agreements. The terms of the proposed
Management/Investment Advisory Agreements (the "Proposed Agreements") between
the Company and the Manager with respect to the Funds are the same in all
material respects as the relevant terms of the Current Agreements between the
same parties, except for their effective and termination dates. A copy of the
form of proposed Management/Investment Advisory Agreement for the Municipal
Money Market Fund is attached to this Proxy Statement as Exhibit A. The proposed
Management/Investment Advisory Agreements for the Cortland General Money Market
Fund and the U.S. Government Fund are identical to the form of the Agreement
attached to this Proxy Statement as Exhibit A, except for name changes.
Shareholders should refer to Exhibit A for the complete terms of the proposed
Management/Investment Advisory Agreement.
DIRECTORS CONSIDERATION OF PROPOSED
MANAGEMENT/INVESTMENT ADVISORY AGREEMENTS
The Proposed Agreements were approved by the Board of Directors of the
Company by votes cast in person at a meeting held on November 14, 1995
specifically called for that purpose. The approval given included the favorable
vote of all of the Disinterested Directors of the Company present in person at
the meeting.
Section 15(c) of the 1940 Act (the federal statute under which the
Company is regulated as a registered investment company) provides, in substance
and, as pertinent, that before any person may serve as investment adviser to a
fund, the fund's board of directors must approve the advisory agreement. In
making their determination, it is the directors' duty to request and the duty of
the prospective adviser to furnish, "such information as may reasonably be
necessary to evaluate the terms" of the proposed advisory agreement.
As required, the Directors of the Company requested from the
principals of the Manager, NEIC and Metropolitan Life, and each furnished,
information deemed necessary by the Board in making its evaluation. The
Disinterested Directors met independently with their counsel on November 14,
1995 and held discussions in which they considered and reviewed the various
agreements and other relevant information.
In approving the Proposed Agreements, the Disinterested Directors,
separately, and the entire Board of Directors considered the following
significant factors, among others: (i) the management fee and the management and
investment advisory services to be performed under the Proposed Agreements are
the same as those under the Current Agreements, and the other terms of the
agreements are the same in all material respects; (ii) there are no changes
contemplated in the objectives or policies of the Funds; (iii) there are no
changes contemplated in the management or operations of the Manager relating to
the Company and its Funds; (iv) there are no changes contemplated in the
personnel managing the Funds or the shareholder or other business activities of
the Funds; (v) that following the Merger, the current business of the Manager
will continue to operate generally autonomously of the other NEIC and
Metropolitan Life businesses; (vi) that following the Merger, the Manager will
have greater financial resources than the Manager as currently constituted, and
therefore there is greater assurance that the Manager will be able to bear all
the expenses related to the management and distribution of the Funds; and (vii)
the likelihood that sales of the Company's Funds will be enhanced by the
Manager's reputation, distribution capabilities and financial resources
following the Merger. The Directors also considered the Manager's policies with
respect to the placing of portfolio transactions for the Funds with brokers or
dealers who furnish brokerage and research services to the Manager. (Those
policies are described under "Portfolio Transactions".) The Directors also
considered that The New England and Metropolitan Life have agreed that they will
use their best efforts to satisfy the provisions of Section 15(f) of the 1940
Act (described above).
As a result of their considerations, the Board of Directors of the
Company determined that the Proposed Agreements would be in the best interests
of the Funds and their shareholders. The Board of Directors also determined that
the Proposed Agreements would not "result in any unfair burden" to the Funds
within the meaning of the 1940 Act. Accordingly, the Board of Directors of the
Company approved the Proposed Agreements and voted to recommend them to
shareholders for approval.
The Proposed Agreements will become effective upon the obtaining of
shareholder approval and upon consummation of the Merger. If the Proposed
Agreements between the Company and the Manager are approved by the Funds'
shareholders, they will continue in effect for a period of two years from the
date of closing of the Merger and, from year to year thereafter, if approved, at
least annually, by the Board of Directors, or by a majority of the outstanding
voting securities of a Fund, as pertinent and, in either event, by a majority of
the Disinterested Directors at a meeting called for the specific purpose of
voting on such agreements. The Proposed Agreements may each be terminated at any
time without penalty either by the vote of a majority of the Board of Directors,
or by the vote of a majority of a Fund's outstanding voting securities, or by
the Manager, on 60 days' prior written notice to the Company.
Although approval of the Proposed Agreements by Fund shareholders is a
condition to the closing of the Merger generally, the Company understands that
The New England and Metropolitan Life may nevertheless proceed with the Merger,
even if the Proposed Agreements are not approved by Fund shareholders. If the
Merger occurs nonetheless, the Current Agreements with the Manager would be
deemed to terminate automatically. Under those circumstances, the Board of
Directors of the Company would consider what alternative actions to take and may
request Fund shareholders to reconsider the Proposed Agreements. In the event of
a termination of the Current Agreements, the Manager may continue to render
management and investment advisory services to the Company and its Funds in the
manner and to the extent permitted by the 1940 Act and the rules and regulations
thereunder.
In order that the Funds may continue to receive management/investment
advisory services following the Merger, under arrangements the same as those in
effect before the Merger, the Directors unanimously recommended that
shareholders of each Fund vote in favor of Proposal I. A vote of a majority of
the outstanding voting securities of a Fund is required in order to approve
Proposal I with respect to such Fund. If the Merger described in Proposal I is
not consummated, Proposal I will not be implemented with respect to a Fund, even
if the shareholder vote necessary to adopt it is received.
RELATED BOARD ACTION
Because the Merger will be considered to result in the assignment of
the Funds' Distribution Agreements with Reich & Tang Distributors L.P. (the
"Distributor"), causing those agreements to terminate as well, at their November
14, 1995 meeting, in anticipation of the Merger, the Board of Directors of the
Company approved a new Distribution Agreement with Reich & Tang Distributors
L.P. for each of the Funds to take effect if a new Management/Investment
Advisory Agreement is approved by shareholders of each Fund and upon
consummation of the Merger. The new Distribution Agreements would replace the
current Distribution Agreements with the Distributor and would be identical to
those agreements, except for the dates of execution and effectiveness.
Pursuant to the terms of the current and proposed Distribution
Agreements, the Distributor, located at 600 Fifth Avenue, New York, NY 10020 has
the exclusive right to enter into dealer agreements with securities dealers who
sell shares of the Funds and with financial institutions which may furnish
services to shareholders on behalf of the Company. Pursuant to plans of
distribution (the "Plans") approved by the Funds' shareholders, each class of
shares of the Funds may pay to certain securities dealers and financial
institutions a specified amount of the value of the classes' assets on an
annualized basis. Such payments may include payments for opening shareholder
accounts, processing investor purchase and redemption orders, responding to
inquiries from shareholder accounts, processing investor purchase and redemption
orders, responding to inquiries from shareholders concerning the status of their
accounts and operations of their Fund and communications with the Company on
behalf of Fund shareholders. Additionally, the Distributor may pay for
advertisements, promotional materials, sales literature and printing and mailing
of prospectuses to other than Fund shareholders and other services to support
distribution pursuant to the Plans. The Distributor may also make payments to
securities dealers and financial institutions, such as banks, out of the
investment management fee the Manager receives from the Funds, out of its past
profits or from any other source available to the Distributor.
Thus, distribution payments will continue to be made to securities
dealers and financial institutions as at present under the same terms and
conditions. No shareholder approval of the new Distribution Agreements is being
sought in this Proxy Statement.
INFORMATION REGARDING THE MANAGER
Reich & Tang Asset Management, Inc., located at 600 Fifth Avenue, New
York, New York, 10022 is the sole general partner of the Manager. It conducts no
business other than managing the Manager.
Messrs. 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. 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.
New England Investment Companies L.P. ("NEICLP") is the limited
partner and owner of a 99.5% interest in the Manager. Reich & Tang Asset
Management, Inc. (a wholly- owned subsidiary of NEICLP) is the general partner
and owner of the remaining .5% interest of the Manager.
The identity of the various other mutual funds for which the Manager
provides advisory services, and the rates of compensation payable in connection
with such services, are set forth in the Appendix to this Proxy Statement.
The following table lists person who are officers of the Company and
are also officers or directors of the General Partner of the Manager:
Positions and Offices with Positions and Offices
General Partner of the with the
Name Manager Company
---------------------------------------------------------------------
Steven W. Duff Director President
Bernadette W. Finn Vice President - Vice President and
Compliance Secretary
Richard De Sanctis Vice President and Treasurer
Treasurer
PORTFOLIO TRANSACTIONS
The Manager is responsible for decisions to buy and sell securities
for the Company, broker-dealer selection and negotiation of commission rates.
Since purchases and sales of portfolio securities by the Company are usually
principal transactions, the Funds incur little or no brokerage commissions. Fund
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid and asked prices. The Company may
also purchase securities from underwriters at prices which include a commission
paid by the issuer to the underwriter.
The Company does not seek to profit from short-term trading, and will
generally (but not always) hold portfolio securities to maturity. However, the
Manager may seek to enhance the yield of the Funds by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
The Manager may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with the Manager's judgment as to desirable portfolio maturity
structure or if such disposition is believed to be advisable due to other
circumstances or conditions. Each Fund is required to maintain an average
weighted portfolio maturity of 90 days or less and purchase only instruments
having remaining maturities of 13 months or less. Both may result in relatively
high portfolio turnover, but since brokerage commissions are not normally paid
on U.S. Government obligations, agencies, money market obligations and municipal
securities, the high rate of portfolio turnover is not expected to have a
material effect on the Funds' net income or expenses.
Allocation of transactions, including their frequency, to various
dealers is determined by the Manager in its best judgment and in a manner deemed
to be in the best interest of shareholders of the Company rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.
The Manager and its affiliates manage several other investment
accounts, some of which may have objectives similar to the Funds'. It is
possible that at times, identical securities will be acceptable for one or more
of such investment accounts. However, the position of each account in the
securities of the same issue may vary and the length of time that each account
may choose to hold its investment in the securities of the same issue may
likewise vary. The timing and amount of purchase by each account will also be
determined by its cash position. If the purchase or sale of securities
consistent with the investment policies of the Funds and one or more of these
accounts is considered at or about the same time, transactions in such
securities will be allocated in good faith among the Funds and such accounts in
a manner deemed equitable by the Manager. The Manager may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution. The allocation and
combination of simultaneous securities purchases on behalf of the three Funds
will be made in the same way that such purchases are allocated among or combined
with those of the Manager's other accounts. Simultaneous transactions could
adversely affect the ability of a Fund to obtain or dispose of the full amount
of a security which it seeks to purchase or sell.
PROPOSAL II
APPROVAL OR DISAPPROVAL OF A FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING THE
ISSUANCE OF SENIOR SECURITIES
Generally, under the 1940 Act, an investment company (such as the
Company) cannot issue senior securities or borrow money except under certain
conditions. Subject to shareholder approval, the Directors intend to adopt a
fundamental investment restriction to comply with 1940 Act requirements
concerning the issuance of senior securities and augment the disclosure in the
Company's prospectuses and statements of additional information with respect to
certain current investment practices which may be considered the issuance of
senior securities. It is proposed that the restriction exclude those
transactions that current regulatory interpretations and policies allow and are
consistent with each Fund's current investment practices. If adopted, the
restriction may not be changed without the approval of a majority of a Fund's
outstanding voting securities.
The proposed fundamental investment restriction would not permit a
Fund to issue any senior security except that:
(a) a Fund may engage in transactions which may result in the
issuance of senior securities to the extent permitted under
applicable regulations and interpretation of the 1940 Act or an
exemptive order;
(b) a Fund may acquire other securities that may be deemed senior
securities to the extent permitted under applicable regulations
or interpretations of the 1940 Act; and
(c) subject to any self-imposed standards and regulatory limitations,
a Fund may borrow money as authorized by the 1940 Act.
If the proposal is approved by shareholders of a Fund, the restriction
would allow the Fund to continue to engage in the following investment
activities without being deemed to have issued a senior security:
1. Delayed Delivery Agreements involving commitments by a Fund
to dealers or issuers to acquire securities or instruments at a specified future
date beyond the customary same-day settlement for money market instruments.
These commitments may fix the payment price and interest rate to be received on
the investment. Delayed delivery agreements will not be used as a speculative or
leverage technique. Rather, from time to time, the Manager can anticipate that
cash for investment purposes will result from scheduled maturities of existing
portfolio instruments or from net sales of shares of the Fund. To assure that a
Fund will be as fully invested as possible in instruments meeting that Fund's
investment objective, a Fund may enter into delayed delivery agreements, but
only to the extent of anticipated funds available for investment during a period
of not more than five business days. Until the settlement date, that Fund will
set aside in a segregated account high-quality debt securities of a dollar value
sufficient at all times to make payment for the delayed delivery securities. Not
more than 25% of a Fund's total assets will be committed to delayed delivery
agreements and when-issued securities, as described below. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Fund and will be subject to the risks of
market fluctuation. The purchase price of the delayed delivery securities is a
liability of the Fund until settlement. Absent extraordinary circumstances, the
Fund will not sell or otherwise transfer the delayed delivery securities prior
to settlement. If cash is not available to the Fund at the time of settlement,
the Fund may be required to dispose of portfolio securities that it would
otherwise hold to maturity in order to meet its obligation to accept delivery
under a delayed delivery agreement.
2. When-Issued Securities - Many new issues of money market
obligations and municipal securities are offered on a "when-issued" basis, that
is, the date for delivery of and payment for the securities is not fixed at the
date of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. A Fund will only make commitments to
purchase such money market obligations and municipal securities with the
intention of actually acquiring such securities, but such Fund may sell these
securities before the settlement date if it is deemed advisable. No additional
when-issued commitments will be made if as a result more than 25% of such Fund's
net assets would become committed to purchases of when-issued securities and
delayed delivery agreements.
If one of the Funds purchases a when-issued security, it will direct
its custodian bank to collateralize the when-issued commitment by establishing a
segregated account in the same fashion as required for a Delayed Delivery
Agreement. The special custody account will likewise be marked-to-market, and
the amount in the special custody account will be increased if necessary to
maintain adequate coverage of the when-issued commitments.
Securities purchased on a when-issued basis and the securities held in
a Fund's portfolio are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates rise). Therefore, if, in order to achieve
higher interest income, a Fund is to remain substantially fully invested at the
same time that it has purchased securities on a when-issued basis, there will be
a possibility that the market value of such Fund's assets will fluctuate to a
greater degree. Furthermore, when the time comes for such Fund to meet its
obligations under when-issued commitments, the Fund will do so by using
then-available cash flow, by sale of the securities held in the separate
account, by sale of other securities or, although it would not normally expect
to do so, by directing the sale of the when-issued securities themselves (which
may have a market value greater or less than the Fund's payment obligation).
A sale of securities to meet such obligations carries with it a
greater potential for the realization of net short-term capital gains, which are
not exempt from federal income taxes. The value of when-issued securities on the
settlement date may be more or less than the purchase price.
3. Reverse Repurchase Agreements involving the sale of money market
instruments held by a Fund, with an agreement that the Fund will repurchase the
instruments at an agreed upon price and date. A Fund will employ reverse
repurchase agreements when necessary to meet unanticipated net redemptions so as
to avoid liquidating other money market instruments during unfavorable market
conditions, or in some cases as a technique to enhance income, and only in
amounts up to 10% of the value of a Fund's total assets at the time it enters
into a reverse repurchase agreement. At the time it enters into a reverse
repurchase agreement, the Fund will place in a segregated custodial account
high-quality debt securities having a dollar value at least equal to the
repurchase price. A Fund will utilize reverse repurchase agreements when the
interest income to be earned from portfolio investments which would otherwise
have to be liquidated to meet redemptions is greater than the interest expense
incurred as a result of the reverse repurchase transactions.
It is proposed that each Fund adopt the following fundamental
investment restriction concerning senior securities:
A Fund may not (unless otherwise indicated): Issue any senior
security (as defined in the 1940 Act) except that (a) a Fund may
engage in transactions which may result in the issuance of senior
securities to the extent permitted under applicable regulations
and interpretation of the 1940 Act or an exemptive order; (b) a
Fund may acquire other securities that may be deemed senior
securities to the extent permitted under applicable regulations
or interpretations of the 1940 Act; and (c) subject to any
self-imposed standards and regulatory limitations, a Fund may
borrow money as authorized by the 1940 Act.
The Directors unanimously recommend that shareholders of each Fund
vote in favor of Proposal II. Adoption of this Proposal is not conditioned upon
the consummation of the Merger or approval of Proposal I. A vote of a majority
of the outstanding voting securities of a Fund is required in order to approve
Proposal II with respect to such Fund.
OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING
As of the date of the Proxy Statement, management is not aware of any
matters to come before the Meeting other than those which have been referred to
above. If any such matters do come before the Meeting, the persons named in the
proxy will vote, act and consent with respect thereto in accordance with their
best judgment.
SHAREHOLDER PROPOSALS
The Articles of Incorporation and the By-Laws of the Company provide
that the Company need not hold annual shareholder meetings, except as required
by the 1940 Act (or the Maryland General Corporation Law). Therefore, it is
probable that no annual meeting of shareholders will be held in 1996 or in
subsequent years until so required. For those years in which annual shareholder
meetings are held, proposals which shareholders of the Company intend to present
for inclusion in the proxy materials with respect to the annual meeting of
shareholders must be received by the Company within a reasonable period of time
before the solicitation is made.
BY ORDER OF THE DIRECTORS
Bernadette N. Finn
Secretary
___________, 1995
<PAGE>
APPENDIX
FEE SCHEDULE FOR OTHER REICH & TANG MUTUAL FUNDS
SHORT TERM INCOME FUND, INC.
(Net assets at November __, 1995: $ )
Management Fee - Money Market Portfolio .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.
Management Fee - U.S. Government Portfolio .275% of average daily net assets up
to $250 million. .25% of average daily net assets in excess of $250 million.
Administrative Services Fee - Each Portfolio.
.20% of average daily net assets up to $1.25 billion.
.19% of average daily net assets in excess of $1.25 billion up to $1.5 billion.
.18% of average daily net assets in excess of $1.5 billion.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.25% of average daily net assets.
DAILY TAX FREE INCOME FUND, INC.
(Net assets at November __, 1995: $ )
Management Fee:
.325% of average daily net assets up to $750 million.
.30% of average daily net assets in excess of $750 million.
Administrative Services Fee:
.20% of average daily net assets up to $1.25 million.
.19% of average daily net assets in excess of $1.25 million up to $1.5 billion.
.18% in excess of $1.5 billion.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.25% of average daily net assets.
REICH & TANG EQUITY FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.80% of average daily net assets.
Administrative Services Fee:
.20% of average daily net assets.
DELAFIELD FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.80% of average daily net assets.
Administrative Services Fee:
.20% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.25% of average daily net assets.
CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.3% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.2% of average daily net assets.
NEW YORK DAILY TAX FREE MONEY MARKET, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.3% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.2% of average daily net assets.
REICH & TANG GOVERNMENT SECURITIES TRUST
(Net assets at November __, 1995: $__________)
Management Fee:
.35% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.25% of average daily net assets.
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.3% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.2% of average daily net assets.
MICHIGAN DAILY TAX FREE INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.3% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.2% of average daily net assets.
TAX EXEMPT PROCEEDS FUND, INC.
(Net assets at November __, 1995: $__________)
All Inclusive Management Fee
.4% of average daily net assets up to $250 million.
.35% of average daily net assets between $250 million and $500 million.
.3% of average daily net assets in excess of $500 million.
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.3% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee:
.2% of average daily net assets.
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.4% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.25% of average daily net assets.
PENNSYLVANIA DAILY MUNICIPAL INCOME FUND, INC.
(Net assets at November __, 1995: $__________)
Management Fee:
.4% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.2% of average daily net assets.
FLORIDA DAILY MUNICIPAL INCOME FUND
(Net assets at November __, 1995: $__________)
Management Fee:
.4% of average daily net assets.
Administrative Services Fee:
.2% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.25% of average daily net assets.
INSTITUTIONAL DAILY INCOME FUND
(Net assets at November __, 1995: $__________)
Investment Management Fee:
.08% of average daily net assets.
Administrative Services Fee:
.05% of average daily net assets.
Shareholder Servicing and Distribution Plan Fee: (Class A only)
.25% of average daily net assets.
<PAGE>
EXHIBIT A
MANAGEMENT/INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of the ____ day of ____________, 1996 by and
between CORTLAND TRUST, INC., a Maryland corporation (the "Fund") on behalf of
its Municipal Money Market Fund Series, and REICH & TANG ASSET MANAGEMENT, L.P.,
a Delaware limited partnership (the "Manager"), with respect to the following
recital of fact:
RECITAL
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended, (the
"1940 Act") and the rules and regulations promulgated thereunder; and
WHEREAS, the Manager is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Fund is authorized to issue shares of common stock in separate
series, with each such series representing shares in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to offer shares in three series called the U.S.
Government Fund, the Cortland General Money Market Fund and the Municipal Money
Market Fund (such series, being referred to as the "Series"); and
WHEREAS, the Fund and the Manager desire to enter into an agreement to
provide for comprehensive management and investment advisory services for the
Municipal Money Market Fund (the "MMMF") on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment of the Manager. The Manager shall manage the Fund's affairs
and shall supervise all aspects of the Fund's operations (except as otherwise
set forth herein) and provide or procure on behalf of the Fund all investment
management, administrative and distribution services, as set forth below,
subject at all times to the policies and control of the Fund's Board of
Directors. The Manager shall give the Fund the benefit of its best judgment,
efforts and facilities in rendering its services as Manager. The Manager shall,
for all purposes herein, be deemed an independent contractor and shall have,
unless otherwise expressly provided or authorized, no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. The
Manager's specific responsibilities shall include the following:
2. Investment Management. The Manager shall act as investment manager for
the MMMF and shall, in such capacity, supervise the investment and reinvestment
of the cash, securities or other properties comprising the MMMF's portfolio,
subject at all times to the policies and control of the Fund's Board of
Directors. The Manager shall give the MMMF the benefit of its best judgment,
efforts and facilities in rendering its services as investment manager.
3. Investment Analysis and Implementation. In carrying out its obligations
under paragraph 2 hereof, the Manager shall:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the MMMF's portfolio and
whether concerning the individual issuers whose securities are included in the
MMMF's portfolio or the activities in which the issuers engage, or with respect
to securities which the Manager considers desirable for inclusion in the MMMF's
portfolio:
(b) determine which issuers and securities shall be represented in the
MMMF's portfolio and regularly report thereon to the Fund's Board of Directors;
(c) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Fund's Board of Directors; and
(d) take, on behalf of the MMMF, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of securities for the MMMF.
4. Broker-Dealer Relationships. The Manager is responsible for decisions to
buy and sell securities for the MMMF's portfolio, broker-dealer selection, and
negotiation of brokerage commission rates. Allocation of transactions, including
their frequency, to various dealers will be determined by the Manager it its
best judgment and in a manner deemed to be in the best interest of shareholders
of the MMMF rather than by any formula. The primary consideration will be prompt
execution of orders in an effective manner at the most favorable price.
5. Control by Board of Directors. Any investment program undertaken by the
Manager pursuant to this Agreement, as well as any other activities undertaken
by the Manager on behalf of the MMMF pursuant thereto, shall at all times be
subject to any directives of the Board of Directors of the Fund.
6. Administrative Services. The Manager shall perform or monitor the
performance of, administrative and management services in connection with the
operations of the MMMF and shall investigate, assist in the selection of and
conduct relations with any of the following employed by the Fund to render
services to the MMMF and its stockholders: custodians, depositories, transfer
agents, if any, dividend and disbursing agents, other shareholder service agents
(including overseeing broker-dealers and financial institutions which have
entered into agreements with the MMMF's distributor to provide shareholder
account and/or distribution services as contemplated under the provisions of any
distribution agreement to be entered into between the Fund and the MMMF's
distributor), accountants, attorneys, underwriters, corporate fiduciaries,
insurers, banks and such other persons in any such capacity deemed to be
necessary or advisable. The Manager shall arrange and pay for the periodic
updating, printing and related expenses of the registration statement relating
to the MMMF's shares and supplements thereto, prepare and pay for the
preparation of all proxy statements and other required reports to shareholders,
and register or qualify, and maintain such registration or qualification, for
sale of the amount of shares required by the laws of any state in which the Fund
deems it appropriate to offer the MMMF's shares for sale. The Manager shall
provide the Fund's Board of Directors on a regular basis financial reports on
and analyses of the MMMF's operations and the operations of comparable
investment companies. The Manager shall make reports to the Board of Directors
of its performance of obligations hereunder and furnish advice and
recommendations with respect to other aspects of the business and affairs of the
MMMF as the Fund shall determine desirable.
7. Accounting Services. The Manager shall furnish, or cause to be
furnished, to the MMMF all necessary accounting services, including:
(i) the computation of the MMMF's net asset value per share at
such times on such dates and in the manner specified in the Fund's
Articles of Incorporation, ByLaws and/or currently effective
registration statement;
(ii) the computation of the MMMF's net income per share for
dividend purposes at such times and dates and in the manner specified
in the Fund's Articles of Incorporation, By-Laws and/or currently
effective registration statement;
(iii) the accrual of interest and other income payable in
respect of the MMMF's portfolio securities;
(iv) the preparation and filing of all federal, state and local
tax reports with respect to the MMMF; and
(v) the maintenance of the books, accounts and financial records
of the MMMF and preservation thereof in accordance with the applicable
provisions of the 1940 Act.
The Manager shall furnish to the Fund or cause to be furnished to the Fund,
without charge to the Fund, the services of a principal financial officer and
such assistant officers as the Board of Directors may require and shall furnish
without charge to the MMMF all necessary office space, equipment, supplies and
utilities in order to perform the accounting functions.
8. Shareholder Account Record Services. The Fund serves as transfer agent
for its own shares. The Manager agrees to furnish all necessary data processing
equipment, supplies, personnel and services required for the Fund to maintain
its shareholder account records. In connection therewith, the Manager shall
receive all daily share purchase and redemption information including
information with respect to dividends reinvested, and shall timely post said
information to the accounts of shareholders of the Fund. The Manager shall
assist the Fund in maintaining all required books and records with respect to
shareholder purchases, redemptions, dividends paid and dividends reinvested and
shall assist the Fund by preparing for filing all required reports and returns,
including federal reports with respect to dividends paid and with respect to
proper tax identification number reporting.
9. Shareholder Services and Distribution. The Fund has adopted plans of
distribution pursuant to Rule 12b-1 under the 1940 Act (the "Plans") and has
employed a registered broker-dealer (the "Distributor") to serve as principal
underwriter of the MMMF's shares. In connection with the Plans, the Manager will
be responsible for conducting the Fund's relations with the Distributor and with
broker/dealers and financial institutions that may establish and maintain
accounts with the MMMF on behalf of their clients or customers.
10. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Manager shall at all times conform to:
(a) all applicable provisions of the 1940 Act; and
(b) the provisions of the Registration Statement of the Fund under
the Securities Act of 1933 and the 1940 Act; and
(c) the provisions of the Fund's Articles of Incorporation, as
amended; and
(d) the provisions of the By-Laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
11. Expenses. The expenses connected with the MMMF shall be borne by the
Manager as follows:
(a) If requested by the Fund, the Manager shall furnish, at its
expense and without cost to the Fund, the services of a President, Secretary and
one or more Vice Presidents of the Fund, to the extent that such additional
officers may be required by the Fund or for the proper conduct of the affairs of
the MMMF.
(b) The Manger shall further maintain, at its expense and without cost
to the MMMF, a trading function in order to carry out its obligations under
subparagraph (d) of paragraph 3 hereof to place orders for the purchase and sale
of portfolio securities for the MMMF.
(c) The Manager shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. The Manager shall also provide the equipment, office space,
facilities and supplies necessary to perform the services set forth in
paragraphs 6, 7, 8, and 9 hereof as well as provide equipment, office space,
facilities and supplies necessary to maintain one or more offices of the Fund,
as may from time to time be required by the Fund's Board of Directors. The
Manager shall pay the compensation, if any, of officers of the Fund who are
officers or employees of the Manager. The Manager shall timely pay (or reduce
its fee in an amount equal to) all expenses of the MMMF unless expressly assumed
by the Fund or the Distributor; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Fund; all fees payable by the Fund
to federal, state, or other governmental agencies; the costs and expenses of
engraving or printing stock certificates representing shares of the Fund; all
costs and expenses in connection with the registration and maintenance of
registration of the MMMF and its shares with the Securities and Exchange
Commission and various states and other jurisdictions (including filing fees,
legal fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the MMMF's
shareholders; all expenses of shareholders' meetings (other than as set forth in
subparagraph (d)(i) of this paragraph 11 and of preparing, printing and mailing
proxy statements and reports to shareholders; all expenses incident to the
payment of any dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service used for pricing
of the MMMF's shares; routine fees and expenses of legal counsel and of
independent accountants, in connection with any matter relating to the Fund;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; and all other charges and
costs of the MMMF's operations.
(d) The Fund shall be responsible for payment of the following
expenses not borne by the Manager: (i) the fees of the directors who are not
"interested persons" of the Fund, as defined by the 1940 Act, and travel and
related expenses of the directors for attendance at meetings, (ii) membership
dues of any industry association, (iii) interest, taxes and brokerage
commissions, (iv) extraordinary expenses, if any, including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto, and (v) any shareholder service or distribution fee payable by
the Fund under the Plans.
12. Compensation. For the services to be rendered, the facilities furnished
and the expenses assumed by the Manager, the Fund shall pay to the Manager on
behalf of the MMMF monthly compensation at the sum of the amounts determined by
applying the following annual rates to the Series' aggregate daily net assets:
.80% of the first $500 million of the Series' aggregate daily net assets, .775%
of the Series' aggregate daily net assets in excess of $500 million but less
than $1 billion, .75% of the Series' aggregate daily net assets in excess of $1
billion but less than $1.5 billion, plus .725% of the Series' aggregate daily
net assets in excess of $1.5 billion and then multiplying the result by a
fraction, the denominator of which is the average daily net assets of the Series
for the period and the numerator of which is the average daily net assets of the
MMMF for the period. Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly upon documentation that expenses to be paid or
assumed by the Manager have been paid on a timely basis and the appropriate
reserves for anticipated expenses of the Fund have been provided for
("Documentation"). If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above; provided
however, that the Fund may reserve final payment of any amounts due pending
presentation of documentation that the expenses to be paid or assumed by the
Manager have in fact been paid. Subject to the provisions of paragraph 13
hereof, payment of the Manager's compensation for the preceding month shall be
made as promptly as possible following the submission to the Fund of
Documentation after completion of the computations contemplated by paragraph 13
hereof.
13. Expense Limitation. In the event the operating expenses of the MMMF
including all management fees, for any fiscal year ending on a date on which
this Agreement is in effect exceed the expense limitation applicable to the MMMF
imposed by the securities laws or regulations thereunder of any state or
jurisdiction in which the MMMF's shares are qualified for sale, as such
limitations may be raised or lowered from time to time, the Manager shall reduce
its management fee to the extent of such excess and, if required, pursuant to
any such laws or regulations, will reimburse the Fund for any annual operating
expenses (after reductions of all management fees) in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commission and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Fund and attributable to the MMMF. Such reduction, if any,
shall be computed and accrued daily, shall be settled on a monthly basis and
shall be based upon the expense limitation applicable to the MMMF as at the end
of the last business day of the month. Should two or more such expense
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the Manager's
fee shall be applicable.
14. Non-Exclusivity. The services of the Manager to the MMMF are not to be
deemed to be exclusive, and the Manager shall be free to render investment
advisory, investment management and corporate administrative or other services
to others (including other investment companies) and to engage in other
activities, so long as its services under this Agreement are not impaired
thereby. It is understood and agreed that the employees of the Manager and the
officers or directors of New England Investment Companies, Inc., the sole
general partner of the Manager, may serve as officers or directors of the Fund,
and that officers or directors of the Fund may serve as employees of the Manager
or as officers or directors of New England Investment Companies, Inc. to the
extent permitted by law; and that the employees of the Manager and the officers
and directors of New England Investment Companies, Inc. are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
15. Non-Exclusive Use of the Name "Cortland". The Fund acknowledges that it
adopted its name through the permission of the Manager. The Manager hereby
consents to the non-exclusive use by the Fund of the name "Cortland" only so
long as the Manager serves as the Series' manager. The Fund covenants and agrees
to protect, exonerate, defend, indemnify and hold harmless the Manager, its
officers, agents and employees from and against any and all costs, losses,
claims, damages or liabilities, joint or several, including all legal expenses
which may arise or have arisen out of the Fund's use or misuse of the name
"Cortland" or out of any breach of or failure to comply with this paragraph 15.
Neither the Fund nor the MMMF shall distribute or circulate any prospectus,
proxy statement, sales literature, promotional material or other printed matter
required to be filed with the Securities and Exchange Commission under Section
24(b) of the 1940 Act which contains any reference to the Manager or using the
name "Cortland" without the prior approval of the Manager and shall submit all
such materials requiring approval of the Manager in draft form, allowing
sufficient time for review by the Manager and its counsel prior to any deadline
for printing. If the Manager or any successor to its business shall cease to
furnish services to the MMMF under this Agreement or similar contractual
arrangement, the Fund:
(a) as promptly as practicable, will take all necessary action to
cause its Articles of Incorporation to be amended to accomplish a change of
name; and
(b) within 90 days after the termination of this Agreement or such
similar contractual arrangement, shall cease to use in any other manner,
including but not limited to use in any prospectus, sales literature or
promotional material, the name "Cortland" or any name, mark or logotype derived
from it or similar to it or indicating that the MMMF is managed by or otherwise
associated with the Manager.
16. Term. This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to paragraph 17
hereof, for a period of two years from the date hereof.
17. Renewal. Following the expiration of its initial term, the Agreement
shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a)(i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the MMMF's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as a director of the Fund), but votes cast in person at a meeting
specifically called for such purpose.
18. Termination. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors or by vote of a
majority of the MMMF's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Manager, on sixty (60) days' written notice
to the other party. This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" having the meaning defined in Section
2(a)(4) of the 1940 Act.
19. Liability of Manager. In the absence of willful misfeasance, bad faith
or gross negligence on the part of the Manager or its officers or employees, or
the officers, directors or employees of its sole general partner, New England
Investment Companies, Inc., or reckless disregard by the Manager of its duties
under this Agreement, the Manager shall not be liable to the Fund or to any
stockholder of the Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may by sustained in
the purchase, holding or sale of any security, provided however, that the
Manager shall at all times act in good faith and agrees to use its best efforts
within reasonable limits to insure the accuracy of all services described in
paragraph 8 hereof, but assumes no responsibility and shall not be liable for
loss or damage due to errors in connection with services provided under
paragraph 8 unless said error is caused by the Manager's negligence, bad faith
or willful misconduct or that of its employees.
20. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
the Manager for this purpose shall be 600 Fifth Avenue, New York, New York
10020.
21. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act shall be resolved by reference to such term
or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to said Act. In addition, where the effect of a requirement of
the 1940 Act reflected in the provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.
CORTLAND TRUST, INC.
By:
President
Attest:
Secretary
REICH & TANG ASSET
MANAGEMENT, L.P.
By: REICH & TANG ASSET
MANAGEMENT, INC.
General Partner
By:
Attest:
Secretary
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
CORTLAND TRUST, INC.
Proxy for Special Meeting of Shareholders
to be Held February 26, 1996
The undersigned hereby appoints Steven W. Duff and Bernadette N. Finn
and each of them (with full power of substitution) as proxies to vote for the
undersigned all shares of Cortland Trust, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Shareholders to be held on Monday, February 26, 1996 at 9:00 a.m.
Eastern time at the offices of Reich & Tang Asset Management L.P., 600 Fifth
Avenue, New York, New York, or any adjournments thereof, upon the matters
described in the accompanying Proxy Statement and upon any other business that
may properly come before the Meeting or any adjournments thereof. Said proxies
are directed to vote or to refrain from voting pursuant to the Proxy Statement
as checked below upon the following matters:
Proposal I: Proposed new Management/Investment Advisory Agreement
between the Company (on behalf of the Fund) and Reich & Tang Asset
Management L.P.
FOR AGAINST ABSTAIN
Proposal II: To approve, with respect to the Fund, a new fundamental
investment restriction concerning the issuance of senior securities.
FOR AGAINST ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH PROPOSAL.
The undersigned acknowledges receipt with this proxy of a copy of the
Notice of Special Meeting of Shareholders and the Proxy Statement of the Board
of Directors. (Please mark, sign, date and return this proxy promptly in the
enclosed envelope.)
Dated:________________________
------------------------------
Signature
------------------------------
Signature if held jointly
Please sign exactly as name appears above. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by the President or other authorized officer. If a
partner, please sign in partnership name by
authorized person.
If your address differs from the above, please
advise the Company as to your correct address.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE>
