CONNECTICUT DAILY TAX FREE INCOME FUND INC, 485BPOS, 1998-05-29

CONNECTICUT DAILY TAX FREE INCOME FUND INC
485BPOS, 1998-05-29

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As filed with the Securities and Exchange Commission on May 29, 1998

Registration No. 2-96456

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No.[ ]

Post-Effective Amendment No. 23 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 20 [X]

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)

c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 830-5220

BERNADETTE N. FINN
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue,
New York, New York 10020
(Name and Address of Agent for Service)

Copy to:MICHAEL R. ROSELLA, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10020
(212) 856-6858

It is proposed that this filing will become effective: (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[X] on June 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

The Registrant filed a Rule 24f-2 Notice for its fiscal year ended January 31,
1998 on March 5, 1998.

<PAGE>

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
Registration Statement on Form N-1A

CROSS-REFERENCE SHEET
Pursuant to Rule 404(c)

Part A
Item No. Prospectus Heading

1. Cover Page . . . . . . . . . . . . . . . Cover Page

2. Synopsis. . . . . . . . . . . . . . . . . . . . Introduction; Table of
Fees and Expenses

3. Condensed Financial Information . . . . . . . . Financial Highlights

4. General Description of Registrant . . . . . . . General Information;
Investment Objectives,
Policies and Risks

5. Management of the Fund . . . . . . . . . . . . Management of the Fund;
Custodian, Transfer Agent
and Dividend Agent;
Distribution and Service
Plan
5A. Management's Discussion of
Fund Performance . . . . . . . . . . . . . . . . Not Applicable

6. Capital Stock and Other Securities . . . . . . . Description of Common
Stock; How to Purchase
and Redeem Shares;
General Information;
Dividends and
Distributions; Federal
Income Taxes

7. Purchase of Securities Being Offered . . . . . . How to Purchase and
Redeem Shares; Net Asset
Value; Distribution and
Service Plan

8. Redemption or Repurchase . . . . . . . . . . . . How to Purchase and
Redeem Shares

9. Legal Proceedings . . . . . . . . . . . . . . . . Not Applicable

<PAGE>

Part B Caption in Statement of
Item No. Additional Information

10. Cover Page . . . . . . . . . . . . . . . . . . Cover Page

11. Table of Contents . . . . . . . . . . . . . . . Table of Contents

12. General Information and History . . . . . . . . Manager; Management of
the Fund; General
Information

13. Investment Objectives and Policies. . . . . . . Investment Objectives,
Policies and Risks

14. Management of the Fund. . . . . . . . . . . . . Manager; Management of
the Fund

15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . Management of the Fund;
Description of Common
Stock

16. Investment Advisory
and Other Services . . . . . . . . . . . . . . Manager; Management of
the Fund; Distribution
and Service Plan;
Custodian and Transfer
Agent; Expense Limitation

17. Brokerage Allocation. . . . . . . . . . . . . . Portfolio Transactions

18. Capital Stock and
Other Securities . . . . . . . . . . . . . . . Description of Common
Stock

19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . . . . . How to Purchase and
Redeem Shares; Net Asset
Value

20. Tax Status . . . . . . . . . . . . . . . . . . Federal Income Taxes;
Connecticut Income Taxes

21. Underwriters . . . . . . . . . . . . . . . . . Distribution and Service
Plan

22. Calculations of Yield
Quotations of Money Market Funds . . . . . . . Yield Quotations

23. Financial Statements . . . . . . . . . . . . . Independent Auditor's
Report; Statement of Net
Assets (audited),dated
January 31, 1998;
Statement of Operations
(audited), dated January
31, 1998; Statements of
Changes in Net Assets
(audited), for the fiscal
years ended January 31,
1997 and 1998; Notes to
Financial Statements
(audited)

<PAGE>

CONNECTICUT 600 FIFTH AVENUE
DAILY TAX FREE NEW YORK, NY 10020
INCOME FUND, INC. (212) 830-5220
- --------------------------------------------------------------------------------
PROSPECTUS

June 1, 1998

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an open-end
management investment company that is a short-term, tax-exempt money market fund
whose investment objectives are to seek as high a level of current income,
exempt from regular Federal income taxes and to the extent possible from
Connecticut personal income taxes, as is believed to be consistent with
preservation of capital, maintenance of liquidity and stability of principal. No
assurance can be given that these objectives will be achieved. The Fund offers
two classes of shares to the general public. The Class A shares of the Fund are
subject to a service fee pursuant to the Fund's Rule 12b-1 Distribution and
Service Plan and are sold through financial intermediaries who provide servicing
to Class A shareholders for which they receive compensation from the Manager and
the Distributor. The Class B shares of the Fund are not subject to a service fee
and either are sold directly to the public or are sold through financial
intermediaries that do not receive compensation from the Manager or the
Distributor. In all other respects, the Class A and Class B shares represent the
same interest in the income and assets of the Fund. The Fund is concentrated in
securities issued by Connecticut or entities within Connecticut. The Fund may
invest a significant percentage of its assets in a single issuer. Therefore, an
investment in the Fund may be riskier than an investment in other types of money
market funds.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund.. Additional information about the Fund
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling or writing the Fund at the
address or telephone number set forth above. The "Statement of Additional
Information" bears the same date as this Prospectus and is incorporated by
reference into this Prospectus in its entirety. The SEC maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information and
other reports and information regarding the Fund which have been filed
electronically with the SEC.

Reich & Tang Asset Management L.P. is a registered investment adviser and acts
as investment manager of the Fund. Reich & Tang Distributors, Inc. acts as
distributor of the Fund's shares and is a registered broker-dealer and member of
the National Association of Securities Dealers, Inc.An investment in the Fund is
neither insured nor guaranteed by the U.S. Government. The Fund intends to
maintain a stable net asset value of $1.00 per share although there can be no
assurance that this value will be maintained.

Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.

This Prospectus should be read and retained by investors for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT BEING OFFERED VIA THE
INTERNET TO RESIDENTS OF PARTICULAR STATES.

<PAGE>

TABLE OF FEES AND EXPENSES

Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>

Class A Class B

Management Fees 0.30% 0.30%
12b-1 Fees 0.20% 0.00%
Other Expenses 0.39% 0.37%
Administration Fees 0.21% _____ 0.21% _____
Total Fund Operating Expenses 0.89% 0.67%

Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming 5% annual return (
cumulative through the end of each year)

Class A $9 $28 $49 $110
Class B $7 $21 $37 $83

</TABLE>

The purpose of the above fee table is to assist an investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a further discussion of these fees see "Management of the Fund"
and "Distribution and Service Plan" herein.

The figures reflected in this example should not be considered as a
representation of past or future expenses. Actual expenses may be greater or
less than those shown above.

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights of Connecticut Daily Tax Free Income Fund,
Inc. have been audited by McGladrey & Pullen LLP, Independent Certified Public
Accountants, whose report thereon is incorporated by reference in the Statement
of Additional Information..

CLASS A Year Ended January 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- --------- ------ ------ ------ ------- ------- ------ ----- ------
Income from investment operations:
Net investment income....... 0.027 0.026 0.030 0.023 0.017 0.021 0.035 0.049 0.054 0.044
Less distributions:
Dividends from net investment income ( 0.027) ( 0.026) ( 0.030) ( 0.023) ( 0.017)( 0.021) ( 0.035) ( 0.049)( 0.054) ( 0.044)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return.................. 2.74% 2.59% 3.02% 2.29% 1.70% 2.12% 3.56% 5.01% 5.58% 4.53%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)$167,780 $136,606 $105,826 $81,801 $120,551 $129,297 $185,339 $178,335 $228,167 $245,529
Ratios to average net assets:
Expenses.................... 0.89% 0.91% 0.91% 0.88% 0.87% 0.86% 0.79% 0.80% 0.78% 0.79%
Net investment income....... 2.70% 2.96% 2.96% 2.25% 1.68% 2.14% 3.51% 4.92% 5.44% 4.44%
Administration fees waived.... -- -- 0.03% -- -- 0.06% -- -- -- --
Expenses paid indirectly...... -- 0.02% -- -- -- -- -- -- -- --

Year October 10, 1996
CLASS B Ended (Commencement of offering) to
January 31, 1998 January 31, 1997
---------------- ----------------------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period...... $ 1.00 $ 1.00
--------- -------
Income from investment operations:
Net investment income..................... 0.029 0.009
Less distributions:
Dividends from net investment income...... ( 0.029) ( 0.009)
---------
Net asset value, end of period............ $ 1.00 $ 1.00
========= =======
Total Return.............................. 2.96% 2.83%*
Ratios/Supplemental Data
Net assets, end of period (000)........... $ 4 $ 7
Ratios to average net assets:
Expenses.................................. 0.67% 0.70%*
Net investment income..................... 2.95% 2.80%*
Expenses paid indirectly.................. -- 0.02%

* Annualized
</TABLE>

<PAGE>

INTRODUCTION

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an open-end
management investment company that is a short-term, tax-exempt money market fund
whose investment objectives are to seek as high a level of current income,
exempt under current law from regular Federal income taxes and to the extent
possible from Connecticut personal income taxes, as is believed to be consistent
with preservation of capital, maintenance of liquidity and stability of
principal by investing principally in short-term, high quality debt obligations
of the State of Connecticut, its political subdivisions, and certain possessions
and territories of the United States, the interest on which is exempt from
regular Federal income tax under section 103 of the Internal Revenue Code (the
"Code"), as described under "Investment Objectives, Policies and Risks" herein.
The Fund also may invest in municipal securities of issuers located in
jurisdictions other than Connecticut, the interest income on which will be
exempt from regular Federal income tax, but will be subject to Connecticut
personal income taxes for Connecticut residents. The Fund seeks to maintain an
investment portfolio with a dollar-weighted average maturity of 90 days or less,
and to value its investment portfolio at amortized cost and maintain a net asset
value of $1.00 per share. The Fund intends to invest all of its assets in
tax-exempt obligations; however, it reserves the right to invest up to 20% of
the value of its net assets in taxable obligations. This is a summary of the
Fund's fundamental investment policies which are set forth in full under
"Investment Objectives, Policies and Risks" herein and in the Statement of
Additional Information and may not be changed without approval of a majority of
the Fund's outstanding shares. No assurance can be given that these objectives
will be achieved.

The Fund's investment advisor is Reich & Tang Asset Management L.P. (the
"Manager"), which is a registered investment advisor and which currently acts as
manager or administrator to seventeen other open-end management investment
companies. The Fund's shares are distributed through Reich & Tang Distributors,
Inc. (the "Distributor"), with whom the Fund has entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to the Class A
shares of the Fund only) pursuant to the Fund's plan adopted under Rule 12b-1 of
the Investment Company Act of 1940, as amended, (the "1940 Act"). (See
"Distribution and Service Plan" herein.)

On any day on which the New York Stock Exchange, Inc. is open for trading ("Fund
Business Day"), investors may, without charge by the Fund, purchase and redeem
shares of the Fund's common stock at their net asset value next determined after
receipt of the order. An investor's subscription purchase order will be accepted
after the payment is converted into Federal funds, and shares will be issued as
of the Fund's next net asset value determination which is made as of 12 noon,
New York City time, on each Fund Business Day. (See "How to Purchase and Redeem
Shares" and "Net Asset Value" herein.) Dividends from accumulated net income are
declared by the Fund on each Fund Business Day. The Fund generally pays interest
dividends monthly. Net capital gains, if any, will be distributed at least
annually and in no event later than within 60 days after the end of the Fund's
fiscal year. All dividends and distributions of capital gains are automatically
invested in additional shares of the same Class of the Fund unless a shareholder
has elected by written notice to the Fund to receive either of such
distributions in cash. (See "Dividends and Distributions" herein.)

and/or obligors of state, municipal and public authority debt obligations to
meet their obligations thereunder. Investors should consider the greater risk of
the Fund's concentration versus the safety that comes with a less concentrated
portfolio and should compare yields available on portfolios of Connecticut
issues with those of more diversified portfolios including out-of-state issues
before making an investment decision.

The Fund's Board of Directors is authorized to divide the unissued shares into
separate series of stock, one for each of the Fund's separate investment
portfolios that may be created in the future.

INVESTMENT OBJECTIVES,
POLICIES AND RISKS

The Fund is an open-end management investment company that is a short-term,
tax-exempt money market fund whose investment objectives are to seek as high a
level of current income, exempt from regular Federal income taxes and, to the
extent possible, from the Connecticut tax on the Connecticut taxable income of
individuals, trusts, and estates (the "Connecticut Personal Income Tax"), as is
believed to be consistent with preservation of capital, maintenance of liquidity
and stability of principal. There can be no assurance that the Fund will achieve
its investment objectives.

The Fund's assets will be invested primarily in high quality debt obligations
issued by or on behalf of the State of Connecticut, other states, territories
and possessions of the United States, and their authorities, agencies,
instrumentalities and political subdivisions, the interest on which is, in the
opinion of bond counsel at the date of issuance, currently exempt from regular
Federal income taxation ("Municipal Obligations") and in Participation
Certificates (which, in the opinion of Battle Fowler LLP, counsel to the Fund,
cause the Fund to be treated as owner of the underlying Municipal Obligations)
in Municipal Obligations purchased from banks, insurance companies or other
financial institutions ("Participation Certificates"). Dividends paid by the
Fund which are "exempt-interest dividends" by virtue of being properly
designated as derived from Municipal Obligations and Participation Certificates
in Municipal Obligations will be exempt from regular Federal income tax provided
the Fund complies with Section 852(b)(5) of Subchapter M of the Code.

Although the Supreme Court has determined that Congress has the authority to
subject the interest on bonds such as the Municipal Obligations to Federal
income taxation, existing law excludes such interest from regular Federal income
tax. However, "exempt-interest dividends" may be subject to the Federal
alternative minimum tax. (See "Federal Income Taxes" herein.) Exempt-interest
dividends paid by the Fund correctly identified as derived from obligations
issued by or on behalf of the State of Connecticut or any political subdivision
thereof, or public instrumentality, state or local authority, district, or
similar public entity created under the laws of the State of Connecticut or from
obligations (such as certain obligations issued by or on behalf of possessions
or territories of the United States) the interest on which Federal law prohibits
the states from taxing ("Connecticut Municipal Obligations") will be exempt from
the Connecticut Personal Income Tax. (See "Connecticut Income Taxes" herein.) To
the extent suitable Connecticut Municipal Obligations are not available for
investment by the Fund, the Fund may purchase Municipal Obligations issued by
other states, their agencies and instrumentalities or other obligations, the
dividends designated as derived from interest income on which will be exempt
from regular Federal income tax but will be subject to the Connecticut Personal
Income Tax. However, except as a temporary defensive measure during periods of
adverse market conditions as determined by the Manager, the Fund will invest at
least 65% of its total assets in Connecticut Municipal Obligations, the
exempt-interest dividends derived from which are exempt from the Connecticut
Personal Income Tax, although the exact amount of the Fund's assets invested in
such securities will vary from time to time. The Fund's investments may include
"when-issued" Municipal Obligations, stand-by commitments and
<PAGE>

taxable repurchase agreements. Although the Fund will attempt to invest 100% of
its assets in Municipal Obligations, the Fund reserves the right to invest up to
20% of the value of its net assets in securities, the interest income on which
is subject to Federal, state and local income tax. The Fund expects to invest
more than 25% of its assets in Participation Certificates purchased from banks
in industrial revenue bonds and other Connecticut Municipal Obligations.

In view of this "concentration" in Participation Certificates in Connecticut
Municipal Obligations, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks which
such an investment may entail, which include extensive governmental regulation,
changes in the availability and cost of capital funds, and general economic
conditions (See "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information.) The investment
objectives of the Fund described in this paragraph may not be changed unless
approved by the holders of a majority of the outstanding shares of the Fund that
would be affected by such a change. As used in this Prospectus, the term
"majority of the outstanding shares" of the Fund means, respectively, the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund.

The Fund may only purchase securities that have been determined by the Fund's
Board of Directors to present minimal credit risks and that are Eligible
Securities at the time of acquisition. The term Eligible Securities means: (i)
Municipal Obligations with remaining maturities of 397 days or less and rated in
the two highest short-term rating categories by any two nationally recognized
statistical rating organizations ("NRSROs") or in such categories by the only
NRSRO that has rated the Municipal Obligations (collectively, the "Requisite
NRSROs"); (ii) Municipal Obligations which are subject to a Demand Feature or
Guarantee (as such terms are defined in Rule 2a-7 of the 1940 Act) and which
have received a rating from an NRSRO, or such guarantor has received a rating
from an NRSRO, with respect to a class of debt obligations (or any debt
obligation within that class) that is comparable in priority and security to the
Guarantee (unless, the guarantor, directly or indirectly, controls, is
controlled by or is under common control with the issuer of the security subject
to the Guarantee); and the issuer of the Demand Feature or Guarantee, or another
institution, has undertaken promptly to notify the holder of the security in the
event the Demand Feature or Guarantee is substituted with another Demand Feature
or Guarantee; and (iii) unrated Municipal Obligations determined by the Fund's
Board of Directors to be of comparable quality. In addition, Municipal
Obligations with remaining maturities of 397 days or less but that at the time
of issuance were long-term securities (i.e. with maturities greater than 366
days) are deemed unrated and may be purchased if such had received a long-term
rating from the Requisite NRSROs in one of the three highest rating categories.
Provided, however, that such may not be purchased if it (i) does not satisfy the
rating requirements set forth in the preceding sentence and (ii) has received a
long-term rating from any NRSRO that is not within the three highest long-term
rating categories. A determination of comparability by the Board of Directors is
made on the basis of its credit evaluation of the issuer, which may include an
evaluation of a letter of credit, guarantee, insurance or other credit facility
issued in support of the Municipal Obligations or Participation Certificates.
(See "Variable Rate Demand Instruments and Participation Certificates" in the
Statement of Additional Information.) While there are several organizations that
currently qualify as NRSROs, two examples of NRSROs are Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies ("S&P") and Moody's Investors
Service, Inc. ("Moody's"). The two highest ratings by S&P and Moody's are "AAA"
and "AA" by S&P in the case of long-term bonds
<PAGE>

and notes or "Aaa" and "Aa" by Moody's in the case of bonds; "SP-1" and "SP-2"
by S&P or "MIG-1" and "MIG-2" by Moody's in the case of notes; "A-1" and "A-2"
by S&P or "Prime-1" and "Prime-2" by Moody's in the case of tax-exempt
commercial paper. The highest rating in the case of variable and floating demand
notes is "SP-1/AA" by S&P and "VMIG-1" by Moody's. Such instruments may produce
a lower yield than would be available from less highly rated instruments.
Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced such that the investment is no longer a
First Tier Security or is rated below the minimum required for purchase by the
Fund. If this occurs, the Board of Directors of the Fund shall promptly reassess
whether the security presents minimal credit risks and shall cause the Fund to
take such action as the Board of Directors determines is in the best interest of
the Fund and its shareholders. Reassessment, however, is not required if the
security is disposed of or matures within five business days of the Manager
becoming aware of the new rating and provided further that the Board of
Directors is subsequently notified of the Manager's actions. The term First Tier
Security means any Eligible Security that: (i) is a rated security that has
received a short-term rating from the Requisite NRSROs in the highest short-term
rating category for debt obligations; (ii) is an unrated security that is, as
determined by the Fund's Board of Directors, to be of comparable quality; (iii)
is a security issued by a registered investment company that is a money market
fund; or (iv) is a government security.

In addition, in the event that a security (1) is in default, (2) ceases to be an
Eligible Security under Rule 2a-7, or (3) is determined to no longer present
minimal credit risks, or an event of insolvency occurs with respect to the
issuer of a portfolio security or the provider of any Demand Feature or
Guarantee, the Fund will dispose of the security absent a determination by the
Fund's Board of Directors that disposal of the security would not be in the best
interests of the Fund. In the event that the security is disposed of, such
disposal shall occur as soon as practicable consistent with achieving an orderly
disposition by sale, exercise of any Demand Feature or otherwise. In the event
of a default with respect to a security which immediately before default
accounted for 1/2 of 1% or more of the Fund's total assets, the Fund shall
promptly notify the SEC of such fact and of the actions that the Fund intends to
take in response to the situation.

In view of the "concentration" of the Fund in Participation Certificates, which
may be secured by Guarantees, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks which
such an investment may entail which include extensive governmental regulation,
changes in the availability and cost of capital funds and general economic
condition. (See "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information.) Banks are subject to
extensive governmental regulations which may limit both the amounts and types of
loans and other financial commitments which may be made and interest rates and
fees which may be charged. The profitability of this industry is largely
dependent upon the availability and cost of capital funds for the purpose of
financing lending operations under prevailing money market conditions. Also,
general economic conditions play an important part in the operations of this
industry and exposure to credit losses arising from possible financial
difficulties of borrowers might affect a bank's ability to meet its obligations
under a letter of credit. The Fund may invest 25% or more of the net assets of
any portfolio in securities that are related in such a way that an economic,
business or political development or change affecting one of the securities
would also affect the other securities including, for example, securities the
interest upon which is paid from revenues of similar type projects, or
securities the issuers of which are located in the same state.

All investments by the Fund will mature or will be deemed to mature within 397
days or less from the date of acquisition and the average maturity of
<PAGE>

the Fund's portfolio (on a dollar-weighted basis) will be 90 days or less. The
maturities of variable rate demand instruments held in the Fund's portfolio will
be deemed to be the longer of the period required before the Fund is entitled to
receive payment of the principal amount of the instrument through demand, or the
period remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.

The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Code. The Fund will be restricted in that, at the
close of each quarter of the taxable year, at least 50% of the value of its
total assets must be represented by cash, government securities, investment
company securities and other securities limited in respect of any one issuer to
not more than 5% in value of the total assets of the Fund and to not more than
10% of the outstanding voting securities of such issuers. In addition, at the
close of each quarter of its taxable year, not more than 25% in value of the
Fund's total assets may be invested in securities of one issuer other than
government securities. The limitations described in this paragraph are not
fundamental policies and may be revised to the extent applicable Federal income
tax requirements are revised. (See "Federal Income Taxes" herein.)

The primary purpose of investing in a portfolio of Connecticut Municipal
Obligations is the special tax treatment accorded Connecticut resident
individual investors. However, payment of interest and preservation of principal
is dependent upon the continuing ability of the issuers and/or obligors of
state, municipal and public authority debt obligations to meet their obligations
thereunder. Investors should consider the greater risk of the Fund's
concentration versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of Connecticut
issues with those of more diversified portfolios including out-of-state issues
before making an investment decision. The Fund's management believes that by
maintaining the Fund's investment portfolio in liquid, short-term, high quality
investments, including Participation Certificates and other variable rate demand
instruments that have high quality credit support from banks, insurance
companies or other financial institutions, the Fund is largely insulated from
the credit risks that may exist on long-term Connecticut Municipal Obligations.
For additional information, please refer to the Statement of Additional
Information.

CONNECTICUT RISK FACTORS

Because of the Fund's concentration in investments in Connecticut Municipal
Obligations, the safety of an investment in the Fund will depend importantly on
the financial strength of Connecticut and its political subdivisions. The
Connecticut economy relies in part on activities that have been subject to
cyclical change. Connecticut's economy has improved since a recession in the
early 1990s. The improvements have been primarily in non-manufacturing
industries, whose employment has recovered most of the losses suffered during
the recession. Manufacturing employment, however, has continued its downward
trend. Despite the recession, the average per capita personal income of
Connecticut residents has remained among the highest in the nation, and the
State's financial performance has improved. After having accumulated a
$965,712,000 unappropriated deficit as of June 30, 1991, the General Fund has
run operating surpluses, based on the State's budgetary method of accounting,
for each of the six fiscal years since. However, the State's high level of
tax-supported debt imposes a relatively significant burden on the State's
revenue base. There can be no assurance that general economic difficulties or
the financial circumstances of Connecticut or its towns and cities will not
adversely affect the market value of their obligations or the ability of the
obligors to pay debt service on such obligations.

MANAGEMENT OF THE FUND

The Fund's Board of Directors which is responsible for the overall management
and
<PAGE>

supervision of the Fund, has employed Reich & Tang Asset Management, L.P. ("the
Manager") to serve as investment manager of the Fund. The Manager provides
persons satisfactory to the Fund's Board of Directors to serve as officers of
the Fund. Such officers, as well as certain other employees and directors of the
Fund, may be directors or officers of Reich & Tang Asset Management, Inc., the
sole general partner of the Manager, or employees of the Manager or its
affiliates. Due to the services performed by the Manager, the Fund currently has
no employees and its officers are not required to devote full-time to the
affairs of the Fund. The Statement of Additional Information contains general
background information regarding each director and principal officer of the
Fund.

The Manager is a Delaware limited partnership with its principal office at 600
Fifth Avenue, New York, New York 10020. As of April 30, 1998, the Manager was
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $11.4 billion. The Manager acts as investment manager or administrator
of seventeen other registered investment companies and also advises pension
trusts, profit-sharing trusts and endowments.

Reich & Tang Asset Management, Inc. (an indirect wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining 0.5%
interest of the Manager. Nvest Corporation, a Massachusetts Corporation
(formerly known as New England Investment Companies, Inc.), serves as the
managing general partner of Nvest Companies.

Reich & Tang Asset Management, Inc. is an indirect subsidiary of Metropolitan
Life Insurance Company ("MetLife"). Also, MetLife directly and indirectly owns
approximately 47% of the outstanding partnership interests of Nvest Companies
and may be deemed a "controlling person" of the Manager. Reich & Tang, Inc.
owns, directly and indirectly, approximately 13% of the outstanding partnership
interests of Nvest Companies.

MetLife is a mutual life insurance company with assets of $297.6 billion at
December 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and its the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.

Nvest Companies is a holding company offering a broad array of investment styles
across a wide range of asset categories through thirteen subsidiaries, divisions
and affiliates offering a wide array of investment styles and products to
institutional clients. Its business units, in addition to the manager, include
AEW Capital Management, L.P., Back Bay Advisors, L.P., Capital Growth
Management, Limited Partnership, Greystone Partners, L.P., Harris Associates,
L.P., Jurika & Voyles, L.P., Loomis, Sayles & Company, L.P., New England Funds,
L.P., Nvest Associates, Inc., Snyder Capital Management, L.P., Vaughan, Nelson,
Scarborough & McCullough, L.P., and Westpeak Investment Advisors, L.P. These
affiliates in the aggregate are
<PAGE>

investment advisors or managers to 80 other registered investment companies.

The recent name change did not result in a change in control of the Manager and
has no impact upon the Manager's performance of its responsibilities and
obligations.

The Investment Management Contract has a term which extends to January 31, 1999
and may be continued in force thereafter for successive twelve-month periods
beginning each February 1, provided that such continuance is specifically
approved annually by majority vote of the Fund's outstanding voting securities
or by its Board of Directors, and in either case by a majority of the directors
who are not parties to the Investment Management Contract or interested persons
of any such party, by votes cast in person at a meeting called for the purpose
of voting on such matter.

Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund.

For its services under the Investment Management Contract, the Manager receives
from the Fund a fee equal to .30% per annum of the Fund's average daily net
assets for managing the Fund's investment portfolio and performing related
services. In addition to its fees under the Investment Management Contract,
Reich & Tang Distributors, Inc., (the "Distributor"), receives a service fee
equal to .20% per annum of the Fund's average daily net assets under the
Shareholder Servicing Agreement. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses, which are attributable to
both classes of the Fund, will be allocated daily to each Class share based on
the percentage of outstanding shares at the end of the day.

Pursuant to the Administrative Services Contract for the Fund, the Manager
performs clerical, accounting supervision and office service functions for the
Fund and provides the Fund the personnel to: (i) supervise the performance of
bookkeeping and related services by Investors Fiduciary Trust Company, the
Fund's bookkeeping agent; (ii) prepare reports to and filings with regulatory
authorities; and (iii) perform such other services as the Fund may from time to
time request of the Manager. The personnel rendering such services may be
employees of the Manager or its affiliates. The Manager, at its discretion, may
voluntarily waive all or a portion of the administrative services fee. For its
services under the Administrative Services Contract, the Manager receives a fee
equal to .21% per annum of the Fund's average daily net assets. Any portion of
the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares (see "Distribution and Service
Plan" herein).

DESCRIPTION OF COMMON STOCK

The Fund was incorporated in Maryland on March 8, 1985. The authorized capital
stock of the Fund consists of twenty billion shares of stock having a par value
of one-tenth of one cent ($.001) per share. The Fund's Board of Directors is
authorized to divide the unissued shares into separate series of stock, each
series representing a separate, additional investment portfolio. Shares of all
series will have identical voting rights, except where, by law, certain matters
must be approved by a majority of the shares of the affected series. Each share
of any series of shares when issued has equal dividend, distribution,
liquidation and voting rights within the series for which it was issued, and
each fractional share has those rights in proportion to the percentage that the
fractional share represents of a whole share. Generally, all shares will be
voted in the aggregate, except if voting by class is required by law or the
matter involved affects only one class, in which case shares will be voted
separately by class. There are no conversion or preemptive rights in connection
with any shares of the Fund. All shares, when issued in accordance with the
terms of the offering will be fully paid and
<PAGE>

nonassessable. Shares are redeemable at net asset value, at the option of the
shareholder.

Under its Articles of Incorporation, the Fund has the right to redeem for cash
shares of stock owned by any shareholder, to the extent and at such times as the
Fund's Board of Directors determines to be necessary or appropriate to prevent
an undue concentration of stock ownership, which would cause the Fund to become
a "personal holding company" for Federal income tax purposes. In this regard,
the Fund may also exercise its right to reject purchase orders. As of April 30,
1998, the amount of shares owned by all officers and directors of the Fund, as a
group, was less than 1% of the outstanding shares of the Fund.

The Class A and Class B shares of the Fund will represent an interest in the
same portfolio of investments and will have identical voting, dividend,
liquidation and other rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions, except that: (i) the
Class A and Class B shares will have different class designations; (ii) only the
Class A shares will be assessed a service fee pursuant to the Rule 12b-1
Distribution and Service Plan of the Fund of .20% of the Fund's average daily
net assets; (iii) only the holders of the Class A shares will be entitled to
vote on matters pertaining to the Plan and any related agreements in accordance
with provisions of Rule 12b-1; and (iv) the exchange privilege will permit
shareholders to exchange their shares only for shares of the same class of an
Exchange Fund. Payments that are made under the Plan will be calculated and
charged daily to the appropriate class prior to determining daily net asset
value per share and dividends/distributions.

The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the outstanding shares, voting for the election of
directors, can elect 100% of the directors, if the holders choose to do so, and,
in that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Certificates for Fund shares will
not be issued to an investor.

DIVIDENDS AND DISTRIBUTIONS

The Fund declares dividends equal to all its net investment income (excluding
capital gains and losses, if any, and amortization of market discount) on each
Fund Business Day and generally pays dividends monthly. There is no fixed
dividend rate. In computing these dividends, interest earned and expenses are
accrued daily.

Net realized capital gains, if any, are distributed at least annually and in no
event later than 60 days after the end of the Fund's fiscal year.

All dividends and distributions of capital gains are automatically invested in
additional Fund shares of the same class of shares immediately upon payment
thereof unless a shareholder has elected by written notice to the Fund to
receive either of such distributions in cash.

The Class A shares will bear a service fee under the Plan. As a result, the net
income of and the dividends payable to the Class A shares will be lower than the
net income of and dividends payable to the Class B shares of the Fund. Dividends
paid to each Class of shares of the Fund will, however, be declared and paid on
the same days at the same times and, except as noted with respect to the service
fees payable under the Plan, will be determined in the same manner and paid in
the same amounts.

HOW TO PURCHASE AND REDEEM SHARES

Investors who have accounts with Participating Organizations may invest in the
Fund through their Participating Organizations in accordance with the procedures
established by the Participating Organizations. Certain Participating
Organizations are compensated by the Distributor from its shareholder servicing
fee and by the Manager from its management fee for the performance of these
services. An investor who purchases shares through a Participating Organization
that receives payment from the Manager or the Distributor will become a Class A
shareholder. (See "Investments Through Participating
<PAGE>

Organizations" herein.) All other investors, and investors who have accounts
with Participating Organizations but who do not wish to invest in the Fund
through their Participating Organizations, may invest in the Fund directly as
Class B shareholders and not receive the benefit of the servicing functions
performed by a Participating Organization. Class B shares may also be offered to
investors who purchase their shares through Participating Organizations who do
not receive compensation from the Distributor or the Manager because they may
not be legally permitted to receive such as fiduciaries. The Manager pays the
expenses incurred in the distribution of Class B shares. Participating
Organizations whose clients become Class B shareholders will not receive
compensation from the Manager or Distributor for the servicing they may provide
to their clients. (See "Direct Purchase and Redemption Procedures" herein.) With
respect to both classes of shares, the minimum initial investment in the Fund by
Participating Organizations is $1,000 which may be satisfied by initial
investments aggregating $1,000 by a Participating Organization on behalf of
customers whose initial investments are less than $1,000. The minimum initial
investment for securities brokers, financial institutions and other industry
professionals that are not Participating Organizations is $1,000. The minimum
initial investment for all other investors is $5,000. Initial investments may be
made in any amount in excess of the applicable minimums. The minimum amount for
subsequent investments is $100 unless the investor is a client of a
Participating Organization whose clients have made aggregate subsequent
investments of $100.

The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent which
accepts orders for purchases and redemptions from Participating Organizations
and from investors directly.

In order to maximize earnings on its portfolio, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require immediate settlement in funds of Federal Reserve member banks on deposit
at a Federal Reserve Bank (commonly known as "Federal Funds"). Accordingly, the
Fund does not accept a subscription or invest an investor's payment in portfolio
securities until the payment has been converted into Federal Funds.

Shares will be issued as of the first determination of the Fund's net asset
value per share for each class made after acceptance of the investor's purchase
order at the net asset value per share next determined after receipt of the
purchase order. Shares begin accruing income dividends on the day they are
purchased. The Fund reserves the right to reject any subscription for its
shares.

Shares are issued as of 12 noon, New York City time, on any Fund Business Day as
defined herein on which an order for the shares and accompanying Federal Funds
are received by the Fund's transfer agent before 12 noon. Orders accompanied by
Federal Funds and received after 12 noon, New York City time, on a Fund Business
Day will not result in share issuance until the following Fund Business Day.
Fund shares begin accruing income on the day the shares are issued to an
investor.

There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals. Unless
other instructions are given in proper form to the Fund's transfer agent, a
check for the proceeds of a redemption will be sent to the shareholder's address
of record. If a shareholder elects to redeem all the shares of the Fund he owns,
all dividends accrued to the date of such redemption will be paid to the
shareholder along with the proceeds of the redemption.

determines that trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which disposal by the
Fund of its portfolio securities is not reasonably practicable or as a result of
which it is not reasonably practicable for the Fund fairly to determine the
value of its net assets, or for such other period as the SEC may by order permit
for the protection of the shareholders of the Fund.

Redemption requests received by the Fund's transfer agent before 12 noon, New
York City time, on any Fund Business Day become effective at 12 noon on that
day. Shares redeemed are not entitled to participate in dividends declared on
the day a redemption becomes effective. A redemption request received after 12
noon, New York City time, on any Fund Business Day becomes effective on the next
Fund Business Day.

The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed or the Fund may
impose a monthly service charge of $10 on such accounts. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization, and the Participating
Organization will be responsible for notifying the Participant Investor of the
proposed mandatory redemption. During the notice period a shareholder or
Participating Organization who receives such a notice may avoid mandatory
redemption by purchasing sufficient additional shares to increase the total net
asset value to at least the minimum amount and thereby avoid such mandatory
redemption.

The redemption of shares may result in the investor's receipt of more or less
than paid for the shares and, thus, in a taxable gain or loss to the investor.

INVESTMENTS THROUGH
PARTICIPATING ORGANIZATIONS

Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Manager with respect to investment of their
customer accounts in the Fund. When instructed by its customer to purchase or
redeem Fund shares, the Participating Organization, on behalf of the customer,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased. No
certificates are issued with respect to investments made through Participating
Organizations.

Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Fund shares for the customers'
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such confirmations and statements will receive them from the Fund
directly.

Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures offered to
Participant Investors by the Participating Organizations. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly may impose
charges, limitations, minimums and restrictions in addition to or different from
those
<PAGE>

applicable to shareholders who invest in the Fund directly. Accordingly, the net
yield to investors who invest through Participating Organizations may be less
than by investing in the Fund directly. A Participant Investor should read this
Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.

The Glass-Steagall Act limits the ability of a depository institution to become
an underwriter or distributor of securities. It is the Fund management's
position, however, that banks are not prohibited from acting in other capacities
for investment companies, such as providing administrative and shareholder
account maintenance services and receiving compensation from the Manager for
providing such services. This is an unsettled area of the law, however, and if a
determination contrary to the Fund management's position is made by a bank
regulatory agency or court concerning shareholder servicing and administration
payments to banks from the Manager, any such payments will be terminated and any
shares registered in the banks' names, for their underlying customers, will be
re-registered in the name of the customers at no cost to the Fund or its
shareholders. In addition, state securities laws may differ on this issue from
the interpretations of Federal law expressed herein and banks and financial
institutions may be required to register as underwriters, distributors or
dealers pursuant to state law.

In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day provided that the Federal Funds required in connection with the orders
are received by the Fund's transfer agent before 4:00 p.m., New York City time,
on that day. Orders for which Federal Funds are received after 4:00 p.m., New
York City time, will not result in share issuance until the following Fund
Business Day. Participating Organizations are responsible for instituting
procedures to insure that purchase orders by their respective clients are
processed expeditiously.

DIRECT PURCHASE AND
REDEMPTION PROCEDURES

The following purchase and redemption procedures apply to investors who wish to
invest in the Fund directly and not through Participating Organizations. These
investors may obtain a current prospectus and the subscription order form
necessary to open an account by telephoning the Fund at the following numbers:

Within New York State 212-830-5220
Outside New York State (toll free) 800-221-3079

All shareholders, other than certain Participant Investors, will receive from
the Fund individual confirmations of each purchase and redemption of Fund shares
(other than draft check redemptions) and a monthly statement listing the total
number of Fund shares owned as of the statement closing date, purchase and
redemptions of Fund shares during the month covered by the statement and the
dividends paid on Fund shares of each shareholder during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Certificates for Fund shares will not be issued to an investor.

Initial Purchases of Shares

Mail

Investors may send a check made payable to "Connecticut Daily Tax Free Income
Fund, Inc." along with a completed subscription order form to:

Connecticut Daily Tax Free Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue
New York, New York 10020

Checks are accepted subject to collection at full face value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
can normally be converted into Federal Funds within two business days after
receipt of the check. Checks drawn on a non-member bank may take substantially
longer to convert into Federal Funds. An investor's
<PAGE>

subscription will not be accepted until the Fund receives Federal Funds.

Bank Wire

To purchase shares of the Fund using the wire system for transmittal of money
among banks, investors should first obtain a new account number by telephoning
the Fund at 212-830-5220 (within New York State) or at 800-221-3079 (outside New
York State). The investors should then instruct a member commercial bank to wire
their money immediately to:

Investors Fiduciary Trust Company
ABA # 101003621
DDA # 890752-953-8
For Connecticut Daily Tax Free
Income Fund, Inc.
Account of (Investor's Name)
Fund Account #
SS #/Tax ID #

The investor should then promptly complete and mail the subscription order form.

Investors planning to wire funds should instruct their bank early in the day so
the wire transfer can be accomplished before 12 noon on that same day. There may
be a charge by the investor's bank for transmitting the money by bank wire, and
there also may be a charge for use of Federal Funds. The Fund does not charge
investors in the Fund for its receipt of wire transfers. Payment in the form of
a "bank wire" received prior to 12 noon, New York City time, on a Fund Business
Day will be treated as a Federal Funds payment received on that day.

Personal Delivery

Deliver a check made payable to "Connecticut Daily Tax Free Income Fund, Inc."
along with a completed subscription order form to:

Reich & Tang Funds
600 Fifth Avenue - 9th Floor
New York, New York 10020

Electronic Funds Transfers (EFT),
Pre-authorized Credit
and Direct Deposit Privilege

You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, or by
having federal salary, social security, or certain veteran's, military or other
payments from the federal government, automatically deposited into your Fund
account. You can also have money debited from your checking account. To enroll
in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, use a copy of a voided check or
a Direct Deposit Sign-Up Form for each type of payment that you desire to
include in the privilege. The appropriate form may be obtained from your broker
or the Fund. You may elect at any time to terminate your participation by
notifying in writing the appropriate depositing entity and/or federal agency.
Death or legal incapacity will automatically terminate your participation in the
privilege. Further, the Fund may terminate your participation upon 30 days'
notice to you.

Subsequent Purchases of Shares

Subsequent purchases can be made by bank wire or personal delivery, as indicated
above, or by mailing a check to:

Connecticut Daily Tax Free Income Fund, Inc.
Reich & Tang Funds
P.O. Box 13232
Newark, New Jersey 07101-3232

There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription form on file with the Fund is still applicable, a
shareholder may reopen an account without filing a new subscription order form
at any time during the year the shareholder's account is closed or during the
following calendar year.

<PAGE>

Redemption of Shares

A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
class following receipt by the Fund's transfer agent of the redemption order.
Normally, payment for redeemed shares is made on the same Fund Business Day
after the redemption is effected, provided the redemption request is received
prior to 12 noon, New York City time and on the next Fund Business Day if the
redemption request is received after 12 noon, New York City time. However,
redemption requests will not be effected unless the check (including a certified
or cashier's check) used to purchase the shares has been cleared for payment by
the investor's bank and converted into Federal Funds. A bank check will be
considered by the Fund to have cleared 15 days after it is deposited by the
Fund.

A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee. When a
signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature, signed and guaranteed by an eligible
guarantor institution which includes a domestic bank, a domestic savings and
loan institution, a domestic credit union, a member bank of the Federal Reserve
System or a member firm of a national securities exchange, pursuant to the
Fund's transfer agent's standards and procedures (signature guarantees by
notaries public are not acceptable).

Written Requests

Shareholders may make a redemption in any amount by sending a written request to
the Fund, accompanied by any certificate that may have been previously issued to
the shareholder, addressed to:

Connecticut Daily Tax Free Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue
New York, New York 10020

All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed. Normally the redemption
proceeds are paid by check mailed to the shareholder of record.

Checks

By making the appropriate election on their subscription form, shareholders may
request a supply of checks which may be used to effect redemptions from the
class of shares in the Fund in which they invest. The checks, which will be
issued in the shareholder's name, are drawn on a special account maintained by
the Fund with the agent bank. Checks may be drawn in any amount of $250 or more.
When a check is presented to the Fund's agent bank, it instructs the Fund's
transfer agent to redeem a sufficient number of full and fractional shares in
the shareholder's account to cover the amount of the check. The use of a check
to make a withdrawal enables a shareholder in the Fund to receive dividends on
the shares to be redeemed up to the Fund Business Day on which the check clears.
Checks provided by the Fund may not be certified. Fund shares purchased by check
may not be redeemed by check for up to 15 days following the date of purchase.

There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.

Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank. Checks drawn on a jointly owned
account may, at the shareholder's election, require only one signature. Checks
in amounts exceeding the value of the shareholder's account
<PAGE>

at the time the check is presented for payment will not be honored. In addition,
the Fund reserves the right to charge the shareholder's account a fee up to $20
for checks not honored as a result of an insufficient account value. Since the
dollar value of the account changes daily, the total value of the account may
not be determined in advance and the account may not be entirely redeemed by
check. The Fund reserves the right to terminate or modify the check redemption
procedure at any time or to impose additional fees.

Investors wishing to avail themselves of this method of redemption should elect
it on their subscription order form. Individuals and joint tenants are not
required to furnish any supporting documentation. Corporations and other
entities making this election, however, are required to furnish a certified
resolution or other evidence of authorization in accordance with the Fund's
normal practices. Appropriate authorization forms will be sent by the Fund or
its agents to corporations and other shareholders who select this option. As
soon as the authorization forms are filed in good order, the Fund will provide
the shareholder with a supply of checks. This checking service may be terminated
or modified at any time.

Telephone

The Fund accepts telephone requests for redemption from shareholders who elect
this option. The proceeds of a telephone redemption may be sent to the
shareholders at their addresses or, if in excess of $1,000, to their bank
accounts, both as set forth in the subscription order form or in a subsequent
written authorization. The Fund may accept telephone redemption instructions
from any person with respect to accounts of shareholders who elect this service
and thus such shareholders risk possible loss of principal and interest in the
event of a telephone redemption not authorized by them. The Fund will employ
reasonable procedures to confirm that telephone redemption instructions are
genuine, and will require that shareholders electing such option provide a form
of personal identification. The failure by the Fund to employ such procedures
may cause the Fund to be liable for any losses incurred by investors due to
telephone redemptions based upon unauthorized or fraudulent instructions.

A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York State at 800-221-3079 and state (i) the name of
the shareholder appearing on the Fund's records, (ii) the shareholder's account
number with the Fund, (iii) the amount to be withdrawn, (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address, and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption request is received before 12
noon, New York City time and on the next Fund Business Day if the redemption
request is received after 12 noon, New York City time. The Fund reserves the
right to terminate or modify the telephone redemption service in whole or in
part at any time and will notify shareholders accordingly.

Exchange Privilege

Shareholders of the Fund are entitled to exchange some or all of their class of
shares in the Fund for shares of the same class of certain other investment
companies which retain Reich & Tang Asset Management L.P. as investment advisor
and which participate in the exchange privilege program with the Fund. If only
one class of shares is available in a particular exchange fund, the shareholder
of the Fund is entitled to exchange their shares for the shares available in
that exchange fund. Currently the exchange privilege program has been
established between the Fund and California Daily Tax Free Income Fund, Inc.,
Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund, Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund,
Inc., and Short Term Income Fund, Inc. In the future,
<PAGE>

the exchange privilege program may be extended to other investment companies
which retain Reich & Tang Asset Management L.P. as investment advisor, manager
or administrator. An exchange of shares in the Fund pursuant to the exchange
privilege is, in effect, a redemption of Fund shares (at net asset value)
followed by the purchase of shares of the investment company into which the
exchange is made (at net asset value) and may result in a shareholder realizing
a taxable gain or loss for Federal income tax purposes.

There is no charge for the exchange privilege or limitation as to frequency of
exchange. The minimum amount for an exchange is $1,000, except that shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure that a sufficient number of shares are exchanged
to meet the minimum initial investment required for the investment company into
which the exchange is being made. Each class of shares is exchanged at their
respective net asset value.

The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Shares of the same class may be exchanged
only between investment company accounts registered in identical names. Before
making an exchange, the investor should review the current prospectus of the
investment company into which the exchange is to be made. Prospectuses may be
obtained by contacting the Distributor at the address or telephone number set
forth on the cover page of this Prospectus.

An exchange pursuant to the exchange privilege is treated for Federal income tax
purposes as a sale on which a shareholder may realize a taxable gain or loss.

Instructions for exchanges may be made by sending a signature guaranteed written
request to:

Connecticut Daily Tax Free Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue
New York, New York 10020

or, for shareholders who have elected that option, by telephone. The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.

Specified Amount Automatic Withdrawal Plan

Shareholders may elect to withdraw shares and receive payment from the Fund of a
specified amount of $50 or more automatically on a monthly, quarterly,
semi-annual or annual basis in an amount approved and confirmed by the Manager.
A specified amount plan payment is generally made by the Fund on the 23rd day of
each month. Whenever such 23rd day of a month is not a Fund Business Day, the
payment date is the Fund Business Day preceding the 23rd day of the month. In
order to make a payment, a number of shares equal in aggregate net asset value
to the payment amount are redeemed at their net asset value on the Fund Business
Day immediately preceding the date of payment. To the extent that the
redemptions to make plan payments exceed the number of shares purchased through
reinvestment of dividends and distributions, the redemptions reduce the number
of shares purchased on original investment, and may ultimately liquidate a
shareholder's investment.

The election to receive automatic withdrawal payments may be made at the time of
the original subscription by so indicating on the subscription order form. The
election may also be made, changed or terminated at any later time by the
participant. Because the withdrawal plan involves the redemption of Fund shares,
such withdrawals may constitute taxable events to the shareholder but the Fund
does not expect that there will be any realizable capital gains.
<PAGE>

DISTRIBUTION AND SERVICE PLAN

Pursuant to Rule 12b-1 under the 1940 Act, the SEC has required that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by Rule 12b-1.
The Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund and Reich & Tang Distributors, Inc.
(the "Distributor") have entered into a Distribution Agreement and a Shareholder
Servicing Agreement (with respect to Class A shares of the Fund only).

Under the Distribution Agreement, the Distributor, for nominal consideration and
as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.

Under the Shareholder Servicing Agreement, the Distributor receives from the
Fund, with respect only to the Class A shares, a service fee equal to .20% per
annum of the Class A shares' average daily net assets (the "Shareholder
Servicing Fee") for providing personal shareholders services and for the
maintenance of shareholder accounts. The fee is accrued daily and paid monthly
and any portion of the fee may be deemed to be used by the Distributor for
payments to Participating Organizations with respect to their provision of such
services to their clients or customers who are shareholders of the Class A
shares of the Fund. The Class B shareholders will not receive the benefit of
such services from Participating Organizations and, therefore, will not be
assessed a Shareholder Servicing Fee.

The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Manager and Distributor in carrying out their obligations under the
Shareholder Servicing Agreement with respect to Class A shares, and (ii)
preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing subscription application
forms for shareholder accounts.

The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the Management Fee and past profits for the
following purposes: (i) to defray the costs of, and to compensate others,
including Participating Organizations with whom the Distributor has entered into
written agreements, for performing shareholder servicing and related
administrative functions on behalf of the Class A shares of the Fund; (ii) to
compensate certain Participating Organizations for providing assistance in
distributing the Class A shares of the Fund; and (iii) to pay the costs of
printing and distributing the Fund's prospectus to prospective investors and to
defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective shareholders, advertising, and
other promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's Class A shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee and past profits, for the
purposes enumerated in (i) above. The Distributor in its sole discretion, will
determine the amount of such payments made pursuant to the Plan, provided that
such payments will not increase the amount which the Fund is required to pay to
the Manager and the Distributor for any fiscal year under the Investment
Management Contract or the Shareholder Servicing Agreement in effect for that
year.

For the fiscal year ended January 31, 1998, the total amount spent pursuant to
the Plan was .38% of the average daily net assets of the Fund, of which .20% of
the average daily net assets was paid by the Fund to the Distributor, pursuant
to the Shareholder Servicing Agreement and an amount representing .18% of the
average daily net assets was paid by the Manager (which may be deemed an
indirect payment by the Fund). Of the total amount paid by the Manager, $494,812
was utilized for broker assistance payments, $6,424 for
<PAGE>

compensation to sales personnel, $2,986 for travel and expenses, $20,107 for
Prospectus printing, and $190 on miscellaneous expenses.

FEDERAL INCOME TAXES

The Fund has elected to qualify under the Code as a regulated investment company
that distributes "exempt-interest dividends" as defined in the Code. The Fund's
policy is to distribute as dividends each year 100% (and in no event less than
90%) of its tax-exempt interest income, net of certain deductions, and its
investment company taxable income (if any). If distributions are made in this
manner, dividends designated as derived from the interest earned on Municipal
Obligations are "exempt-interest dividends" and are not subject to regular
Federal income tax although such "exempt-interest dividends" may be subject to
Federal alternative minimum tax. Dividends paid from taxable income, if any, and
distributions of any realized short-term capital gains (whether from tax-exempt
or taxable obligations) are taxable to shareholders as ordinary income for
Federal income tax purposes, whether received in cash or reinvested in
additional shares of the Fund. The Fund does not expect to realize long-term
capital gains, and thus does not contemplate distributing "capital gain
dividends" or having undistributed capital gain income within the meaning of the
Code. The Fund will inform shareholders of the amount and nature of its income
and gains in a written notice mailed to shareholders not later than 60 days
after the close of the Fund's taxable year. For Social Security recipients,
interest on tax-exempt bonds, including exempt interest dividends paid by the
Fund, is to be added to adjusted gross income for purposes of computing the
amount of Social Security benefits includible in gross income. Interest on
certain "private activity bonds" (generally, a bond issue in which more than 10%
of the proceeds are used for a non-governmental trade or business and which
meets the private security or payment test, or a bond issue which meets the
private loan financing test) issued after August 7, 1986 will constitute an item
of tax preference subject to the individual alternative minimum tax.
Corporations will be required to include in alternative minimum taxable income,
75% of the amount by which their adjusted current earnings (including generally,
tax-exempt interest) exceeds their alternative minimum taxable income
(determined without this item). In addition, in certain cases Subchapter S
corporations with accumulated earnings and profits from Subchapter C years will
be subject to a tax on "passive investment income," including tax-exempt
interest. Although the Fund intends to maintain a $1.00 per share net asset
value, a shareholder may realize a taxable gain or loss upon the disposition of
shares.

With respect to variable rate demand instruments, including Participation
Certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for regular Federal income tax
purposes as the owner of the underlying Municipal Obligations and the interest
thereon will be exempt from regular Federal income taxes to the Fund to the same
extent as interest on the underlying Municipal Obligations. Counsel has pointed
out that the Internal Revenue Service has announced that it will not ordinarily
issue advance rulings on the question of the ownership of securities or
participation interests therein subject to a put and could reach a conclusion
different from that reached by counsel. (See "Federal Income Taxes" in the
Statement of Additional Information.)

In South Carolina v. Baker, the U.S. Supreme Court held that the Federal
government may constitutionally require states to register bonds which they
issue and may subject the interest on such bonds to Federal tax if not
registered, and the Court further held that there is no constitutional
prohibition against the Federal government taxing the interest earned on state
or other municipal bonds. The Supreme Court decision affirms the authority of
the Federal government to regulate and control bonds such as the Municipal
Obligations and to tax such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the
Municipal Obligations in accordance with Section 103 of the Code.
<PAGE>

CONNECTICUT INCOME TAXES

The designation of all or a portion of a dividend paid by the Fund as an
"exempt-interest dividend" under the Code does not necessarily result in the
exemption of such amount from tax under the laws of any state or local taxing
authority. However, in the opinion of Day, Berry & Howard, special Connecticut
tax counsel to the Fund, exempt-interest dividends correctly designated as
derived from Connecticut Municipal Obligations received by the Fund are not
subject to the Connecticut tax on the Connecticut taxable income of individuals,
trusts and estates (the "Connecticut Personal Income Tax").

Exempt-interest dividends that are not derived from Connecticut Municipal
Obligations and any other dividends of the Fund that are treated as ordinary
income for Federal income tax purposes are includible in a taxpayer's tax base
for the purposes of the Connecticut Personal Income Tax.

While capital gain dividends are not anticipated by the Fund, capital gain
dividends and amounts, if any, in respect of undistributed long-term capital
gains of the Fund would be includible in a taxpayer's tax base for purposes of
the Connecticut Personal Income Tax, as would gains, if any, recognized upon the
redemption, sale, or exchange of shares of the Fund, except that capital gain
dividends derived from obligations issued by or on behalf of the State of
Connecticut, its political subdivisions, or any public instrumentality, state or
local authority, district or similar public entity created under Connecticut law
are not subject to the tax.

Dividends and distributions paid by the Fund that constitute items of tax
preference for purposes of the Federal alternative minimum tax, other than
exempt-interest dividends, derived from Connecticut Municipal Obligations, may
be subject to the net Connecticut minimum tax.

All dividends paid by the Fund, including exempt-interest dividends are
includible in gross income for purposes of the Connecticut Corporation Business
Tax payable by corporations. However, the Corporation Business Tax allows a
deduction for a portion of amounts includible in gross income thereunder to the
extent they are treated as dividends other than exempt-interest dividends or
capital gain dividends for Federal income tax purposes, but disallows deductions
for expenses related to such amounts.

Shareholders are urged to consult their tax advisors with respect to the
treatment of distributions from the Fund in their own states and localities.

GENERAL INFORMATION

The Fund was incorporated under the laws of the State of Maryland on March 8,
1985 and it is registered with the SEC as an open-end management investment
company.

The Fund prepares semi-annual unaudited and annual audited reports which include
a list of investment securities held by the Fund and which are sent to
shareholders.

As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-Laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of the revised
investment advisory contracts with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution agreement with
respect to a particular class or series of stock, and (d) upon the written
request of holders or shares entitled to cast not less than 25% of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be required
by the 1940 Act including the removal of Fund director(s) and communication
among shareholders, any registration of the Fund with the SEC or any state, or
as the Directors may consider necessary or desirable. Each Director serves until
the next meeting of the shareholders called for the purpose of considering the
election or reelection of such Director or of a successor to such Director, and
until the election and qualification of his or her successor, elected at such a
meeting, or until such Director sooner dies,
<PAGE>

resigns, retires or is removed by the vote of the shareholders.

As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have a material impact of the Fund's ability to provide service at current
levels, there can be no assurance that steps taken in preparation for the year
2000 will be sufficient to avoid an adverse impact on the Fund.

For further information with respect to the Fund and the shares offered hereby,
reference is made to the Fund's registration statement filed with the SEC,
including the exhibits thereto. The Registration Statement and the exhibits
thereto may be examined at the SEC and copies thereof may be obtained upon
payment of certain duplicating fees.

NET ASSET VALUE

The net asset value of each Class of the Fund's shares is determined as of 12
noon, New York City time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except customary business holidays and Good
Friday. The net asset value of a Class is computed by dividing the value of the
Fund's net assets for such Class (i.e., the value of its securities and other
assets less its liabilities, including expenses payable or accrued but excluding
capital stock and surplus) by the total number of shares outstanding for such
Class.

The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, except that if fluctuating
interest rates cause the market value of the Fund's portfolio to deviate more
than 1/2 of 1% from the value determined on the basis of amortized cost, the
Board of Directors will consider whether any action should be initiated.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument is higher or lower
than the price an investment company would receive if the instrument were sold.
The Fund intends to maintain a stable net asset value at $1.00 per share
although there can be no assurance that this will be achieved.

CUSTODIAN AND TRANSFER AGENT

Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., 600 Fifth Avenue, New York, New York 10020, is the transfer agent and
dividend agent for the shares of the Fund. The Fund's transfer agent and
custodian do not assist in, and are not responsible for, investment decisions
involving assets of the Fund.

<PAGE>

TABLE OF CONTENTS
Table of Fees and Expenses........................... CONNECTICUT
Financial Highlights................................. DAILY TAX
Introduction......................................... FREE INCOME
Investment Objectives, FUND, INC
Policies and Risks..............................
Connecticut Risk Factors.............................
Management of the Fund...............................
Description of Common Stock..........................
Dividends and Distributions..........................
How to Purchase and Redeem Shares....................
Investments Through
Participating Organizations.......................
Direct Purchase and
Redemption Procedures.............................
Initial Purchases of Shares....................... PROSPECTUS
Electronic Funds Transfers (EFT) JUNE 1, 1998
Pre-authorized Credit and Direct
Deposit Privilege..............................
Subsequent Purchases of Shares....................
Redemption of Shares..............................
Exchange Privilege................................
Specified Amount Automatic
Withdrawal Plan.................................
Distribution and Service Plan........................
Federal Income Taxes.................................
Connecticut Income Taxes.............................
General Information..................................
Net Asset Value......................................
Custodian and Transfer Agent.........................

<PAGE>

PROSPECTUS June 1, 1998

EVERGREEN SHARES OF CONNECTICUT
DAILY TAX FREE INCOME FUND, INC.

[GRAPHIC OMITTED]

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an
open-end management investment company that is a short-term, tax-exempt money
market fund whose investment objectives are to seek as high a level of current
income, exempt from regular Federal income taxes and to the extent possible from
Connecticut personal income taxes, as is believed to be consistent with
preservation of capital, maintenance of liquidity and stability of principal. No
assurance can be given that these objectives will be achieved. The Fund offers
two classes of shares to the general public, however only Class A shares are
offered by this Prospectus ("the Evergreen Shares"). The Class A shares of the
Fund are subject to a service fee pursuant to the Fund's Rule 12b-1 Distribution
and Service Plan and are sold through financial intermediaries who provide
servicing to Class A shareholders for which they receive compensation from the
Manager and the Distributor. The Class B shares of the Fund are not subject to a
service fee and either are sold directly to the public or are sold through
financial intermediaries that do not receive compensation from the Manager or
the Distributor. In all other respects, the Class A and Class B shares represent
the same interest in the income and assets of the Fund. The Fund is concentrated
in the securities issued by Connecticut or entities within Connecticut. The Fund
may invest a significant percentage of its assets in a single issuer. Therefore,
an investment in the Fund may be riskier than an investment in other types of
money market funds.

This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Fund.. Additional information about
the Fund has been filed with the Securities and Exchange Commission (the "SEC")
and is available upon request and without charge by calling the Fund at (800)
807-2940. The "Statement of Additional Information" bears the same date as this
Prospectus and is incorporated by reference into this Prospectus in its
entirety. The SEC maintains a web site (http://www.sec.gov) that contains the
Statement of Additional Information and other reports and information regarding
the Fund which have been filed electronically with the SEC.

Investors should be aware that the Evergreen shares may not be
purchased other than through certain securities dealers with whom Evergreen
Distributor, Inc. ("EDI") has entered into agreements for this purpose or
directly from EDI. Evergreen shares have been created for the primary purpose of
providing a Connecticut tax-free money market fund product for shareholders of
certain funds distributed by EDI. Shares of the Fund other than Evergreen shares
are offered pursuant to a separate Prospectus.

Reich & Tang Asset Management L.P., a registered investment adviser,
acts as manager of the Fund, and Reich & Tang Distributors, Inc., a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
acts as distributor of the Fund's shares.

An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. The Fund intends to maintain a stable net asset value of $1.00 per
share although there can be no assurance that this value will be maintained.
Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.

This Prospectus Should Be Read And Retained By Investors For Future Reference.

<PAGE>

TABLE OF CONTENTS

TABLE OF FEES AND EXPENSES SHAREHOLDER SERVICES
FINANCIAL HIGHLIGHTS Effect of Banking Laws
INTRODUCTION DISTRIBUTION AND SERVICE PLAN
INVESTMENT OBJECTIVES, FEDERAL INCOME TAXES
POLICIES AND RISKS CONNECTICUT INCOME TAXES
CONNECTICUT RISK FACTORS GENERAL INFORMATION
MANAGEMENT OF THE FUND NET ASSET VALUE
DESCRIPTION OF COMMON STOCK CUSTODIAN AND TRANSFER AGENT
DIVIDENDS AND DISTRIBUTIONS
HOW TO PURCHASE AND REDEEM SHARES
How to Buy Shares
How to Redeem Shares

<PAGE>

- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
- --------------------------------------------------------------------------------

Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>

Class A Class B

Management Fees 0.30% 0.30%
12b-1 Fees 0.20% 0.00%
Other Expenses 0.39% 0.37%
Administration Fees 0.21% _____ 0.21% _____
Total Fund Operating Expenses 0.89% 0.67%

Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming 5% annual return (
cumulative through the end of each year)

Class A $9 $28 $49 $110
Class B $7 $21 $37 $83

</TABLE>

The figures reflected in this example should not be considered as a
representation of past or future expenses. Actual expenses may be greater or
less than those shown above.

<PAGE>

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

* Annualized
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an
open-end management investment company that is a short-term, tax-exempt money
market fund whose investment objectives are to seek as high a level of current
income, exempt under current law from regular Federal income taxes and to the
extent possible from Connecticut personal income taxes, as is believed to be
consistent with preservation of capital, maintenance of liquidity and stability
of principal by investing principally in short-term, high quality debt
obligations of the State of Connecticut, its political subdivisions, and certain
possessions and territories of the United States, the interest on which is
exempt from regular Federal income tax under section 103 of the Internal Revenue
Code (the "Code"), as described under "Investment Objectives, Policies and
Risks" herein. The Fund also may invest in municipal securities of issuers
located in jurisdictions other than Connecticut, the interest income on which
will be exempt from regular Federal income tax, but will be subject to
Connecticut personal income taxes for Connecticut residents. The Fund seeks to
maintain an investment portfolio with a dollar-weighted average maturity of 90
days or less, and to value its investment portfolio at amortized cost and
maintain a net asset value of $1.00 per share. The Fund intends to invest all of
its assets in tax-exempt obligations; however, it reserves the right to invest
up to 20% of the value of its net assets in taxable obligations. This is a
summary of the Fund's fundamental investment policies which are set forth in
full under "Investment Objectives, Policies and Risks" herein and in the
Statement of Additional Information and may not be changed without approval of a
majority of the Fund's outstanding shares. No assurance can be given that these
objectives will be achieved.

The Fund's investment advisor is Reich & Tang Asset Management L.P.
(the "Manager"), which is a registered investment advisor and which currently
acts as manager or administrator to seventeen other open-end management
investment companies. The Fund's shares are distributed through Reich & Tang
Distributors, Inc. (the "Distributor"), with whom the Fund has entered into a
Distribution Agreement and a Shareholder Servicing Agreement (with respect to
Class A shares of the Fund only) pursuant to the Fund's plan adopted of Rule
12b-1 under the Investment Company Act of 1940, as amended, (the "1940 Act").
(See "Distribution and Service Plan" herein.)

On any day on which the New York Stock Exchange, Inc. is open for
trading ("Fund Business Day"), investors may, without charge by the Fund,
purchase and redeem shares of the Fund's common stock at their net asset value
next determined after receipt of the order. An investor's purchase order will be
accepted after the payment is converted into Federal funds, and shares will be
issued as of the Fund's next net asset value determination which is made as of
12 noon, Eastern time, on each Fund Business Day. (See "How to Purchase and
Redeem Shares" and "Net Asset Value" herein.) Dividends from accumulated net
income are declared by the Fund on each Fund Business Day. The Fund generally
pays interest dividends monthly. Net capital gains, if any, will be distributed
at least annually and in no event later than within 60 days after the end of the
Fund's fiscal year. All dividends and distributions of capital gains are
automatically invested in additional shares of the Class A shares of the Fund
unless a shareholder has elected by written notice to the Fund to receive either
of such distributions in cash. (See "Dividends and Distributions" herein.)

The Fund intends that its investment portfolio will be concentrated in
Connecticut Municipal Obligations and Participation Certificates as defined
herein. A summary of special risk factors affecting the State of Connecticut is
set forth under "Connecticut Risk Factors" herein and in the Statement of
Additional Information. Investment in the Fund should be made with an
understanding of the risks which an investment in Connecticut Municipal
Obligations may entail. Payment of interest and preservation of capital are
dependent upon the continuing ability of Connecticut issuers and/or obligors of
state, municipal and public authority debt obligations to meet their obligations
thereunder. Investors should consider the greater risk of the Fund's
concentration versus the safety that comes with a less concentrated portfolio
and should compare yields available on portfolios of Connecticut issues with
those of more diversified portfolios including out-of-state issues before making
an investment decision. The Fund's Board of Directors is authorized to divide
the unissued shares into separate series of stock, one for each of the Fund's
separate investment portfolios that may be created in the future.

Evergreen shares are identical to other shares of the Fund, which are
offered pursuant to a separate prospectus, with respect to investment objectives
and yield, but differ with respect to certain other matters. See "How to
Purchase and Redeem Shares" and "Shareholder Services."
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES,
POLICIES AND RISKS
- --------------------------------------------------------------------------------

The Fund is an open-end management investment company that is a
short-term, tax-exempt money market fund whose investment objectives are to seek
as high a level of current income, exempt from regular Federal income taxes and,
to the extent possible, from the Connecticut tax on the Connecticut taxable
income of individuals, trusts, and estates (the "Connecticut Personal Income
Tax"), as is believed to be consistent with preservation of capital, maintenance
of liquidity and stability of principal. There can be no assurance that the Fund
will achieve its investment objectives.

The Fund's assets will be invested primarily in high quality debt
obligations issued by or on behalf of the State of Connecticut, other states,
territories and possessions of the United States, and their authorities,
agencies, instrumentalities and political subdivisions, the interest on which
is, in the opinion of bond counsel at the date of issuance, currently exempt
from regular Federal income taxation ("Municipal Obligations") and in
Participation Certificates in Municipal Obligations purchased from banks,
insurance companies or other financial institutions ("Participation
Certificates"). Dividends paid by the Fund which are "exempt-interest dividends"
by virtue of being properly designated as derived from Municipal Obligations and
Participation Certificates will be exempt from regular Federal income tax
provided the Fund complies with Section 852(b)(5) of Subchapter M of the Code.

Although the Supreme Court has determined that Congress has the
authority to subject the interest on bonds such as the Municipal Obligations to
Federal income taxation, existing law excludes such interest from regular
Federal income tax. However, "exempt-interest dividends" may be subject to the
Federal alternative minimum tax. (See "Federal Income Taxes" herein.)
Exempt-interest dividends paid by the Fund correctly identified as derived from
obligations issued by or on behalf of the State of Connecticut or any political
subdivision thereof, or public instrumentality, state or local authority,
district, or similar public entity created under the laws of the State of
Connecticut or from obligations (such as certain obligations issued by or on
behalf of possessions or territories of the United States) the interest on which
Federal law prohibits the states from taxing ("Connecticut Municipal
Obligations") will be exempt from the Connecticut Personal Income Tax. (See
"Connecticut Income Taxes" herein.) To the extent suitable Connecticut Municipal
Obligations are not available for investment by the Fund, the Fund may purchase
Municipal Obligations issued by other states, their agencies and
instrumentalities or other obligations, the dividends designated as derived from
interest income on which will be exempt from regular Federal income tax but will
be subject to the Connecticut Personal Income Tax. However, except as a
temporary defensive measure during periods of adverse market conditions as
determined by the Manager, the Fund will invest at least 65% of its total assets
in Connecticut Municipal Obligations, the exempt-interest dividends derived from
which are exempt from the Connecticut Personal Income Tax, although the exact
amount of the Fund's assets invested in such securities will vary from time to
time. The Fund's investments may include "when-issued" Municipal Obligations,
stand-by commitments and taxable repurchase agreements. Although the Fund will
attempt to invest 100% of its assets in Municipal Obligations, the Fund reserves
the right to invest up to 20% of the value of its net assets in securities, the
interest income on which is subject to Federal, state and local income tax. The
Fund expects to invest more than 25% of its assets in Participation Certificates
purchased from banks in industrial revenue bonds and other Connecticut Municipal
Obligations.

In view of this "concentration" in Participation Certificates in
Connecticut Municipal Obligations, an investment in the Fund should be made with
an understanding of the characteristics of the banking industry and the risks
which such an investment may entail, which include extensive governmental
regulation, changes in the availability and cost of capital funds, and general
economic conditions (See "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information.) The investment
objectives of the Fund described in this paragraph may not be changed unless
approved by the holders of a majority of the outstanding shares of the Fund that
would be affected by such a change. As used in this Prospectus, the term
"majority of the outstanding shares" of the Fund means, respectively, the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund.

the Fund's Board of Directors to be of comparable quality. In addition,
Municipal Obligations with remaining maturities of 397 days or less but that at
the time of issuance were long-term securities (i.e. with maturities greater
than 366 days) are deemed unrated and may be purchased if such had received a
long-term rating from the Requisite NRSROs in one of the three highest rating
categories. Provided, however, that such may not be purchased if it (i) does not
satisfy the rating requirements set forth in the preceding sentence and (ii) has
received a long-term rating from any NRSRO that is not within the three highest
long-term rating categories. A determination of comparability by the Board of
Directors is made on the basis of its credit evaluation of the issuer, which may
include an evaluation of a letter of credit, guarantee, insurance or other
credit facility issued in support of the Municipal Obligations or Participation
Certificates. (See "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information.) While there are
several organizations that currently qualify as NRSROs, two examples of NRSROs
are Standard & Poor's Rating Services, a division of the McGraw-Hill Companies
("S&P") and Moody's Investors Service, Inc. ("Moody's"). The two highest ratings
by S&P and Moody's are "AAA" and "AA" by S&P in the case of long-term bonds and
notes or "Aaa" and "Aa" by Moody's in the case of bonds; "SP-1" and "SP-2" by
S&P or "MIG-1" and "MIG-2" by Moody's in the case of notes; "A-1" and "A-2" by
S&P or "Prime-1" and "Prime-2" by Moody's in the case of tax-exempt commercial
paper. The highest rating in the case of variable and floating demand notes is
"SP-1/AA" by S&P and "VMIG-1" by Moody's. Such instruments may produce a lower
yield than would be available from less highly rated instruments.

Subsequent to its purchase by the Fund, the quality of an investment
may cease to be rated or its rating may be reduced such that the investment is
no longer a First Tier Security or is rated below the minimum required for
purchase by the Fund. If this occurs, the Board of Directors of the Fund shall
promptly reassess whether the security presents minimal credit risks and shall
cause the Fund to take such action as the Board of Directors determines is in
the best interest of the Fund and its shareholders. Reassessment, however, is
not required if the security is disposed of or matures within five business days
of the Manager becoming aware of the new rating and provided further that the
Board of Directors is subsequently notified of the Manager's actions. The term
First Tier Security means any Eligible Security that: (i) is a rated security
that has received a short-term rating from the Requisite NRSROs in the highest
short-term rating category for debt obligations; (ii) is an unrated security
that is, as determined by the Fund's Board of Directors, to be of comparable
quality; (iii) is a security issued by a registered investment company that is a
money market fund; or (iv) is a government security.

In addition, in the event that a security (1) is in default, (2) ceases
to be an Eligible Security under Rule 2a-7, or (3) is determined to no longer
present minimal credit risks or an event of insolvency occurs with respect to
the issuer of a portfolio security or the provider of any Demand Feature or
Guarantee, the Fund will dispose of the security absent a determination by the
Fund's Board of Directors that disposal of the security would not be in the best
interests of the Fund. In the event that a security is disposed of it, such
disposal shall occur as soon as practicable consistent with achieving an orderly
disposition by sale, exercise of any Demand Feature or otherwise. In the event
of a default with respect to a security which immediately before default
accounted for 1/2 of 1% or more of the Fund's total assets, the Fund shall
promptly notify the SEC of such fact and of the actions that the Fund intends to
take in response to the situation.

In view of the "concentration" of the Fund in Participation
Certificates, which may be secured by Guarantees, an investment in the Fund
should be made with an understanding of the characteristics of the banking
industry and the risks which such an investment may entail which include
extensive governmental regulation, changes in the availability and cost of
capital funds and general economic condition. (See "Variable Rate Demand
Instruments and Participation Certificates" in the Statement of Additional
Information.) Banks are subject to extensive governmental regulations which may
limit both the amounts and types of loans and other financial commitments which
may be made and interest rates and fees which may be charged. The profitability
of this industry is largely dependent upon the availability and cost of capital
funds for the purpose of financing lending operations under prevailing money
market conditions. Also, general economic conditions play an important part in
the operations of this industry and exposure to credit losses arising from
possible financial difficulties of borrowers might affect a bank's ability to
meet its obligations under a letter of credit. The Fund may invest 25% or more
of the net assets of any portfolio in securities that are related in such a way
that an economic, business or political development or change affecting one of
the securities would also affect the other securities including, for example,
securities the interest upon which is paid from revenues of similar type
projects, or securities the issuers of which are located in the same state.

All investments by the Fund will mature or will be deemed to mature
within 397 days or less from the date of acquisition and the average maturity of
the Fund's portfolio (on a dollar-weighted basis) will be 90 days or less. The
maturities of variable rate demand instruments held in the Fund's portfolio will
be deemed to be the longer of the period required before the Fund is entitled to
receive payment of the principal amount of the instrument through demand, or the
period remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.

securities limited in respect of any one issuer to not more than 5% in value of
the total assets of the Fund and to not more than 10% of the outstanding voting
securities of such issuers. In addition, at the close of each quarter of its
taxable year, not more than 25% in value of the Fund's total assets may be
invested in securities of one issuer other than government securities. The
limitations described in this paragraph are not fundamental policies and may be
revised to the extent applicable Federal income tax requirements are revised.
(See "Federal Income Taxes" herein.)

The primary purpose of investing in a portfolio of Connecticut
Municipal Obligations is the special tax treatment accorded Connecticut resident
individual investors. However, payment of interest and preservation of principal
is dependent upon the continuing ability of the issuers and/or obligors of
state, municipal and public authority debt obligations to meet their obligations
thereunder. Investors should consider the greater risk of the Fund's
concentration versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of Connecticut
issues with those of more diversified portfolios including out-of-state issues
before making an investment decision. The Fund's management believes that by
maintaining the Fund's investment portfolio in liquid, short-term, high quality
investments, including Participation Certificates and other variable rate demand
instruments that have high quality credit support from banks, insurance
companies or other financial institutions, the Fund is largely insulated from
the credit risks that may exist on long-term Connecticut Municipal Obligations.
For additional information, please refer to the Statement of Additional
Information.

- --------------------------------------------------------------------------------
CONNECTICUT RISK FACTORS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

The Fund's Board of Directors which is responsible for the overall
management and supervision of the Fund, has employed Reich & Tang Asset
Management, L.P. ("the Manager") to serve as investment manager of the Fund. The
Manager provides persons satisfactory to the Fund's Board of Directors to serve
as officers of the Fund. Such officers, as well as certain other employees and
directors of the Fund, may be directors or officers of Reich & Tang Asset
Management, Inc., the sole general partner of the Manager, or employees of the
Manager or its affiliates. Due to the services performed by the Manager, the
Fund currently has no employees and its officers are not required to devote
full-time to the affairs of the Fund. The Statement of Additional Information
contains general background information regarding each director and principal
officer of the Fund.

The Manager is a Delaware limited partnership with its principal office
at 600 Fifth Avenue, New York, New York 10020. As of April 30, 1998, the Manager
was investment manager, adviser or supervisor with respect to assets aggregating
in excess of $11.4 billion. The Manager acts as investment manager or
administrator of seventeen other registered investment companies and also
advises pension trusts, profit-sharing trusts and endowments.

Reich & Tang Asset Management, Inc. (an indirect wholly-owned
subsidiary of Nvest Companies) is the sole general partner and owner of the
remaining 0.5% interest of the Manager. Nvest Corporation, a Massachusetts
Corporation (formerly known as New England Investment Companies, Inc.), serves
as the managing general partner of Nvest Companies.
<PAGE>

Reich & Tang Asset Management, Inc. is an indirect subsidiary of
Metropolitan Life Insurance Company ("MetLife"). Also, MetLife directly and
indirectly owns approximately 47% of the outstanding partnership interests of
Nvest Companies and may be deemed a "controlling person" of the Manager. Reich &
Tang, Inc. owns, directly and indirectly, approximately 13% of the outstanding
partnership interests of Nvest Companies.

MetLife is a mutual life insurance company with assets of $297.6
billion at December 31, 1996. It is the second largest life insurance company in
the United States in terms of total assets. MetLife provides a wide range of
insurance and investment products and services to individuals and groups and its
the leader among United States life insurance companies in terms of total life
insurance in force, which exceeded $1.6 trillion at December 31, 1996 for
MetLife and its insurance affiliates. MetLife and its affiliates provide
insurance or other financial services to approximately 36 million people
worldwide.

Nvest Companies is a holding company offering a broad array of
investment styles across a wide range of asset categories through thirteen
subsidiaries, divisions and affiliates offering a wide array of investment
styles and products to institutional clients. Its business units, in addition to
the manager, include AEW Capital Management, L.P., Back Bay Advisors, L.P.,
Capital Growth Management, Limited Partnership, Greystone Partners, L.P., Harris
Associates, L.P., Jurika & Voyles, L.P., Loomis, Sayles & Company, L.P., New
England Funds, L.P., Nvest Associates, Inc., Snyder Capital Management, L.P.,
Vaughan, Nelson, Scarborough & McCullough, L.P., and Westpeak Investment
Advisors, L.P. These affiliates in the aggregate are investment advisors or
managers to 80 other registered investment companies.

The recent name change did not result in a change in control of the
Manager and has no impact upon the Manager's performance of its responsibilities
and obligations.

The Investment Management Contract has a term which extends to January
31, 1999 and may be continued in force thereafter for successive twelve-month
periods beginning each February 1, provided that such continuance is
specifically approved annually by majority vote of the Fund's outstanding voting
securities or by its Board of Directors, and in either case by a majority of the
directors who are not parties to the Investment Management Contract or
interested persons of any such party, by votes cast in person at a meeting
called for the purpose of voting on such matter.

Pursuant to the Investment Management Contract, the Manager manages the
Fund's portfolio of securities and makes decisions with respect to the purchase
and sale of investments, subject to the general control of the Board of
Directors of the Fund.

For its services under the Investment Management Contract, the Manager
receives from the Fund a fee equal to .30% per annum of the Fund's average daily
net assets for managing the Fund's investment portfolio and performing related
services. In addition to its fees under the Investment Management Contract,
Reich & Tang Distributors, Inc., (the "Distributor"), receives a service fee
equal to .20% per annum of the Fund's average daily net assets under the
Shareholder Servicing Agreement. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses, which are attributable to
both classes of the Fund, will be allocated daily to each Class shares based on
the percentage of outstanding shares at the end of the day.

Pursuant to the Administrative Services Contract for the Fund, the
Manager performs clerical, accounting supervision and office service functions
for the Fund and provides the Fund the personnel to: (i) supervise the
performance of bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping agent; (ii) prepare reports to and filings with
regulatory authorities; and (iii) perform such other services as the Fund may
from time to time request of the Manager. The personnel rendering such services
may be employees of the Manager or its affiliates. The Manager, at its
discretion, may voluntarily waive all or a portion of the administrative
services fee. For its services under the Administrative Services Contract, the
Manager receives a fee equal to .21% per annum of the Fund's average daily net
assets. Any portion of the total fees received by the Manager may be used to
provide shareholder services and for distribution of Fund shares (see
"Distribution and Service Plan" herein).

- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK
- --------------------------------------------------------------------------------

The Fund was incorporated in Maryland on March 8, 1985. The authorized
capital stock of the Fund consists of twenty billion shares of stock having a
par value of one-tenth of one cent ($.001) per share. The Fund's Board of
Directors is authorized to divide the unissued shares into separate series of
stock, each series representing a separate, additional investment portfolio.
Shares of all series will have identical voting rights, except where, by law,
certain matters must be approved by a majority of the shares of the affected
series. Each share of any series of shares when issued has equal dividend,
distribution, liquidation and voting rights within the series for which it was
issued, and each fractional share has those rights in proportion to the
percentage that the fractional share represents of a whole share. Generally, all
shares will be voted in the aggregate, except if voting by class is required by
law or the matter involved affects only one class, in which case shares will be
voted
<PAGE>

separately by class. There are no conversion or preemptive rights in connection
with any shares of the Fund. All shares, when issued in accordance with the
terms of the offering will be fully paid and nonassessable. Shares are
redeemable at net asset value, at the option of the shareholder.

Under its Articles of Incorporation the Fund has the right to redeem
for cash shares of stock owned by any shareholder to the extent and at such
times as the Fund's Board of Directors determines to be necessary or appropriate
to prevent an undue concentration of stock ownership which would cause the Fund
to become a "personal holding company" for Federal income tax purposes. In this
regard, the Fund may also exercise its right to reject purchase orders. As of
April 30, 1998, the amount of shares owned by all officers and directors of the
Fund, as a group, was less than 1% of the outstanding shares of the Fund.

The Class A and Class B shares of the Fund, will represent an interest
in the same portfolio of investments and will have identical voting, dividend,
liquidation and other rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions, except that: (i) the
Class A and Class B shares will have different class designations; (ii) only the
Class A shares will be assessed a service fee pursuant to the Rule 12b-1
Distribution and Service Plan of the Fund of .20% of the Fund's average daily
net assets; (iii) only the holders of the Class A shares will be entitled to
vote on matters pertaining to the Plan and any related agreements in accordance
with provisions of Rule 12b-1; and (iv) the exchange privilege will permit
shareholders to exchange their shares only for shares of the same class of an
Exchange Fund. Payments that are made under the Plans will be calculated and
charged daily to the appropriate class prior to determining daily net asset
value per share and dividends/distributions.

The shares of the Fund have non-cumulative voting rights, which means
that the holders of more than 50% of the shares outstanding voting for the
election of directors can elect 100% of the directors if the holders choose to
do so, and, in that event, the holders of the remaining shares will not be able
to elect any person or persons to the Board of Directors. Certificates for Fund
shares will not be issued to an investor.

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------

The Fund declares dividends equal to all its net investment income
(excluding capital gains and losses, if any, and amortization of market
discount) on each Fund Business Day and generally pays dividends monthly. There
is no fixed dividend rate. In computing these dividends, interest earned and
expenses are accrued daily.

Net realized capital gains, if any, are distributed at least annually
and in no event later than 60 days after the end of the Fund's fiscal year.

All dividends and distributions of capital gains are automatically
invested in additional Fund shares immediately upon payment thereof unless a
shareholder has elected by written notice to the Fund to receive either of such
distributions in cash.

The Class A shares will bear the service fee under the Plan. As a
result, the net income of and the dividends payable to the Class A shares will
be lower than the net income of and dividends payable to the Class B shares of
the Fund. Dividends paid to each Class of shares of the Fund will, however, be
declared and paid on the same days at the same times and, except as noted with
respect to the service fees payable under the Plan, will be determined in the
same manner and paid in the same amounts.

- --------------------------------------------------------------------------------
HOW TO PURCHASE AND REDEEM SHARES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

You can purchase shares of the Fund through broker-dealers, banks or
other financial intermediaries, or directly through EDI. The minimum initial
investment is $1,000 which may be waived in certain situations. There is no
minimum for subsequent investments. In states where EDI is not registered as a
broker-dealer, shares of the Fund will only be sold through other broker-dealers
or other financial institutions that are registered. Only Evergreen Class A
shares are offered through this Prospectus. Instructions on how to purchase
shares of the Fund are set forth in the Share Purchase Application.

Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss the Fund or the Fund's Manager incurs.
If such investor is an existing shareholder, the Fund may redeem shares from his
or her account to reimburse the Fund or the Fund's Manager for any loss. In
addition, such investors may be prohibited or restricted from making further
purchase in any of the Evergreen mutual funds.

HOW TO REDEEM SHARES

You may "redeem", i.e., sell your shares in the Fund to the Fund on any
Fund Business Day, either directly or through your financial intermediary. The
price you will receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, the Fund
will not send proceeds until it is reasonably satisfied
<PAGE>

that the check has been collected (which may take up to ten days). Once a
redemption request has been telephoned or mailed, it is irrevocable and may not
be modified or canceled.

Redeeming Shares Through Your Financial Intermediary. The Fund must receive
instructions from your financial intermediary before 4:00 p.m. (Eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to the Fund and may
charge you for this service. Certain financial intermediaries may require that
you give instructions earlier than 4:00 p.m. (Eastern time).

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to Evergreen Service Company ("Evergreen Service
Company") which is the registrar, transfer agent and dividend disbursing agent
for the Fund. Stock power forms are available from your financial intermediary,
Evergreen Service Company, and many commercial banks. Additional documentation
is required for the sale of shares by corporations, financial intermediaries,
fiduciaries and surviving joint owners. Signature guarantees are required for
all redemption requests for shares with a value of more than $10,000 or where
the redemption proceeds are to be mailed to an address other than that shown in
the account registration. A signature guarantee must be provided by a bank or
trust company (not a Notary Public), a member firm of a domestic stock exchange
or by other financial institutions whose guarantees are acceptable to Evergreen
Service Company.

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling Evergreen Service Company at 800-423-2615 between the hours of 8:00
a.m. to 5:30 p.m. (Eastern time) each Fund Business Day. Redemption requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. Such redemption requests must include the
shareholder's account name, as registered with the Fund, and the account number.
During periods of drastic economic or market changes, shareholders may
experience difficulty in effecting telephone redemptions. Shareholders who are
unable to reach Evergreen Service Company by telephone should follow the
procedures outlined above for redemption by mail.

The telephone redemption service is not available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered, or (ii) be
wired to an account with the same registration as the shareholder's account in
the Fund at a designated commercial bank. Evergreen Service Company currently
deducts a $5.00 wire charge from all redemption proceeds wired. This charge is
subject to change without notice. Redemption proceeds will be wired on the same
day if the request is made prior to 12 noon (Eastern time). Such shares,
however, will not earn dividends for that day. Redemption requests received
after 12 noon will earn dividends for that day, and the proceeds will be wired
on the following business day. A shareholder who decides later to use this
service, or to change instructions already given, should fill out a Shareholder
Services Form and send it to Evergreen Service Company, P.O. Box 2121, Boston,
Massachusetts 02106-2121, with such shareholder's signature guaranteed by a bank
or trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable to
Evergreen Service Company. Shareholders should allow approximately ten days for
such form to be processed. The Fund will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. These procedures
include requiring some form of personal identification prior to acting upon
instructions and tape recording of telephone instructions. If the Fund fails to
follow such procedures, it may be liable for any losses due to unauthorized or
fraudulent instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine. The Fund reserves the right to
refuse a telephone redemption if it is believed advisable to do so. Financial
intermediaries may charge a fee for handling telephone requests. Procedures for
redeeming Fund shares by telephone may be modified or terminated without notice
at any time.

Redemptions by Check. Upon request, the Fund will provide holders of Evergreen
shares, without charge, with checks drawn on the Fund that will clear through
Evergreen Service Company. Shareholders will be subject to the Evergreen Service
Company rules and regulations governing such checking accounts. Checks will be
sent usually within ten business days following the date the account is
established. Checks may be made payable to the order of any payee in an amount
of $250 or more. The payee of the check may cash or deposit it like a check
drawn on a bank (Investors should be aware that, as in the case with regular
bank checks, certain banks may not provide cash at the time of deposit, but will
wait until they have received payment from Evergreen Service Company.) When such
a check is presented to Evergreen Service Company for payment, Evergreen Service
Company, as the shareholder's agent, causes the Fund to redeem a sufficient
number of full and fractional shares in the shareholder's account to cover the
amount of the check. Checks will be returned by Evergreen Service Company if
there are insufficient or uncollectable shares to meet the withdrawal amount.
The check writing procedure for withdrawal enables shareholders to continue
earning income on the shares to be redeemed up to but not including the date the
redemption check is presented to Evergreen Service Company for payment.

Shareholders wishing to use this method of redemption should fill out
the appropriate part of the Share Purchase Application (including the Signature
Card) and mail the completed form to Evergreen Service Company, P.O. Box 2121,
Boston, Massachusetts 02106-2121. Shareholders requesting this service after an
account has been opened must contact Evergreen Service Company since additional
documentation will be required. Currently there is no charge either for checks
or for the clearance of any checks. This service may be terminated or altered at
any time.

<PAGE>

- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

The Fund offers the following shareholder services. For more
information about these services or your account, contact EDI or the toll-free
number on the front of this Prospectus. Some services are described in more
detail in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.

Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $25,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account two business days after the request
is received.

Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designated a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $75. Fund shares will be redeemed as necessary to meet withdrawal payments.
All participants must elect to have their dividends and capital gain
distributions reinvested automatically. In order to make a payment, a number of
shares equal in aggregate net asset value to the payment amount are redeemed at
their net asset value on the Fund Business Day immediately preceding the date of
payment. To the extent that the redemptions to make plan payments exceed the
number of shares purchased through reinvestment of dividends and distributions,
the redemptions reduce the number of shares purchased on original investment,
and may ultimately liquidate a shareholder's investment. Because the withdrawal
plan involves the redemption of Fund shares, such withdrawals may constitute
taxable events to the shareholder but the Fund does not expect that there will
be any realizable capital gains.

Investments Through Employee Benefit and Savings Plan. Certain qualified and
non-qualified benefit and savings plans may make shares of the Fund and the
other Evergreen mutual funds available to their participants. Each Fund's
investment adviser may provide compensation to organizations providing
administrative and recordkeeping services to plans which make shares of the
Evergreen mutual funds available to their participants.

Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the last
business day of each month, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for subsequent
dividends and/or distributions to be paid in cash at least three full business
days prior to a given record date, the dividends and/or distributions to be paid
to a shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.

Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.

The Fund sells and redeems its shares on a continuing basis at their
net asset value and does not impose a charge for either sales or redemptions.

In order to maximize earnings on its portfolio, the Fund normally has
its assets as fully invested as is practicable. Many securities in which the
Fund invests require immediate settlement in funds of Federal Reserve member
banks on deposit at a Federal Reserve Bank (commonly known as "Federal Funds").
Accordingly, the Fund does not accept a subscription or invest an investor's
payment in portfolio securities until the payment has been converted into
Federal Funds.

Shares will be issued as of the first determination of the Fund's net
asset value per share made after acceptance of the investor's purchase order at
the net asset value per share next determined after receipt of the purchase
order. Shares begin accruing income dividends on the day they are purchased. The
Fund reserves the right to reject any subscription for its shares.

Shares are issued as of 12 noon, Eastern time, on any Fund Business Day
as defined herein on which an order for the shares and accompanying Federal
Funds are received by the Fund's transfer agent before 12 noon. Orders
accompanied by Federal Funds and received after 12 noon, Eastern time, on a Fund
Business Day will not result in share issuance until the following Fund Business
Day. Fund shares begin accruing income on the day the shares are issued to an
investor.

There is no redemption charge, no minimum period of investment, no
minimum amount for a redemption, and no restriction on frequency of withdrawals.
Unless other instructions are given in proper form to the Fund's transfer agent,
a check for the proceeds of a redemption will be sent to the shareholder's
address of record. If a shareholder elects to redeem all the shares of the Fund
he owns, all dividends accrued to the date of such redemption will be paid to
the shareholder along with the proceeds of the redemption.
<PAGE>

The right of redemption may not be suspended or the date of payment
upon redemption postponed for more than seven days after the shares are tendered
for redemption, except for any period during which the New York Stock Exchange,
Inc. is closed (other than customary weekend and holiday closings) or during
which the SEC determines that trading thereon is restricted, or for any period
during which an emergency (as determined by the SEC) exists as a result of which
disposal by the Fund of its portfolio securities is not reasonably practicable
or as a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or for such other period as the SEC may
by order permit for the protection of the shareholders of the Fund.

Redemption requests received by the Fund's transfer agent before 12
noon, Eastern time, on any Fund Business Day become effective at 12 noon that
day. Shares redeemed are not entitled to participate in dividends declared on
the day a redemption becomes effective. A redemption request received after 12
noon, Eastern time, on any Fund Business Day becomes effective on the next Fund
Business Day.

The Fund has reserved the right to close an account that through
redemption has remained below $1000 for 30 days. Shareholders will receive 60
days' written notice to increase the account value before the account is closed.

The redemption of shares may result in the investor's receipt of more
or less than paid for the shares and, thus, in a taxable gain or loss to the
investor.

EFFECT OF BANKING LAWS

The Glass-Steagall Act limits the ability of a depository institution
to become an underwriter or distributor of securities. It is the Fund
management's position, however, that banks are not prohibited from acting in
other capacities for investment companies, such as providing administrative and
shareholder account maintenance services and receiving compensation from the
Manager for providing such services. This is an unsettled area of the law,
however, and if a determination contrary to the Fund management's position is
made by a bank regulatory agency or court concerning shareholder servicing and
administration payments to banks from the Manager, any such payments will be
terminated and any shares registered in the banks' names, for their underlying
customers, will be re-registered in the name of the customers at no cost to the
Fund or its shareholders. In addition, state securities laws may differ on this
issue from the interpretations of Federal law expressed herein and banks and
financial institutions may be required to register as underwriters, distributors
or dealers pursuant to state law.

- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN
- --------------------------------------------------------------------------------

Pursuant to Rule 12b-1 under the 1940 Act, the SEC has required that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by Rule 12b-1.
The Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund and Reich & Tang Distributors, Inc.
(the "Distributor") have entered into a Distribution and a Shareholder Servicing
Agreement with the Manager (with respect to Class A shares only).

Under the Distribution Agreement, the Distributor, for nominal
consideration and as agent for the Fund, will solicit orders for the purchase of
the Fund's shares, provided that any subscriptions and orders will not be
binding on the Fund until accepted by the Fund as principal.

Under the Shareholder Servicing Agreement, the Distributor receives
from the Fund with respect only to Class A shares a service fee equal to .20%
per annum of the Class A shares' average daily net assets (the "Shareholder
Servicing Fee"). The fee is accrued daily and paid monthly and any portion of
the fee may be deemed to be used by the Distributor for purposes of distribution
of Fund shares and for payments to Participating Organizations with respect to
servicing their clients or customers who are shareholders of the Class A shares
of the Fund. The Class B shareholders will not receive the benefit of such
services from participating organizations and, therefore will not be assessed a
shareholder servicing fee.

The Plan and the Shareholder Servicing Agreement provide that, in
addition to the Shareholder Servicing Fee, the Fund will pay for (i)
telecommunications expenses including the cost of dedicated lines and CRT
terminals, incurred by the Manager and Distributor in carrying out their
obligations under the Shareholder Servicing Agreement with respect to Class A
shares, and (ii) preparing, printing and delivering the Fund's prospectus to
existing shareholders of the Fund and preparing and printing subscription
application forms for shareholder accounts.

The Plan provides that the Manager may make payments from time to time
from its own resources, which may include the Management Fee and past profits
for the following purposes: (i) to defray the costs of, and to compensate
others, including Participating Organizations with whom the Distributor has
entered into written agreements, for performing shareholder servicing and
related administrative functions on behalf of the Class A shares of the Fund;
(ii) to compensate certain Participating Organizations for providing assistance
in distributing the Fund's Class A shares; and (iii) to pay the costs of
printing and distributing the Fund's prospectus to prospective investors and to
defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective shareholders, advertising, and
other promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing
<PAGE>

Fee and past profits, for the purposes enumerated in (i) above. The Manager and
the Distributor may make payments to Participating Organizations for providing
certain of such services up to a maximum of (on an annualized basis) .40% of the
average daily net asset value of the shares serviced through the Participating
Organization. However, the Distributor in its sole discretion, will determine
the amount of such payments made pursuant to the Plan, provided that such
payments will not increase the amount which the Fund is required to pay to the
Manager and the Distributor for any fiscal year under the Investment Management
Contract or the Shareholder Servicing Agreement in effect for that year.

For the fiscal year ended January 31, 1998, the total amount spent
pursuant to the Plan for Class A shares was .38% of the average daily net assets
of the Fund, of which .20% of the average daily net assets was paid by the Fund
to the Manager, pursuant to the Shareholder Servicing Agreement and an amount
representing .18% of the average daily net assets was paid by the Manager (which
may be deemed an indirect payment by the Fund). Of the total amount paid by the
Manager, $494,812 was utilized for broker assistance payments, $6,424 for
compensation to sales personnel, $2,986 for travel and expenses, $20,107 for
Prospectus printing, and $190 on miscellaneous expenses.

- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
- --------------------------------------------------------------------------------

The Fund has elected to qualify under the Code as a regulated
investment company that distributes "exempt-interest dividends" as defined in
the Code. The Fund's policy is to distribute as dividends each year 100% (and in
no event less than 90%) of its tax-exempt interest income, net of certain
deductions, and its investment company taxable income (if any). If distributions
are made in this manner, dividends designated as derived from the interest
earned on Municipal Obligations are "exempt-interest dividends" and are not
subject to regular Federal income tax although such "exempt-interest dividends"
may be subject to Federal alternative minimum tax. Dividends paid from taxable
income, if any, and distributions of any realized short-term capital gains
(whether from tax-exempt or taxable obligations) are taxable to shareholders as
ordinary income for Federal income tax purposes, whether received in cash or
reinvested in additional shares of the Fund. The Fund does not expect to realize
long-term capital gains, and thus does not contemplate distributing "capital
gain dividends" or having undistributed capital gain income within the meaning
of the Code. The Fund will inform shareholders of the amount and nature of its
income and gains in a written notice mailed to shareholders not later than 60
days after the close of the Fund's taxable year. For Social Security recipients,
interest on tax-exempt bonds, including exempt interest dividends paid by the
Fund, is to be added to adjusted gross income. Interest on certain "private
activity bonds" (generally, a bond issue in which more than 10% of the proceeds
are used for a non-governmental trade or business and which meets the private
security or payment test, or a bond issue which meets the private loan financing
test) issued after August 7, 1986 will constitute an item of tax preference
subject to the individual alternative minimum tax. Corporations will be required
to include in alternative minimum taxable income, 75% of the amount by which
their adjusted current earnings (including generally, tax-exempt interest)
exceeds their alternative minimum taxable income (determined without this item).
In addition, in certain cases Subchapter S corporations with accumulated
earnings and profits from Subchapter C years will be subject to a tax on
"passive investment income," including tax-exempt interest. Although the Fund
intends to maintain a $1.00 per share net asset value, a shareholder may realize
a taxable gain or loss upon the disposition of shares.

With respect to variable rate demand instruments, including Participation
Certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for Federal income tax purposes as
the owner of the underlying Municipal Obligations and that the interest thereon
will be exempt from Federal income taxes to the Fund to the same extent as the
interest on the underlying Municipal Obligations. Counsel has pointed out that
the Internal Revenue Service has announced that it will not ordinarily issue
advance rulings on the question of the ownership of securities or participation
interests therein subject to a put and could reach a conclusion different from
that reached by counsel. (See "Federal Income Taxes" in the Statement of
Additional Information.)

In South Carolina v. Baker, the U.S. Supreme Court held that the
Federal government may constitutionally require states to register bonds which
they issue and may subject the interest on such bonds to Federal tax if not
registered, and the Court further held that there is no constitutional
prohibition against the Federal government taxing the interest earned on state
or other municipal bonds. The Supreme Court decision affirms the authority of
the Federal government to regulate and control bonds such as the Municipal
Obligations and to tax such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the
Municipal Obligations in accordance with Section 103 of the Code.

- --------------------------------------------------------------------------------
CONNECTICUT INCOME TAXES
- --------------------------------------------------------------------------------

The designation of all or a portion of a dividend paid by the Fund as
an "exempt-interest dividend" under the Code does not necessarily result in the
exemption of such amount from tax under the laws of any state or local taxing
authority. However, in the opinion of Day, Berry & Howard LLP, special
Connecticut tax counsel to the Fund, exempt-interest dividends correctly
designated as derived from Connecticut Municipal Obligations received
<PAGE>

by the Fund are not subject to the Connecticut tax on the Connecticut taxable
income of individuals, trusts and estates (the "Connecticut Personal Income
Tax").

Exempt-interest dividends that are not derived from Connecticut
Municipal Obligations and any other dividends of the Fund that are treated as
ordinary income for Federal income tax purposes are includible in a taxpayer's
tax base for the purposes of the Connecticut Personal Income Tax.

While capital gain dividends are not anticipated by the Fund, capital
gain dividends and amounts, if any, in respect of undistributed long-term
capital gains of the Fund would be includible in a taxpayer's tax base for
purposes of the Connecticut Personal Income Tax, as would gains, if any,
recognized upon the redemption, sale, or exchange of shares of the Fund, except
that capital gain dividends derived from obligations issued by or on behalf of
the State of Connecticut, its political subdivisions, or any public
instrumentality, state or local authority, district or similar public entity
created under Connecticut law are not subject to the tax.

Dividends and distributions paid by the Fund that constitute items of
tax preference for purposes of the Federal alternative minimum tax, other than
exempt-interest dividends, derived from Connecticut Municipal Obligations, may
be subject to the net Connecticut minimum tax.

Shareholders are urged to consult their tax advisors with respect to
the treatment of distributions from the Fund in their own states and localities.

- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Fund was incorporated under the laws of the State of Maryland on
March 8, 1985 and it is registered with the SEC as an open-end management
investment company.

The Fund prepares semi-annual unaudited and annual audited reports
which include a list of investment securities held by the Fund and which are
sent to shareholders.

As a general matter, the Fund will not hold annual or other meetings of
the Fund's shareholders. This is because the By-Laws of the Fund provide for
annual meetings only (a) for the election of directors, (b) for approval of the
revised investment advisory contracts with respect to a particular class or
series of stock, (c) for approval of revisions to the Fund's distribution
agreement with respect to a particular class or series of stock, and (d) upon
the written request of shareholders entitled to cast not less than 25% of all
the votes entitled to be cast at such meeting. Annual and other meetings may be
required with respect to such additional matters relating to the Fund as may be
required by the 1940 Act including the removal of Fund director(s) and
communication among shareholders, any registration of the Fund with the SEC or
any state, or as the Directors may consider necessary or desirable. Each
Director serves until the next meeting of the shareholders called for the
purpose of considering the election or reelection of such Director or of a
successor to such Director, and until the election and qualification of his or
her successor, elected at such a meeting, or until such Director sooner dies,
resigns, retires or is removed by the vote of the shareholders.

As the year 2000 approaches, an issue has emerged regarding how
existing application software programs and operating systems can accommodate
this date value. Failure to adequately address this issue could have potentially
serious repercussions. The Manager is in the process of working with the Fund's
service providers to prepare for the year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Manager does not anticipate that the year 2000 issue
will have a material impact of the Fund's ability to provide service at current
levels, there can be no assurance that steps taken in preparation for the year
2000 will be sufficient to avoid an adverse impact on the Fund.

For further information with respect to the Fund and the shares offered
hereby, reference is made to the Fund's registration statement filed with the
SEC, including the exhibits thereto. The Registration Statement and the exhibits
thereto may be examined at the SEC and copies thereof may be obtained upon
payment of certain duplicating fees.

- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------

The net asset value of each Class of the Fund's shares is determined as
of 12 noon, Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except customary business holidays and Good
Friday. The net asset value of a Class is computed by dividing the value of the
Fund's net assets for such Class (i.e., the value of its securities and other
assets less its liabilities, including
<PAGE>

expenses payable or accrued but excluding capital stock and surplus) by the
total number of shares outstanding for such Class.

The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, except that if
fluctuating interest rates cause the market value of the Fund's portfolio to
deviate more than 1/2 of 1% from the value determined on the basis of amortized
cost, the Board of Directors will consider whether any action should be
initiated. Although the amortized cost method provides certainty in valuation,
it may result in periods during which the value of an instrument is higher or
lower than the price an investment company would receive if the instrument were
sold. The Fund intends to maintain a stable net asset value at $1.00 per share
although there can be no assurance that this will be achieved.

- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105, is custodian for the Fund's cash and securities. Evergreen
Service Company, P.O. Box 2121, Boston, Massachusetts 02106-2121 is the
registrar, transfer agent and dividend disbursing agent for the Evergreen shares
of the Fund. The Fund's transfer agent and custodian do not assist in, and are
not responsible for, investment decisions involving assets of the Fund.

<PAGE>

Distributor

Evergreen Distributor, Inc., 125 West 55th Street, New York, New York 10019

537621 (REV02)
6/98

<PAGE>

[GRAPHIC OMITTED]

[GRAPHIC OMITTED] PROSPECTUS
CHASE VISTA SELECT SHARES OF CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

June 1, 1998

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an open-end
management investment company that is a short-term, tax-exempt money market fund
whose investment objectives are to seek as high a level of current income,
exempt from Federal income taxes and to the extent possible from Connecticut
personal income taxes, as is believed to be consistent with preservation of
capital, maintenance of liquidity and stability of principal. The Fund offers
two classes of shares to the general public, however only Class A shares are
offered by this Prospectus. The Class A shares of the Fund are subject to a
service fee pursuant to the Fund's Rule 12b-1 Distribution and Service Plan and
are sold through financial intermediaries who provide servicing to Class A
shareholders for which they receive compensation from the Manager and the
Distributor. The Class B shares of the Fund are not subject to a service fee and
either are sold directly to the public or are sold through financial
intermediaries that do not receive compensation from the Manager or Distributor.
In all other respects, the Class A and Class B shares represent the same
interests in the income and assets of the Fund. No assurance can be given that
these objectives will be achieved. This Prospectus relates exclusively to the
Chase Vista Select shares class of the Fund. The Fund is concentrated in the
securities issued by Connecticut or entities within Connecticut. The Fund may
invest a significant percentage of its assets in a single issuer. Therefore, an
investment in the Fund may be riskier than an investment in other types of money
market funds.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. Additional information about the Fund
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-34-VISTA. The
"Statement of Additional Information" bears the same date as this Prospectus and
is incorporated by reference into this Prospectus in its entirety. The SEC
maintains a web site (http://www.sec.gov) that contains the Statement of
Additional Information and other reports and information regarding the Fund
which have been filed electronically with the SEC.

Investors should be aware that the Chase Vista Select shares may not be
purchased other than through certain securities dealers with whom Vista Fund
Distributors, Inc. ("VFD") has entered into agreements for this purpose,
directly from VFD or through certain "Participating Organizations" (see
"Investments Through Participating Organizations") with whom they have accounts.
Vista Select shares have been created for the primary purpose of providing a
Connecticut tax-free money market fund product for shareholders of certain funds
distributed by VFD. Shares of the Fund other than the Chase Vista Select shares
are offered pursuant to a separate prospectus.

An investment in the Fund is neither insured nor guaranteed by the United States
Government. The Fund intends to maintain a stable net asset value of $1.00 per
share although there can be no assurance that this value will be maintained.
Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.

This Prospectus should be read and retained by investors for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT BEING OFFERED VIA THE INTERNET TO
RESIDENTS OF PARTICULAR STATES.

<PAGE>

TABLE OF CONTENTS

Table of Contents ........................................................

Table of Fees and Expenses ...............................................

Financial Highlights .....................................................

Introduction .............................................................

Investment Objectives, Policies and Risks ................................

Connecticut Risk Factors ..................................................

Management of The Fund ....................................................

Description of Common Stock ...............................................

Dividends and Distributions ...............................................

How to Purchase and Redeem Shares .........................................
Initial Purchase of Chase Vista Select Shares .........................
Subsequent Purchases of Shares ........................................
Redemption of Shares ..................................................
Exchange Privilege ....................................................
Specified Amount Automatic Withdrawal Plan ............................
Investments Through Participating Organizations .......................

Distribution and Service Plan .............................................

Federal Income Taxes ......................................................

Connecticut Income Taxes ..................................................

General Information .......................................................

Net Asset Value ...........................................................

Custodian, Transfer Agent and Dividend Agent ..............................

<PAGE>

TABLE OF FEES AND EXPENSES
--------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>

Class A Class B

Management Fees 0.30% 0.30%
12b-1 Fees 0.20% 0.00%
Other Expenses 0.39% 0.37%
Administration Fees 0.21% _____ 0.21% _____
Total Fund Operating Expenses 0.89% 0.67%

Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming 5% annual return (
cumulative through the end of each year)

Class A $9 $28 $49 $110
Class B $7 $21 $37 $83

</TABLE>

The figures reflected in this example should not be considered as a
representation of past or future expenses. Actual expenses may be greater or
less than those shown above.

<PAGE>

FINANCIAL HIGHLIGHTS
-----------------------------
(for a share outstanding throughout the period)

The following financial highlights of Connecticut Daily Tax Free Income Fund,
Inc. has been audited by McGladrey & Pullen LLP, Independent Certified Public
Accountants, whose report
Year Ended January 31,
CLASS A 1998 1997 1996
- ------- --------- --------- ------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00 $ 1.00 $ 1.00
--------- --------- -------
Income from investment operations:
Net investment income..................... 0.027 0.026 0.030
Less distributions:
Dividends from net investment income....... ( 0.027) ( 0.026) ( 0.030)
------- ------- -------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00
========= ========= =======
Total return................................... 2.74% 2.59% 3.02%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ..... $167,780 $136,606 $105,826
Ratios to average net assets:
Expenses..................................... 0.89% 0.91% 0.91%
Net investment income........................ 2.70% 2.56% 2.96%
Administration fees waived................... -- -- 0.03%
Expenses paid indirectly..................... -- 0.02% --

Year
Ended
CLASS B January 31, 1998
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00
-------
Income from investment operations:
Net investment income........................ 0.029
Less distributions:
Dividends from net investment income......... ( 0.029)
--------
Net asset value, end of period................. $ 1.00
=======
Total Return................................... 2.96%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)...... $ 4
Ratios to average net assets:
Expenses..................................... 0.67%
Net investment income........................ 2.95%
Expenses paid indirectly..................... --

<PAGE>

thereon is incorporated by reference in the Statement of Additional Information.

Year Ended January 31,
1995 1994 1993 1992 1991 1990 1989
- ------ --------- --------- --------- -------- -------- ------

$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------- --------- --------- --------- -------- -------- ------

0.023 0.017 0.021 0.035 0.049 0.054 0.044

( 0.023) ( 0.017) ( 0.021) ( 0.035) ( 0.049) ( 0.054) ( 0.044)
- ------- ------- ------- --------- --------- ------- -------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ========= ========= ======== ======== =======
2.29% 1.70% 2.12% 3.56% 5.01% 5.58% 4.53%

$81,801 $ 120,551 $ 129,297 $ 185,339 $178,335 $228,167 $245,529

0.88% 0.87% 0.86%+ 0.79% 0.80% 0.78% 0.79%
2.25% 1.68% 2.14%+ 3.51% 4.92% 5.44% 4.44%
-- -- 0.06% -- -- -- --
-- -- -- -- -- -- --

October 10, 1996
(Commencement of offering) to
January 31, 1997
---------------------------

$ 1.00

0.009

( 0.009)
----------------
$ 1.00
=======
2.83%

$ 7

0.70%*
2.80%*
0.02%

* Annualized

<PAGE>

INTRODUCTION
- -----------------------

Connecticut Daily Tax Free Income Fund, Inc. (the "Fund") is an open-end
management investment company that is a short-term, tax-exempt money market fund
whose investment objectives are to seek as high a level of current income,
exempt under current law from regular Federal income taxes and to the extent
possible from Connecticut personal income taxes, as is believed to be consistent
with preservation of capital, maintenance of liquidity and stability of
principal by investing principally in short-term, high quality debt obligations
of the State of Connecticut, its political subdivisions, and certain possessions
and territories of the United States, the interest on which is exempt from
regular Federal income tax under section 103 of the Internal Revenue Code (the
"Code"), as described under "Investment Objectives, Policies and Risks" herein.
The Fund also may invest in municipal securities of issuers located in
jurisdictions other than Connecticut, the interest income on which will be
exempt from regular Federal income tax, but will be subject to Connecticut
personal income taxes for Connecticut residents. The Fund seeks to maintain an
investment portfolio with a dollar-weighted average maturity of 90 days or less,
and to value its investment portfolio at amortized cost and maintain a net asset
value of $1.00 per share. The Fund intends to invest all of its assets in
tax-exempt obligations; however, it reserves the right to invest up to 20% of
the value of its net assets in taxable obligations. This is a summary of the
Fund's fundamental investment policies which are set forth in full under
"Investment Objectives, Policies and Risks" herein and in the Statement of
Additional Information and may not be changed without approval of a majority of
the Fund's outstanding shares. No assurance can be given that these objectives
will be achieved.

The Fund's investment advisor is Reich & Tang Asset Management L.P. (the
"Manager"), which is a registered investment advisor and which currently acts as
manager or administrator to seventeen other open-end management investment
companies. The Fund's shares are distributed through Reich & Tang Distributors,
Inc. (the "Distributor"), with whom the Fund has entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to Class A shares
of the Fund only) pursuant to the Fund's plan adopted under Rule 12b-1 of the
Investment Company Act of 1940, as amended, (the "1940 Act"). (See "Distribution
and Service Plan" herein.)

"How to Purchase and Redeem Shares" and "Net Asset Value" herein.) Dividends
from accumulated net income are declared by the Fund on each Fund Business Day.
The Fund generally pays interest dividends monthly. Net capital gains, if any,
will be distributed at least annually and in no event later than within 60 days
after the end of the Fund's fiscal year. All dividends and distributions of
capital gains are automatically invested in additional shares of the Class A
shares of the Fund unless a shareholder has elected by written notice to the
Fund to receive either of such distributions in cash. (See "Dividends and
Distributions" herein.)

The Fund's Board of Directors is authorized to divide the unissued shares into
separate series of stock, one for each of the Fund's separate investment
portfolios that may be created in the future.

Chase Vista Select shares have been created for the primary purpose of providing
a Connecticut tax-free money market fund product for investors who purchase
shares directly from VFD, through dealers with whom VFD has entered into
agreements for this purpose, or through certain "Participating Organizations"
(see "Investments Through Participating Organizations" herein) with whom they
have accounts or who acquire Chase Vista Select shares through the exchange of
shares of certain other investment companies as hereinafter described. Chase
Vista Select shares are identical to other shares of the Fund, which are offered
pursuant to a separate prospectus, with respect to investment objectives and
yield, but differ with respect to certain other matters. For example,
shareholders who hold other shares of the Fund may not participate in the
exchange privilege described herein and have different arrangements for
redemptions by check.

INVESTMENT OBJECTIVES, POLICIES
AND RISKS
- --------------------------------

The Fund is an open-end management investment company
<PAGE>

that is a short-term, tax-exempt money market fund whose investment objectives
are to seek as high a level of current income, exempt from regular Federal
income taxes and, to the extent possible from the Connecticut tax on the
Connecticut taxable income of individuals, trusts, and estates (the "Connecticut
Personal Income Tax"), as is believed to be consistent with preservation of
capital, maintenance of liquidity and stability of principal. There can be no
assurance that the Fund will achieve its investment objectives.

The Fund's assets will be invested primarily in high quality debt obligations
issued by or on behalf of the State of Connecticut, other states, territories
and possessions of the United States, and their authorities, agencies,
instrumentalities and political subdivisions, the interest on which is, in the
opinion of bond counsel at the date of issuance, currently exempt from regular
Federal income taxation ("Municipal Obligations") and in Participation
Certificates (which, in the opinion of Battle Fowler LLP, counsel to the Fund,
cause the Fund to be treated as owner of the underlying Municipal Obligations)
in Municipal Obligations purchased from banks, insurance companies or other
financial institutions ("Participation Certificates"). Dividends paid by the
Fund which are "exempt-interest dividends" by virtue of being properly
designated as derived from Municipal Obligations and Participation Certificates
will be exempt from regular Federal income tax provided the Fund complies with
Section 852(b)(5) of Subchapter M of the Code.

defensive measure during periods of adverse market conditions as determined by
the Manager, the Fund will invest at least 65% of its assets in Connecticut
Municipal Obligations, the exempt-interest dividends derived from which are
exempt from the Connecticut Personal Income Tax, although the exact amount of
the Fund's assets invested in such securities will vary from time to time. The
Fund's investments may include "when-issued" Municipal Obligations, stand-by
commitments and taxable repurchase agreements. Although the Fund will attempt to
invest 100% of its assets in Municipal Obligations, the Fund reserves the right
to invest up to 20% of the value of its total assets in securities, the interest
income on which is subject to Federal, state and local income tax. The Fund
expects to invest more than 25% of its assets in Participation Certificates
purchased from banks in industrial revenue bonds and other Connecticut Municipal
Obligations.

In view of this "concentration" in Participation Certificates in Connecticut
Municipal Obligations, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks which
such an investment may entail, which include extensive governmental regulation,
changes in the availability and cost of capital funds, and general economic
conditions. (See "Variable Rate Demand Instruments and Participation
Certificates" in the Statement of Additional Information.) The investment
objectives of the Fund described in this paragraph may not be changed unless
approved by the holders of a majority of the outstanding shares of the Fund that
would be affected by such a change. As used in this Prospectus, the term
"majority of the outstanding shares" of the Fund means, respectively, the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund.

subject to the Guarantee); and the issuer of the Demand Feature or Guarantee, or
another institution, has undertaken promptly to notify the holder of the
security in the event the Demand Feature or Guarantee is substituted with
another Demand Feature or Guarantee; and (iii) unrated Municipal Obligations
determined by the Fund's Board of Directors to be of comparable quality. In
addition, Municipal Obligations with remaining maturities of 397 days or less
but that at the time of issuance were long-term securities (i.e. with maturities
greater than 366 days) are deemed unrated and may be purchased if such had
received a long-term rating from the Requisite NRSROs in one of the three
highest rating categories. Provided, however, that such may not be purchased if
it (i) does not satisfy the rating requirements set forth in the preceding
sentence and (ii) has received a long-term rating from any NRSRO that is not
within the three highest long-term rating categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the Municipal
Obligations or Participation Certificates. (See "Variable Rate Demand
Instruments and Participation Certificates" in the Statement of Additional
Information.) While there are several organizations that currently qualify as
NRSROs, two examples of NRSROs are Standard & Poor's Rating Services, a division
of the McGraw-Hill Companies ("S&P") and Moody's Investors Service, Inc.
("Moody's"). The two highest ratings by S&P and Moody's are "AAA" and "AA" by
S&P in the case of long-term bonds and notes or "Aaa" and "Aa" by Moody's in the
case of bonds; "SP-1" and "SP-2" by S&P or "MIG-1" and "MIG-2" by Moody's in the
case of notes; "A-1" and "A-2" by S&P or "Prime-1" and "Prime-2" by Moody's in
the case of tax-exempt commercial paper. The highest rating in the case of
variable and floating demand notes is "SP-1/AA" by S&P and "VMIG-1" by Moody's.
Such instruments may produce a lower yield than would be available from less
highly rated instruments. Subsequent to its purchase by the Fund, the quality of
an investment may cease to be rated or its rating may be reduced such that the
investment is no longer a First Tier Security or is rated below the minimum
required for purchase by the Fund. If this occurs, the Board of Directors of the
Fund shall reassess promptly whether the security presents minimal credit risks
and shall cause the Fund to take such action as the Board of Directors
determines is in the best interest of the Fund and its shareholders.
Reassessment, however, is not required if the security is disposed of or matures
within five business days of the Manager becoming aware of the new rating and
provided further that the Board of Directors is subsequently notified of the
Manager's actions. The term First Tier Security means any Eligible Security
that: (i) is a rated security that has received a
<PAGE>

short-term rating from the Requisite NRSROs in the highest short-term rating
category for debt obligations; (ii) is an unrated security that is, as
determined by the Fund's Board of Directors, to be of comparable quality; (iii)
is a security issued by a registered investment company that is a money market
fund; or (iv) is a government security.

In addition, in the event that a security (1) is in default, (2) ceases to be an
Eligible Security under Rule 2a-7, or (3) is determined to no longer present
minimal credit risks, or an event of insolvency occurs with respect to the
issuer of a portfolio security or the provider of any Demand Feature or
Guarantee, the Fund will dispose of the security absent a determination by the
Fund's Board of Directors that disposal of the security would not be in the best
interests of the Fund. In the event that the security is disposed of, such
disposal shall occur as soon as practicable consistent with achieving an orderly
disposition by sale, exercise of any demand feature or otherwise. In the event
of a default with respect to a security which immediately before default
accounted for 1/2 of 1% or more of the Fund's total assets, the Fund shall
promptly notify the SEC of such fact and of the actions that the Fund intends to
take in response to the situation.

days or less. The maturities of variable rate demand instruments held in the
Fund's portfolio will be deemed to be the longer of the period required before
the Fund is entitled to receive payment of the principal amount of the
instrument through demand, or the period remaining until the next interest rate
adjustment, although the stated maturities may be in excess of 397 days.

The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Code. The Fund will be restricted in that, at the
close of each quarter of the taxable year, at least 50% of the value of its
total assets must be represented by cash, Government securities, investment
company securities and other securities limited in respect of any one issuer to
not more than 5% in value of the total assets of the Fund and to not more than
10% of the outstanding voting securities of such issuers. In addition, at the
close of each quarter of its taxable year, not more than 25% in value of the
Fund's total assets may be invested in securities of one issuer other than
government securities. The limitations described in this paragraph are not
fundamental policies and may be revised to the extent applicable Federal income
tax requirements are revised. (See "Federal Income Taxes" herein.)

CONNECTICUT
RISK FACTORS
- --------------------------

suffered during the recession. Manufacturing employment, however, has continued
its downward trend. Despite the recession, the average per capita personal
income of Connecticut residents has remained among the highest in the nation,
and the State's financial performance has improved. After having accumulated a
$965,712,000 unappropriated deficit as of June 30, 1991, the General Fund has
run operating surpluses, based on the State's budgetary method of accounting,
for each of the six fiscal years since. However, the State's high level of
tax-supported debt imposes a relatively significant burden on the State's
revenue base. There can be no assurance that general economic difficulties or
the financial circumstances of Connecticut or its towns and cities will not
adversely affect the market value of their obligations or the ability of the
obligors to pay debt service on such obligations.

MANAGEMENT OF THE FUND
- ----------------------
The Fund's Board of Directors which is responsible for the overall management
and supervision of the Fund, has employed Reich & Tang Asset Management L.P.
("the Manager") to serve as investment manager of the Fund. The Manager
provides persons satisfactory to the Fund's Board of Directors to serve as
officers of the Fund. Such officers, as well as certain other employees and
directors of the Fund, may be directors or officers of Reich & Tang Asset
Management, Inc., the sole general partner of the Manager, or employees of the
Manager or its affiliates. Due to the services performed by the Manager, the
Fund currently has no employees and its officers are not required to devote
full-time to the affairs of the Fund. The Statement of Additional Information
contains general background information regarding each director and principal
officer of the Fund.

The recent name change did not result in a change in control of the Manager and
has no impact upon the Manager's performance of its responsibilities and
obligations.

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.

For its services under the Investment Management Contract, the Manager receives
from the Fund a fee equal to .30% per annum of the Fund's average daily net
assets for managing the Fund's investment portfolio and performing related
services. In addition to its fees under the Investment Management Contract,
Reich & Tang Distributors, Inc. (the "Distributor"), receives a fee equal to
.20% per annum of the Fund's average daily net assets under the Shareholder
Servicing Agreement. The fees are accrued daily and paid monthly. Investment
management fees and operating expenses which are attributable to both classes of
the Fund will be allocated daily to each Class share based on the percentage of
outstanding shares at the end of the day.

Pursuant to the Administrative Services Contract for the Fund, the Manager
performs clerical, accounting supervision and office service functions for the
Fund and provides the Fund the personnel to: (i) supervise the performance of
accounting and related services by Investors Fiduciary Trust Company, the Fund's
bookkeeping agent; (ii) prepare reports to and filings with regulatory
authorities; and (iii) perform such other services as the Fund may from time to
time request of the Manager. The personnel rendering such services may be
employees of the Manager or its affiliates. The Manager, at its discretion, may
voluntarily waive all or a portion of the administrative services fee. For its
services under the Administrative Services Contract, the Manager receives a fee
equal to .21% per annum of the Fund's average daily net assets. Any portion of
the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares (see "Distribution and Service
Plan" herein).

DESCRIPTION OF
COMMON STOCK
- -----------------------------

distribution, liquidation and voting rights within the series for which it was
issued, and each fractional share has those rights in proportion to the
percentage that the fractional share represents of a whole share. Generally all
shares will be voted in the aggregate except if voting by class is required by
law or the matter involved affects only one class, in which case shares will be
voted separately by class. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares, when issued in accordance
with the terms of the offering, will be fully paid and nonassessable. Shares are
redeemable at net asset value, at the option of the shareholder.

Chase Vista Select shares have been created for the primary purpose of providing
a Connecticut tax-free money market fund product for investors who purchase
shares directly from VFD, through dealers with whom VFD has entered into
agreements for this purpose (see "Investments Through Participating
Organizations" herein) with whom they have accounts or who acquire Chase Vista
Select shares through the exchange of shares of certain other investment
companies as hereinafter described. Chase Vista Select shares are identical to
other shares of the Fund, which are offered pursuant to a separate prospectus,
with respect to investment objectives and yield, but differ with respect to
certain other matters. For example, shareholders who hold other shares of the
Fund may not participate in the exchange privilege described herein and have
different arrangements for redemptions by check.

Under its Articles of Incorporation the Fund has the right to redeem for cash
shares of stock owned by any shareholder to the extent and at such times as the
Fund's Board of Directors determines to be necessary or appropriate to prevent
an undue concentration of stock ownership which would cause the Fund to become a
"personal holding company" for Federal income tax purposes. In this regard, the
Fund may also exercise its right to reject purchase orders. As of April 30,
1998, the amount of shares owned by all officers and directors of the Fund, as a
group, was less than 1% of the outstanding shares of the Fund.

to determining daily net asset value per share and dividends/distributions.

The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors can elect 100% of the directors if the holders choose to do so, and,
in that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Unless specifically requested by an
investor who is a shareholder of record, the Fund does not issue certificates
evidencing Fund shares.

DIVIDENDS AND DISTRIBUTIONS
- ------------------------------
The Fund declares dividends equal to all its net investment income (excluding
capital gains and losses, if any, and amortization of market discount) on each
Fund Business Day and generally pays dividends monthly. There is no fixed
dividend rate. In computing these dividends, interest earned and expenses are
accrued daily.

Net realized capital gains, if any, are distributed at least annually and in no
event later than 60 days after the end of the Fund's fiscal year.

All dividends and distributions of capital gains are automatically invested in
additional Fund shares of the same Class of shares immediately upon payment
thereof unless a shareholder has elected by written notice to the Fund to
receive either of such distributions in cash. The Class A shares will bear a
service fee under the Plan. As a result, the net income of and the dividends
payable to the Class A shares will be lower than the net income of and dividends
payable to the Class B shares of the Fund. Dividends paid to each Class of
shares of the Fund will, however, be declared and paid on the same days at the
same times and, except as noted with respect to the service fees payable under
the Plan, will be determined in the same manner and paid in the same amounts.

HOW TO PURCHASE AND REDEEM SHARES

Investors may invest in Chase Vista Select shares through VFD or through dealers
with whom VFD has entered into agreements for this purpose as described herein
and those who have accounts with Participating Organizations may invest in the
Chase Vista Select shares through their Participating Organizations in
accordance with the procedures established by the Participating Organizations.
(See "Investments Through Participating Organizations" herein.) Only Class A
shares are offered through this Prospectus. Certain Participating Organizations
are compensated by the Distributor from its shareholder servicing fee and by the
Manager from its management fee for the performance of these services. An
investor who purchases shares through a Participating Organization that receives
payment from the Manager or the Distributor will become a Class A shareholder.
All other investors, and investors who have accounts with Participating
Organizations but who do not wish to invest in the Fund through their
Participating Organizations, may invest in the Fund directly as Class B
shareholders and not receive the
<PAGE>

benefit of the servicing functions performed by a Participating Organization.
Class B shares may also be offered to investors who purchase their shares
through Participating Organizations who do not receive compensation from the
Distributor or the Manager because they may not be legally permitted to receive
such as fiduciaries. The Manager pays the expenses incurred in the distribution
of Class B shares. Participating Organizations whose clients become Class B
shareholders will not receive compensation from the Manager or Distributor for
the servicing they may provide to their clients. The minimum initial investment
in the Chase Vista Select shares is $2,500. Initial investments may be made in
any amount in excess of the applicable minimums. The minimum amount for
subsequent investments is $100.

Shares will be issued as of the first determination of the Fund's net asset
value per share for each Class made after acceptance of the investor's purchase
order at the net asset value per share next determined after receipt of the
purchase order. Shares begin accruing income dividends on the day they are
purchased. The Fund reserves the right to reject any subscription for its
shares. Certificates for Fund shares will not be issued to an investor.

There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals. Unless
other instructions are given in proper form to the Fund's transfer agent, a
check for the proceeds of a redemption will be sent to the shareholders' address
of record. If a shareholder elects to redeem all the shares of the Fund he owns,
all
<PAGE>

dividends accrued to the date of such redemption will be paid to the shareholder
along with the proceeds of the redemption.

The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted, or for any period during
which an emergency (as determined by the SEC) exists as a result of which
disposal by the Fund of its portfolio securities is not reasonably practicable
or as a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or for such other period as the SEC may
by order permit for the protection of the shareholders of the Fund.

The Fund has reserved the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed. For Participant
Investor accounts, notice of a proposed mandatory redemption will be given only
to the appropriate Participating Organization, and the Participating
Organization will be responsible for notifying the Participant Investor of the
proposed mandatory redemption. During the notice period a shareholder or
Participating Organization who receives such a notice may avoid mandatory
redemption by purchasing sufficient additional shares to increase the total net
asset value to at least the minimum amount and thereby avoid such mandatory
redemption.

The redemption of shares may result in the investor's receipt of more or less
than he paid for his shares and, thus, in a taxable gain or loss to the
investor.

INITIAL PURCHASES OF
CHASE VISTA SELECT SHARES

Investors may obtain a current prospectus and the order form necessary to open
an account by telephoning the Chase Vista Service Center at 1-800-34-VISTA.

Mail. To purchase shares of the Chase Vista Select Shares, investors may send a
check made payable to "Chase Vista Select Shares of Connecticut Daily Tax Free
Income Fund, Inc." along with a completed subscription order form to:

Chase Vista Select
Connecticut Daily Tax Free Income
<PAGE>
Fund, Inc.
P. O. Box 419392
Kansas City, Missouri 64141-6392

Bank Wire. To purchase shares using the wire system for transmittal of money
among banks, investors should first obtain a new account number by telephoning
the Fund at 1-800-34-VISTA to obtain a new account number. The investors should
then instruct a member commercial bank to wire their money immediately to:

DST Systems, Inc.
ABA #1010-0362-1
CHASE VISTA FUNDS
DDA # 751-1-629
For Connecticut Daily Tax Free
Income Fund, Inc.
Account of
Fund Account #
SS #/Tax ID #

The investor should then promptly complete and mail the subscription order form.

SUBSEQUENT PURCHASES
OF SHARES

Subsequent purchases can be made by bank wire or by mailing a check to:

Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392

There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate the shareholder's account number. Provided that the information
on the subscription order form on file with the Fund is still applicable, a
shareholder may re-open an account without filing a new subscription order form
at any time during the year the shareholder's account is closed or during the
following calendar year.

REDEMPTION OF SHARES

A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class following receipt by the Fund's transfer agent of the redemption order.
Normally, payment for redeemed shares is made on the same Fund Business Day
after the redemption is effected, provided the redemption request is received
prior to 12 noon, New York City
<PAGE>

time and on the next Fund Business Day if the redemption request is received
after 12 noon, New York City time. However, redemption requests will not be
effected unless the check (including a certified or cashier's check) used to
purchase the shares has been cleared for payment by the investor's bank and
converted into Federal Funds. A bank check will be considered by the Fund to
have cleared 15 days after it is deposited by the Fund.

A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on their original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee. When a
signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under their signature, signed and guaranteed by an eligible
guarantor institution which includes a domestic bank, a domestic savings and
loan institution, a domestic credit union, a member bank of the Federal Reserve
System or a member firm of a national securities exchange, pursuant to the
fund's transfer agent's standard and procedures (signature guarantees by
notaries public are not acceptable).

Written Requests. Shareholders may make a redemption in any amount by sending
a written request to the Fund addressed to:

Chase Vista Funds
P.O. Box 419392
Kansas City, Missouri 64141-6392

Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.

Checks. By making the appropriate election on their subscription form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares in the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $500 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which the check clears. Checks provided by the Fund may not be certified.
Vista Select Shares purchased by check may not be redeemed by check until the
check has cleared, which could take up to 15 days following the date of
purchase.

There is no charge to the shareholder for checks provided by the Fund. The Fund
reserves the right to impose a charge or impose a different minimum check amount
in the future, if the Board of Directors determines that doing so is in the best
interests of the Fund and its shareholders.
<PAGE>

Shareholders electing the checking option are subject to the procedures, rules
and regulations of the Fund's agent bank governing checking accounts. Checks
drawn on a jointly owned account may, at the shareholder's election, require
only one signature. The Fund's agent bank will not honor checks which are in
amounts exceeding the value of the shareholder's account at the time the check
is presented for payment. Since the dollar value of the account changes daily,
the total value of the account may not be determined in advance and the account
may not be entirely redeemed by check. In addition, the Fund reserves the right
to charge the shareholder's account a fee up to $20 for checks not honored as a
result of an insufficient account value, a check deemed not negotiable because
it has been held longer than six months, an unsigned check and a post-dated
check. The Fund reserves the right to terminate or modify the check redemption
procedure at any time or impose additional fees following notification to the
Fund's shareholders.

Investors wishing to avail themselves of this method of redemption should elect
it on their subscription order form. Individuals and joint tenants are not
required to furnish any supporting documentation. Corporations and other
entities making this election, however, are required to furnish a certified
resolution or other evidence of authorization in accordance with the Fund's
normal practices. Appropriate authorization forms will be sent by the Fund or
its agents to corporations and other shareholders who select this option. As
soon as the authorization forms are filed in good order with the Fund's agent
bank, it will provide the shareholder with a supply of checks. This checking
service may be terminated or modified at any time or to impose additional fees
following notification to the Funds shareholders.

Telephone. The Fund accepts telephone requests for redemption from shareholders
who elect this option. The proceeds of a telephone redemption may be sent to the
shareholders at their addresses or, to their bank accounts, both as set forth in
the subscription order form or in a subsequent written authorization. However,
all telephone redemption requests in excess of $25,000 will be wired directly to
such previously designated bank account, for the protection of shareholders. The
Fund may accept telephone redemption instructions from any person with respect
to accounts of shareholders who elect this service and thus such shareholders
risk possible loss of principal and interest in the event of a telephone
redemption not authorized by them. To provide evidence of telephone
instructions, the transfer agent will record telephone conversations with
shareholders. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The failure by the Fund to
employ such procedures may cause the Fund to be liable for any losses incurred
by investors due to telephone redemptions based upon unauthorized or fraudulent
instructions.

<PAGE>
A shareholder making a telephone withdrawal should call the Fund at
1-800-34-VISTA and state (i) the name of the shareholder appearing on the Fund's
records, (ii) the shareholder's account number with the Fund, (iii) the amount
to be withdrawn, (iv) whether such amount is to be forwarded to the
shareholder's designated bank account or address, and (v) the name of the person
requesting the redemption. Usually the proceeds are sent to the designated bank
account or address on the same Fund Business Day the redemption is effected,
provided the redemption request is received before 12 noon, New York City time
and on the next Fund Business Day if the redemption request is received after 12
noon, New York City time. The Fund reserves the right to terminate or modify the
telephone redemption service in whole or in part at any time and will notify
shareholders accordingly.

EXCHANGE PRIVILEGE

Shareholders of the Chase Vista Select shares of the Fund may exchange at
relative net asset value for Vista Shares of any Chase Vista Money Market Fund
and the Chase Vista Select shares of any Reich & Tang sponsored funds and may
exchange at relative net asset value plus any applicable sales charges, for the
shares of the non-money market Chase Vista Funds, in accordance with the terms
of the then-current prospectus of the fund being acquired. The prospectus of the
Chase Vista Fund into which shares are being exchanged should be read carefully
prior to any exchange and retained for future reference. With respect to
exchanges into a fund which charges a front-end sales charge, such sales charge
will not be applicable if the shareholder previously acquired his Chase Vista
Select shares by exchange from such fund. Under the Exchange Privilege, Chase
Vista Select shares may be exchanged for shares of other funds only if those
funds are registered in the states where the exchange may legally be made. In
addition, the account registration for the Chase Vista Funds into which Chase
Vista Select shares are being exchanged must be identical to that of the account
registration for the Fund from which shares are being redeemed. Any such
exchange may create a gain or loss to be recognized for Federal income tax
purposes. Normally, shares of the fund to be acquired are purchased on the
redemption date, but such purchase may be delayed by either Fund up to five
business days if the Fund determines that it would be disadvantageous by an
immediate transfer of the proceeds. (This privilege may be amended or terminated
at any time following 60 days' prior notice.) Arrangements have been made for
the acceptance of instructions by telephone to exchange shares if certain
preauthorizations or indemnifications are accepted and on file. Further
information is available from the Transfer Agent.

SPECIFIED AMOUNT AUTOMATIC WITHDRAWAL PLAN

Shareholders who own $10,000 or more of the shares of the Fund may elect to
withdraw shares and
<PAGE>

receive payment from the Fund of a specified amount of $100 or more
automatically on a monthly or quarterly basis in an amount approved and
confirmed by the Manager. In order to make a payment, a number of shares equal
in aggregate net asset value to the payment amount are redeemed at their net
asset value so that the designated payment is received on approximately the 1st
or 15th day of the month following the end of the selected payment period. To
the extent that the redemptions to make plan payments exceed the number of
shares purchased through reinvestment of dividends and distributions, the
redemptions reduce the number of shares purchased on original investment, and
may ultimately liquidate a shareholder's investment.

INVESTMENTS THROUGH
PARTICIPATING ORGANIZATIONS

Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Fund. When instructed by its customer to purchase
or redeem Fund shares, the Participating Organization, on behalf of the
customer, transmits to the transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased. No
certificates are issued with respect to investments in the Fund.

Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Chase Vista Select Shares for the
customers' accounts. Also, Participating Organizations may send their customers
periodic account statements showing the total number of Chase Vista Select
shares owned by each customer as of the statement closing date, purchases and
redemptions of Chase Vista Select shares by each customer during the period
covered by the statement and the income earned by Chase Vista Select shares of
each customer during the statement period (including dividends paid in cash or
reinvested in additional Chase Vista Select shares).

who invest in the Fund directly may impose charges, limitations, minimums and
restrictions in addition to or different from those applicable to shareholders
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through Participating Organizations may be less than by investing in the
Fund directly. A Participant Investor should read this Prospectus in conjunction
with the materials provided by the Participating Organization describing the
procedures under which Chase Vista Select shares may be purchased and redeemed
through the Participating Organization.

The Glass-Steagall Act limits the ability of a depository institution to become
an underwriter or distributor of securities. Its the Fund management's position,
however, that banks are not prohibited from acting in other capacities for
investment companies, such as providing administrative and shareholder account
maintenance services and receiving compensation from the Manager for providing
such services. This is an unsettled area of the law, however, and if a
determination contrary to the Fund management's position is made by a bank
regulatory agency or court concerning shareholder servicing and administration
payments to banks from the Manager, any such payments will be terminated and any
shares registered in the banks' names, for their underlying customers, will be
re-registered in the name of the customers at no cost to the Fund or its
shareholders. In addition, state securities laws may differ on this issue from
the interpretations of Federal law expressed herein and banks and financial
institutions may be required to register as underwriters, distributors or
dealers pursuant to state law.

In the case of qualified Participating Organizations, orders received by the
transfer agent before 12 noon, New York City time, on a Fund Business Day,
without accompanying Federal Funds will result in the issuance of shares on that
day provided that the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will not result in share issuance until the following Fund Business
Day.

DISTRIBUTION AND
SERVICE PLAN
- ---------------------------------

Under the Distribution Agreement, the Distributor, for nominal
<PAGE>

consideration and as agent for the Fund, will solicit orders for the purchase of
the Fund's shares, provided that any subscriptions and orders will not be
binding on the Fund until accepted by the Fund as principal.

Under the Shareholder Servicing Agreement, the Distributor receives from the
Fund with respect to Class A shares only, a service fee equal to .20% per annum
of the Class A shares' average daily net assets (the "Shareholder Servicing
Fee") for providing personal shareholders services and for maintenance of
shareholder accounts. The fee is accrued daily and paid monthly and any portion
of the fee may be deemed to be used by the Distributor for purposes of
distribution of Fund shares and for payments to Participating Organizations with
respect to their provision of such services to their clients or customers who
are shareholders of the Class A shares of the Fund. The Class B shareholders
will not receive the benefit of such services from Participating Organizations
and, therefore, will not be assessed a Shareholder Servicing Fee.

The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Manager and Distributor in carrying out their obligations under the
Shareholder Servicing Agreement (with respect to Class A shares only), and (ii)
preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing subscription application
forms for shareholder accounts.

The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the Management Fee and past profits for the
following purposes: (i) defray the costs of, and to compensate others, including
Participating Organizations with whom the Distributor has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of the Class A shares of the Fund; (ii) to compensate
certain Participating Organizations for providing assistance in distributing the
Class A shares of the Fund; and (iii) to pay the costs of printing and
distributing the Fund's prospectus to prospective investors, and to defray the
cost of the preparation and printing of brochures and other promotional
materials, mailings to prospective shareholders, advertising, and other
promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Class A shares of the Fund.
The Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee and past profits, for the
purposes enumerated in (i) above. The Distributor in its sole discretion, will
determine the amount of such payments made pursuant to the Plan, provided that
such payments will not increase the amount which the Fund is required to pay to
the Manager and the Distributor for any fiscal year under the Investment
Management Contract or the Shareholder Servicing Agreement or the
<PAGE>

Administrative Services Contract in effect for that year.

For the fiscal year ended January 31, 1998, the total amount spent pursuant to
the Plan for Class A shares was .38% of the average daily net assets of the
Fund, of which .20% of the average daily net assets was paid by the Fund to the
Manager, pursuant to the Shareholder Servicing Agreement and an amount
representing .18% of the average daily net assets was paid by the Manager (which
may be deemed an indirect payment by the Fund). Of the total amount paid by the
Manager, $494,812 was utilized for broker assistance payments, $6,424 for
compensation to sales personnel, $2,986 for travel and expenses, $20,107 for
Prospectus printing, and $190 on miscellaneous expenses.

FEDERAL INCOME TAXES
- ------------------------------------
The Fund has elected to qualify under the Code as a regulated investment company
that intends to distribute "exempt-interest dividends" as defined in the Code.
The Fund's policy is to distribute as dividends each year 100% (and in no event
less than 90%) of its tax-exempt interest income, net of certain deductions, and
its investment company taxable income (if any). If distributions are made in
this manner, dividends designated as derived from the interest earned on
Municipal Obligations are "exempt-interest dividends" and are not subject to
regular Federal income tax although such "exempt-interest dividends" may be
subject to Federal alternative minimum tax. Dividends paid from taxable income,
if any, and distributions of any realized short-term capital gains (whether from
tax-exempt or taxable obligations) are taxable to shareholders as ordinary
income for Federal income tax purposes, whether received in cash or reinvested
in additional shares of the Fund. The Fund does not expect to realize long-term
capital gains, and thus does not contemplate distributing "capital gain
dividends" or having undistributed capital gain income within the meaning of the
Code. The Fund will inform shareholders of the amount and nature of its income
and gains in a written notice mailed to shareholders not later than 60 days
after the close of the Fund's taxable year. For Social Security recipients,
interest on tax-exempt bonds, including exempt interest dividends paid by the
Fund, is to be added to adjusted gross income for purposes of computing the
amount of Social Security benefits includible in gross income. Interest on
certain "private activity bonds" (generally, a bond issue in which more than 10%
of the proceeds are used for a non-governmental trade or business and which
meets the private securities or payment test, or a bond issue which meets the
private loan financing test) issued after August 7, 1986 will constitute an item
of tax preference subject to the individual alternative minimum tax and
increases the individual alternative minimum tax. Corporations will be required
to include as an item of tax preference for purposes of the alternative minimum
tax, 75% of the amount by which their adjusted current earnings (including
generally, tax-exempt interest) exceeds their
<PAGE>

alternative minimum taxable income (determined without this tax preference
item). In addition, in certain cases Subchapter S corporations with accumulated
earnings and profits from Subchapter C years will be subject to a tax on
"passive investment income," including tax-exempt interest. Although the Fund
intends to maintain a $1.00 per share net asset value, a shareholder may realize
a taxable gain or loss upon the disposition of shares.

With respect to variable rate demand instruments, including Participation
Certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for Federal income tax purposes as
the owner of the underlying Municipal Obligations and the interest thereon will
be exempt from Federal income taxes to the Fund to the same extent as interest
on the underlying Municipal Obligations. Counsel has pointed out that the
Internal Revenue Service has announced that it will not ordinarily issue advance
rulings on the question of the ownership of securities or participation
interests therein subject to a put and could reach a conclusion different from
that reached by counsel. (See "Federal Income Taxes" in the Statement of
Additional Information.)

CONNECTICUT INCOME TAXES
- -------------------------------------

The designation of all or a portion of a dividend paid by the Fund as an
"exempt-interest dividend" under the Code does not necessarily result in the
exemption of such amount from tax under the laws of any state or local taxing
authority. However, in the opinion of Day, Berry & Howard LLP, special
Connecticut tax counsel to the Fund, exempt-interest dividends correctly
designated as derived from Connecticut Municipal Obligations received by the
Fund are not subject to the Connecticut tax on the Connecticut taxable income of
individuals, trusts and estates (the "Connecticut Personal Income Tax").

Exempt-interest dividends that are not derived from Connecticut Municipal
Obligations and any other dividends of the Fund that are treated as ordinary
income for Federal income tax purposes are includible in a taxpayer's tax base
for purposes of the Connecticut Personal Income Tax.
<PAGE>

All dividends paid by the Fund, including exempt-interest dividends are
includible in gross income for purposes of the Connecticut Corporation Business
Tax payable by corporations. However, the Corporation Business Tax allows a
deduction for a portion of amounts includible in gross taxable income thereunder
to the extent they are treated as dividends other than exempt-interest dividends
or capital gain dividends for Federal income tax purposes, but disallows
deductions for expenses related to such amounts.

Shareholders are urged to consult their tax advisors with respect to the
treatment of distributions from the Fund in their own states and localities.

GENERAL INFORMATION
- -----------------------------

The Fund was incorporated under the laws of the State of Maryland on March 8,
1985 and it is registered with the SEC as a non-diversified, open-end management
investment company.

The Fund prepares semi-annual unaudited and annual audited reports which include
a list of investment securities held by the Fund and which are sent to
shareholders.

As a general matter, the Fund will not hold annual or other meetings
<PAGE>

of the Fund's shareholders. This is because the By-Laws of the Fund provide for
annual meetings only (a) for the election of directors, (b) for approval of the
revised investment advisory contracts with respect to a particular class or
series of stock, (c) for approval of revisions to the Fund's distribution
agreement with respect to a particular class or series of stock, and (d) upon
the written request of holders or shares entitled to cast not less than 25% of
all the votes entitled to be cast at such meeting. Annual and other meetings may
be required with respect to such additional matters relating to the Fund as may
be required by the 1940 Act including the removal of Fund director(s) and
communication among shareholders, any registration of the Fund with the SEC or
any state, or as the Directors may consider necessary or desirable. Each
Director serves until the next meeting of the shareholders called for the
purpose of considering the election or reelection of such Director or of a
successor to such Director, and until the election and qualification of his or
her successor, elected at such a meeting, or until such Director sooner dies,
resigns, retires or is removed by the vote of the shareholders.

NET ASSET VALUE
- ----------------------------
The net asset value of each Class of the Fund's shares is determined as of 12
noon, New York City time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except customary business holidays and Good
Friday. The net asset value of a Class is computed by dividing the value of the
Fund's net assets for each Class (i.e., the value of its securities and other
assets less its liabilities, including expenses payable or accrued but excluding
capital stock and surplus) by the total number of shares outstanding for such
Class.

be no assurance that this will be achieved.

CUSTODIAN TRANSFER AGENT AND
DIVIDEND AGENT
- ------------------------------------

Investors Fiduciary Trust Company, 801 Pennsylvania , Kansas City, Missouri
64105 is custodian for the Fund's cash and securities. DST Systems, Inc., 127
West 10th Street, Kansas City, Missouri 64105, is the transfer agent and
dividend agent for the Chase Vista Select shares of the Fund. The Fund's
custodian and transfer agents do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.

<PAGE>

(This Page Intentionally Left Blank)

<PAGE>

[GRAPHIC OMITTED]

Chase Vista Service Center
P.O. Box 419392
Kansas City, Missouri 64141-6392

CVSCT-1-698

<PAGE>

- --------------------------------------------------------------------------------
CONNECTICUT 600 FIFTH AVENUE, NEW YORK, NY 10020
DAILY TAX FREE (212) 830-5220
INCOME FUND, INC.
================================================================================
STATEMENT OF ADDITIONAL INFORMATION

June 1, 1998

Relating to Connecticut Daily Tax Free Income Fund, Inc.,
Evergreen Shares of Connecticut Daily Tax Free Income Fund, Inc., and the
Chase Vista Select Shares of Connecticut Daily Tax Free Income, Inc.
Prospectuses dated June 1 , 1998

This Statement of Additional Information, although not in itself a Prospectus,
expands upon and supplements the information contained in the current Prospectus
of Connecticut Daily Tax Free Income Fund, Inc., Evergreen Shares of Connecticut
Daily Tax Free Income Fund, Inc. and Chase Vista Select Shares of Connecticut
Daily Tax Free Income Fund, Inc. (collectively, the "Funds"), dated June 1, 1998
and should be read in conjunction with the respective Prospectus. The Fund's
Prospectus may be obtained, without charge, from any Participating Organization
or by writing or calling the Fund. This Statement of Additional Information is
incorporated by reference into the respective Prospectus in its entirety.

If you wish to invest in Evergreen Shares of Connecticut Daily Tax Free Income
Fund, Inc., you should obtain a separate prospectus by writing to Evergreen
Service Company, P.O. Box 2121, Boston, Massachusetts 02106-2121 or by calling
(800) 807-2840.

If you wish to invest in Chase Vista Select Shares of Connecticut Daily Tax Free
Income Fund, Inc., you should obtain a separate prospectus by writing to Chase
Vista Service Center, P.O. Box 419392, Kansas City, Missouri 64141-6392 or by
calling (800) 34-VISTA.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Table of Contents
- ----------------------------------------------------------------------------------------
Investment Objectives,
Policies and Risks............................ Manager.................................
Description of Municipal Obligations.......... Expense Limitation......................
Variable Rate Demand Instruments Management of the Fund..................
and Participation Certificates........... Compensation Table......................
When-Issued Securities...................... Counsel and Auditors....................
Stand-by Commitments........................ Distribution and Service Plan...........
Taxable Securities............................ Description of Common Stock.............
Repurchase Agreements....................... Federal Income Taxes....................
Connecticut Risk Factors...................... Connecticut Income Taxes................
Investment Restrictions....................... Custodian and Transfer Agent............
Portfolio Transactions........................ Financial Statements....................
How to Purchase and Redeem Shares............. Description of Ratings..................
Net Asset Value............................... Taxable Equivalent Yield Table..........
Yield Quotations..............................

</TABLE>

<PAGE>

INVESTMENT OBJECTIVES, POLICIES AND RISKS

As stated in the Prospectus, the Fund is an open-end management investment
company that is a short-term, tax-exempt money market fund. The Fund's
investment objectives are to seek as high a level of current income, exempt from
regular Federal income taxes and, to the extent possible, from the Connecticut
tax on the Connecticut taxable income of individuals, trusts and estates (the
"Connecticut Personal Income Tax"), as is believed to be consistent with
preservation of capital, maintenance of liquidity and stability of principal. No
assurance can be given that these objectives will be achieved. The following
discussion expands upon the description of the Fund's investment objectives and
policies in the Prospectus.

The Fund's assets will be invested primarily in high quality debt obligations
issued by or on behalf of the State of Connecticut, other states, territories
and possessions of the United States, and their authorities, agencies,
instrumentalities and political subdivisions, the interest on which currently is
exempt from regular Federal income taxation ("Municipal Obligations") and in
Participation Certificates in Municipal Obligations purchased from banks,
insurance companies or other financial institutions ("Participation
Certificates"). Dividends paid by the Fund which are "exempt-interest dividends"
by virtue of being properly designated as having been derived from Municipal
Obligations and Participation Certificates will be exempt from Federal income
tax provided the Fund complies with Section 852(b)(5) of Subchapter M of the
Internal Revenue Code of 1986, as amended, (the "Code"). Although the Supreme
Court has determined that Congress has the authority to subject the interest on
bonds such as the Municipal Obligations to regular Federal income taxation,
existing law excludes such interest from Federal income tax. However,
"exempt-interest dividends" may be subject to the Federal alternative minimum
tax. (See "Federal Income Taxes" herein.)

Exempt-interest dividends paid by the Fund correctly identified as derived from
obligations issued by or on behalf of the State of Connecticut, any political
subdivision thereof, or public instrumentality, state or local authority,
district, or similar public entity created under the laws of Connecticut or from
obligations (such as certain obligations issued by or on behalf of possessions
or territories of the United States) the interest on which Federal law prohibits
the states from taxing ("Connecticut Municipal Obligations") will be exempt from
the Connecticut Personal Income Tax. (See "Connecticut Income Taxes" herein.) To
the extent suitable Connecticut Municipal Obligations are not available for
investment by the Fund, the Fund may purchase Municipal Obligations issued by
other states, their agencies and instrumentalities or other obligations, the
dividends designated as derived from interest income on which will be exempt
from Federal income tax but will be subject to the Connecticut Personal Income
Tax. Except as a temporary defensive measure during periods of adverse market
conditions as determined by the Manager, the Fund will invest at least 65% of
its assets in Connecticut Municipal Obligations, the exempt-interest dividends
derived from which are exempt from the Connecticut Personal Income Tax, although
the exact amount of the Fund's assets invested in such securities will vary from
time to time. The Fund seeks to maintain an investment portfolio with a
dollar-weighted average maturity of 90 days or less and to value its investment
portfolio at amortized cost and maintain a net asset value at a $1.00 per share
for each class. There can be no assurance that this value will be maintained.
The Fund may hold uninvested cash reserves pending investment. The Fund's
investments may include "when-issued" Municipal Obligations, stand-by
commitments and taxable repurchase agreements.

Although the Fund will attempt to invest 100% of its assets in Municipal
Obligations (excluding securities, the interest income on which may be subject
to the Federal alternative minimum tax) and in Participation Certificates, the
Fund reserves the right to invest up to 20% of the value of its net assets in
securities, the interest income on which is subject to Federal, state and local
income tax. The Fund expects to invest more than 25% of its assets in
Participation Certificates purchased from banks in industrial revenue bonds and
other Connecticut Municipal Obligations. In view of this "concentration" in
Participation Certificates in Connecticut Municipal Obligations, an investment
in Fund shares should be made with an understanding of the characteristics of
the banking industry and the risks which such an investment may entail. (See
"Variable Rate Demand Instruments and Participation Certificates" herein.) The
investment objectives of the Fund described in this paragraph may not be changed
unless approved by the holders of a majority of the outstanding shares of the
Fund that would be affected by such a change. As used herein, the term "majority
of the outstanding shares" of the Fund means, respectively, the vote of the
lesser of (i) 67% or more of the shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund.

Directors); (ii) Municipal Obligations which are subject to a Demand Feature or
Guarantee (as such terms are defined in Rule 2a-7 of the 1940 Act) and which
have received a rating from an NRSRO, or such guarantor has received a rating
from an NRSRO, with respect to a class of debt obligations (or any debt
obligation within that class) that is comparable in priority and security to the
Guarantee (unless, the guarantor, directly or indirectly, controls, is
controlled by or is under common control with the issuer of the security subject
to the Guarantee); and the issuer of the Demand Feature or Guarantee, or another
institution, has undertaken promptly to notify the holder of the security in the
event the Demand Feature or Guarantee is substituted with another Demand Feature
or Guarantee; and (iii) unrated Municipal Obligations determined by the Fund's
Board of Directors to be of comparable quality. In addition, Municipal
Obligations with remaining maturities of 397 days or less but that at the time
of issuance were long-term securities (i.e. with maturities greater than 366
days) are deemed unrated and may be purchased if such had received a long-term
rating from the Requisite NRSROs in one of the three highest rating categories.
Provided, however, that such may not be purchased if it (i) does not satisfy the
rating requirements set forth in the preceding sentence and (ii) has received a
long-term rating from any NRSRO that is not within the three highest long-term
rating categories. A determination of comparability by the Board of Directors is
made on the basis of its credit evaluation of the issuer, which may include an
evaluation of a letter of credit, Guarantee, insurance or other credit facility
issued in support of the Municipal Obligations or Participation Certificates.
(See "Variable Rate Demand Instruments and Participation Certificates " herein.)
While there are several organizations that currently qualify as NRSROs, two
examples of NRSROs are Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies ("S&P") and Moody's Investors Service, Inc. ("Moody's").
The two highest ratings by S&P and Moody's are "AAA" and "AA" by S&P in the case
of long-term bonds and "Aaa" and "Aa" by Moody's in the case of bonds; "MIG-1"
and "MIG-2" by Moody's in the case of notes; "A-1" and "A-2" by S&P or "Prime-1"
and "Prime-2" by Moody's in the case of tax-exempt commercial paper. Such
instruments may produce a lower yield than would be available from less highly
rated instruments. The Fund's Board of Trustees has determined that Municipal
Obligations which are backed by the credit of the Federal Government will be
considered to have a rating equivalent to Moody's "Aaa". (See "Description of
Ratings" herein.) The highest rating in the case of variable and floating demand
notes is "SP-1/AA" by S&P or "VMIG-1" by Moody's. Such instruments may produce a
lower yield than would be available from less highly rated instruments. The
Fund's Board of Directors has determined that obligations which are backed by
the credit of the Federal government (the interest on which is not exempt from
Federal income taxation) will be considered to have a rating equivalent to
Moody's "Aaa". (See "Description of Ratings" herein.)

All investments by the Fund will mature or will be deemed to mature within 397
days or less from the date of acquisition and the average maturity of the Fund
portfolio (on a dollar-weighted basis) will be 90 days or less. The maturities
of variable rate demand instruments held in the Fund's portfolio will be deemed
to be the longer of the period required before the Fund is entitled to receive
payment of the principal amount of the instrument through demand, or the period
remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.

With respect to 75% of its total assets, the Fund shall invest not more than 5%
of its total assets in Municipal Obligations or Participation Certificates
issued by a single issuer. Provided, however, the Fund shall not invest more
than 5% of its total assets in Municipal Obligations or Participation
Certificates issued by a single issuer, unless Municipal Obligations are First
Tier Securities. The concentration in Municipal Obligations and Participation
Certificates may present greater risks than in the case of a more diversified
company. The Fund intends to continue to qualify as a "regulated investment
company" under Subchapter M of the Code. The Fund will be restricted in that at
the close of each quarter of the taxable year, at least 50% of the value of its
total assets must be represented by cash, government securities, investment
company securities and other securities limited in respect of any one issuer to
not more than 5% in value of the total assets of the Fund and to not more than
10% of the outstanding voting securities of such issuer. In addition, at the
close of each quarter of its taxable year, not more than 25% in value of the
Fund's total assets may be invested in securities of one issuer other than
government securities. The limitations described in this paragraph are not
fundamental policies and may be revised to the extent applicable Federal income
tax requirements are revised. (See "Federal Income Taxes" herein.)

DESCRIPTION OF MUNICIPAL OBLIGATIONS

As used in the Prospectus, "Municipal Obligations" include the following as well
as "Variable Rate Demand Instruments and Participation Certificates" discussed
herein.

1) Municipal Bonds with remaining maturities of 397 days or less that are
Eligible Securities at the time of acquisition.
<PAGE>

Municipal Bonds are debt obligations of states, cities, counties,
municipalities and municipal agencies (all of which are generally referred
to as "municipalities") which generally have a maturity at the time of
issue of one year or more and which are issued to raise funds for various
public purposes such as construction of a wide range of public facilities,
to refund outstanding obligations and to obtain funds for institutions and
facilities.

The two principal classifications of Municipal Bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by
the issuer's pledge of its faith, credit and taxing power for the payment
of principal and interest. Issuers of general obligation bonds include
states, counties, cities, towns and other governmental units. The principal
of, and interest on, revenue bonds are payable from the income of specific
projects or authorities and generally are not supported by the issuer's
general power to levy taxes. In some cases, revenues derived from specific
taxes are pledged to support payments on a revenue bond.

In addition, certain kinds of "private activity bonds" are issued by
public authorities to provide funding for various privately operated
industrial facilities (hereinafter referred to as "industrial revenue
bonds" or "IRBs"). Interest on the IRBs is generally exempt, with certain
exceptions, from regular Federal income tax pursuant to Section 103(a) of
the Code, provided the issuer and corporate obligor thereof continue to
meet certain conditions. (See "Federal Income Taxes" herein.) IRBs are, in
most cases, revenue bonds and do not generally constitute the pledge of the
credit of the issuer of such bonds. The payment of the principal and
interest on IRBs usually depends solely on the ability of the user of the
facilities financed by the bonds or other guarantor to meet its financial
obligations and, in certain instances, the pledge of real and personal
property as security for payment. If there is no established secondary
market for the IRBs, the IRBs or the Participation Certificates in IRBs
purchased by the Fund will be supported by letters of credit, Guarantees or
insurance that meet the definition of Eligible Securities at the time of
acquisition stated herein and provide the Demand Feature which may be
exercised by the Fund to provide liquidity. Shareholders should note that
the Fund may invest in IRBs acquired in transactions involving a
Participating Organization. In accordance with investment restriction 6
herein, the Fund is permitted to invest up to 10% of the portfolio in high
quality, short-term Municipal Obligations (including IRBs) meeting the
definition of Eligible Securities at the time of acquisition that may not
be readily marketable or have a liquidity feature.

2) Municipal Notes with remaining maturities of 397 days or less that are
Eligible Securities at the time of acquisition. The principal kinds of
Municipal Notes include tax anticipation notes, bond anticipation notes,
revenue anticipation notes and project notes. Notes sold in anticipation of
collection of taxes, a bond sale or receipt of other revenues are usually
general obligations of the issuing municipality or agency. Project notes
are issued by local agencies and are guaranteed by the United States
Department of Housing and Urban Development. Project notes are also secured
by the full faith and credit of the United States. The Fund's investments
may be concentrated in Municipal Notes of Connecticut issuers.

3) Municipal Commercial Paper that is an Eligible Security at the time of
acquisition. Issues of Municipal Commercial Paper typically represent very
short-term, unsecured, negotiable promissory notes. These obligations are
often issued to meet seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues
of municipalities or are refinanced with long-term debt. In most cases
Municipal Commercial Paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions which may be called upon in the
event of default by the issuer of the commercial paper.

4) Municipal Leases, which may take the form of a lease or an installment
purchase or conditional sale contract, issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications
equipment and other capital assets. Municipal Leases frequently have
special risks not normally associated with general obligation or revenue
bonds. Leases and installment purchase or conditional sale contracts (which
normally provide for title to the leased asset to pass eventually to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and
statutory requirements for the issuance of debt. The debt-issuance
limitations of many state constitutions and statutes are deemed to be
inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has
no obligation to make future payments under the lease or contract unless
money is appropriated for such purpose by the appropriate legislative body
on a yearly or other periodic basis. To reduce this risk, the Fund will
only purchase Municipal Leases subject to a non-appropriation clause where
the payment of principal and accrued interest is backed by an unconditional
irrevocable letter of credit, a guarantee, insurance or other comparable
undertaking of an approved financial institution. These types of municipal
leases may be considered

illiquid and subject to the 10% limitation of investments in illiquid
securities set forth under "Investment Restrictions" contained herein. The
Board of Directors may adopt guidelines and delegate to the Manager the
daily function of determining and monitoring the liquidity of municipal
leases. In making such determination, the Board and the Manager may
consider such factors as the frequency of trades for the obligation, the
number of dealers willing to purchase or sell the obligations and the
number of other potential buyers and the nature of the marketplace for the
obligations, including the time needed to dispose of the obligations and
the method of soliciting offers. If the Board determines that any municipal
leases are illiquid, such lease will be subject to the 10% limitation on
investments in illiquid securities.

5) Any other Federal tax-exempt, and to the extent possible, Connecticut
Dividends and Interest tax-exempt obligations issued by or on behalf of
states and municipal governments and their authorities, agencies,
instrumentalities and political subdivisions, whose inclusion in the Fund
would be consistent with the Fund's "Investment Objectives, Policies and
Risks" and permissible under Rule 2a-7 under the 1940 Act.

Subsequent to its purchase by the Fund, a rated Municipal Obligation may cease
to be rated or its rating may be reduced such that the investment is no longer a
First Tier Security or is rated below the minimum required for purchase by the
Fund. If this occurs, the Board of Directors of the Fund shall promptly reassess
whether the Municipal Obligation presents minimal credit risks and shall cause
the Fund to take such action as the Board of Directors determines in the best
interest of the Fund and its shareholders. However, reassessment is not required
if the Municipal Obligation is disposed of or matures within five business days
of the Manager becoming aware of the new rating and provided further that the
Board of Directors is subsequently notified of the Manager's actions.

In addition, in the event that a Municipal Obligation (1) is in default, (2)
ceases to be an Eligible Security, or (3) there is a determination that it no
longer presents minimal credit risks, or an event of insolvency occurs with
respect to the issuer of a portfolio security or the provider of any Demand
Feature or Guarantee, the Fund will dispose of the Municipal Obligation absent a
determination by the Fund's Board of Directors that disposal of the Municipal
Obligation would not be in the best interests of the Fund. In the event that the
Municipal Obligation is disposed of, such disposal shall occur as soon as
practicable consistent with achieving an orderly disposition by sale, exercise
of any Demand Feature or otherwise. In the event of a default with respect to a
Municipal Obligation which immediately before default accounted for 1/2 of 1% or
more of the Fund's total assets, the Fund shall promptly notify the Securities
and Exchange Commission (the "SEC") of such fact and of the actions that the
Fund intends to take in response to the situation. Certain Municipal Obligations
issued by instrumentalities of the United States government are not backed by
the full faith and credit of the United States Treasury but only by the
creditworthiness of the instrumentality. Where necessary to ensure that the
Municipal Obligations are Eligible Securities, or where the obligations are not
freely transferable, the Fund will require that the obligation to pay the
principal and accrued interest be backed by a Guarantee that would qualify the
investment as an Eligible Security.

Variable Rate Demand Instruments and Participation Certificates

Variable rate demand instruments that the Fund will purchase are tax-exempt
Municipal Obligations that provide for a periodic adjustment in the interest
rate paid on the instrument and permit the holder to demand payment of the
unpaid principal balance plus accrued interest at specified intervals upon a
specified number of days' notice either from the issuer or by drawing on a bank
letter of credit, a guarantee or insurance issued with respect to such
instrument.

The variable rate demand instruments in which the Fund may invest are payable on
demand on not more than thirty calendar days' notice and may be exercised either
at any time or at specified intervals not exceeding 397 days depending upon the
terms of the instrument. The terms of the instruments provide that interest
rates are adjustable at intervals ranging from daily to up to 397 days and the
adjustments are based upon the "prime rate"* of a bank or other appropriate
interest rate adjustment index as provided in the respective instruments. The
Fund will decide which variable rate demand instruments it will purchase in
accordance with procedures prescribed by its Board of Directors to minimize
credit risks. A fund utilizing the amortized cost method of valuation under Rule
2a-7 of the 1940 Act may only purchase variable rate demand instruments only if
(i) the instrument is subject to an unconditional Demand Feature, exercisable by
the Fund in the event of a default in the payment of principal or interest on
the underlying securities, that is an Eligible Security, or (ii) the instrument
is not subject to an unconditional Demand Feature but does qualify as an
Eligible Security and has a long-term rating by the Requisite NRSROs in one of
the two highest rating categories, or if unrated, is determined to be of
comparable quality by the Fund's Board of Directors. The Fund's Board of
Directors may determine that an unrated variable rate demand instrument meets
the Fund's quality criteria if it is backed by a letter of credit or Guarantee
or is insured by a insurer that meets the quality criteria for the Fund stated
herein or on the basis of a credit evaluation of the underlying obligor. If an
instrument is ever not deemed to be an Eligible Security, the Fund either will
see it in the market or exercise the Demand Feature.

<PAGE>

The variable rate demand instruments that the Fund may invest in include
Participation Certificates purchased by the Fund from banks, insurance companies
or other financial institutions in fixed or variable rate, tax-exempt Municipal
Obligations (expected to be concentrated in IRBs) owned by such institutions or
affiliated organizations. The Fund will not purchase Participation Certificates
in fixed rate tax-exempt Municipal Obligations without obtaining an opinion of
counsel that the Fund will be treated as the owner thereof for Federal income
tax purposes. A Participation Certificate gives the Fund an undivided interest
in the Municipal Obligation in the proportion that the Fund's participation
interest bears to the total principal amount of the Municipal Obligation and
provides the demand repurchase feature described below. Where the institution
issuing the participation does not meet the Fund's eligibility criteria, the
participation is backed by an irrevocable letter of credit or guaranty of a bank
(which may be the bank issuing the Participation Certificate, a bank issuing a
confirming letter of credit to that of the issuing bank, or a bank serving as
agent of the issuing bank with respect to the possible repurchase of the
certificate of participation) or insurance policy of an insurance company that
the Board of Directors of the Fund has determined meets the prescribed quality
standards for the Fund. The Fund has the right to sell the Participation
Certificate back to the institution and draw on the letter of credit or
insurance after no more than 30 days' notice, either at any time or at specified
intervals not exceeding 397 days (depending on the terms of the participation),
for all or any part of the full principal amount of the Fund's participation
interest in the security, plus accrued interest. The Fund intends to exercise
the demand only (1) upon a default under the terms of the bond documents, (2) as
needed to provide liquidity to the Fund in order to make redemptions of Fund
shares or (3) to maintain a high quality investment portfolio. The institutions
issuing the Participation Certificates will retain a service and letter of
credit fee and a fee for providing the demand repurchase feature, in an amount
equal to the excess of the interest paid on the instruments over the negotiated
yield at which the participations were purchased by the Fund. The total fees
generally range from 5% to 15% of the applicable prime rate or other interest
rate index. With respect to insurance, the Fund will attempt to have the issuer
of the participation certificate bear the cost of the insurance, although the
Fund retains the option to purchase insurance if necessary, in which case the
cost of insurance will be an expense of the Fund subject to the Fund's expense
limitation. (See "Expense Limitation" herein.) The Manager has been instructed
by the Fund's Board of Directors to continually monitor the pricing, quality and
liquidity of the variable rate demand instruments held by the Fund, including
the Participation Certificates, on the basis of published financial information
and reports of the rating agencies and other bank analytical services to which
the Fund may subscribe. Although these instruments may be sold by the Fund, the
Fund intends to hold them until maturity, except under the circumstances stated
above. (See "Federal Income Taxes" herein.)

In view of the "concentration" of the Fund in Participation Certificates in
Connecticut Municipal Obligations, which may be secured by bank letters of
credit or Guarantees, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks which
such an investment may entail. Banks are subject to extensive governmental
regulations which may limit both the amounts and types of loans and other
financial commitments which may be made and interest rates and fees which may be
charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations under a letter
of credit. The Fund may invest 25% or more of the net assets of any portfolio in
securities that are related in such a way that an economic, business or
political development or change affecting one of the securities would also
affect the other securities including, for example, securities the interest upon
which is paid from revenues of similar type projects, or securities the issuers
of which are located in the same state.

The recent period has seen fluctuations in interest rates, particularly "prime
rates" charged by banks. While the value of the underlying variable rate demand
instruments may change with changes in interest rates generally, the variable
rate nature of the underlying variable rate demand instruments should minimize
changes in value of the instruments. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation and the risk of potential
capital depreciation is less than would be the case with a portfolio of fixed
income securities. The portfolio may contain variable rate demand instruments on
which stated minimum or maximum rates, or maximum rates set by state law, which
limit the degree to which interest on such variable rate demand instruments may
fluctuate; to the extent state law contains such limits, increases or decreases
in value may be somewhat greater than would be the case without such limits.
Additionally, the portfolio may contain variable rate demand Participation
Certificates in fixed rate Municipal Obligations. The fixed rate of interest on
these Municipal Obligations will be a ceiling on the variable rate of the
participation certificate. In the event that interest rates increased so that
the variable rate exceeded the fixed rate on the Municipal Obligations, the
Municipal Obligations could no longer be valued at par and may cause the Fund to
take corrective action, including the elimination of the instruments from the
portfolio. Because the adjustment

* The "prime rate" is generally the rate charged by a bank to its most
credit-worthy customers for short-term loans. The prime rate of a particular
bank may differ from other banks and will be the rate announced by each bank on
a particular day. Changes in the prime rate may occur with great frequency and
generally become effective on the date announced.
<PAGE>

of interest rates on the variable rate demand instruments is made in relation to
movements of the applicable banks' "prime rates", or other interest rate
adjustment index, the variable rate demand instruments are not comparable to
long-term fixed rate securities. Accordingly, interest rates on the variable
rate demand instruments may be higher or lower than current market rates for
fixed rate obligations of comparable quality with similar maturities.

Because of the variable rate nature of the instruments, the Fund's yield will
decline and its shareholders will forego the opportunity for capital
appreciation during periods when prevailing interest rates have declined. On the
other hand, during periods where prevailing interest rates have increased, the
Fund's yield will increase and its shareholders will have reduced risk of
capital depreciation.

For purposes of determining whether a variable rate demand instrument held by
the Fund matures within 397 days from the date of its acquisition, the maturity
of the instrument will be deemed to be the longer of (1) the period required
before the Fund is entitled to receive payment of the principal amount of the
instrument, or (2) the period remaining until the instrument's next interest
rate adjustment. The maturity of a variable rate demand instrument will be
determined in the same manner for purposes of computing the Fund's
dollar-weighted average portfolio maturity. If a variable rate demand instrument
ceases to be an Eligible Security, it will be sold in the market or through
exercise of the repurchase Demand Feature to the issuer.

When-Issued Securities

New issues of certain Municipal Obligations frequently are offered on a
when-issued basis. The payment obligation and the interest rate that will be
received on these Municipal Obligations are each fixed at the time the buyer
enters into the commitment although delivery and payment of the Municipal
Obligations normally take place within 45 days after the date of the Fund's
commitment to purchase. Although the Fund will only make commitments to purchase
when-issued Municipal Obligations with the intention of actually acquiring them,
the Fund may sell these securities before the settlement date if deemed
advisable by the Manager.

Municipal Obligations purchased on a when-issued basis and the securities held
in the Fund's portfolio are subject to changes in value (both generally changing
in the same way, that is, both experiencing appreciation when interest rates
decline and depreciation when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Purchasing Municipal Obligations on
a when-issued basis can involve a risk that the yields available in the market
when the delivery takes place may actually be higher or lower than those
obtained in the transaction itself. A separate account of the Fund consisting of
cash or liquid debt securities equal to the amount of the when-issued
commitments will be established at the Fund's custodian bank. For the purpose of
determining the adequacy of the securities in the account, the deposited
securities will be valued at market value. If the market or fair value of such
securities declines, additional cash or highly liquid securities will be placed
in the account daily so that the value of the account will equal the amount of
such commitments by the Fund. On the settlement date of the when-issued
securities, the Fund will meet its obligation from then available cash flow,
sale of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the when-issued
securities themselves (which may have a value greater or lesser than the Fund's
payment obligations). Sale of securities to meet such obligations may result in
the realization of capital gains or losses, which are not exempt from Federal
income tax.

Stand-by Commitments

When the Fund purchases Municipal Obligations it may also acquire stand-by
commitments from banks and other financial institutions with respect to such
Municipal Obligations. Under a stand-by commitment, a bank or broker-dealer
agrees to purchase at the Fund's option a specified Municipal Obligation at a
specified price with same day settlement. A stand-by commitment is the
equivalent of a "put" option acquired by the Fund with respect to a particular
Municipal Obligation held in its portfolio.

The amount payable to the Fund upon its exercise of a stand-by commitment
normally would be (1) the acquisition cost of the Municipal Obligation
(excluding any accrued interest that the Fund paid on the acquisition), less any
amortized market premium or plus any amortized market or original issue discount
during the period the Fund owned the security, plus (2) all interest accrued on
the security since the last interest payment date during the period the security
was owned by the Fund. Absent unusual circumstances relating to a change in
market value, the Fund would value the underlying Municipal Obligation at
amortized cost. Accordingly, the amount payable by a bank or dealer during the
time a stand-by commitment is exercisable would be substantially the same as the
market value of the underlying Municipal Obligation.

The Fund's right to exercise a stand-by commitment would be unconditional and
unqualified. A stand-by commitment would not be transferable by the Fund,
although it could sell the underlying Municipal Obligation to a third party at
any time.
<PAGE>

The Fund expects that stand-by commitments generally will be available without
the payment of any direct or indirect consideration. However, if necessary and
advisable, the Fund may pay for stand-by commitments either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to such a commitment (thus reducing the yield to maturity otherwise available
for the same securities). The total amount paid in either manner for outstanding
stand-by commitments held in the Fund's portfolio would not exceed 1/2 of 1% of
the value of the Fund's total assets calculated immediately after each stand-by
commitment was acquired.

The Fund would enter into stand-by commitments only with banks and other
financial institutions that, in the Manager's opinion, present minimal credit
risks and, where the Municipal Obligation does not meet the eligibility
criteria, only where the issuer of the stand-by commitment has received a rating
which meets the eligibility criteria or if not rated, presents a minimal risk of
default as determined by the Board of Directors. The Fund's reliance upon the
credit of these banks and broker-dealers would be supported by the value of the
underlying Municipal Obligations held by the Fund that were subject to the
commitment.

The Fund intends to acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. The purpose of this practice is to permit the Fund to be fully
invested in securities the interest on which is exempt from regular Federal
income taxes while preserving the necessary liquidity to purchase securities on
a when-issued basis, to meet unusually large redemptions and to purchase at a
later date securities other than those subject to the stand-by commitment.

The acquisition of a stand-by commitment would not affect the valuation or
assumed maturity of the underlying Municipal Obligations which will continue to
be valued in accordance with the amortized cost method. Stand-by commitments
acquired by the Fund would be valued at zero in determining net asset value. In
those cases in which the Fund paid directly or indirectly for a stand-by
commitment, its cost would be reflected as unrealized depreciation for the
period during which the commitment is held by the Fund. Stand-by commitments
would not affect the dollar-weighted average maturity of the Fund's portfolio.
The maturity of a security subject to a stand-by commitment is longer than the
stand-by repurchase date.

The stand-by commitments that the Fund may enter into are subject to certain
risks which include the ability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, the fact that the commitment
is not marketable by the Fund, and that the maturity of the underlying security
will generally be different from that of the commitment.

In addition, the Fund may apply to the Internal Revenue Service for a ruling, or
seek from its counsel an opinion, that interest on Municipal Obligations subject
to stand-by commitments will be exempt from Federal income taxation. (See
"Federal Income Taxes" herein.) In the absence of a favorable tax ruling or
opinion of counsel, the Fund will not engage in the purchase of securities
subject to stand-by commitments.

TAXABLE SECURITIES

Although the Fund will attempt to invest 100% of its net assets in Municipal
Obligations, the Fund may invest up to 20% of the value of its total assets in
securities of the kind described below, the interest income on which is subject
to Federal income tax, under any one or more of the following circumstances: (a)
pending investment of proceeds of sales of Fund shares or of portfolio
securities; (b) pending settlement of purchases of portfolio securities; and (c)
to maintain liquidity for the purpose of meeting anticipated redemptions. In
addition, the Fund may temporarily invest more than 20% in such taxable
securities when, in the opinion of the Manager, it is advisable to do so because
of adverse market conditions affecting the market for Municipal Obligations. The
kinds of taxable securities in which the Fund may invest are limited to the
following short-term, fixed-income securities (maturing in 397 days or less from
the time of purchase): (1) obligations of the United States government or its
agencies, instrumentalities or authorities; (2) commercial paper meeting the
definition of Eligible Securities at the time of acquisition; (3) certificates
of deposit of domestic banks with assets of $1 billion or more; and (4)
repurchase agreements with respect to any Municipal Obligations or other
securities which the Fund is permitted to own. (See "Federal Income Taxes"
herein.)

Repurchase Agreements

The Fund may invest in instruments subject to repurchase agreements with
securities dealers or member banks of the Federal Reserve System. Under the
terms of a typical repurchase agreement, the Fund would acquire an underlying
debt instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase and the Fund to resell the
instrument at a fixed price and time, thereby determining the yield during the
Fund's holding period. This results in a fixed rate of return insulated from
market fluctuations during such period. A repurchase agreement is subject to the
risk that the seller may fail to repurchase the security. Repurchase agreements
may be deemed to be loans under the 1940 Act. All repurchase agreements entered
into by the Fund shall be fully collateralized at all times during the period of
the agreement in that the value of the underlying security shall be at least
equal to the amount of the loan, including the accrued interest thereon,
<PAGE>

and the Fund or its custodian shall have possession of the collateral, which the
Fund's Board believes will give it a valid, perfected security interest in the
collateral. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities are not owned
by the Fund but only constitute collateral for the seller's obligation to pay
the repurchase price. Therefore, the Fund may suffer time delays and incur costs
in connection with the disposition of the collateral. The Fund's Board believes
that the collateral underlying repurchase agreements may be more susceptible to
claims of the seller's creditors than would be the case with securities owned by
the Fund. It is expected that repurchase agreements will give rise to income
which will not qualify as tax-exempt income when distributed by the Fund. The
Fund will not invest in a repurchase agreement maturing in more than seven days
if any such investment together with illiquid securities held by the Fund exceed
10% of the Fund's total net assets. (See Investment Restriction Number 6
herein.) Repurchase agreements are subject to the same risks described herein
for stand-by commitments.

CONNECTICUT RISK FACTORS

As referred to in the Prospectus, the safety of an investment in the Fund
depends importantly on the fiscal stability of Connecticut and its subdivisions,
agencies, instrumentalities or authorities, which issue the Connecticut
Municipal Obligations in which the Fund's investments are concentrated.

The following information is only a summary of risk factors associated with
Connecticut. It has been compiled from official government statements and other
publicly available documents. Although the Sponsors have not independently
verified the information, they have no reason to believe that it is not correct
in all material respects.

Manufacturing has historically been of prime economic importance to Connecticut.
The State's manufacturing industry is diversified, with transportation equipment
(primarily aircraft engines, helicopters and submarines) the dominant industry,
followed by non-electrical machinery, fabricated metal products and electrical
machinery. As a result of a rise in employment in service-related industries and
a decline in manufacturing employment, however, manufacturing accounted for only
17.39% of total non-agricultural employment in Connecticut in 1996.
Defense-related business represents a relatively high proportion of the
manufacturing sector. On a per capita basis, defense awards to Connecticut have
traditionally been among the highest in the nation, and reductions in defense
spending have had a substantial adverse impact on Connecticut's economy.

The average annual unemployment rate in Connecticut increased from a low of 3.0%
in 1988 to a high of 7.6% in 1992 and, after a number of important changes in
the method of calculation, was reported to be 5.8% in 1996. Average per capita
personal income of Connecticut residents increased in every year from 1987 to
1996, rising from $21,592 to $33,875. However, pockets of significant
unemployment and poverty exist in several Connecticut cities and towns.

At the end of the 1990-1991 fiscal year, the General Fund had accumulated
unappropriated deficit of $966,712,000. For the six fiscal years ended June 30,
1997, the General Fund ran operating surpluses, based on the State's budgetary
method of accounting, of approximately $110,200,000, $113,500,000, $19,700,000,
$80,500,000, $250,000,000 and $262,600,000, respectively. General Fund budgets
for the biennium ending June 30, 1999, were adopted in 1997. General Fund
expenditures and revenues are budgeted to be approximately $9,550,000,000 and
$9,700,000,000 for the 1997-1998 and 1998-1999 fiscal years, respectively, an
increase of more than 35% from the budgeted expenditures of approximately
$7,008,000,000 for the 1991-1992 fiscal year.

During the 1991, the State issued a total of $965,710,000 Economic Recovery
Notes. The notes were to be payable no later than June 30, 1996, but as part of
the budget adopted for the biennium ending June 30, 1997, payment of the notes
scheduled to be paid during the 1995-1996 fiscal year was rescheduled to be made
over the four fiscal years ending June 30, 1999. The outstanding notes were
$157,055,000 as of December 1, 1997.

The State's primary method for financing capital projects is through the sale of
general obligation bonds. These bonds are backed by the full faith and credit of
the State. As of December 1, 1997, the State had authorized direct general
obligation bond indebtedness totaling $1,460,239,000, of which $10,159,950,000
had been approved for issuance by the State Bond commission and $9,181,272,000
had been issued. As of December 1, 1997, State direct general obligation
indebtedness outstanding was $6,475,986,251.

In 1995, the State established the University of Connecticut as a separate
corporate entity to issue bonds and construct certain infrastructure
improvements. The University is authorized to issue bonds totaling $962,000,000
to finance the improvements. The University's bonds will be secured by s State
debt service commitment, the aggregate
<PAGE>

amount of which is limited to $382,000,000 for bonds issued in the four fiscal
years ending June 30, 1999, and $580,000,000 for bonds issued in the six fiscal
years ending June 30, 2005.

In addition, the State has limited or contingent liability on a significant
amount of other bonds. Such bonds have been issued by the following quasi-public
agencies: the Connecticut Housing Finance Authority, the Connecticut Development
Authority, the Connecticut Higher Education Supplemental Loan Authority, the
Connecticut Resources Recovery Authority and the Connecticut Health and
Educational Facilities Authority. Such bonds have also been issued by the cities
of Bridgeport and West Haven and the Southeastern Connecticut Water Authority.
As of December 1, 1997, the amount of the bonds outstanding on which the State
has limited or contingent liability totaled $4,000,900,000.

In 1984, the State established a program to plan, construct and improve the
State's transportation system (other than Bradley International Airport). The
total cost of the program through June 30, 2002, is currently estimated to be
$12.3 billion, to be met from federal, state and local funds. The State expects
to finance most of its $5.1 billion share of such cost by issuing $4.6 billion
of special tax obligation ("STO") bonds. The STO bonds are payable solely from
specified motor fuel taxes, motor vehicle receipts, and license, permit and fee
revenues pledged therefore and credited to the Special Transportation Fund,
which was established to budget and account for such revenues.

As of December 1, 1997, the General Assembly had authorized $4,302,700,000 of
such STO bonds, of which $3,894,700,000 new money borrowings had been issued. It
is anticipated that additional STO bonds will be authorized annually in amounts
necessary to finance and to complete the infrastructure program. Such additional
bonds may have equal rank with the outstanding bonds provided certain pledged
revenue coverage requirements are met. The State expects to continue to offer
bonds for this program.

The State's general obligation bonds are rated AA- by Standard & Poors and Aa3
by Moody's. On March 17, 1995, Fitch reduced its ratings of the State's general
obligation bonds from AA+ to AA.

The State, its officers and its employees are defendants in numerous lawsuits.
Although it is not possible to determine the outcome of these lawsuits, the
Attorney General has opined that an adverse decision in any of the following
cases might have a significant impact on the State's financial position: (i) a
class action by the Connecticut Criminal Defense Lawyers Association claiming a
campaign of illegal surveillance activity and seeking damages and injunctive
relief; (ii)an action on behalf of all persons with traumatic brain injury who
have been placed in certain State hospitals alleged not to provide adequate
treatment and training, and seeking placement in community residential settings
with appropriate support services; (iii) litigation involving claims by Indian
tribes to a portion of the State's land area; and (iv) an action by certain
students and municipalities claiming that the State's formula for financing
public education violates the State's Constitution and seeking a declaratory
judgment and injunctive relief.

As a result of litigation on behalf of black and Hispanic school children in the
City of Hartford seeking "integrated education" with the Greater Hartford
metropolitan area, on July 9, 1996, the State Supreme Court directed the
legislature to develop appropriate measures to remedy the racial and ethnic
segregation in the Hartford public schools. The fiscal impact of this decision
might be significant but is not determinable at this time.

General obligation bonds issued by municipalities are payable primarily from ad
valorem taxes on property located in the municipality. A municipality's property
tax base is subject to many factors outside the control of the municipality,
including the decline in Connecticut's manufacturing industry. Certain
Connecticut municipalities have experienced severe fiscal difficulties and have
reported operating and accumulated deficits. The most notable of these is the
City of Bridgeport, which filed a bankruptcy petition on June 7, 1991. The State
opposed the petition. The United States Bankruptcy Court for the District of
Connecticut held that Bridgeport has authority to file such petition but that
its petition should be dismissed on the grounds that Bridgeport was not
insolvent when the petition was filed. State legislation enacted in 1993
prohibits municipal bankruptcy filings without the prior written consent of the
Governor.

In addition to general obligation bonds backed by the full faith and credit of
the municipality, certain municipal authorities finance projects by issuing
bonds that are not considered to be debts of the municipality. Such bonds may be
repaid only from revenues of the financed project, the revenues from which may
be insufficient to service the related debt obligations.

Regional economic difficulties, reductions in revenues and increases in expenses
could lead to further fiscal problems for the State and its political
subdivisions, authorities and agencies. Difficulties in payment of debt service
on borrowings could result in declines, possibly severe, in the value of their
outstanding obligations, increases in their and impairment of their ability to
pay debt service on their obligations.
<PAGE>

INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment restrictions which
apply to all portfolios and which may not be changed unless approved by a
majority of the outstanding shares of each series of the Fund's shares that
would be affected by such a change. The Fund may not:

1) Make portfolio investments other than as described under "Investment
Objectives, Policies and Risks" or any other form of Federal
tax-exempt investment which meets the Fund's high quality criteria, as
determined by the Board of Directors and which is consistent with the
Fund's objectives and policies.

2) Borrow Money. This restriction shall not apply to borrowings from
banks for temporary or emergency (not leveraging) purposes, including
the meeting of redemption requests that might otherwise require the
untimely disposition of securities, in an amount up to 15% of the
value of the Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed)
at the time the borrowing was made. While borrowings exceed 5% of the
value of the Fund's total assets, the Fund will not make any
investments. lnterest paid on borrowings will reduce net income.

3) Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 15% of the value of its total assets and only to
secure borrowings for temporary or emergency purposes.

4) Sell securities short or purchase securities on margin, or engage in
the purchase and sale of put, call, straddle or spread options or in
writing such options, except to the extent that securities subject to
a demand obligation and stand-by commitments may be purchased as set
forth under "Investment Objectives, Policies and Risks."

5) Underwrite the securities of other issuers, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.

6) Purchase securities subject to restrictions on disposition under the
Securities Act of 1933 ("restricted securities"), except the Fund may
purchase variable rate demand instruments which contain a demand
feature. The Fund will not invest in a repurchase agreement maturing
in more than seven days if any such investment together with
securities that are not readily marketable held by the Fund exceed 10%
of the Fund's total net assets.

7) Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or oil and gas interests, but this
shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests in real estate.

8) Make loans to others, except through the purchase of portfolio
investments, including repurchase agreements, as described under
"Investment Objectives, Policies and Risks."

9) Purchase more than 10% of all outstanding voting securities of any one
issuer or invest in companies for the purpose of exercising control.

10) Invest more than 25% of its assets in the securities of "issuers" in
any single industry, provided that the Fund may invest more than 25%
of its assets in Participation Certificates and there shall be no
limitation on the purchase of those Municipal Obligations and other
obligations issued or guaranteed by the United States government, its
agencies or instrumentalities. When the assets and revenues of an
agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the issuing entity and
a security is backed only by the assets and revenues of the entity,
the entity would be deemed to be the sole issuer of the security.
Similarly, in the case of an industrial revenue bond, if that bond is
backed only by the assets and revenues of the non-governmental user,
then such non-governmental user would be deemed to be the sole issuer.
If, however, in either case, the creating government or some other
entity, such as an insurance company or other corporate obligor,
guarantees a security or a bank issues a letter of credit, such a
Guarantee or letter of credit would be considered a separate security
and would be treated as an issue of such government, other entity or
bank. Immediately after the acquisition of any securities subject to a
Demand Feature or Guarantee (as such terms are defined in Rule 2a-7
under the Investment Company Act of 1940), with respect to 75% of the
total assets of the Fund, not more than 10% of the Fund's assets may
be invested in securities that are subject to a Guarantee or Demand
Feature from the same institution. However, the Fund may only invest
more than 10% of its assets in securities subject to a Guarantee or
Demand Feature issued by a non-controlled person.

<PAGE>

11) Invest in securities of other investment companies, except the Fund
may purchase unit investment trust securities where such unit trusts
meet the investment objectives of the Fund and then only up to 5% of
the Fund's net assets, except as they may be acquired as part of a
merger, consolidation or acquisition of assets.

12) Issue senior securities, except insofar as the Fund may be deemed to
have issued a senior security in connection with any permitted
borrowing.

If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or in the amount of the Fund's assets will not constitute a
violation of such restriction.

PORTFOLIO TRANSACTIONS

The Fund's purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There usually are no brokerage commissions paid for
such purchases. The Fund has paid no brokerage commissions since its formation.
Any transaction for which the Fund pays a brokerage commission will be effected
at the best price and execution available. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price. The Fund purchases Participation
Certificates in variable rate Municipal Obligations with a Demand Feature from
banks or other financial institutions at a negotiated yield to the Fund based on
the applicable interest rate adjustment index for the security. The interest
received by the Fund is net of a fee charged by the issuing institution for
servicing the underlying obligation and issuing the participation certificate,
letter of credit, Guarantee or insurance and providing the demand repurchase
feature.

Allocation of transactions, including their frequency, to various dealers is
determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities will
be given to banks or dealers that are Participating Organizations.

Investment decisions for the Fund will be made independently from those for any
other investment companies or accounts that may be or become managed by the
Manager or its affiliates. If, however, the Fund and other investment companies
or accounts managed by the Manager are simultaneously engaged in the purchase or
sale of the same security, the transactions may be averaged as to price and
allocated equitably to each account. In some cases, this policy might adversely
affect the price paid or received by the Fund or the size of the position
obtainable for the Fund. In addition, when purchases or sales of the same
security for the Fund and for other investment companies managed by the Manager
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantage available to large denomination purchasers or
sellers.

No portfolio transactions are executed with the Manager or its affiliates acting
as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Manager or its affiliates.

HOW TO PURCHASE AND REDEEM SHARES

The material relating to the purchase and redemption of shares of each class in
the respective Prospectus is herein incorporated by reference.

NET ASSET VALUE

The Fund does not determine net asset value per share of each class on the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

The net asset value of the Fund's shares is determined as of 12 noon, New York
City time, on each Fund Business Day. The net asset value of a class is computed
by dividing the value of the Fund's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued but excluding capital stock and surplus) by the total number of shares
outstanding for such class.

whether any action should be initiated, as described in the following paragraph.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument is higher or lower
than the price an investment company would receive if the instrument were sold.

The Fund's Board of Directors has established procedures to stabilize the Fund's
net asset value at $1.00 per share of each class. These procedures include a
review of the extent of any deviation of net asset value per share, based on
available market rates, from the Fund's $1.00 amortized cost per share of each
class. Should that deviation exceed 1/2 of 1%, the Board will consider whether
any action should be initiated to eliminate or reduce material dilution or other
unfair results to shareholders. Such action may include redemption of shares in
kind, selling portfolio securities prior to maturity, reducing or withholding
dividends and utilizing a net asset value per share as determined by using
available market quotations. The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less, will not purchase any instrument with a
remaining maturity greater than 397 days, will limit portfolio investments,
including repurchase agreements, to those United States dollar-denominated
instruments that the Fund's Board of Directors determines present minimal credit
risks, and will comply with certain reporting and recordkeeping procedures. The
Fund has also established procedures to ensure compliance with the requirement
that portfolio securities are Eligible Securities. (See "Investment Objectives,
Policies and Risks" herein.)

YIELD QUOTATIONS

The Fund calculates a seven-day yield quotation using a standard method
prescribed by the rules of the SEC. Under that method, the Fund's yield figure,
which is based on a chosen seven-day period, is computed as follows: the Fund's
return for the seven-day period (which is obtained by dividing the net change in
the value of a hypothetical account having a balance of one share at the
beginning of the period by the value of such account at the beginning of the
period [expected to always be $1.00]) is multiplied by (365/7) with the
resulting annualized figure carried to the nearest hundredth of one percent. For
purposes of the foregoing computation, the determination of the net change in
account value during the seven-day period reflects (i) dividends declared on the
original share and on any additional shares, including the value of any
additional shares purchased with dividends paid on the original share, and (ii)
fees charged to all shareholder accounts. Realized capital gains or losses and
unrealized appreciation or depreciation of the Fund's portfolio securities are
not included in the computation. Therefore annualized yields may be different
from effective yields quoted for the same period.

The Fund's "effective yield" for each Class is obtained by adjusting its
"current yield" to give effect to the compounding nature of the Fund's
portfolio, as follows: the unannualized base period return is compounded and
brought out to the nearest one hundredth of one percent by adding one to the
base period return, raising the sum to a power equal to 365 divided by 7 and
subtracting one from the result, i.e., effective yield = (base period return +
1)365/7 - 1.

Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day. The Fund's yield for any given period is not an indication, or
representation by the Fund, of future yields or rates of return on the Fund's
shares, and may not provide a basis for comparison with bank deposits or other
investments that pay a fixed yield for a stated period of time. Investors who
purchase the Fund's shares directly may realize a higher yield than Participant
Investors because they will not be subject to any fees or charges that may be
imposed by Participating Organizations.

The Fund may from time to time advertise its tax equivalent yield. The tax
equivalent yield for each Class is computed based upon a 30-day (or one month)
period ended on the date of the most recent balance sheet included in this
Statement of Additional Information, computed by dividing that portion of the
yield of the Fund (as computed pursuant to the formulae previously discussed)
which is tax-exempt by one minus a stated income tax rate and adding the product
to that portion, if any, of the yield of the Fund that is not tax-exempt. The
tax equivalent yield for the Fund may also fluctuate daily and does not provide
a basis for determining future yields.

The Fund may from time to time advertise a taxable equivalent yield table which
shows the yield an investor would need to receive from a taxable investment in
order to equal a tax-free yield from the Fund. (See the Taxable Equivalent Yield
Table appearing herein.)

The Fund's Class A shares yield for the seven day period ended April 30, 1998
was 2.99% which is equivalent to an effective yield of 3.03%. The Fund's Class B
shares commenced operation on October 10, 1996. The Fund's Class B shares yield
for the seven day period ended April 30, 1998 was 3.18% which is equivalent to
an effective yield of 3.23%.

MANAGER

The investment manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020 (the "Manager"). As of April 30, 1998, the Manager was
investment manager, adviser, or supervisor with respect to assets aggregating in
excess of $11.4 billion. In addition to the Fund, the
<PAGE>

Manager acts as investment manager and administrator of seventeen other
investment companies and also advises pension trusts, profit-sharing trust and
endowments.

The recent name change did not result in a change in control of the Manager and
has no impact upon the Manager's performance of its responsibilities and
obligations.

The Investment Management Contract has a term which extends to January 31, 1999,
and may be continued in force thereafter for successive twelve-month periods
beginning each February 1, provided that such continuance is specifically
approved annually by majority vote of the Fund's outstanding voting securities
or by its Board of Directors, and in either case by a majority of the directors
who are not parties to the Investment Management Contract or interested persons
of any such party, by votes cast in person at a meeting called for the purpose
of voting on such matter.

The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of Reich &
Tang Asset Management, Inc., or employees of the Manager or its affiliates.

The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by the Manager on sixty days' written notice, and will automatically
terminate in the event of its assignment. The Investment Management Contract
provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or of reckless disregard of its
obligations thereunder, the Manager shall not be liable for any action or
failure to act in accordance with its duties thereunder.

For its services under the Investment Management Contract, the Manager receives
from the Fund a fee equal to .30% per annum of the Fund's average daily net
assets (the "Management Fee") for managing the Fund's investment portfolio and
performing related administrative and clerical services. Pursuant to the
Investment Management Contract, for the fiscal years ended January 31, 1996,
1997 and 1998, the Manager received fees of $278,564, $360,874 and $416,312
respectively. The
<PAGE>

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 and
administrative services. (See "Distribution and Service Plan" herein.)

Investment management fees and operating expenses which are attributable to both
Classes of the Fund will be allocated daily to each Class based on the
percentage of outstanding shares at the end of the day. Additional shareholder
services provided by Participating Organizations to Class A shareholders
pursuant to the Plan shall be compensated by the Distributor from its
shareholder servicing fee, the Manager from its management fee and the Fund
itself. Expenses incurred in the distribution of Class B shares and the
Servicing of Class B shares shall be paid by the Manager.

Pursuant to the Administrative Services Contract with the Fund, the Manager
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to: (i) supervise the
performance of bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping agent; (ii) prepare reports to and filings with
regulatory authorities; and (iii) perform such other services as the Fund may
from time to time request of the Manager. The personnel rendering such services
may be employees of the Manager, of its affiliates or of other organizations.
For its services under the Administrative Services Contract, the Manager
receives from the Fund a fee equal to .21% per annum of the Fund's average daily
net assets. For the Fund's fiscal year ended January 31, 1998, the Manager
received under the Administrative Services Contract a fee of $291,418.

Expense Limitation

The Manager has agreed to reimburse the Fund for its expenses (exclusive of
interest, taxes, brokerage and extraordinary expenses) which in any year exceed
the limits on investment company expenses prescribed by any state in which the
Fund's shares are qualified for sale. For the purpose of this obligation to
reimburse expenses, the Fund's annual expenses are estimated and accrued daily,
and any appropriate estimated payments are made to it on a monthly basis.
Subject to the obligations of the Manager to reimburse the Fund for its excess
expenses as described above, the Fund has, under the Investment Management
Contract, confirmed its obligation for payment of all its other expenses,
including taxes, brokerage fees and commissions, commitment fees, certain
insurance premiums, interest charges and expenses of the custodian, transfer
agent and dividend disbursing agent's fees, telecommunications expenses,
auditing and legal expenses, accounting services or recordkeeping agent fees,
costs of forming the corporation and maintaining corporate existence,
compensation of directors, officers and employees of the Fund and costs of other
personnel performing services for the Fund who are not officers of the general
partner of the Manager or its affiliates, costs of investor services,
shareholders' reports and corporate meetings, SEC registration fees and
expenses, state securities laws registration fees and expenses, expenses of
preparing and printing the Fund's prospectus for delivery to existing
shareholders and of printing application forms for shareholder accounts, and the
fees payable to the Manager under the Investment Management Contract. As a
result of the recent passage of the National Securities Markets Improvement Act
of 1996, all state expense limitations have been eliminated at this time.

The Fund may from time to time hire its own employees or contract to have
management services performed by third parties (including Participating
Organizations) as discussed herein, and the management of the Fund intends to do
so whenever it appears advantageous to the Fund. The Fund's expenses for
employees and for such services are among the expenses subject to the expense
limitation described above.

MANAGEMENT OF THE FUND

The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below. The address of each such person, unless
otherwise indicated is 600 Fifth Avenue, New York, New York 10020. Mr. Duff may
be deemed an "interested person" of the Fund, as defined in the 1940 Act, on the
basis of his affiliation with the Manager.

Steven W. Duff, 44 - President and Director of the Fund, has been President of
Mutual Funds division of the Manager since September 1994. Mr. Duff was formerly
Director of Mutual Fund Administration at NationsBank which he was associated
with from June 1981 to August 1994. Mr. Duff is President and a Director of Back
Bay Funds, Inc., California Daily Tax Free Income Fund, Inc., Cortland Trust,
Inc., Daily Tax Free Income Fund, Inc., Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Short Term
Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc., President and
a Trustee of Florida Daily Municipal Income Fund, Institutional Daily Income
Fund and Pennsylvania Daily Municipal Income Fund, Executive Vice President of
Reich & Tang Equity Fund, Inc. and President and Chief Executive Officer of Tax
Exempt Proceeds Fund, Inc. and a Director of Pax World Money Market Fund, Inc.

Dr. W. Giles Mellon, 67 - Director of the Fund, has been Professor of Business
Administration in the Graduate School of Management, Rutgers University with
which he has been associated since 1966. His address is Rutgers University
Graduate
<PAGE>

School of Management, 180 University Avenue, Newark, New Jersey 07102. Dr.
Mellon is also a Director of Back Bay Funds, Inc., California 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., Pax World Money
Market Fund, Inc., Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc. and a Trustee of Florida Daily
Municipal Income Fund, Institutional Daily Income Fund and Pennsylvania Daily
Municipal Income Fund.

Robert Straniere, 57 - Director of the Fund, has been a member of the New York
State Assembly and a partner with Straniere Law Firm since 1981. His address is
182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also a Director
of Back Bay Funds, Inc., California Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Lifecycle Funds, Inc., Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund,
Inc., Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Virginia
Daily Municipal Income Fund, Inc. and a Trustee of Florida Daily Municipal
Income Fund, Institutional Daily Income Fund and Pennsylvania Daily Municipal
Income Fund.

Dr. Yung Wong, 59 - Director of the Fund, was Director of Shaw Investment
Management (UK) Limited from 1994 to October 1995 and formerly was General
Partner of Abacus Partners Limited Partnership (a general partner of a venture
capital investment firm) since 1984. His address is 29 Alden Road, Greenwich,
Connecticut 06831. Dr. Wong is a Director of Republic Telecom Systems
Corporation (provider of telecommunications equipment) since January 1989 and of
TelWatch, Inc. (provider of network management software) since August 1989. Dr.
Wong is also a Director of Back Bay Funds, Inc., California 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., Pax World Money
Market Fund, Inc., Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc., and a Trustee of Florida Daily
Municipal Income Fund, Institutional Daily Income Fund and Pennsylvania Daily
Municipal Income Fund.

Molly Flewharty, 47 - Vice President of the Fund, has been Vice President of the
Reich & Tang Mutual Funds division of the Manager since September 1993. Ms.
Flewharty was formerly Vice President of Reich & Tang, Inc. which she was
associated with from December 1977 to September 1993. Ms. Flewharty is also Vice
President of Back Bay Funds, Inc., California 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., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal
Income Fund, Reich & Tang Equity Fund, Inc., Tax Exempt Proceeds Fund, Inc.,
Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.

Lesley M. Jones, 49 - Vice President of the Fund, has been Senior Vice President
of the Reich & Tang Mutual Funds division of the Manager since September 1993.
Ms. Jones was formerly Senior Vice President of Reich & Tang, Inc. which she was
associated with from April 1973 to September 1993. Ms. Jones is also a Vice
President of Back Bay Funds, Inc., California Daily Tax Free Income Fund, Inc.,
Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal
Income Fund, Institutional Daily Income Fund, Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax
Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax
World Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich &
Tang Equity Fund, Inc., Short Term Income Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc.

Dana E. Messina, 41 - Vice President of the Fund, has been Executive Vice
President of the Reich & Tang Mutual Funds division of the Manager since January
1995 and was Vice President from September 1993 to January 1995. Ms. Messina was
formerly Vice President of Reich & Tang, Inc. which she was associated with from
December 1980 to September 1993. Ms. Messina is also Vice President of Back Bay
Funds, Inc., California 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., Pax
World Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich &
Tang Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds Fund,
Inc. and Virginia Daily Municipal Income Fund, Inc.

Bernadette N. Finn, 50 - Secretary of the Fund, is Vice President and Assistant
Secretary of the Reich & Tang Mutual Funds division of the Manager since
September 1993. Ms. Finn was formerly Vice President and Assistant Secretary of
Reich & Tang, Inc. which she was associated with from September 1970 to
September 1993. Ms. Finn is also Secretary of Back Bay Funds, Inc., California
Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income
Fund, Inc., Florida Daily
<PAGE>

Municipal Income Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey
Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund,
Inc., Pennsylvania Daily Municipal Income Fund, Tax Exempt Proceeds Fund, Inc.,
and Virginia Daily Municipal Income Fund, Inc., a Vice President and Secretary
of Delafield Fund, Inc., Institutional Daily Income Fund, Reich & Tang Equity
Fund, Inc. and Short Term Income Fund, Inc.

Richard De Sanctis, 40 - Treasurer of the Fund, is Vice President and Treasurer
of the Manager since September 1993. Mr. De Sanctis was formerly Controller of
Reich & Tang, Inc. from January 1991 to September 1993. He is also Treasurer of
Back Bay Funds, Inc., California Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang
Equity Fund, Inc., Tax Exempt Proceeds Fund, Inc., Short Term Income Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc. and Vice President and Treasurer
of Cortland Trust, Inc.

Rosanne Holtzer, 33 - Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Manager since December 1997. Ms. Holtzer was
formerly Manager of Fund Accounting for the Manager with which she was
associated with from June 1986. She is also Assistant Treasurer of Back Bay
Funds, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income
Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income Fund,
Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund, Inc., New
Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund,
Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World Money Market
Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund,
Inc., Short Term Income Fund, Inc., and Virginia Daily Municipal Income Fund,
Inc. and is Vice President and Assistant Treasurer of Cortland Trust, Inc.

The Fund paid an aggregate remuneration of $15,000 to its directors with respect
to the fiscal year ended January 31, 1998, all of which consisted of aggregate
directors' fees paid to the three disinterested directors, pursuant to the terms
of the Investment Management Contract. (See "Manager" herein.) See Compensation
Table below.

<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C>
COMPENSATION TABLE

(1) (2) (3) (4) (5)

Name of Aggregate Pension or Estimated Annual Total Compensation
Person, Compensation from Retirement Benefits Benefits upon from Fund and Fund
Position Registrant for Fiscal Accrued as Part of Retirement Complex Paid to
Year Fund Expenses Directors

W. Giles Mellon,
Director $5,000.00 0 0 $52,250 (14 Funds)

Robert Straniere,
Director $5,000.00 0 0 $52,250 (14 Funds)

Dr. Yung Wong,
Director $5,000.00 0 0 $52,250 (14 Funds)

</TABLE>

* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending January 31, 1998 (and, with respect to certain of the
funds in the Fund Complex, estimated to be paid during the fiscal year ending
January 31, 1998). The parenthetical number represents the number of investment
companies (including the Fund) from which such person receives compensation that
are considered part of the same Fund complex as the Fund, because, among other
things, they have a common investment advisor.

COUNSEL AND AUDITORS

Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.

Matters in connection with Connecticut tax law are passed upon by Day, Berry and
Howard, Cityplace, Hartford, Connecticut 06103.

McGladrey & Pullen LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected as auditors for the Fund.
<PAGE>

DISTRIBUTION AND SERVICE PLAN

Pursuant to Rule 12b-1 under the 1940 Act, the SEC has required that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by Rule 12b-1.
The Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund and the Distributor have entered
into a Distribution Agreement and a Shareholder Servicing Agreement (with
respect to Class A shares only) with Reich & Tang Distributors, Inc. (the
"Distributor") as distributor of the Fund's shares.

Effective October 3, 1996, a majority of the Fund's Board of Directors,
including independent directors, approved the creation of a second class of
shares of the Fund's outstanding common stock. In furtherance of this action,
the Board of Directors has reclassified the common stock of the Fund into Class
A and Class B shares. The Class A shares will be offered to investors who desire
certain additional shareholder services from Participating Organizations that
are compensated by the Fund's Manager and Distributor for such services.

For its services under the Shareholder Servicing Agreement (with respect to
Class A shares), the Distributor receives from the Fund a fee equal to .20% per
annum of the Fund's average daily net assets of Class A shares (the "Shareholder
Servicing Fee"). The fee is accrued daily and paid monthly and any portion of
the fee may be deemed to be used by the Distributor for purposes of distribution
of only the Fund's Class A shares and for payments to Participating
Organizations with respect to servicing their clients or customers who are Class
A shareholders of the Fund. The Class B shareholders will not receive the
benefit of such services from Participating Organizations and, therefore, will
not be assessed a Shareholder Servicing Fee.

The Plan and the Shareholder Servicing Agreement provide that, in addition to
the Shareholder Servicing Fee, the Fund will pay for (i) telecommunications
expenses including the cost of dedicated lines and CRT terminals, incurred by
the Manager and Distributor in carrying out their obligations under the
Shareholder Servicing Agreement with respect to Class A shares only and (ii)
preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing subscription application
forms for shareholder accounts.

The Plan provides that the Manager may make payments from time to time from its
own resources which may include the Management Fee and past profits for the
following purposes: (i) to defray the costs of, and to compensate others,
including Participating Organizations with whom the Distributor has entered into
written agreements, for performing shareholder servicing and related
administrative functions on behalf of the Class A shares of the Fund; (ii) to
compensate certain Participating Organizations for providing assistance in
distributing the Fund's Class A shares; to pay the costs of printing and
distributing the Fund's prospectus to prospective investors; and (iii) to defray
the cost of the preparation and printing of brochures and other promotional
materials, mailings to prospective shareholders, advertising, and other
promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee with respect to Class A shares
and past profits for the purposes enumerated in (i) above. The Distributor, in
its sole discretion, will determine the amount of such payments made pursuant to
the Plan, provided that such payments will not increase the amount which the
Fund is required to pay to the Manager and Distributor for any fiscal year under
the Investment Management Contract, the Shareholder Servicing Agreement or the
Administrative Services Contract in effect for that year.

In accordance with Rule 12b-1, the Plan provides that all written agreements
relating to the Plan entered into between either the Fund or the Distributor and
Participating Organizations or other organizations must be in a form
satisfactory to the Fund's Board of Directors. In addition, the Plan requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and the
Distributor pursuant to the Plan and identifying the distribution activities for
which those expenditures were made.

The following applies only to Class A shares of the Fund. For the Fund's fiscal
year ended January 31, 1998, the amount payable to the Distributor under the
Distribution and Service Plan and Shareholder Servicing Agreement adopted
thereunder pursuant to the Rule under the 1940 Act, totaled $277,469, none of
which was waived. During this same period the Manager and Distributor made
payments under the Plan totaling $524,519, of which $494,812 was paid to or on
behalf of Participating Organizations. The excess of such payments over the
total payments the Distributor received from the Fund represents distribution
expenses funded by the Manager and Distributor from their own resources
including the Management Fee.

The Board of Directors, including a majority of the non-interested directors as
defined in the 1940 Act, initially approved the Plan on April 29, 1985 and most
recently approved the Plan on January , 1998 to continue in effect until
January 31, 1999. The Plan
<PAGE>

provides that it may continue in effect for successive annual periods provided
it is approved by the shareholders or by the Board of Directors, including a
majority of directors who are not interested persons of the Fund and who have no
direct or indirect interest in the operation of the Plan or in the agreements
related to the Plan. The Plan further provides that it may not be amended to
increase materially the costs which may be spent by the Fund for distribution
pursuant to the Plan without shareholder approval, and the other material
amendments must be approved by the directors in the manner described in the
preceding sentence. The Plan may be terminated at any time by a vote of a
majority of the disinterested directors of the Fund or the Fund's Class A
shareholders.

DESCRIPTION OF COMMON STOCK

The authorized capital stock of the Fund, which was incorporated on March 8,
1985 in Maryland, consists of twenty billion shares of stock having a par value
of one-tenth of one cent ($.001) per share. Each share has equal dividend,
distribution, liquidation and voting rights and a fractional share has those
rights in proportion to the percentage that the fractional share represents of a
whole share. Shares will be voted in the aggregate. There are no conversion or
preemptive rights in connection with any shares of the Fund. All shares, when
issued in accordance with the terms of the offering will be fully paid and
non-assessable. Shares are redeemable at net asset value, at the option of the
shareholder. The Fund is subdivided into two classes of stock, Class A and Class
B. Each share, regardless of class, will represent an interest in the same
portfolio of investments and will have identical voting, dividend, liquidation
and other rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions, except that: (i) the
Class A and Class B shares will have different class designations; (ii) only the
Class A shares will be assessed a service fee pursuant to the Rule 12b-1
Distribution and Service Plan of the Fund of .20% of the Fund's average daily
net assets; (iii) only the holders of the Class A shares would be entitled to
vote on matters pertaining to the Plan and any related agreements in accordance
with provisions of Rule 12b-1; and (iv) the exchange privilege will permit
shareholders to exchange their shares only for shares of the same class of an
Exchange Fund. Payments that are made under the Plans will be calculated and
charged daily to the appropriate class prior to determining daily net asset
value per share and dividends/distributions. As of April 30, 1998 there were
149,258,519 shares of the Fund's Class A shares outstanding and 4,366 shares of
the Fund's Class B shares outstanding. As of April 30, 1997, the amount of
shares owned by all officers and directors of the Fund as a group was less than
1% of the outstanding shares of the Fund. Set forth below is certain information
as to persons who owned 5% or more of the Fund's outstanding shares as of April
30, 1997.

Nature of
Name and Address % of class ownership

Class A

IFTC/Vista Mutual Funds 26.15% Record
c/o Vista Institutional Department
127 West 10th Street
Kansas City, MO 64105

Evergreen Investment Services 13.46% Record
201 S. College Street-Suite 600
Charlotte, NC 28288-1195

Investors Fiduciary Trust Company 6.95% Record
210 W. 10th Street - 8th Floor
Kansas City, MO 64105-1614

Dawson Samberg Capital Management 14.12% Record
354 Pequot Avenue
Southport, CT 06490-1345

Neuberger & Berman 6.59% Record
55 Water Street-27th Floor
New York, NY 10041-0001
<PAGE>

Class B

Lewco Securities Corp. 84.18% Record
34 Exchange Place
Jersey City, NJ 07311

Under its Articles of Incorporation the Fund has the right to redeem shares of
stock owned by any shareholder for cash, to the extent and at such times as the
Fund's Board of Directors determines to be necessary or appropriate to prevent
an undue concentration of stock ownership which would cause the Fund to become a
"personal holding company" for Federal income tax purposes. In this regard, the
Fund may also exercise its right to reject purchase orders.

The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors can elect 100% of the directors if the holders choose to do so, and,
in that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Unless specifically requested by an
investor, the Fund will not issue certificates evidencing Fund shares.

As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of the Fund's
revised investment advisory agreement with respect to a particular class or
series of stock, (c) for approval of revisions to the Fund's distribution
agreement with respect to a particular class or series of stock, and (d) upon
the written request of shareholders entitled to cast not less than 25% of all
the votes entitled to be cast at such meeting. Annual and other meetings may be
required with respect to such additional matters relating to the Fund as may be
required by the 1940 Act, any registration of the Fund with the SEC or any
state, or as the Directors may consider necessary or desirable. Each Director
serves until the next meeting of shareholders called for the purpose of
considering the election or re-election of such Director or of a successor to
such Director, and until the election and qualification of his or her successor,
elected at such meeting, or until such Director sooner dies, resigns, retires or
is removed by the vote of the shareholders.

FEDERAL INCOME TAXES

The Fund has elected to qualify under the Code as a "regulated investment
company" that distributes "exempt-interest dividends". The Fund intends to
continue to qualify for regulated investment company status so long as such
qualification is in the best interests of its shareholders. Such qualification
relieves the Fund of liability for Federal income taxes to the extent its
earnings are distributed in accordance with the applicable provisions of the
Code.

The Fund's policy is to distribute as dividends each year 100% and in no event
less than 90% of its tax-exempt interest income, net of certain deductions.
Exempt-interest dividends, as defined in the Code, are dividends or any part
thereof (other than capital gain dividends) paid by the Fund that are
attributable to interest on obligations the interest on which is exempt from
regular Federal income tax and designated by the Fund as exempt-interest
dividends in a written notice mailed to the Fund's shareholders not later than
60 days after the close of its taxable year. The percentage of the total
dividends paid by the Fund during any taxable year that qualifies as
exempt-interest dividends will be the same for all shareholders receiving
dividends during the year.

Exempt-interest dividends are to be treated by the Fund's shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share has been held for six months or less, then any loss on the sale
or exchange of such share will be disallowed to the extent of the amount of such
exempt-interest dividend. The Code provides that interest on indebtedness
incurred, or continued, to purchase or carry certain tax-exempt securities such
as shares of the Fund is not deductible. Therefore, among other consequences, a
certain proportion of interest on indebtedness incurred, or continued, to
purchase or carry securities on margin may not be deductible during the period
an investor holds shares of the Fund. For Social Security recipients, interest
on tax-exempt bonds, including exempt-interest dividends paid by the Fund, is to
be added to adjusted gross income for purposes of computing the amount of social
security benefits includible in gross income. The amount of such interest
received must be disclosed on the shareholders' Federal income tax returns.
Taxpayers other than corporations are required to include as an item of tax
preference for purposes of the Federal alternative minimum tax all tax-exempt
interest on "private activity" bonds (generally, a bond issue in which more than
10% of the proceeds are used in a non-governmental trade or business) (other
than Section 501(c)(3) bonds) issued after August 7, 1986. Thus, this provision
will apply to the portion of the exempt-interest dividends from the Fund's
assets that are attributable to such post-August 7, 1986 private activity bonds,
if any such bonds are acquired by the Fund. Corporations are required to
increase their alternative minimum taxable income by 75% of the amount by which
the adjusted current earnings (which will include tax-exempt interest) of the
corporation exceeds the alternative minimum
<PAGE>

taxable income (determined without this provision). In addition, in certain
cases, Subchapter S corporations with accumulated earnings and profits from
Subchapter C years are subject to a minimum tax on excess "passive investment
income" which includes tax-exempt interest. A shareholder is advised to consult
his tax adviser with respect to whether exempt-interest dividends retain the
exclusion under Section 103(a) of the Code if such shareholder would be treated
as a "substantial user" or "related person" under Section 147(a) of the Code
with respect to some or all of the "private activity bonds," if any, held by the
Fund.

Although it is not intended, it is possible that the Fund may realize short-term
or long-term capital gains or losses from its portfolio transactions. The Fund
may also realize short-term or long-term capital gains upon the maturity or
disposition of securities acquired at discounts resulting from market
fluctuations. Short-term capital gains will be taxable to shareholders as
ordinary income when they are distributed. Any net capital gains (the excess of
its net realized long-term capital gain over its net realized short-term capital
loss) will be distributed annually to the Fund's shareholders. The Fund will
have no tax liability with respect to distributed net capital gains and the
distributions will be taxable to shareholders as long-term capital gains
regardless of how long the shareholders have held Fund shares. However, Fund
shareholders who at the time of a net capital gain distribution have not held
their Fund shares for more than six months, and who subsequently dispose of
those shares at a loss, will be required to treat such loss as a long-term
capital loss, to the extent of such net capital gain distribution. Distributions
of net capital gain will be designated as a "capital gain dividend" in a written
notice mailed to the Fund's shareholders not later than 60 days after the close
of the Fund's taxable year. Capital gains realized by corporations are generally
taxed at the same rate as ordinary income. However, capital gains dividends are
taxable at a maximum rate of 28% to non-corporate shareholders if the Fund's
holding period is more than 12 months and 20% if the Fund's holding period is
more than 18 months, without regard to the length of time shares have been held
by the holder. Corresponding maximum rate and holding period rules apply with
respect to capital gains realized by a holder on the disposition of shares.

The Fund intends to distribute at least 90% of its investment company taxable
income (taxable income subject to certain adjustments exclusive of the excess of
its net long-term capital gain over its net short-term capital loss) for each
taxable year. The Fund will be subject to Federal income tax on any
undistributed investment company taxable income. To the extent such income is
distributed it will be taxable to shareholders as ordinary income. Expenses paid
or incurred by the Fund will be allocated between tax-exempt and taxable income
in the same proportion as the amount of the Fund's tax-exempt income bears to
the total of such exempt income and its gross income (excluding from gross
income the excess of capital gains over capital losses). If the Fund does not
distribute at least 98% of its ordinary income and 98% of its capital gain net
income for a taxable year, the Fund will be subject to a nondeductible 4% excise
tax on the excess of such amounts over the amounts actually distributed.

If a shareholder fails to provide the Fund with a current taxpayer
identification number, the Fund generally is required to withhold 31% of taxable
interest, dividend payments and proceeds from the redemption of shares of the
Fund.

Dividends and distributions to shareholders will be treated in the same manner
for Federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund.

With respect to the variable rate demand instruments, including Participation
Certificates therein, the Fund is relying on the opinion of Battle Fowler LLP,
counsel to the Fund, that it will be treated for Federal income tax purposes as
the owner of the underlying Municipal Obligations and the interest thereon will
be exempt from regular Federal income taxes to the Fund to the same extent as
interest on the underlying Municipal Obligations. Counsel has pointed out that
the Internal Revenue Service has announced that it will not ordinarily issue
advance rulings on the question of ownership of securities or participation
interests therein subject to a put, and as a result, the Internal Revenue
Service could reach a conclusion different from that reached by counsel.

The Code provides that the interest on indebtedness incurred or continued to
purchase or carry shares of the Fund is not deductible. Therefore, among other
consequences, a certain proportion of interest on indebtedness incurred, or
continued to purchase or carry securities may not be deductible during the
period an investor holds shares of the Fund. P.L. 99-514 expands the application
of this rule as it applies to financial institutions, effective with respect to
Fund shares acquired after December 31, 1986. The Clinton Administration's
Revenue Proposals for fiscal years 1999 would extend this provision to all
financial intermediaries effective for taxable years beginning after the date of
enactment with respect to obligations acquired on or after the date of first
committee action.

From time to time, proposals have been introduced before Congress to restrict or
eliminate the Federal income tax exemption for interest on Municipal
Obligations. If such a proposal were introduced and enacted in the future, the
ability of the Fund to pay
<PAGE>

exempt-interest dividends would be adversely affected and the Fund would
re-evaluate its investment objectives and policies and consider changes in the
structure.

In South Carolina v. Baker, the U.S. Supreme Court held that the Federal
government may constitutionally require states to register bonds they issue and
may subject the interest on such bonds to Federal income tax if not registered,
and that there is no constitutional prohibition against the Federal government's
taxing the interest earned on state or other municipal bonds. The Supreme Court
decision affirms the authority of the Federal government to regulate and control
bonds such as the Municipal Obligations and to tax such bonds in the future. The
decision does not, however, affect the current exemption from taxation of the
interest earned on the Municipal Obligations in accordance with Section 103 of
the Code.

CONNECTICUT INCOME TAXES

The designation of all or a portion of a dividend paid by the Fund as an
"exempt-interest dividend" under the Code does not necessarily result in the
exemption of such amount from tax under the laws of any state or local taxing
authority. With respect to "exempt-interest dividends" that are paid by the
Fund, in the opinion of Day, Berry & Howard, special Connecticut tax counsel to
the Fund, exempt-interest dividends correctly designated as derived from
Connecticut Municipal Obligations received by the Fund are not subject to the
Connecticut Personal Income Tax.

Exempt-interest dividends that are not derived from Connecticut Municipal
Obligations and any other dividends of the Fund (including, if any, capital gain
dividends) are includible in the tax base for the Connecticut Personal Income
Tax except that capital gain dividends derived from obligations issued by or on
behalf of the State of Connecticut, its political subdivisions, or any public
instrumentality, state or local authority, district or similar public entity
created under Connecticut law are not subject to the tax.

Exempt-interest dividends, except those derived from Connecticut Municipal
Obligations, are subject to the net Connecticut minimum tax. Exempt-interest
dividends derived from Connecticut Municipal Obligations are not exempt from the
Connecticut Corporation Business Tax payable by corporations.

Shareholders are urged to consult their tax advisors with respect to the
treatment of distributions from the Fund in their own states and localities.

CUSTODIAN AND TRANSFER AGENT

Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., 600 Fifth Avenue, New York, New York 10020 is transfer agent and dividend
disbursing agent for the shares of Connecticut Daily Tax Free Income Fund, Inc.
Evergreen Service Company, P.O. Box 2121, Boston, Massachusetts 02106-2121 is
the registrar, transfer agent and dividend disbursing agent for the Evergreen
Shares of the Fund. DST Systems, Inc., 801 Pennsylvania, Kansas City, Missouri
64105 is transfer agent and dividend disbursing agent for the Chase Vista Select
shares of the Fund. The custodian and transfer agents do not assist in, and are
not responsible for, investment decisions involving assets of the Fund.

FINANCIAL STATEMENTS

The audited financial statements for the Fund and the report of McGladrey &
Pullen thereon for the fiscal year ended January 31, 1998 are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.

<PAGE>
DESCRIPTION OF RATINGS*

Description of Moody's Investors Service, Inc.'s two highest municipal bond
ratings:

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, or fluctuation of protective elements
may be of greater amplitude, or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

Con. (...) - Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.

Description of Moody's Investors Service, Inc.'s two highest ratings of state
and municipal notes and other short-term loans:

Moody's ratings for state and municipal notes and other short-term loans will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in bond risk
are of lesser importance in the short run. Symbols used will be as follows:

MIG-1 - Loans bearing this designation are of the best quality, enjoying strong
protection from established cash flows of Funds for their servicing or from
established and broad-based access to the market for refinancing, or both.

MIG-2 - Loans bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.

Description of Standard & Poor's Rating Services two highest debt ratings:

AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

Plus (+) or Minus (-) - The AA rating may be modified by the addition of a plus
or minus sign to show relative standing within the AA rating category.

Provisional Ratings - The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.

Standard & Poor's does not provide ratings for state and municipal notes.

Description of Standard & Poor's Rating Services two highest commercial paper
ratings:

A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.

A-2 - Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.

Description of Moody's Investors Service, Inc.'s two highest commercial paper
ratings:

Moody's employs the following designations, both judged to be investment grade,
to indicate the relative repayment capacity of rated issues: Prime-1, highest
quality; Prime-2, higher quality.
- --------------------------------------------------------------------------------
* As described by the rating agencies.

<PAGE>

- --------------------------------------------------------------------------------
CORPORATE EQUIVALENT YIELD TABLE
- --------------------------------------------------------------------------------
1. If Your Taxable Income Bracket Is . . .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
Corporate $0- $50,001- $75,001- $100,001- $335,001- $10,000,001- $15,000,001- $18,333,334
Return 50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 and over
- --------------------------------------------------------------------------------------------------------------------------
2. Then Your Combined Income Tax Bracket Is. . .
- --------------------------------------------------------------------------------------------------------------------------
Federal
Tax 15.00% 25.00% 34.00% 39.00% 34.00% 35.00% 38.00% 35.00%
Rate
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------

State
Tax 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50% 9.50%
Rate

- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------

Combined
Marginal
Tax 23.08% 32.13% 40.27% 44.80% 40.27% 41.18% 43.89% 41.18%
Rate

- --------------------------------------------------------------------------------------------------------------------------
3. Now Compare Your Tax Free Income Yields With Taxable Income Yields
- --------------------------------------------------------------------------------------------------------------------------
Tax Equivalent Taxable Investment Yield
Exempt Requires to Match Tax Exempt Yield
Yield
- ---------- ---------------------------------------------------------------------------------------------------------------

2.00% 2.60% 2.95% 3.35% 3.62% 3.35% 3.40% 3.56% 3.40%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
2.50% 3.25% 3.68% 4.19% 4.53% 4.19% 4.25% 4.46% 4.25%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
3.00% 3.90% 4.42% 5.02% 5.43% 5.02% 5.10% 5.35% 5.10%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
3.50% 4.55% 5.16% 5.86% 6.34% 5.86% 5.95% 6.24% 5.95%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
4.00% 5.26% 5.89% 6.70% 7.25% 6.70% 6.80% 7.13% 6.80%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
4.50% 5.85% 6.63% 7.53% 8.15% 7.53% 7.65% 8.02% 7.65%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
5.00% 6.50% 7.37% 8.37% 9.06% 8.37% 8.50% 8.91% 8.50%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
5.50% 7.15% 8.10% 9.21% 9.96% 9.21% 9.35% 9.80% 9.35%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
6.00% 7.80% 8.84% 10.05% 10.87% 10.05% 10.20% 10.69% 10.20%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
6.50% 8.45% 9.58% 10.88% 11.77% 10.88% 11.05% 11.58% 11.05%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------
7.00% 9.10% 10.31% 11.72% 12.68% 11.72% 11.90% 12.48% 11.90%
- ---- ----------- ------------ -------------- -------------- -------------- --------------- --------------- ---------------

</TABLE>

To use this chart, find the applicable level of taxable income based on your tax
filing status in section one. Then read down to section two to determine your
combined tax bracket and, in section three, to see the equivalent taxable yields
for each of the tax free income yields given.
- --------------------------------------------------------------------------------

<PAGE>
- --------------------------------------------------------------------------------
TAXABLE EQUIVALENT YIELD TABLE
- --------------------------------------------------------------------------------
1. If Your Taxable Income Bracket Is . . .
- --- ---------------- -------------- ----------------- ---------------- ---------

Single $0- $25,351- $61,401- $128,101- $278,451
Return 25,350 61,400 128,100 278,450 and over

- --------------------------------------------------------------------------------

Joint $0- $42,351- $102,301- $155,951- $278,451
Return 42,350 102,300 155,950 278,450 and over

- --------------------------------------------------------------------------------

2. Then Your Combined Income Tax Bracket Is . . .
- --------------------------------------------------------------------------------
Federal
Tax Rate 15.00% 28.00% 31.00% 36.00% 39.60%
- --------------------------------------------------------------------------------
State
Tax Rate 4.50% 4.50% 4.50% 4.50% 4.50%
- --------------------------------------------------------------------------------
Combined
Marginal 18.83% 31.24% 34.11% 38.88% 42.32%
Tax Rate
- --------------------------------------------------------------------------------

3. Now Compare Your Tax Free Income Yields
With Taxable Income Yields
- --------------------------------------------------------------------------------
Tax Exempt
Yield Equivalent Taxable Investment Yield

2.00% 2.46% 2.91% 3.04% 3.27% 3.47%
- --------------------------------------------------------------------------------
2.50% 3.08% 3.64% 3.79% 4.09% 4.33%
- --------------------------------------------------------------------------------
3.00% 3.70% 4.36% 4.55% 4.91% 5.20%
- --------------------------------------------------------------------------------
3.50% 4.31% 5.09% 5.31% 5.73% 6.07%
- --------------------------------------------------------------------------------
4.00% 4.93% 5.82% 6.07% 6.54% 6.93%
- --------------------------------------------------------------------------------
4.50% 5.54% 6.54% 6.83% 7.36% 7.80%
- --------------------------------------------------------------------------------
5.00% 6.16% 7.27% 7.59% 8.18% 8.67%
- --------------------------------------------------------------------------------
5.50% 6.78% 8.00% 8.35% 9.00% 9.54%
- --------------------------------------------------------------------------------
6.00% 7.39% 8.73% 9.11% 9.82% 10.40%
- --------------------------------------------------------------------------------
6.50% 8.01% 9.45% 9.86% 10.63% 11.27%
- --------------------------------------------------------------------------------
7.00% 8.62% 10.18% 10.62% 11.45% 12.14%
- --------------------------------------------------------------------------------

<PAGE>

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(A) Financial Statements.

Included in Prospectus - Part A:

(1) Table of Fees and Expenses

(2) Financial Highlights

Included in Statement of Additional Information - Part B:

(1) Report of McGladrey & Pullen, LLP independent certified public
accountants, dated February 26, 1998.

(2) Statement of Net Assets (audited),dated January 31, 1998.

(3) Statement of Operations (audited),dated January 31, 1998.

(4) Statements of Changes in Net Assets (audited),for the fiscal years
ended January 1997 and 1998.

(5) Notes to Financial Statements (audited).

(B) Exhibits.

(1) Articles of Incorporation, dated March 7, 1985, and an Amendment
thereto, dated December 31, 1993, of the Registrant. (Refiled herewith
for Edgar purposes only)

(2) By-Laws of the Registrant. (Refiled herewith for Edgar purposes only)

(3) Not applicable.

(4) Form of certificate for shares of Common Stock, par value $.001 per
share, of the Registrant. (Refiled herewith for Edgar purposes only)

(5) Form of Investment Management Contract between the Registrant and
Reich & Tang Asset Management L.P. filed with Post-Effective Amendment
No. 22 to said Registration Statement on May 31, 1997, and
incorporated herein by reference.

(6) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc., filed as Exhibit 15.2 herein.

(7) Not applicable.

(8) Custody Agreement dated May 26, 1995, between the Registrant and
Investors Fiduciary Trust Company. (Refiled herewith for Edgar
purposes only)

(9) Not applicable.

C-1

<PAGE>

(10) Opinion of Battle Fowler LLP, dated May 13, 1985, as to the legality
of the Securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Federal Income Taxes" in the Prospectus and in the Statement of
Additional Information, and under the heading "Counsel and Auditors"
in the Statement of Additional Information. (Refiled herewith for
Edgar purposes only)

(11.1) Opinion of Day, Berry & Howard, dated May 13, 1985, and Consent of
Day, Berry & Howard, dated May 10, 1995, to the use of their name
under the heading "Connecticut Income Taxes" in the Prospectus and in
the Statement of Additional Information, and under the heading
"Counsel and Auditors" in the Statement of Additional Information.
(Refiled herewith for Edgar purposes only)

(11.2) Consent of Certified Public Accountants, filed herein.

(11.3) Powers of Attorney, dated May 13, 1985, of Principal Officers and
Directors of the Registrant. (Refiled herewith for Edgar purposes
only)

(12) Not applicable.

(13) Written assurance, dated May 13, 1985, of Reich & Tang, Inc. that its
purchase of shares of the Registrant was for investment purposes
without any present intention of redeeming or reselling. (Refiled
herewith for Edgar purposes only)

(14) Not applicable.

(15.1) Form of Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, filed with Post-Effective Amendment
No. 22 to said Registration Statement on May 31, 1997, and
incorporated herein by reference.

(15.2) Form of Distribution Agreement between the Registrant and Reich &
Tang Distributors, Inc., filed herein.

(15.3) Form of Shareholder Servicing Agreement between the Registrant and
Reich & Tang Distributors, Inc., filed herein.

(15.4) Form of Administrative Services Contract between the Registrant and
Reich & Tang Distributors, Inc., filed herein.

(16) Not Applicable

(17) Financial Data Schedule (For EDGAR purposes only).

Item 25. Persons controlled by or Under Common Control with Registrant.

None.

Item 26. Number of Holders of Securities.

Number of Record Holders
Title of Class as of April 30, 1998
-------------- ---------------------
Class A Common Stock
(par value $.001) 538

Class B Common Stock
(par value $.001) 2

C-2

<PAGE>

Item 27. Indemnification.

Registrant incorporates herein by reference the response to Item 27 of
Registration Statement filed with the Commission on May 13, 1985.

Item 28. Business and Other Connections of Investment Advisor.

The description of Reich & Tang Asset Management L.P. ("RTAM") under the
caption "Management of the Fund" in the Prospectus and "Manager" and "Management
of the Fund" in the Statement of Additional Information constituting parts A and
B, respectively, of this Post-Effective Amendment No. 23 to the Registration
Statement are incorporated herein by reference.

Effective January 1, 1998, NEIC Operating Partnership, L.P. ("NEICOP") was
the limited partner and owner of a 99.5% interest in the Manager replacing New
England Investment Companies, L.P. ("NEICLP") as the limited partner and owner
of such interest in the Manager due to a restructuring by New England Investment
Companies, Inc. ("NEIC"). Subsequently, effective March 31, 1998 Nvest
Companies, L.P. ("Nvest Companies") due to a change in the name NEICOP, replaces
NEICOP as the limited partner and owner of a 99.5% interest in the manager.
Reich & Tang Asset Management, Inc. (an indirect wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining .5%
interest of the Manager. Nvest Corporation (formerly known as New England
Investment Companies Inc.) a Massachusetts corporation, serves as the managing
general partner of Nvest Companies.

Reich & Tang Asset Management, Inc. is an indirect subsidiary of
Metropolitan Life Insurance Company ("MetLife"). MetLife directly and indirectly
owns approximately 47% of the outstanding partnership interests of Nvest
Companies, and may be deemed a "controlling person" of the Manager. Reich &
Tang, Inc. owns directly and indirectly approximately 13% of the outstanding
partnership interests of Nvest Companies.

Registrant's investment advisor, Reich & Tang Asset Management L.P., is a
registered investment advisor. Reich & Tang Asset Management L.P.'s investment
advisory clients include California Daily Tax Free Income Fund, Inc. Cortland
Trust, Inc., Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income
Fund, Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Short Term
Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia Daily Municipal
Income Fund, Inc., registered investment companies whose address is 600 Fifth
Avenue, New York, New York 10020, which invest principally in money market
instruments, Delafield Fund, Inc. and Reich & Tang Equity Fund, Inc., registered
investment companies whose addresses are 600 Fifth Avenue, New York, New York
10020, which invests principally in equity securities. In addition, Reich & Tang
Asset Management L.P. is the sole general partner of Alpha Associates, August
Associates, Reich & Tang Minutus L.P., Reich & Tang Minutus II, L.P., Reich &
Tang Equity Partnerships L.P. and Tucek Partners L.P., private investment
partnerships organized as limited partnerships.

Peter S. Voss, President, Chief Executive Officer and a Director of Nvest
Corporation (formerly New England Investment Companies, Inc.) since October
1992, Chairman of the Board of Nvest Corporation since December 1992, Group
Executive Vice President, Bank of America, responsible for the global asset
management private banking businesses, from April 1992 to October 1992,
Executive Vice President of Security Pacific Bank, and Chief Executive Officer
of Security Pacific Hoare Govett Companies a wholly-owned subsidiary of Security
Pacific Corporation, from April 1988 to April 1992, Director of The New England
since March 1993, Chairman of the Board of Directors of NEIC's subsidiaries
other than Loomis, Sayles & Company, L.P. ("Loomis") and Back Bay Advisors, L.P.
("Back Bay"), where he serves as a Director, and Chairman of the Board of
Trustees of all of the mutual funds in the TNE Fund Group and the Zenith Funds.
G. Neil Ryland, Executive Vice President, Treasurer and Chief Financial Officer
Nvest Corporation since July 1993, Executive Vice President and Chief Financial
Officer of The Boston Company, a diversified financial services

C-3

<PAGE>

company, from March 1989 until July 1993, from September 1985 to December 1988,
Mr. Ryland was employed by Kenner Parker Toys, Inc. as Senior Vice President and
Chief Financial Officer. Edward N. Wadsworth, Executive Vice President, General
Counsel, Clerk and Secretary of Nvest Corporation since December 1989, Senior
Vice President and Associate General Counsel of The New England from 1984 until
December 1992, and Secretary of Westpeak and Draycott and the Treasurer of Nvest
Corporation. Lorraine C. Hysler has been Secretary of RTAM since July 1994,
Assistant Secretary of NEIC since September 1993, Vice President of the Mutual
Funds Group of NEICLP from September 1993 until July 1994, and Vice President of
Reich & Tang Mutual Funds since July 1994. Ms. Hysler joined Reich & Tang, Inc.
in May 1977 and served as Secretary from April 1987 until September 1993.
Richard E. Smith, III has been a Director of RTAM since July 1994, President and
Chief Operating Officer of the Capital Management Group of NEICLP from May 1994
until July 1994, President and Director of RTAM since July 1994, President and
Chief Operating Officer of the Chief Operating Officer of the Reich & Tang
Capital Management Group since July 1994, Executive Vice President and Director
of Rhode Island Hospital Trust from March 1993 to May 1994, President, Chief
Executive Officer and Director of USF&G Review Management Corp. from January
1988 until September 1992. Steven W. Duff has been a Director of RTAM since
October 1994, President and Chief Executive Officer of Reich & Tang Mutual Funds
since August 1994, Senior Vice President of NationsBank from June 1981 until
August 1994, Mr. Duff is President and a Director of Back Bay Funds, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pax World Money Market Fund, Inc., Short Term Income Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc., President and Trustee of
Institutional Daily Municipal Income Fund, Pennsylvania Daily Municipal Income
Fund, President and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.,
and Executive Vice President of Reich & Tang Equity Fund, Inc. Bernadette N.
Finn has been Vice President/Compliance of RTAM since July 1994, Vice President
of Mutual Funds Division of NEICLP from September 1993 until July 1994, Vice
President of Reich & Tang Mutual Funds since July 1994. Ms. Finn joined Reich &
Tang, Inc. in September 1970 and served as Vice President from September 1982
until May 1987 and as Vice President and Assistant Secretary from May 1987 until
September 1993. Ms. Finn is also Secretary ofBack Bay Funds, Inc., California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Cortland Trust, Inc., Delafield Fund, Inc., Daily Tax Free Income Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Funds,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Tax Exempt
Proceeds Fund, Inc. and Virginia Daily Municipal Income Fund, Inc., a Vice
President and Secretary of Reich & Tang Equity Fund, Inc., and Short Term Income
Fund, Inc. Richard De Sanctis has been Treasurer of RTAM since July 1994,
Assistant Treasurer of NEIC since September 1993 and Treasurer of the Mutual
Funds Group of NEICLP from September 1993 until July 1994, Treasurer of the
Reich & Tang Mutual Funds since July 1994. Mr. De Sanctis joined Reich & Tang,
Inc. in December 1990 and served as Controller of Reich & Tang, Inc., from
January 1991 to September 1993. . Mr. De Sanctis is also Treasurer ofBack Bay
Funds, Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Reich & Tang
Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc.
and Virginia Daily Municipal Income Fund, Inc. and is Vice President and
Treasurer of Cortland Trust, Inc. Richard I. Weiner has been Vice President of
RTAM since July 1994, has been Vice President of NEIC since September 1993, Vice
President of the Capital Management Group of NEIC from September 1993 until July
1994, Vice President of Reich & Tang Asset Management L.P. Capital Management
Group since July 1994. Mr. Weiner joined Reich & Tang, Inc. in August 1970 and
has served as a Vice President since September 1982. Rosanne Holtzer has been
Vice President of the Mutual Funds division of the Manager since December 1997.

C-4
<PAGE>

Ms. Holtzer was formerly Manager of Fund Accounting for the Manager with which
she was associated with from June 1986, in addition she is also Assistant
Treasurer of Back Bay Funds, Inc., California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, Institutional Daily
Income Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Short
Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc. and is Vice President and Assistant Treasurer of
Cortland Trust, Inc.

Item 29. Principal Underwriters.

(a) Reich & Tang Distributors, Inc., the Registrant's distributor, is
also distributor for Back Bay Funds, Inc., California 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., Pax World Money Market Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc., Short
Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia Daily
Municipal Income Fund, Inc.

(b) The following are the directors and officers of Reich & Tang
Distributors, Inc.. The principal business address of Messrs. Voss, Ryland, and
Wadsworth is 399 Boylston Street, Boston, Massachusetts 02116. For all other
persons, the principal business address is 600 Fifth Avenue, New York, New York
10020.

Positions and Offices
With the General Partner Positions and Offices
Name of the Distributor With Registrant

Peter S. Voss Director None
G. Neal Ryland Director None
Edward N. Wadsworth Executive Officer None
Richard E. Smith III President and Director Chairman
Steven W. Duff Director Executive Vice President
Bernadette N. Finn Vice President Secretary
Robert F. Hoerle Managing Director None
Lorraine C. Hysler Secretary None
Richard De Sanctis Treasurer Treasurer
Richard I. Weiner Vice President None
Rosanne Holtzer Vice President Assistant Treasurer

Item 30. Location of Accounts and Records.

Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of the Registrant; at Reich
& Tang Asset Management L.P., 600 Fifth Avenue, New York, New York 10020, the
Registrant's manager at Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, Missouri 64105, the Registrant's custodian; and at Reich & Tang
Services, Inc., 600 Fifth Avenue, New York, New York 10020, the Registrant's
transfer agent and dividend disbursing agent.

C-5

<PAGE>

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

(a) Not applicable.

(b) Not applicable.

C-6

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and State of New York, on the 29th day of May, 1998.

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

By: /s/ Steven W. Duff
Steven W. Duff
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on May 29, 1998.

SIGNATURE TITLE

(1) Principal Executive
Officer

/s/Steven W. Duff President and Director
Steven W. Duff

(2) Principal Financial and
Accounting Officer

/s/Richard De Sanctis Treasurer
Richard De Sanctis

(3) Majority of Directors

/s/Steven W. Duff
Steven W. Duff Director

Dr. W. Giles Mellon (Director)
Dr. Yung Wong (Director)
Robert Straniere (Director)

By: /s/Bernadette N. Finn
Bernadette N. Finn
Attorney-in-Fact*
- --------------------

* Executed copies of the Power of Attorney dated May 13, 1985 are refiled
herewith for Edgar purposes only.

ARTICLES OF INCORPORATION

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

FIRST: (1) The name of the incorporator is Nancy J. Esh.

(2) The incorporator's post office address is 280 Park Avenue, New York,
New York 10017.

(3) The incorporator is over eighteen years of age.

(4) The incorporator is forming the corporation named in these Articles of
Incorporation under the General Corporation Law of the State of Maryland.

SECOND: The name of the corporation (hereinafter called the "Corporation")
is Connecticut Daily Tax Free Income Fund, Inc.

THIRD: The purposes for which the Corporation is formed are:

(a) to conduct, operate and carry on the business of an
investment company;

(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise dispose of notes, bills, bonds, debentures and
other negotiable or non-negotiable instruments, obligations and
evidences of indebtedness issued or guaranteed as to principal and
interest by the United States Government, or any agency or
instrumentality thereof, any State or local government, or any agency
or instrumentality thereof, or any other securities of any kind issued
by any corporation or other issuer organized under the laws of the
United States or any State, territory or possession thereof or any
foreign country or any subdivision thereof or otherwise, to pay for
the same in cash or by the issue of stock, including treasury stock,
bonds and notes of the Corporation or otherwise; and to exercise any
and all rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including and without limitation, the right to consent and otherwise
act with respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said rights,
powers and privileges in respect of any said investments;

(c) to conduct research and investigations in respect of
securities, organizations, business and general business and financial
conditions in

<PAGE>

the United States of America and elsewhere for the purpose of
obtaining information pertinent to the investment and employment of
the assets of the Corporation and to procure any and all of the
foregoing to be done by others as independent contractors and to pay
compensation therefore;

(d) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the
assets of the Corporation, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any other
person, firm, association or corporation;

(e) to issue, sell, distribute, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, shares of stock of the Corporation, including
shares of stock of the Corporation in fractional denominations, and to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of shares of stock of the Corporation, any funds or
property of the Corporation, whether capital or surplus or otherwise,
to the full extent now or hereafter permitted by the laws of the State
of Maryland and by these Articles of Incorporation;

(f) to conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices
both within and without the State of Maryland, in any and all States
of the United States of America, in the District of Columbia, and in
any or all commonwealths, territories, dependencies, colonies,
possessions, agencies, or instrumentalities of the United States of
America and of foreign governments;

(g) to carry out all or any part of the foregoing purposes or
objects as principal or agent, or in conjunction with any other
person, firm, association, corporation or other entity, or as a
partner or member of a partnership, syndicate or joint venture or
otherwise, and in any part of the world to the same extent and as
fully as natural persons might or could do;

(h) to have and exercise all of the powers and privileges
conferred by the laws of the State of Maryland upon corporations
formed under the laws of such State; and

(i) to do any and all such further acts and things and to
exercise any and all such further powers and privileges as may be
necessary, incidental, relative, conducive, appropriate or desirable
for the foregoing purposes.

The enumeration herein of the objects and purposes of the Corporation shall
be construed as powers as well as objects and purposes and shall not be deemed
to exclude by
<PAGE>

inference any powers, objects or purposes which the Corporation is empowered to
exercise, whether expressly by force of the laws of the State of Maryland now or
hereafter in effect, or impliedly, by the reasonable construction of the said
law.

FOURTH: The post office address of the principal office of the Corporation
within the State of Maryland is 1300 Mercantile Bank & Trust Building, 2 Hopkins
Plaza, Baltimore, Maryland 21201.

The resident agent of the Corporation in the State of Maryland is United
States Corporation Company, at 1300 Mercantile Bank & Trust Building, 2 Hopkins
Plaza, Baltimore, Maryland 21201.

FIFTH: (1) The total number of shares of stock of all classes which the
Corporation shall have authority to issue is twenty billion (20,000,000,000),
all of which stock shall have at par value of One Tenth of One Cent ($.001) per
share. The aggregate par value of all authorized shares of stock of the
Corporation is Twenty Million Dollars ($20,000,000).

(2) (a) The Board of Directors of the Corporation is authorized to
classify or to reclassify, from time to time, any unissued shares of stock of
the Corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preference, conversion or other rights, voting powers,
restrictions, limitations as to dividends, and qualifications or terms and
conditions of or rights to require redemption of the stock and, pursuant to such
classification or reclassification, to increase or decrease the number of
authorized shares of any class, but the number of shares of any class shall not
be reduced by the Board of Directors below the number of shares thereof then
outstanding.

(b) Without limiting the generality of the foregoing the
dividends and distributions of investment income and capital gains with respect
to the stock of the Corporation, and with respect to each class that hereafter
may be created, shall be in such amount as may be declared from time to time by
the Board of Directors, and such dividends and distributions may vary from class
to class to such extent and for such purposes as the Board of Directors may deem
appropriate, including but not limited to, the purpose by complying with
requirements of regulatory or legislative authorities.

(3) Until such time as the Board of Directors shall provide
otherwise in accordance with section (2) of this Article FIFTH, all of the
authorized shares of stock of the Corporation are designated as Common Stock.
Such shares and the holders thereof shall be subject to the following
provisions.

(a) As more fully set forth hereafter, the assets and liabilities
and the income and expenses of each class of the Corporation's stock shall be
determined separately and, accordingly, the net asset value, the dividends
payable to holders, and the amounts distributable in the event of dissolution of
the Corporation to holders of shares of the Corporation's stock may vary from
class to class. Except for these differences and certain other
<PAGE>

differences hereafter set forth, each class of the Corporation's stock shall
have the same preference, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of and rights to require redemption.

(b) All consideration received by the Corporation for the issue
or sale of shares of a class of the Corporation's stock, together with all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" that class.

(c) The assets belonging to a class of the Corporation's stock
shall be charged with the liabilities of the Corporation with respect to that
class and with that class' share of the liabilities of the Corporation not
attributable to any particular class, in the latter case in the proportion that
the net asset value of that class bears to the net asset value of all classes of
the Corporation's stock as determined in accordance with Article NINTH of these
Articles of Incorporation. The determination of the Board of Directors shall be
conclusive as to the allocation of liabilities, including accrued expenses and
reserves, and assets to a particular class or classes.

(d) Each holder of stock of the Corporation, upon request to the
Corporation (accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer, if any certificates have been issued
to represent such shares) shall be entitled to require the Corporation to
redeem, to the extent that the Corporation may lawfully effect such redemption
under the laws of the State of Maryland, all or any part of the shares of stock
standing in the name of such holder on the books of the Corporation at a price
per share equal to the net asset value per share computed in accordance with
Article NINTH hereof.

(e) (i) The term "Minimum Amount" when used herein shall mean One
Thousand Dollars ($1,000) unless otherwise fixed by the Board of Directors from
time to time, provided that the Minimum Amount may not in any event exceed
Twenty-Five Thousand Dollars ($25,000). The Board of Directors may establish
differing Minimum Amounts for each class of the Corporation's stock and for
holders of shares of each class of stock based on such criteria as the Board of
Directors may deem appropriate.

(ii) If the net asset value of the shares of a class of the
Corporation's stock held by a stockholder shall be less than the Minimum Amount
then in effect with respect to shares of that class or with respect to shares of
that class held by the stockholders in the same category as that stockholder,
the Corporation may redeem all of those shares, upon
<PAGE>

notice given in accordance with paragraph (iv) of this subsection (e), to the
extent that the Corporation may lawfully effect such redemption under the laws
of the State of Maryland.

(iii) The Corporation shall be entitled but not required to
redeem shares of stock from any stockholder or stockholders, to the extent and
at such times as the Board of Directors shall, in its absolute discretion,
determine to be necessary or advisable to prevent the Corporation from
qualifying as a "personal holding company", within the meaning of the Internal
Revenue Code of 1954, as amended from time to time. Notice shall be given in
accordance with paragraph (iv) of this subsection (e).

(iv) The notice referred to in paragraphs (ii) and (iii) of this
subsection (e) shall be in writing personally delivered or deposited in the
mail, at least thirty days (or such other number of days as may be specified
from time to time by the Board of Directors) prior to such redemption. If
mailed, the notice shall be addressed to the stockholder at his post office
address as shown on the books of the Corporation, and sent by certified or
registered mail, postage prepaid. The price for shares acquired by the
Corporation pursuant to this subsection (e) shall be an amount equal to the net
asset value of such shares, computed in accordance with Article NINTH hereof.

(f) Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by the Corporation
within seven business days of such surrender out of the funds legally available
therefore, provided that the Corporation may suspend the right of the holders of
stock of the Corporation to redeem shares of stock and may postpone the right of
such holders to receive payment for any shares when permitted or required to do
so by applicable statutes or regulations. Payment of the aggregate such price
may be made in cash or, at the option of the Corporation, wholly or partly in
such portfolio securities of the Corporation as the Corporation shall select.

(g) The right of any holder of stock of the Corporation redeemed
by the Corporation as provided in subsections (d) or (e) of this section 3 to
receive dividends thereon and all other rights of such holder with respect to
such shares shall terminate at the time as of which the purchase or redemption
price of such shares is determined, except the right of such holder to receive
(i) the redemption price of such shares from the Corporation or its designated
agent and (ii) any dividend or distribution to which such holder has previously
become entitled as the record holder of such shares on the record date for such
dividend or distribution. If shares of stock are redeemed by the Corporation
pursuant to subsection (e) of this section (3) and certificates representing the
redeemed shares have been issued, the redemption price need not be paid by the
Corporation until the certificates have been received by the Corporation or its
agent duly endorsed for transfer.

(h) The Corporation shall be entitled to purchase shares of its
stock, to the extent that the Corporation may lawfully effect such purchase
under the laws of the State of Maryland, upon such terms and conditions and for
such consideration as the Board of
<PAGE>

Directors shall deem advisable, by agreement with the stockholder at a price not
exceeding the net asset value per share computed in accordance with Article
NINTH hereof.

(i) The net asset value of each share of a class of the
Corporation's stock issued and sold or redeemed or purchased at net asset value
shall be the net asset value per share of the shares of that class determined in
accordance with Article NINTH hereof based on the assets belonging to that class
less the liabilities charged to that class.

(j) In the absence of any specification as to the purpose for
which shares of stock of the Corporation are redeemed or purchased by it, all
shares so redeemed or purchased shall be deemed to be retired in the sense
contemplated by the laws of the State of Maryland and the number of the
authorized shares of stock of the Corporation shall not be reduced by the number
of any shares redeemed or purchased by it.

(k) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or in cash or both, as may be declared from
time to time by the Board of Directors, acting in its sole discretion, with
respect to such class, provided that dividends or distributions shall be paid on
shares of a class of stock only out of lawfully available assets belonging to
that class.

(l) For the purpose of allowing the net asset value per share of
class of the Corporation's stock to remain constant, the Corporation shall be
entitled to declare, pay and credit as dividends daily the net income (which may
include or give effect to realized and unrealized gains and losses, as
determined in accordance with the Corporation's accounting and portfolio
valuation policies) of the Corporation allocated to that class. If the amount so
determined for any day is negative, the Corporation shall be entitled, without
the payment of monetary compensation but in consideration of the interest of the
Corporation and its stockholders in maintaining a constant net asset value per
share of the class, to redeem pro rata from all the stockholders of record of
shares of the class at the time of such redemption (in proportion to their
respective holdings thereof) such number of outstanding shares of the class, or
fractions thereof, as shall be required to permit the net asset value per share
of the class to remain constant.

(m) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a class of the Corporation's stock shall be
entitled to receive, as a class, out of the assets of the Corporation available
for distribution to stockholders, the assets belonging to that class. The assets
so distributable to the stockholders of a class shall be distributed among such
stockholders in proportion to the number of shares of that class held by them
and recorded on the books of the Corporation. In the event that there are any
assets available for distribution that are not attributable to any particular
class of stock, such assets shall be allocated to all classes in proportion to
the net asset value of the respective classes and then distributed to the
holders of stock of each class in proportion to the net asset value of the
shares of that class held by the respective holders.
<PAGE>

(n) On each matter submitted to a vote of the stockholders, each
holder of a share of stock shall be entitled to one vote for each such share
standing in his name on the books of the Corporation irrespective of the class
thereof; provided, however, that to the extent class voting is required by the
Investment Company Act of 1940 or regulations thereunder, as from time to time
amended, or the laws of the State of Maryland as to any such matter, those
requirements shall apply.

(o) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole shares, including without
limitation, the right to vote, the right to receive dividends and distributions,
and the right to participate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing fractional shares.

(4) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any and all of
the shares of stock of the Corporation, whether now or hereafter authorized, may
be issued, or may be reissued or transferred if the same have been reacquired
and have treasury status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine, without first
offering same, or any thereof, to any said holder.

(5) All persons who shall acquire stock or other securities of
the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.

SIXTH: The number of directors of the Corporation, until such number shall
be increased pursuant to the By-Laws of the Corporation, shall be three. The
number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The names of the persons who shall act as directors of the Corporation
until the first annual meeting or until their successors are duly chosen and
qualify are Joseph H. Reich, Oscar L. Tang and William Berkowitz.

SEVENTH: The following provisions are inserted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the Board of
Directors and stockholders.

(a) The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors which shall have and may exercise
all powers of the Corporation except those powers which are by law, by these
Articles of Incorporation or by the By-Laws conferred upon or reserved to the
stockholders. In furtherance and not in limitation of the powers conferred by
law, the Board of Directors shall have power:
<PAGE>

(i) to make, alter and repeal the By-Laws of the Corporation;

(ii) to issue and sell, from time to time, shares of any class of
the Corporation's stock in such amounts and on such terms and conditions, and
for such amount and kind of consideration, as the Board of Directors shall
determine, provided that the consideration per share to be received by the
Corporation shall be not less than the greater of the net asset value per share
of that class of stock at such time computed in accordance with Article NINTH
hereof or the par value thereof;

(iii) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves for working
capital or for any other proper purpose or purposes, and to reduce, abolish or
add to any such reserve or reserves from time to time as said Board of Directors
may deem to be in the best interests of the Corporation; and to determine in its
discretion what part of the assets of the Corporation available for dividends in
excess of such reserve or reserves shall be declared in dividends and paid to
the stockholders of the Corporation; and

(iv) from time to time to determine to what extent and at what
times and places and under what conditions and regulations the accounts, books
and records of the Corporation, or any of them, shall be open to the inspection
of the stockholders; and no stockholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred by the laws
of the State of Maryland, unless and until authorized to do so by resolution of
the Board of Directors or of the stockholders of the Corporation.

(b) Notwithstanding any provision of the General Corporation Law
of the State of Maryland requiring a greater proportion than a majority of the
votes of all classes or of any class of the Corporation's stock entitled to be
cast in order to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate number of votes
entitled to be cast thereon subject to any applicable requirements of the
Investment Company Act of 1940, as from time to time in effect, or rules or
orders of the Securities and Exchange Commission or any successor thereto.

(c) Except as may otherwise be expressly provided by applicable
statutes or regulatory requirements, the presence in person or by proxy of the
holders of one-third of the shares of stock of the Corporation entitled to vote
shall constitute a quorum at any meeting of the stockholders.

(d) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or changes set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or dis-
<PAGE>

charged or shall by then or thereafter required to be paid or discharged), as to
the value of or the method of valuing any investment owned or held by the
Corporation, as to the market value or fair value of any investment or fair
value of any other asset of the Corporation, as to the allocation of any asset
of the Corporation to a particular class or classes of the Corporation's stock,
as to the charging of any liability of the Corporation to a particular class or
classes of the Corporation's stock, as to the number of shares of the
Corporation outstanding, as to the estimated expense to the Corporation in
connection with purchases of its shares, as to the ability to liquidate
investments in orderly fashion, or as to any other matters relating to the
issue, sale, purchase and/or other acquisition or disposition of investments or
shares of the Corporation, shall be final and conclusive and shall be binding
upon the Corporation and all holders of its shares, past, present and future,
and shares of the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be binding as
aforesaid.

(e) Except to the extent prohibited by the Investment Company Act
of 1940, as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, officer or employee of the Corporation
shall not be disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the Corporation be void or
voidable by reason of the fact that any director, officer or employee or any
firm of which any director, officer or employee is a member or any corporation
of which any director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or contract; provided
that in case a director, or a firm or corporation of which a director is a
member, stockholder, officer or director, is so interested, such fact shall be
disclosed to or shall have been known by the Board of Directors or a majority
thereof; and any director of the Corporation who is so interested, or who is a
member, stockholder, officer or director of such firm or corporation, may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such transaction or
contract, with like force and effect as if he were not such director, or member,
stockholder, officer or director of such firm or corporation.

(f) Specifically and without limitation of the foregoing
subsection (e) but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution and
administration contracts and other contracts, and may otherwise do business,
with Reich & Tang, Inc., and any parent, subsidiary or affiliate of such firm or
any affiliates of any such affiliate, or the stockholders, directors, officers
and employees thereof, and may deal freely with one another notwithstanding that
the Board of Directors of the Corporation may be composed in part of directors,
officers or employees of such firm and/or its parents, subsidiaries or
affiliates and that officers of the Corporation may have been, be or become
directors, officers, or employees of such firm, and/or its parents, subsidiaries
or affiliates, and neither such management or advisory, underwriting,
distribution or administration contracts nor any other contract or transaction
between the Corporation and such firm and/or its parents, subsidiaries or
affiliates shall be invalidated or in any way affected thereby, nor shall any
director or officer of the Corporation be liable to the Corporation or to any
<PAGE>

stockholder or creditor thereof or to any person for any loss incurred by it or
him under or by reason of such contract or transaction; provided that nothing
herein shall protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office; and provided always that such contract or transaction shall have been on
terms that were not unfair to the Corporation at the time at which it was
entered into.

EIGHTH: Subject to the requirements of the Investment Company Act of 1940
and rules promulgated thereunder, as from time to time amended, to the maximum
extent permitted by the General Corporation Law of the State of Maryland as from
time to time amended, the Corporation shall indemnify its currently acting and
its former directors and officers and those persons who, at the request of the
Corporation, serve or have served another corporation, partnership, joint
venture, trust or other enterprise in one or more of such capacities.

NINTH: For the purpose of the computation of net asset value referred to in
these Articles of Incorporation, the following rules shall apply:

(a) The net asset value of each share of a class of the
Corporation's stock issued or sold at its net asset value shall be the net asset
value per share of that class when next determined as provided in paragraph (d)
of this Article NINTH following acceptance by the Corporation of the
subscription or other agreement with respect to the issue or sale of such share.

(b) The net asset value of each share of a class of the
Corporation's stock redeemed by the Corporation at the request of its holder
shall be the net asset value per share of that class when next determined as
provided in paragraph (d) of this Article NINTH following the time the
Corporation receives a request for redemption of such share in good order with
all appropriate documentation, including stock certificates, if any, duly
endorsed for transfer.

(c) The net asset value of each share of a class of the
Corporation's stock purchased or redeemed by it otherwise than upon request for
redemption by its holder shall be the net asset value per share of that class of
the Corporation's stock when next determined as provided in paragraph (d) of
this Article NINTH following the Corporation's determination or agreement to
purchase or redeem such share, the expiration of any notice period fulfillment
of any other conditions precedent to such purchase or redemption, or such lower
price per share as may be specified in the agreement, if any, with the
stockholder for the purchase or redemption of his shares.

(d) The net asset value of a share of a class of the
Corporation's stock as at the time of a particular determination shall be the
quotient obtained by dividing the value at such time of the net asset of that
class (i.e., the value of the assets belonging to that class less the
liabilities charged to that class exclusive of capital stock and surplus) by the
total number
<PAGE>

of shares of that class outstanding at such time, all determined and computed as
provided in the Corporation's By-Laws or by or pursuant to the direction of the
Board of Directors.

(e) The Corporation shall determine the net asset value per share
of a class of its stock on such days and at such times as prescribed by the
rules and regulations of the Securities and Exchange Commission or any successor
thereto. The Corporation may also determine such net asset value at other times.

(f) The Corporation may suspend the determination of the net
asset value of a class of its stock during any period when it may suspend the
right of the holders of shares of that class to require the Corporation to
redeem their shares.

TENTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation or in any amendment
hereto in the manner now or hereafter prescribed by the laws of the State of
Maryland, and all rights conferred upon stockholders herein are granted subject
to this reservation.

IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation Law of the State of Maryland and does hereby acknowledge that said
adoption and signing are her act.

/s/Nancy J. Esh, Incorporator
Nancy J. Esh, Incorporator

Dated: March 7, 1985

<PAGE>

ARTICLES OF AMENDMENT
OF
CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

Connecticut Daily Tax Free Income Fund, Inc., a Maryland Corporation
having its principal office in the State of Maryland in the City of Baltimore
(hereinafter called the "Corporation"), the total number of shares of stock of
all classes and series which the Corporation presently has authority to issue is
20,000,000,000 shares of capital stock (par value $.001 per share), amounting in
aggregate par value to $20,000,000, certifies to the Department of Assessments
and Taxation of Maryland that:

FIRST: The charter of the Corporation is hereby amended
as follows:

1. Article FIFTH of the charter of the Corporation is hereby amended by
striking out Article FIFTH and inserting in lieu thereof the following:

Fa) The total number of shares of stock of all classes and
series which the Corporation has authority to issue is
20,000,000,000 shares of capital stock (par value $.001 per
share), amounting in aggregate par value to $20,000,000. All
of such shares are classified as "Common Stock". The Board
of Directors may classify or reclassify any unissued shares
of capital stock (whether or not such shares have been
previously classified or reclassified) from time to time by
setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications,
or terms or conditions of redemption of such shares of
stock.

(a) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act, the
Board of Directors shall have the power and authority, without the approval
of the holders of any outstanding shares, to increase or decrease the
number of shares of capital stock or the number of shares of capital stock
of any class or series that the Corporation has authority to issue.

b) Any series of Common Stock shall be referred to herein individually
as a "Series" and collectively, together with any further series from time
to time established, as the "Series".

c) The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of any
additional
<PAGE>

Series of Common Stock of the Corporation (unless provided otherwise by the
Board of Directors with respect to any such additional Series at the time
it is established and designated):

(i) Asset Belonging to Series. All consideration received by the
Corporation from the issue or sale of shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any investment
or reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of
account of the Corporation. Such consideration, assets, income,
earnings, profits and proceeds, together with any General Items
allocated to that Series as provided in the following sentence, are
herein referred to collectively as "assets belonging to" that Series.
In the event that there are any assets, income, earnings, profits or
proceeds which are not readily identifiable as belonging to any
particular Series (collectively, "General Items"), such General Items
shall be allocated by or under the supervision of the Board of
Directors to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as the
Board of Directors, in its sole discretion, deems fair and equitable;
and any General Items so allocated to a particular Series shall belong
to that Series. Each such allocation by the Board of Directors shall
be conclusive and binding for all purposes.

(ii) Liabilities of Series. The assets belonging to each
particular Series shall be charged with the liabilities of the
Corporation in respect of that Series and all expenses, costs, charges
and reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Corporation which are not
readily identifiable as pertaining to any particular Series, shall be
allocated and charged by or under the supervision of the Board of
Directors to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as the
Board of Directors, in its sole discretion, deems fair and equitable.
The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to collectively as
"liabilities of" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by or under the supervision
<PAGE>

of the Board of Directors shall be conclusive and binding for all
purposes.

(iii) Dividends and Distributions. Dividends and capital gains
distributions on shares of a particular Series may be paid with such
frequency, in such form and in such amount as the Board of Directors
may determine by resolution adopted from time to time, or pursuant to
a standing resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities of that Series. All dividends on shares
of a particular Series shall be paid only out of the income belonging
to that Series and all capital gains distributions on shares of a
particular Series shall be paid only out of the capital gains
belonging to that Series. All dividends and distributions on shares of
a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of shares of that Series held
by such holders at the date and time of record established for the
payment of such dividends or distributions, except that in connection
with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be
payable on shares as to which the stockholder's purchase order and/or
payment have not been received by the time or times established by the
Board of Directors under such program or procedure.

Dividends and distributions may be paid in cash, property or
additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time for
the election by stockholders of the form in which dividends or
distributions are to be paid. Any such dividend or distribution paid
in shares shall be paid at the current net asset value thereof.

(i) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote for
each share standing in his name on the books of the Corporation,
irrespective of the Series thereof, and all shares of all Series shall
vote as a single class ("Single Class Voting"); provided, however,
that (i) as to any matter with respect to which a separate vote of any
Series is required by the Investment Company Act or by the Maryland
General Corporation Law, such requirement as to a separate vote by
that Series shall apply in lieu of Single Class Voting; (ii) in the
event that the separate vote requirement referred to in clause (i)
above applies with respect to one or more Series, then, subject to
clause (iii) below, the shares of all other
<PAGE>

Series shall vote as a single class; and (iii) as to any matter which
does not affect the interest of a particular Series, including
liquidation of another Series as described in subsection (7) below,
only the holders of shares of the one or more affected Series shall be
entitled to vote.

(ii) Redemption by Stockholders. Each holder of shares of a
particular Series shall have the right at such times as may be
permitted by the Corporation to require the Corporation to redeem all
or any part of his shares of that Series, at a redemption price per
share equal to the net asset value per share of that Series next
determined after the shares are properly tendered for redemption, less
such redemption fee or sales charge, if any, as may be established
from time to time by the Board of Directors in its sole discretion.
Payment of the redemption price shall be in cash; provided, however,
that if the Board of Directors determines, which determination shall
be conclusive, that conditions exist which make payment wholly in cash
unwise or undesirable, the Corporation may, to the extent and in the
manner permitted by the Investment Company Act, make payment wholly or
partly in securities or other assets belonging to the Series of which
the shares being redeemed are a part, at the value of such securities
or assets used in such determination of net asset value.

Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation
within such period from surrender as may be required under the
Investment Company Act and the rules and regulations thereunder.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of
shares of any Series to require the Corporation to redeem shares of
that Series during any period or at any time when and to the extent
permissible under the Investment Company Act.

(i) Redemption by Corporation. The Board of Directors may cause
the Corporation to redeem at their net asset value the shares of any
Series held in an account having, because of redemptions or exchanges,
a net asset value on the date of the notice of redemption less than
the Minimum Amount, as defined below, in that Series specified by the
Board of Directors from time to time in its sole discretion, provided
that at least 30 days prior written notice of the proposed redemption
has been given to the holder of any such account by first class mail,
postage prepaid, at the address contained in the books and records of
the Corporation
<PAGE>

and such holder has been given an opportunity to purchase the required
value of additional shares.

(i) the term "Minimum Amount" when used herein shall mean One
Thousand Dollars ($1,000) unless otherwise fixed by the Board of
Directors from time to time, provided that the Minimum Amount may not
in any event exceed Twenty-Five Thousand Dollars ($25,000). The Board
of Directors may establish differing Minimum Amounts for each class
and series of the Corporation's stock and for holders of shares of
each such class and series of stock based on such criteria as the
Board of Directors may deem appropriate.

(ii) the Corporation shall be entitled but not required to redeem
shares of stock from any stockholder or stockholders, as provided in
this subsection (6), to the extent and at such times as the Board of
Directors shall, in its absolute discretion, determine to be necessary
or advisable to prevent the Corporation from qualifying as a "personal
holding company", within the meaning of the Internal Revenue Code of
1986, as amended from time to time.

(i) Liquidation. In the event of the liquidation of a particular
Series, the stockholders of the Series that is being liquidated shall
be entitled to receive, as a class, when and as declared by the Board
of Directors, the excess of the assets belonging to that Series over
the liabilities of that Series. The holders of shares of any
particular Series shall not be entitled thereby to any distribution
upon liquidation of any other Series. The assets so distributable to
the stockholders of any particular Series shall be distributed among
such stockholders in proportion to the number of shares of that Series
held by them and recorded on the books of the Corporation. The
liquidation of any particular Series in which there are shares then
outstanding may be authorized by vote of a majority of the Board of
Directors then in office, subject to the approval of a majority of the
outstanding voting securities of that Series, as defined in the
Investment Company Act, and without the vote of the holders of shares
of any other Series. The liquidation of a particular Series may be
accomplished, in whole or in part, by the transfer of assets of such
Series to another Series or by the exchange of shares of Series for
the shares of another Series.

(ii) Net Asset Value Per Share. The net asset value per share of
any Series shall be the quotient obtained by dividing the value of the
net assets of that Series (being the value of the assets belonging to
that Series less the liabilities of that Series) by the total number
of shares of that Series outstanding, all
<PAGE>

as determined by or under the direction of the Board of Directors in
accordance with generally accepted accounting principles and the
Investment Company Act. Subject to the applicable provisions of the
Investment Company Act, the Board of Directors, in its sole
discretion, may prescribe and shall set forth in the By-Laws of the
Corporation or in a duly adopted resolution of the Board of Directors
such bases and times for determining the value of the assets belonging
to, and the net asset value per share of outstanding shares of, each
Series, or the net income attributable to such shares, as the Board of
Directors deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Maryland
General Corporation Law and the Investment Company Act, to determine
which item shall be treated as income and which items as capital and
whether any item of expense shall be charged to income or capital.
Each such determination and allocation shall be conclusive and binding
for all purposes.

The Board of Directors may determine to maintain the net asset
value per share of any Series at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with
the Investment Company Act for the continuing declaration of income
attributable to that Series as dividends and for the handling of any
losses attributable to that Series. Such procedures may provide that
in the event of any loss, each stockholder shall be deemed to have
contributed to the capital of the Corporation attributable to that
Series his pro rata portion of the total number of shares required to
be canceled in order to permit the net asset value per share of that
Series to be maintained, after reflecting such loss, at the designated
constant dollar amount. Each stockholder of the Corporation shall be
deemed to have agreed, by his investment in any Series with respect to
which the Board of Directors shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the
event of any such loss.

(i) Equality. All shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities of that Series), and each
share of any particular Series shall be equal to each other share of
that Series. The Board of Directors may from time to time divide or
combine the shares of any particular Series into a greater or lesser
number of shares of that Series without thereby changing the
proportionate interest in the assets belonging to that Series or in
any way affecting the rights of holders of shares of any other Series.

<PAGE>

(ii) Conversion or Exchange Rights. Subject to compliance with
the requirements of the Investment Company Act, the Board of Directors
shall have the authority to provide that holders of shares of any
Series shall have the right to convert or exchange said shares into
shares of one or more other Series of shares in accordance with such
requirements and procedures as may be established by the Board of
Directors.

b) The Board of Directors may, from time to time and without
stockholder action, classify shares of a particular Series into one or more
additional classes of that Series, the voting, dividend, liquidation and
other rights of which shall differ from the classes of common stock of that
Series to the extent provided in Articles Supplementary for such additional
class, such Articles to be filed for record with the appropriate
authorities of the State of Maryland. Each class so created shall consist,
until further changed, of the lesser of (x) the number of shares classified
in Section (c) of this Article FIFTH or (y) the number of shares that could
be issued by issuing all of the shares of that Series currently or
hereafter classified less the total number of shares of all classes of such
Series then issued and outstanding. Any class of a Series of Common Stock
shall be referred to herein individually as a "Class" and collectively,
together with any further class or classes of such Series from time to time
established, as the "Classes".

c) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other
shares of Common Stock of that Series; provided, however, that
notwithstanding anything in the charter of the Corporation to the contrary:

(i) Any class of shares may be subject to such sales loads,
contingent deferred sales charges, Rule 12b-1 fees, administrative
fees, service fees, or other fees, however designated, in such amounts
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act.

(ii) Expenses related solely to a particular Class of a Series
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated)
shall be borne by that Class and shall be appropriately reflected (in
the manner determined by the Board of Directors) in the net asset
value, dividends, distributions and liquidation rights of the shares
of that Class.
<PAGE>

(iii) As to any matter with respect to which a separate vote of
any Class of a Series is required by the Investment Company Act or by
the Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (2) above), such requirement as to a separate vote by that
Class shall apply in lieu of Single Class Voting, and if permitted by
the Investment Company Act or the Maryland General Corporation Law,
the Classes of more than one Series shall vote together as a single
class on any such matter which shall have the same effect on each such
Class. As to any matter which does not affect the interest of a
particular Class of a Series, only the holders of shares of the
affected Classes of that Series shall be entitled to vote.

d) The Corporation may issue and sell fractions of shares of capital
stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the
words "share" or "shares" are used in the charter or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.

e) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.

f) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any
such shares which the Corporation shall issue or propose to issue; and any
and all of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same
have been reacquired and have treasury status, by the Board of Directors to
such persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said
holder.

(j) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended."

2. Article SEVENTH subsection (a)(ii) of the charter of the Corporation is
hereby amended by striking out the language on line two which states "of any
class of the Corporation's stock" and inserting in lieu thereof the following:
<PAGE>

"of any class or series of the Corporation's stock"

3. Article SEVENTH subsection (a)(ii) of the charter of the Coporation is
hereby amended by changing the reference to Article NINTH in line eight to
Article FIFTH.

4. The charter of the Corporation is hereby amended by striking out Article
EIGHTH and inserting in lieu thereof the following:

E1) The Corporation shall indemnify (i) its currently acting and former
directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted
by the General Laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures and to
the fullest extent permitted by law, and (ii) other employees and
agents to such extent as shall be authorized by the Board of Directors
or the By-Laws and as permitted by law. Nothing contained herein shall
be construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the charter
of the Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect
to acts or omissions occurring prior to such amendment or repeal.

(1) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company
Act, no director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money damages;
provided, however, that nothing herein shall be construed to protect
any director or officer of the Corporation against any liability to
the Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his
office. No amendment of the charter of the Corporation or repeal of
any of its provisions shall limit or eliminate the limitation of
<PAGE>

liability provided to directors and officers hereunder with respect to
any act or omission occurring prior to such amendment or repeal."

5. The charter of the Corporation is hereby amended by striking out
Article NINTH (as the language therein is already contained in new Article
FIFTH of these Articles of Amendment).

SECOND: The amendments of the charter of the Corporation as herein set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation.

IN WITNESS WHEREOF, Connecticut Daily Tax Free Income Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its
President or one of its Vice Presidents and attested by its Secretary or
one of its Assistant Secretaries, on December , 1993. CONNECTICUT DAILY TAX
FREE INCOME FUND, INC.

By: /s/William Berkowitz
William Berkowitz
President
Attest:

/s/Bernadette N. Finn
Bernadette N. Finn
Secretary

<PAGE>

THE UNDERSIGNED, President of CONNECTICUT DAILY TAX FREE INCOME FUND,
INC., who executed on behalf of said corporation, the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Amendment to
be the corporate act of said corporation and further certifies that, to the best
of his knowledge, information, and in all material respects, under the penalties
of perjury.

CONNECTICUT DAILY TAX FREE INCOME
FUND, INC.

By: /s/William Berkowitz
William Berkowitz
President

BY-LAWS

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.

a Maryland corporation

ARTICLE I

Offices

Section 1. Principal Office in Maryland. The Corporation shall have a
principal office in the City of Baltimore, State of Maryland.

Section 2. Other Offices. The Corporation may have offices also at such
other places within and without the State of Maryland as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.

ARTICLE II

Meetings of Stockholders

Section 1. Place of Meeting. Meetings of stockholders shall be held at such
place, either within the State of Maryland or at such other place within the
United States, as shall be fixed from time to time by the Board of Directors.

Section 2. Annual Meetings. Annual meetings of stockholders shall be held
on a date fixed from time to time by the Board of Directors not less than ninety
nor more than one hundred twenty days following the end of each fiscal year of
the Corporation, for the election of directors and the transaction of any other
business within the powers of the Corporation.

Section 3. Notice of Annual Meeting. Written or printed notice of an annual
meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than ninety days
before the date of the meeting.

Section 4. Special Meetings. Special meetings of stockholders may be called
by the chairman, the president or by the Board of Directors and shall be called
by the secretary upon the written request of holders of shares entitled to cast
not less than twenty-five percent of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on
<PAGE>

thereat. In the case of such request for a special meeting, upon payment by such
stockholders to the Corporation of the estimated reasonable cost of preparing
and mailing a notice of such meeting, the secretary shall give the notice of
such meeting. The secretary shall not be required to call a special meeting to
consider any matter which is substantially the same as a matter acted upon at
any special meeting of stockholders held within the preceding twelve months
unless requested to do so by the holders of shares entitled to cast not less
than a majority of all votes entitled to be cast at such meeting.

Section 5. Notice of Special Meeting. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.

Section 6. Business of Special Meetings. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice
thereof.

Section 7. Quorum. Except as may otherwise be expressly provided by
applicable statutes or regulations, the holders of one-third of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business.

Section 8. Voting. When a quorum is present at any meeting, the affirmative
vote of a majority of the votes cast shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
Investment Company Act of 1940, as from time to time in effect, or other
statutes or rules or orders of the Securities and Exchange Commission or any
successor thereto or of the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.

Section 9. Proxies. Each stockholder shall at every meeting of stockholders
be entitled to one vote in person or by proxy for each share of the stock having
voting power held by such stockholder, but no proxy shall be voted after eleven
months from its date, unless otherwise provided in the proxy.

Section 10. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise
<PAGE>

any rights in respect of any change, conversion or exchange of stock or for
the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date which shall be not more than ninety days and, in the case
of a meeting of stockholders, not less than ten days prior to the date on which
the particular action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period, but not to exceed,
in any case, twenty days. If the stock transfer books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) the record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date to the meeting; and (2) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring the dividend or
allotment of rights, is adopted, provided that the payment or allotment date
shall not be more than ninety days after the date of the adoption of such
resolution.

Section 11. Inspectors of Election. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his or her ability. The
inspectors, if any, shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder, the inspector or inspectors, if any, shall make
a report in writing of any
<PAGE>

challenge, question or matter determined by him or her or them and execute a
certificate of any fact found by him or them.

Section 12. Informal Action by Stockholders. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.

ARTICLE III

Board of Directors

Section 1. Number of Directors. The number of directors shall be fixed at
no less than three nor more than twenty. Within the limits specified above, the
number of directors shall be fixed from time to time by the Board of Directors,
but the tenure of office of a director in office at the time of any decrease in
the number of directors shall not be affected as a result thereof. The directors
shall be elected to hold office at the annual meeting of stockholders, except as
provided in Section 2 of this Article, and each director shall hold office until
the next annual meeting of stockholders or until his successor is elected and
qualified. Any director may resign at any time upon written notice to the
Corporation. Any director may be removed, either with or without cause, at any
meeting of stockholders duly called and at which a quorum is present by the
affirmative vote of the majority of the votes entitled to be cast thereon, and
the vacancy in the Board of Directors caused by such removal may be filled by
the stockholders at the time of such removal. Directors need not be
stockholders.

Section 2. Vacancies and Newly Created Directorships. Any vacancy occurring
in the Board of Directors for any cause, including an increase in the number of
directors, may be filled by the stockholders or by a majority of the remaining
members of the Board of Directors even if such majority is less than a quorum.
So long as the Corporation is a registered investment company under the
Investment Company Act of 1940, vacancies in the Board of Directors may be
filled by a majority of the remaining members of the Board of Directors only if,
immediately after filing any such vacancy, at least two-thirds of the directors
then holding office shall have been elected to such
<PAGE>

office at a meeting of stockholders. A director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until the next
annual meeting of stockholders or until his successor is elected and qualifies.

Section 3. Powers. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors which shall exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Articles of Incorporation or by these By-Laws conferred
upon or reserved to the stockholders.

Section 4. Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders and at the place thereof. No notice of such meeting to
the directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not so held,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.

Section 5. Other Meetings. The Board of Directors of the Corporation or any
committee thereof may hold meetings, both regular and special, either within or
without the State of Maryland. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by the chairman, the president or by two or more directors. Notice
of special meetings of the Board of Directors shall be given by the secretary to
each director at least three days before the meeting if by mail or at least 24
hours before the meeting if given in person or by telephone or by telegraph. The
notice need not specify the business to be transacted.

Section 6. Quorum and Voting. At meetings of the Board of Directors, two of
the directors in office at the time, but in no event less than one-third of the
entire Board of Directors, shall constitute a quorum for the transaction of
business. When required pursuant to Section 15(c) under the Investment Company
Act of 1940 or Rule 12b-1 thereunder a quorum shall also require the presence in
person of a majority of directors who are not parties to a contract or agreement
to be voted upon or interested persons of any such party. The action of a
majority of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.

<PAGE>

Section 7. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, appoint from among its members an
executive committee and other committees of the Board of Directors, each
committee to be composed of two or more of the directors of the Corporation. The
Board of Directors may, to the extent provided in the resolution, delegate to
such committees, in the intervals between meetings of the Board of Directors,
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, except the power to declare dividends,
to issue stock, to recommend to stockholders any action requiring stockholders'
approval, to amend the By-Laws or to approve any merger or share exchange which
does not require stockholders' approval. Such committee or committees shall have
the name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Board of Directors designates one or more
directors as alternate members of any committee, who may replace an absent or
disqualified member at any meeting of the committee, the members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a majority of the
members or alternate members of such committee shall constitute a quorum for the
transaction of business and the act of a majority of the members or alternate
members present at any meeting at which a quorum is present shall be the act of
the committee.

Section 8. Minutes of Committee Meetings. The committees shall keep regular
minutes of their proceedings.

Section 9. Informal Action by Board of Directors and Committees. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.

Section 10. Meetings by Conference Telephone. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and such participation shall constitute presence in person at such meeting.
<PAGE>
Section 11. Fees and Expenses. The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.

ARTICLE IV

Notices

Section 1. General. Notices to directors and stockholders mailed to them at
their post office addresses appearing on the books of the Corporation shall be
deemed to be given at the time when deposited in the United States mail.

Section 2. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the statutes, of the Articles of Incorporation or of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
iconstitute a waiver of notice of such meeting except when the person attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.

ARTICLE V

Officers

Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chairman of the Board of Directors, a president, a
secretary and a treasurer. The Board of Directors may also choose such vice
presidents and additional officers or assistant officers as it may deem
advisable. Any number of offices, except the offices of president and vice
president, may be held by the same person. No officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument is
required by law to be executed, acknowledged or verified by two or more
officers.

Section 2. Other Officers and Agents. The Board of Directors may appoint
such other officers and agents as it desires who shall hold their offices for
such terms and shall
<PAGE>

exercise such power and perform such duties as shall be determined from time to
time by the Board of Directors.

Section 3. Tenure of Officers. The officers of the Corporation shall hold
office at the pleasure of the Board of Directors. Each officer shall hold his
office until his successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
may be removed at any time by the Board of Directors when, in its judgment, the
best interests of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise
shall be filled by the Board of Directors.

Section 4. Chairman of the Board of Directors. The chairman of the Board of
Directors shall be the chief executive officer of the Corporation, shall preside
at all meetings of the stockholders and of the Board of Directors, shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute on behalf of the Corporation, and may affix the seal or
cause the seal to be affixed to, all instruments requiring such execution except
to the extent that signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.

Section 5. President. The president shall, in the absence of the chairman
of the Board of Directors, preside at all meetings of the stockholders or of the
Board of Directors. He shall be ex officio a member of all committees designated
by the Board of Directors, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.

Section 6. Vice Presidents. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the power of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the
<PAGE>

president shall descend to the vice presidents in the specified order of
seniority.

Section 7. Secretary. The secretary shall act under the direction of the
president. Subject to the direction of the president, the secretary shall attend
all meetings of the Board of Directors and all meetings of stockholders and
record the proceedings in a book to be kept for that purpose and shall perform
like duties for the committees designated by the Board of Directors when
required. He shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the president or the Board of
Directors. He shall keep in safe custody the seal of the Corporation and shall
affix the seal or cause it to be affixed to any instrument requiring it.

Section 8. Assistant Secretaries. The assistant secretaries in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.

Section 9. Treasurer. The treasurer shall act under the direction of the
president. Subject to the direction of the president he shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the president or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.

Section 10. Assistant Treasurers. The assistant treasurers in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.

<PAGE>
ARTICLE VI

Certificates of Stock

Section 1. General. Every holder of stock of the Corporation who has made
full payment of the consideration for such stock shall be entitled upon request
to have a certificate, signed by, or in the name of the Corporation by, the
president or a vice president and countersigned by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the Corporation,
certifying the number and class of whole shares of stock owned by such holder in
the Corporation.

Section 2. Fractional Share Interests or Scrip. The Corporation may, but
shall not be obliged to, issue fractions of a share of stock, arrange for the
disposition of fractional interests by those entitled thereto, pay in cash the
fair value of fractions of a share of stock as of the time when those entitled
to receive such fractions are determined, or issue scrip or other evidence of
ownership which shall entitle the holder to receive a certificate for a full
share of stock upon the surrender of such scrip or other evidence of ownership
aggregating a full share. Fractional shares of stock shall have proportionately
to the respective fractions represented thereby all the rights of whole shares,
including the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation, excluding,
however, the right to receive a stock certificate representing such fractional
shares. The Board of Directors may cause such scrip or evidence of ownership to
be issued subject to the condition that it shall become void if not exchanged
for certificates representing full shares of stock before a specified date or
subject to the condition that the shares of stock for which such scrip or
evidence of ownership is exchangeable may be sold by the Corporation and the
proceeds thereof distributed to the holders of such scrip or evidence of
ownership, or subject to any other reasonable conditions which the Board of
Director shall deem advisable, including provision for forfeiture of such
proceeds to the Corporation if not claimed within a period of not less than
three years after the date of the original issuance of scrip certificates.

Section 3. Signatures on Certificates. Any of or all the signatures on a
certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the Corporation or
a facsimile thereof may, but need not, be affixed to certificates of stock.

<PAGE>

Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.

Section 5. Transfer of Shares. Upon request by the registered owner of
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.

Section 6. Registered Owners. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including, redemption, voting and dividends,
and the Corporation shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Maryland.

ARTICLE VII

Miscellaneous

Section 1. Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for repairing or maintaining any property of
the Corporation, or for the purchase of additional property, or for such other
purpose as the Board of Directors shall think
<PAGE>

conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve.

Section 2. Dividends. Dividends upon the stock of the Corporation may,
subject to the provisions of the Articles of Incorporation and of the provisions
of applicable law, be declared by the Board of Directors at any time. Dividends
may be paid in cash, in property or in shares of the Corporation's stock,
subject to the provisions of the Articles of Incorporation and of applicable
law.

Section 3. Capital Gains Distributions. The amount and number of capital
gains distributions paid to the stockholders during each fiscal year shall be
determined by the Board of Directors. Each such payment shall be accompanied by
a statement as to the source of such payment, to the extent required by law.

Section 4. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

Section 5. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.

Section 6. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words, "Corporate Seal,
Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.

Section 7. Filing of By-Laws. A certified copy of the By-Laws, including
all amendments, shall be kept at the principal office of the Corporation in the
State of Maryland.

Section 8. Annual Report. The books of account of the Corporation shall be
examined by an independent firm of public accountants at the close of each
annual fiscal period of the Corporation and at such other times, if any, as may
be directed by the Board of Directors of the Corporation. Within one hundred and
twenty days of the close of each annual fiscal period a report based upon such
examination at the close of that fiscal period shall be mailed to each
stockholder of the Corporation of record at the close of such annual fiscal
period, unless the Board of Directors shall set another record date, at his
address as the same appears on the books of the Corporation. Each such report
shall contain such information as is required to be set forth therein by the
Investment Company Act of 1940 and the rules and regulations promulgated by the
Securities and Exchange Commission thereunder. Such report shall also be
submitted at
<PAGE>

the annual meeting of the stockholders and filed within twenty days thereafter
at the principal office of the Corporation in the State of Maryland.

Section 9. Stock Ledger. The Corporation shall maintain at its principal
office outside of the State of Maryland an original or duplicate stock ledger
containing the names and addresses of all stockholders and the number of shares
of stock hold by each stockholder. Such stock ledger may be in written form or
in any other form capable of being converted into written form within a
reasonable time for visual inspection.

Section 10. Ratification of Accountants by Stockholders. At every annual
meeting of the stockholders of the Corporation otherwise called there shall be
submitted for ratification or rejection the name of the firm of independent
public accountants which has been selected for the current fiscal year in which
such annual meeting is held by a majority of those members of the Board of
Directors who are not investment advisers of, or interested person (as defined
in the Investment Company Act of 1940) of an investment adviser of, or officers
or employees of, the Corporation.

Section 11. Custodian. All securities and similar investments owned by the
Corporation shall be held by a custodian which shall be either a trust company
or a national bank of good standing, having a capital surplus and undivided
profits aggregating not less than two million dollars ($2,000,000), or a member
firm of the New York Stock Exchange, Inc. The terms of custody of such
securities and cash shall include such provisions required to be contained
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.

Upon the resignation or inability to serve of any such custodian the
Corporation shall (a) use its best efforts to obtain a successor custodian, (b)
require the cash and securities of the Corporation held by the custodian to be
delivered directly to the successor custodian, and (c) in the event that no
successor custodian can be found, submit to the stockholders of the Corporation,
before permitting delivery of such cash and securities to anyone other than a
successor custodian, the question whether the Corporation shall be dissolved or
shall function without a custodian; provided, however, that nothing herein
contained shall prevent the termination of any agreement between the Corporation
and any such custodian by the affirmative vote of the holders of a majority of
all the stock of the Corporation at the time outstanding and entitled to vote.
Upon its resignation or inability to serve and pending action by the Corporation
as set forth in this section, the custodian may deliver any assets of the
Corporation held by it to a qualified bank or trust company in the City of New
York, or to a member
<PAGE>

firm of the New York Stock Exchange, Inc. selected by it, such assets to be held
subject to the terms of custody which governed such retiring custodian.

Section 12. Investment Advisers. The Corporation may enter into one or more
management or advisory, underwriting, distribution or administration contract
with any person, firm, partnership, association or corporation but such contract
or contracts shall continue in effect only so long as such continuance is
specifically approved annually by a majority of the Board of Directors or by
vote of the holders of a majority of the voting securities of the Corporation,
and in either case by vote of a majority of the directors who are not parties to
such contracts or interested persons (as defined in the Investment Company Act
of 1940) of any such party cast in person at a meeting called for the purpose of
voting on such approval.

ARTICLE VIII

Amendments

The Board of Directors shall have the power, by a majority vote of the
entire Board of Directors at any meeting thereof, to make, alter and repeal
By-Laws of the Corporation.

THIS IS TO CERTIFY THAT _________________________ is the owner of ____________
_____________ fully paid and non-assessable shares of common stock, par value
$.001 per share of Connecticut Daily Tax Free Income Fund, Inc. (herein called
the "Corporation") transferable on the books of the Corporation in person or by
attorney duly authorized in writing upon surrender of this certificate properly
endorsed. The holder hereof by accepting this certificate expressly assents to
and is bound by the Articles of Incorporation, as amended, and the By-Laws, as
amended, of the Corporation, copies of which are available for inspection at the
principal office of the Corporation in the State of Maryland.

THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE REDEEMED BY THE
CORPORATION UPON REQUEST OF THE STOCKHOLDER AS PROVIDED IN THE ARTICLES OF
INCORPORATION OF THE CORPORATION. IN ADDITION, THE ARTICLES OF INCORPORATION
PROVIDE THAT THE CORPORATION, AT ITS OPTION, MAY REDEEM SHARES OF ITS STOCK
UNDER CERTAIN OTHER CIRCUMSTANCES. THE CORPORATION IS AUTHORIZED TO ISSUE TWO
CLASSES OF STOCK, PRIMARY PORTFOLIO COMMON STOCK AND U.S. GOVERNMENT PORTFOLIO
COMMON STOCK. A FULL STATEMENT OF THE DESIGNATION AND ANY PREFERENCES,
CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO
DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF
EACH CLASS MAY BE OBTAINED FROM THE CORPORATION BY ANY STOCKHOLDER UPON REQUEST
AND WITHOUT CHARGE.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated:

----------------------- ------------------------------
Secretary President

EXHIBIT 8

CUSTODY AGREEMENT

THIS AGREEMENT made the 1st day of April, 1994 by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), and The Funds listed in Exhibit A, having
its principal office and place of business at 600 Fifth Avenue; New York, New
York 10020 ("Fund").

WITNESSETH:

WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio; and

WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;

NOW THEREFORE, for an in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:

1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian
of the securities and monies at any time owned by the Fund.

2. REPRESENTATIONS AND WARRANTIES.

A. Fund hereby represents, warrants and acknowledges to Custodian:

1. That it is a corporation or trust (as specified above) duly organized
and existing and in good standing under the laws of its state of
organization, and that it is registered under the Investment Company
Act of 1940 (the "1940 Act"); and

2. That it has the requisite power and authority under applicable law,
its articles of incorporation and its bylaws to enter into this
Agreement; that it has taken all requisite action necessary to appoint
Custodian as custodian for the Fund; that this Agreement has been duly
executed and delivered by Fund; and that this Agreement constitutes a
legal, valid binding obligation of Fund, enforceable in accordance
with its terms.

<PAGE>

B. Custodian hereby represents, warrants and acknowledges to Fund:

1. That it is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri; and

2. That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into and perform this Agreement;
that this Agreement has been duly executed and delivered by Custodian;
and that this Agreement constitutes a legal, valid binding obligation
of Custodian, enforceable in accordance with its terms.

3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.

A. Delivery of Assets

Except as permitted by the 1940 Act, Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or as
soon thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it or
from time to time coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of securities
or monies not so delivered.

B. Delivery of Accounts and Records

Fund shall turn over or cause to be turned over to Custodian all of
the Fund's relevant accounts and records previously maintained.
Custodian shall be entitled to rely conclusively on the completeness
and correctness of the accounts and records turned over to it, and
Fund shall indemnify and hold Custodian harmless of and from any and
all expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of
such accounts and records or in the failure of Fund to provide, or to
provide in a timely manner, any accounts, records or information
needed by the Custodian to perform its functions hereunder.

C. Delivery of Assets to Third Parties

Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time segregated in a separate account,

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and if Fund is comprised of more than one portfolio of investment
securities (each a "Portfolio") Custodian shall keep the assets of
each Portfolio segregated in a separate account. Custodian will not
deliver, assign, pledge or hypothecate any such assets to any person
except as permitted by the provisions of this Agreement or any
agreement executed by it according to the terms of Section 3.S. of
this Agreement. Upon delivery of any such assets to a subcustodian
pursuant to Section 3.S. of this Agreement, Custodian will create and
maintain records identifying those assets which have been delivered to
the subcustodian as belonging to the Fund, by Portfolio if applicable.
The Custodian is responsible for the safekeeping of the securities and
monies of Fund only until they have been transmitted to and received
by other persons as permitted under the terms of this Agreement,
except for securities and monies transmitted to subcustodians
appointed under Section 3.S. of this Agreement, for which Custodian
remains responsible to the extent provided in Section 3.S. hereof.
Custodian may participate directly or indirectly through a
subcustodian in the Depository Trust Company (DTC), Treasury/Federal
Reserve Book Entry System (Fed System), Participant Trust Company
(PTC) or other depository approved by the Fund (as such entities are
defined at 17 CFR Section 270.17f-4(b)) (each a "Depository") and
collectively, the "Depositories").

D. Registration of Securities

The Custodian shall at all times hold registered securities of the
Fund in the name of the Custodian, the Fund, or a nominee of either of
them, unless specifically directed by instructions to hold such
registered securities in so-called "street name", provided that, in
any event, all such securities and other assets shall be held in an
account of the Custodian containing only assets of the Fund, or only
assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian at
all time shall indicate the Fund or other customer for which such
securities and other assets are held in such account and the

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<PAGE>

respective interests therein. If, however, the Fund directs the
Custodian to maintain securities in "street name", notwithstanding
anything contained herein to the contrary, the Custodian shall be
obligated only to utilize its best efforts to timely collect income
due the Fund on such securities and to notify the Fund of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers. All securities, and the
ownership thereof the Fund, which are held by Custodian hereunder,
however, shall at all time be identifiable on the records of the
Custodian. The Fund agrees to hold Custodian and its nominee harmless
for any liability as a shareholder of record of securities held in
custody.

E. Exchange of Securities

Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchange, portfolio securities
held by it for the account of Fund for other securities or cash issued
or paid in connection with any reorganization, recapitalization,
merger, consolidation, split-up of shares, change of par value,
conversion or otherwise, and will deposit any such securities in
accordance with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange securities
held by it in temporary form for securities in definitive form, to
effect an exchange of shares when the par value of the stock is
changed, and, upon receiving payment therefor, to surrender bonds or
other securities held by it at maturity or when advised of earlier
call for redemption, except that Custodian shall receive instructions
prior to surrendering any convertible security.

F. Purchases of Investments of the Fund

Fund will, on each business day on which a purchase of securities
shall be made by it, deliver to custodian instructions which shall
specify with respect to each such purchase.

1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;

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<PAGE>

3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes
and other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer through
whom the purchase was made.
9. Whether the security is to be received in certificated form or
via a specified Depository.

In accordance with such instructions, Custodian will pay for out of
monies held for the account of Fund, but only insofar as such monies
are available for such purpose, and receive the portfolio securities
so purchased by or for the account of Fund, except that Custodian may
in its sole discretion advance funds to the Fund, which may result in
an overdraft because the monies held by the Custodian on behalf of the
Fund are insufficient to pay the total amount payable upon such
purchase. Except as otherwise instructed by Fund, such payment shall
be made by the Custodian only upon receipt of securities: (a) by the
Custodian; (b) by a clearing corporation of a national exchange of
which the Custodian is a member; or (c) by a Depository.
Notwithstanding the foregoing, (i) in the case of a repurchase
agreement, the Custodian may release funds to a Depository prior to
the receipt of advice from the Depository that the securities
underlying such repurchase agreement have been transferred by
book-entry into the account maintained with such Depository by the
Custodian, on behalf of its customers, provided that the Custodian's
instructions to the Depository require that the Depository make
payment of such funds only upon transfer by book-entry of the
securities underlying the repurchase agreement in such amount; (ii) in
the case of time deposits, call account deposits, currency deposits

5
<PAGE>

and other deposits, foreign exchange transactions, futures contracts
or options, the Custodian may make payment therefor before receipt of
an advice or confirmation evidencing said deposit or entry into such
transaction; and (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make, or cause a subcustodian appointed pursuant to
Section 3.S.2. of this Agreement to make, payment therefor in
accordance with generally accepted local custom and market practice.

G. Sales and deliveries of Investments of the Fund - Other than Options
and Futures

Fund will, on each business day on which a sale of investment
securities (other than options and futures) of Fund has been made,
deliver to Custodian instructions specifying with respect to each such
sales:

1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.

In accordance with such instructions, Custodian will deliver or cause
to be delivered the securities thus designated as sold for the amount
of Fund to the broker or other person specified in the instructions
relating to such sale. Except as otherwise instructed by Fund, such
delivery shall be made upon receipt of payment therefor: (a) in such

6
<PAGE>

form as is satisfactory to the Custodian; (b) credit to the account of
the Custodian with a clearing corporation of a national securities
exchange of which the Custodian is a member; or (c) credit to the
amount of the Custodian, on behalf of its customers, with a
Depository. Notwithstanding the foregoing: (i) in the case of
securities held in physical form, such securities shall be delivered
in accordance with "street delivery custom" to a broker or its
clearing agent; or (ii) in the case of the sale of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make, or cause a subcustodian appointed pursuant to
Section 3.S.2. of this Agreement to make, payment therefor in
accordance with generally accepted local custom and market practice.

H. Purchases of Sales of Options and Futures

Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:

1. If appliable, the name of the Portfolio making such purchase or
sale;

2. Security Options

a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the
sale or purchase was made.

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<PAGE>
3. Options on Indices

a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.

4. Security Index Future Contracts

a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into this
Custody Agreement); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made or other
applicable settlement instructions.

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<PAGE>
5. Options on Index Future Contracts

a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,exercising,
expiring or closing transaction;

h. Whether the option is written or purchased; and
i. The market on which the option is traded.

I. Securities Pledged or Loaned

If specifically allowed for in the prospectus of Fund, and subject to such
additional terms and conditions as Custodian may require:

1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledge designated in such
instructions by way of pledge or hypothecation to secure any loan
incurred by Fund; provided, however, that the securities shall be
released only upon payment to Custodian of the monies borrowed, except
that in cases where additional collateral is required to secure a
borrowing already made, further securities may be released or caused
to be released for that purpose upon receipt of instructions. Upon
receipt of instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon redelivery to it of the
securities pledge or hypothecated therefor and upon surrender of the
note or notes evidencing such loan.

2. Upon receipt of instructions, Custodian will release securities held
in custody to the borrower designated in such instructions; provided,
however, that the securities will be released only upon deposit with
Custodian of full cash collateral as specified in such instructions,

9
<PAGE>

and that Fund will retain the right to any dividends, interest or
distribution on such loaned securities. upon receipt of instructions
and the loaned securities, Custodian will release the cash collateral
to the borrower.

J. Routine Matters

Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution, purchase,
transfer, or other dealing with securities or other dealing with
securities or other property of Fund except as may be otherwise
provided in this Agreement or directed from time to time by the Fund
in writing.

K. Deposit Accounts

Custodian will open and maintain one or more special purpose deposit
account in the name of Custodian ("Account"), subject only to draft or
order by Custodian upon receipt of instructions. All monies received
by Custodian from or for the account of Fund shall be deposited in
said Accounts. Barring events not in the control of the Custodian such
as strikes, lockouts or labor disputes, riots, war or equipment or
transmission failure or damage, fire, flood, earthquake or other
natural disaster, action or inaction of governmental authority or
other causes beyond its control, at 9:00 a.m., Kansas City time, on
the second business day after deposit of any check into an Account,
Custodian agrees to make Fed Funds available to the Fund in the amount
of the check. Deposits made by Federal Reserve wire will be available
to the Fund immediately and ACH wires will be available to the Fund on
the next business day. Income earned on the portfolio securities will
be credited to the Fund based on the schedule attached as Exhibit A.
The Custodian will be entitled to reverse any credited amounts where
credits have been made and monies are not finally collected. If monies
are collected after such reversal, the Custodian will credit the Funds
in that amount. Custodian may open and maintain Accounts in its own
banking department, or in such other banks or trust companies as may
be designated by it or by Fund in writing, all such Accounts, however,

10
<PAGE>

to be in the name of Custodian and subject only to its draft or order.
Funds received and held for the account of different Portfolios shall
be maintained in separate Accounts established for each Portfolio.

L. Income and other Payments to Fund

Custodian will:

1. Collect, claim, and receive and deposit for the account of Fund
all income and other payments which become due and payable on or
after the effective date of this Agreement with respect to the
securities deposited under this Agreement, and credit the account
of Fund in accordance with the schedule attached hereto as
Exhibit A. If, for any reason, the Fund is credited with income
that is not subsequently collected, Custodian may reverse that
credited amount.

2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and

3. Take such other action as may be necessary or proper in
connection with:

a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:

1. all coupons and other income items requiring
presentation; and

2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the custodian has actual knowledge, or
should reasonably be expected to have knowledge; and

b. the endorsement for collection, in the name of Fund, of all
checks, drafts or other negotiable instruments.

Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt
of instructions and upon being indemnified to its satisfactory against

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<PAGE>

the costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights and other
similar items and will deal with the same pursuant to instructions.
Unless prior instructions have been received to the contrary,
Custodian will, without further instructions, sell any rights held for
the account of Fund on the last trade date prior to the date of
expiration of such rights.

M. Payment of Dividends and other Distributions

On the declaration of any dividend or other distribution on the shares
of capital stock of Fund ("Fund Shares") by the Board of Directors of
Fund, Fund shall deliver to Custodian instructions with respect
thereto. On the date specified in such instructions for the payment of
such dividend or other distribution, Custodian will pay out of the
monies held for the account of Fund, insofar as the same shall be
available for such purposes, and credit to the account of the Dividend
Disbursing Agent for Fund, such amount as may be necessary to pay the
amount per share payable in cash on Fund Shares issued and outstanding
on the record date established by such resolution.

N. Shares of Fund Purchased by Fund

Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or
its agent shall advise Custodian of the aggregate dollar amount to be
paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the amount of Fund and either deposit the same in the
account maintained for the purpose of paying for the repurchase or
redemption of Fund Shares or deliver the same in accordance with such
advice. Custodian shall not have any duty or responsibly to determine
that Fund Shares have been removed form the proper shareholder account
or accounts or that the proper number of Fund Shares have been
cancelled and removed from the shareholder records.

O. Shares of Fund Purchased from Fund

Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such

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<PAGE>

shares. Custodian shall not have any duty or responsibility to
determine that Fund Shares purchased from Fund have been added to the
proper shareholder account or accounts or that the proper number of
such shares have been added to the shareholder records.

P. Proxies and Notices

Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such proxies
or other authorizations as may be required. Except as provided by this
Agreement or pursuant to instructions hereafter received by Custodian,
neither it nor its nominee will exercise any power inherent in any
such securities, including any power to vote the same, or execute any
proxy, power of attorney, or other similar instrument voting any of
such securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.

Q. Disbursements

Custodian will pay or cause to be paid, insofar as funds are available
for the purpose, bills, statements and other obligations of Fund
(including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund,
interest charges, dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fee, transfer agents' fee,
brokerage commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth the
name of the person to whom payment is to be made, the amount of the
payment, and the purpose of the payment.

R. Daily Statement of Accounts.

Custodian will, within a reasonable time, render to Fund a detailed
statement of the amounts received or paid and of securities received

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<PAGE>

or delivered for the account of Fund during each business day.
Custodian will, from time to time, upon request by Fund, render a
detailed statement of the securities and monies held for Fund under
this Agreement, and Custodian will maintain such books and records as
are necessary to enable it to do so. Custodian will permit such
persons as are authorized by Fund, including Fund's independent public
accounts, reasonable access to such records or will provide reasonable
confirmation of the contents of such records, and if demanded,
Custodian will permit federal and state regulatory agencies to examine
the securities, books and records. Upon the written instructions of
Fund or as demanded by federal or state regulatory agencies, Custodian
will instruct any subcustodian to permit such persons as are
authorized by Fund, including Fund's independent public accounts,
reasonable access to such records, or to provide reasonable
confirmation of the contents of such records, and to permit such
agencies to examine the books, records and securities held by such
subcustodian which relate to Fund.

S. Appointment of Subcustodians

1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies acting as subcustodians as may be
selected by Custodian. Any such subcustodian selected by the
Custodian must have the qualifications required for a custodian
under the 1940 Act, as amended. It is understood that Custodian
initially intends to appoint United Missouri Bank, N.A. (UMB) and
United Missouri Trust Company of New York (UMTCNY) as
subcustodians. Custodian shall be responsible to the Fund for any
loss, damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of UMB, UMTCNY and any
other subcustodians selected and appointed by Custodian (except
subcustodians appointed as the request of Fund and as provided in
Subsection 2 below) to the same extent Custodian would be

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<PAGE>

responsible to the Fund under Section 5. of this Agreement if it
committed the act or omission itself. Upon request of the Fund,
Custodian shall be willing to contract with other subcustodians
reasonably acceptable to the Custodian for purposes of (i)
effecting third-party repurchase transactions with banks,
brokers, dealers or other entities through the use of a common
custodian or subcustodian, or (ii) providing depository and
clearing agency services with respect to certain variable rate
demand note securities; or (iii) for other reasonable purposes
specified by Fund; provided, however, that the Custodian shall be
responsible to the Fund for any loss, damage or expense suffered
or incurred by the Fund resulting from the actions or omissions
of any such subcustodian only to the same extent such
subcustodian is responsible to the Custodian. The Fund shall be
entitled to review the Custodian's contracts with any such
subcustodians appointed at the request of Fund. Custodian shall
be responsible to the Fund for any loss, damage or expense
suffered or incurred by the Fund resulting from the actions or
omission of any Depository only to the same extent such
Depository is responsible to Custodian.

2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17F-5(c)(1) under the 1940
Act) and Fund's cash or cash equivalents, in amounts deemed by
the Fund to be reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody of one or
more banks or trust companies acting as subcustodians, and
thereafter, pursuant to a written contract or contracts as
approved by Fund's Board of Directors, may be transferred to
accounts maintained by any such subcustodian with eligible
foreign custodians, as defined in Rule 17f-5(c)(2). Custodian
shall be responsible to the Fund for any loss, damage or expense
suffered or incurred by the Fund resulting from the actions or

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<PAGE>

omissions of any foreign subcustodians or a domestic
subcustodians or a domestic subcustodian contracting with such
foreign subcustodians only to the same extent such domestic
subcustodian is responsible to the Custodian.

T. Accounts and Records Property of Fund

Custodian acknowledges that all of accounts and records maintained by
Custodian pursuant to this Agreement are the property of Fund, and
will be made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts and
records but shall be reimbursed by Fund for all expenses and employee
time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from Fund of the necessary information
or instructions, Custodian will supply information from the books and
records it maintains for Fund that Fund needs for tax returns,
questionnaires, periodic reports to shareholders and such other
reports and information requests as Fund and Custodian shall agree
upon from time to time.

U. Adoption of Procedures

Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved or directed by Fund or its accountants or other advisors
conflicts with of violates any requirements of its prospectus,
articles of incorporation, bylaws, any applicable law, rule or
regulation, or any order, decree or agreement by which Fund may be
bound. Fund will be responsible to notify Custodian of any changes in
statutes, regulations, rules requirements or policies which might
necessitate changes in Custodian's responsibilities or procedures.

V. Overdrafts

If Custodian shall in its sole discretion advance funds to the account
of the Fund which results in an overdraft in any Account because the
monies held therein by Custodian on behalf of the Fund are

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<PAGE>

insufficient to pay the total amount payable upon a purchase of
securities as specified in Fund's instructions or for some other
reason, the amount of the overdraft shall be payable by the Fund to
Custodian upon demand together with the overdraft charge set forth on
the then-current Fee Schedule from the date advanced until the date of
payment. Fund hereby grants Custodian a lien on any security interest
in the assets of the Fund to secure the full amount of any outstanding
overdraft and related overdraft charges.

W. Exercise of Rights; Tender Offers

Upon receipt of instructions, the Custodian shall: (a) deliver
warrants, puts calls, rights or similar securities to the trustee
therefor, or to the agent of such issuer or trustee, for the purpose
of exercise or sale, provided that the new securities, cash or other
assets, if any, are to be delivered to the Custodian; and (b) deposit
securities upon invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered to the
Custodian or the tendered securities are to be returned to the
Custodian.

4. INSTRUCTIONS.

A. The term "instructions", as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund shall
deliver to Custodian, prior to delivery of any assets to Custodian and
thereafter from time to time as changes therein are necessary, written
instructions naming one or more designated representatives to give
instructions in the name and on behalf of Fund, which instructions may
be received and accepted by Custodian as conclusive evidence of the
authority of any designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will be fully
protected in acting in reliance thereon) until receipt by Custodian of
notice to the contrary. Unless such written instructions delegating
authority to any person to give instructions specifically limit such
authority to specific matters or require that the approval of anyone
else will first have been obtained, Custodian will be under no

17
<PAGE>

obligation to inquire into the right of such person, acting alone, to
give any instructions whatsoever which Custodian may receive from such
person. If Fund fails to prove Custodian any such instructions naming
designated representatives, any instructions received by Custodian
from a person reasonably believed to be an appropriate representative
of Fund shall constitute valid and proper instructions hereunder.

B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may record
on tape, or otherwise, any oral instruction whether given in person or
via telephone, each such recording identifying the parties, the date
and the time of the beginning and ending of such oral instruction.

5. LIMITATION OF LIABILITY OF CUSTODIAN

A. Custodian shall at all time use reasonable care and due diligence and
act good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify
and hold Custodian harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted against Custodian, incurred by
Custodian or for which Custodian may be held to be liable, arising out
of or attributable to:

1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian
has acted in good faith and with due diligence and reasonable
care; and

2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay
or reimburse Custodian under this indemnification provision), the
Fund's negligence or willful misconduct, or the failure of any
representation or warranty of the Fund hereunder to be and remain
true and correct in all respects at all times.

18
<PAGE>

B. Custodian may request and obtain at the expense of Fund the advice and
opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law, and it shall be without liability to Fund
for any action taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the Fund or
the Fund's accountants or counsel, it may in its discretion, with
notice to the Funds, not act according to such instruction.

C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or the other authorized individuals, and
other persons believed by it in good faith to be exert in matters upon
which they are consulted, and Custodian shall not be liable for any
actions taken, in good faith, upon such advice and statements.

D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money by Custodian, or which might make it or
its nominee liable for payment of monies or in any other way,
Custodian shall be indemnified and held harmless by Fund against any
liability on account of such action; provided, however, that nothing
herein shall obligate Custodian to take any such action except in its
sole discretion.

E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed and shall be entitled to receive upon request as
conclusive proof of any fact or matter required to be ascertained from
Fund hereunder a certificate signed by an officer or designated
representative of Fund.

F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:

1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase of any securities or foreign
currency positions or evidence of ownership required by Fund to

19
<PAGE>
be received by Custodian, or propriety of the decision to
purchase or amount paid therefor;

2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for
which the same are sold;

3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;

4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or

5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.

G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check , draft wire transfer,
clearinghouse funds, uncollected funds, or instrument for payment of
money to be received by it on behalf of Fund until Custodian actually
receives such money; provided, however, that it shall advise Fund
promptly if it fails to receive any such money in the ordinary course
of business and shall cooperate with Fund toward the end that such
money shall be received.

H. Except as provided in Section 3.S., Custodian shall not be responsible
for loss occasioned by the acts, neglects, defaults or insolvency of
any broker, bank, trust company, or any other person with whom
Custodian may deal.

I. Custodian shall not be responsible or liable for the failure or delay
in performance of its obligations under this Agreement, or those of
any entity for which it is responsible hereunder, arising out of or
caused, directly or indirectly by circumstances beyond the affected
entity's reasonable control, including, without limitations: any
interruption, loss or malfunction of any utility, transportation,
computer(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, ruling,
regulations or direction; war, strike, riot, emergency, civil

20
<PAGE>

disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornadoes, acts of God or public enemy,
revolutions, or insurrection.

J. IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS
AGREEMENT BE LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE
OTHER PARTY, FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES FOR ANY
ACT OR FAILURE TO ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF
ADVISED OF THIS POSSIBILITY THEREOF.

6. COMPENSATION. In consideration for its services hereunder, Fund will pay to
Custodian such compensation as shall be set forth in a separate fee
schedule to be agreed to by Fund and Custodian from time to time. A copy of
the initial fee schedule is attached hereto and incorporated herein by
reference. Custodian shall also be entitled to receive, and Fund agrees to
pay a Custodian, on demand, reimbursement for Custodian's cash
disbursements and reasonable out-of-pocket costs and expenses, including
attorney's fees, incurred by Custodian in connection with the performance
of services hereunder. Custodian may charge such compensation against
monies held by it for the account of Fund. Custodian will also be entitled
to charge against any monies held by it for the account of Fund the amount
of any loss, charge, liability, advance, overdraft or expense for which it
shall be entitled to reimbursement from Fund, including but not limited to
fees and expenses due to Custodian for other services provided to the Fund
by Custodian. Custodian will be entitled to reimbursement by the Fund for
losses, damages, liabilities, advances, overdrafts and expenses of
subcustodians only to the extent that (i) Custodian would have been
entitled to reimbursement hereunder if it had incurred that same itself
directly, and (ii) Custodian is obligated to reimburse the subcustodian
therefor.

7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of _________. Thereafter, either party to this Agreement may
terminate the same by notice in writing, delivered or mailed, postage
prepaid, to the other party hereto and received not less than ninety (90)
days prior to the date upon which such termination will take effect. Upon
termination of this Agreement, Fund will pay Custodian its fees and

21
<PAGE>

compensation due hereunder and its reimbursable disbursements, costs and
expenses paid or incurred to such date and Fund shall designate a successor
custodian by notice in writing to Custodian by the termination date. In the
event no written order designating a successor custodian has been delivered
to Custodian on or before the date when such termination becomes effective,
then Custodian may, at its option, deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of
Custodian, and meeting the qualifications for custodian set forth in the
1940 Act and having not less that Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by its last
published report, or apply to a court of competent jurisdiction for the
appointment of a successor custodian or other proper relief, or take any
other lawful action under the circumstances; provided, however, that Fund
shall reimburse Custodian for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith. Custodian will, upon
termination of this Agreement and payment of all sums due to Custodian from
Fund hereunder or otherwise deliver to the successor custodian so specified
or appointed, or as specified by the court, at Custodian office, all
securities then held by Custodian hereunder, duly endorsed and in form for
transfer, and all funds and other properties of Fund deposited with or held
by Custodian hereunder and Custodian will co-operate in effecting changes
in book-entries at all Depositories. Upon delivery to a successor custodian
or as specified by the court, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such successor will be the
successor custodian under this Agreement and will be entitled to reasonable
compensation for its services. In the event that securities, funds and
other properties remain in the possession of the Custodian after the date
of termination thereof owing to failure of the Fund to appoint a successor
custodian, the Custodian shall be entitled to compensation as provided in
the then-current fee schedule hereunder for its services during such period
as the Custodian retains possession of such securities, funds and other
properties, and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect.

22
<PAGE>

8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at ______________________, or at such other address as Fund may have
designated to Custodian in writing, will be deemed to have been properly
given to Fund hereunder; and notices, requests, instructions and other
writings addressed to Custodian at its offices at 127 West 10th Street,
Kansas City, Missouri 64105, Attention: Custody Department, or to such
other address as it may have designated to Fund in writing, will be deemed
to have been properly given to Custodian hereunder.

9. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:

A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund shall be deemed to
relate solely to the particular Portfolio to which such transaction
relates. Under no circumstances shall the rights, obligation or
remedies with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio. The use of
this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and shall
not constitute any basis for joining the Portfolios for any reason.

B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund in
writing.

10. MISCELLANEOUS.

A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principle thereof.

B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.

23
<PAGE>

C. The representations and warranties and the indemnification extended
hereunder are intended to and shall continue after and survive the
expiration, termination or cancellation of this Agreement.

D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.

E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting form any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forbearance or waiver had occurred. No
waiver, release or discharge of any party's rights hereunder shall be
effective unless contained in a written instrument signed by the party
sought to be charged.

F. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect

G. This Agreement may be executed into or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.

H. If any part, term or provision of this Agreement is determined by the
courts or any regulatory authority to be illegal, in conflict with any
law or otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held
to be illegal or invalid.

I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.

24
<PAGE>

J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Custodian and Fund.

K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder shall not
affect any rights or obligations of the other party hereunder.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.

INVESTORS FIDUCIARY TRUST COMPANY

By: /s/Allen A. Straw
Title: Executive Vice President

FUND

By: /s/Bernadette N. Finn
Title: Secretary

25
<PAGE>

EXHIBIT A

INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE

<TABLE>
<CAPTION>
TRANSACTION DTC PHYSICAL FED

TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE

<S> <C> <C> <C> <C> <C> <C>
Calls Puts As Received C or F* As Received C or F*

Maturities As Received C or F* Maturity Date C or F* Maturity Date F

Tender Reorgs. As Received C As Received C N/A

Dividends Paydate C Paydate C N/A

Floating Rate Paydate C Paydate C N/A
Int.

Floating Rate As Rate C N/A
Int. (No Rate) N/A Received

Mtg. Backed Paydate C Paydate + 1 C Paydate F
P&I Bus. Day

Fixed Rate
Inc. Paydate C Paydate C Paydate F

Euroclear N/A C Paydate C

</TABLE>

Legend

C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based in how received.

26
<PAGE>

EXHIBIT A

Name of Fund

California Daily Tax Free Income Fund, Inc. *
Connecticut Daily Tax Free Income Fund, Inc. *
Cortland Trust Inc. *
Daily Tax Free Income Fund, Inc. *
Florida Daily Municipal Income Fund +
Institutional Daily Income Fund +
Michigan Daily Tax Free Income Fund, Inc. *
New Jersey Daily Municipal Income Fund, Inc. *
New York Daily Tax Free Income Fund, Inc. *
North Carolina Daily Municipal Income Fund, Inc. *
Pennsylvania Daily Municipal Income Fund +
Reich & Tang Equity Fund, Inc. *
Reich & Tang Government Securities Trust +
Short Term Income Fund, Inc. *
Tax Exempt Proceeds Funds, Inc. *

* Maryland Corporation
+ Massachusetts Business Trust

Dated: August 30, 1994

BATTLE, FOWLER, JAFFIN & KHEEL
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 949-8300

May 13, 1985

Connecticut Daily Tax Free Income Fund, Inc.
100 Park Avenue
New York, New York 10017

Gentlemen:

We have acted as counsel to Connecticut Daily Tax Free Income
Fund, Inc., a Maryland corporation (the "Fund"'), in connection with the
preparation and filing of Registration Statement No. 2-96546 on Form N-lA and
all amendments thereto (the "Registration Statement") covering shares of Common
Stock, par value $.001 per share, of the Fund.

We have examined copies of the Articles of Incorporation and
By-Laws of the Fund, the Registration Statement, and such other corporate
records, proceedings and documents, including the consent of the Board of
Directors and the minutes of the meeting of the Board of Directors of the Fund,
as we have deemed necessary for the purpose of this opinion. We have also
examined such other documents, papers, statutes and authorities as we deemed
necessary to form a basis for the opinion hereinafter expressed. In our
examination of such material, we have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to us. As to
various questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.

Based upon the foregoing, we are of the opinion that the
shares of Common Stock, par value $.001 per share, of the Fund, to be issued in
accordance with the terms of the offering, as set forth in the Prospectus and
Statement of Additional Information included as part of the Registration
Statement, and in accordance with applicable state securities laws, when so
issued and paid for, will constitute validly authorized and legally issued
shares of Common Stock, fully paid and non-assessable.

<PAGE>

We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us in the Registration
Statement under the heading "Federal Income Taxes" in the Prospectus and in the
Statement of Additional Information, and under the heading "Counsel and
Auditors" in the Statement of Additional Information.

Very truly yours,

Battle, Fowler, Jaffin & Kheel

DAY, BERRY & HOWARD
Three Landmark Square
Stanford, CT. 06901-2599
Telephone (203) 348-3840

May 13, 1985

Connecticut Daily Tax Free Income Fund, Inc.
100 Park Avenue
New York, New York 10017

Dear Sirs:

In connection with the registration under the Securities Act of 1933 of
shares for a public offering of the Connecticut Daily Tax Free Income Fund, Inc.
(the "Fund") you have requested our opinion with respect to the treatment under
Connecticut law of "exempt-interest dividends" to be paid by the Fund in
accordance with the provisions of Section 852 (b) (5) of the Internal Revenue
Code of 1954, as amended (the "Code")

In rendering our opinion, we have relied on statements made in a
registration statement dated May 13, 1985, as filed with the Securities and
Exchange Commission (the "Registration Statement") and have not independently
verified the facts contained therein. (Capitalized terms not otherwise defined
herein have the same meaning as in the Registration Statement.)

We have also assumed with your consent that the Fund will do the
following:

(1) Take all actions necessary to satisfy the requirements for,
and continue to maintain its status as, a Regulated Investment
Company under the provisions of Subchapter M of the Code;

(2) Satisfy the requirements of Section 852(b)(5) of the Code in
order to enable it to pay exempt-interest dividends as that
term is defined therein and properly designate the amounts
attributable to such dividends as provided in the Code and any
Treasury Regulations promulgated thereunder; and

(3) Separately identify the portion of any such exempt-interest
dividends which is derived from Connecticut Municipal
Obligations and Territorial Municipal Obligations.

Pursuant to Chapter 224 of the General Statutes of Connecticut Revision
of 1958, as amended, Connecticut imposes a tax on the dividends and, since July
1, 1983, on the interest
<PAGE>

income of resident individuals (the "Connecticut Dividends and Interest Tax")
and a tax on the gains from the sale or exchange of capital assets of such
individuals (the "Connecticut Capital Gains Tax"), each subject to certain
limitations and exceptions. The Connecticut Dividends and Interest Tax is
imposed on (A) amounts taxable as dividends for Federal income tax purposes
without regard to the dividend exclusion, and (B) interest income (i) taxable
for Federal income tax purposes, other than such income from obligations the
interest on which a state is prohibited from taxing under Federal law or (ii)
from obligations issued by or on behalf of any state, any political subdivision
thereof, or any agency, instrumentality, authority or district of any state or
any political subdivision thereof (collectively hereafter a "Political
Subdivision"), other than such income from obligations issued by or on behalf of
the State of Connecticut or a Connecticut Political Subdivision. Net gains on
the sale or exchange of obligations of the State of Connecticut or any
Connecticut Political Subdivision are not subject to the Connecticut Capital
Gains Tax.

Connecticut has generally followed Federal income tax standards in
determining the character of items of income for Connecticut tax purposes. Prior
to the enactment of Section 852(b)(5) of the Code, distributions by a regulated
investment company were treated as dividends or capital gain for Connecticut tax
purposes without regard to whether derived from interest which would have been
excludable from the Connecticut tax base had it been received directly by the
taxpayer. Woodruff v. Tax Commissioner 185 Conn. 186 (1981). No portion of a
capital gain dividend paid by a regulated investment company, although
characterized as a capital gain for purposes of the Connecticut Capital Gains
Tax by virtue of its characterization as capital gain under Federal income tax
law, is eligible for the exclusion from the Connecticut Capital Gains Tax
applicable to gains on the sale or exchange of an obligation of the State of
Connecticut or of a Connecticut Political Subdivision.

With the inclusion of interest income in the tax base of the
Connecticut Dividends and Interest Tax, Connecticut proposed regulations, which
have now become final, providing that exempt-interest dividends of a regulated
investment company are includable in interest income (rather than dividend
income) for purposes of the tax, except to the extent derived from Connecticut
Municipal Obligations, because Section 852(b)(5)(B) of the Code provides that
exempt-interest dividends are treated as interest income excludable from gross
income for Federal income tax purposes under Section 103(a) of the Code.
Exempt-interest dividends are not treated as "dividends" for Federal income tax
purposes and thus exempt-interest dividends are subject to the Connecticut
Dividends and Interest Tax, if at all, only as "interest income."

The Connecticut regulations, on their face, however, suggest that
exempt-interest dividends derived from Territorial Municipal Obligations (such
as in respect of certain obligations of Puerto Rico and the Virgin Islands)
would be subject to the Connecticut Dividends and Interest Tax. They provide, in
the first instance, that for purposes of this tax any exempt-interest dividends
are included in interest income, and then go on to exclude only exempt-interest
dividends derived from Connecticut Municipal Obligations. Since the Connecticut
regulations acknowledge that the source of exempt-interest dividends as derived
<PAGE>

from Connecticut Municipal Obligations can be specified and will be recognized,
it is not clear whether the failure specifically to exclude exempt-interest
dividends derived from Territorial Municipal Obligations, interest on which
would not be subject to the tax if received directly by a Connecticut resident
individual, is intentional.

The intention generally expressed in the statute is not to include in
interest income amounts in respect of Territorial Municipal Obligations.
Moreover, the category of interest income exempt from Federal income tax that is
added back to the tax base of the Connecticut Dividends and Interest Tax
encompasses only interest on obligations of a "state" or its Political
Subdivisions and does not explicitly extend to interest on obligations of any
territory or possession of the United States. Although it is not clear to us
that, as a matter of United States Constitutional law, the Federal prohibition
itself would flow through the Fund to its shareholders, exempt-interest
dividends derived from Territorial Municipal Obligations should not be found to
be included in the tax base of the Connecticut Dividends and Interest Tax under
the Connecticut statute. Thus, we conclude that, if the failure of the
Connecticut regulations to exclude exempt-interest dividends derived from
Territorial Municipal Obligations is intentional, to that extent the Connecticut
regulations should be found to be invalid as a matter of Connecticut law.

Based on the foregoing, including without limitation the assumptions
set forth above and in the Registration Statement, and an examination of such
questions of law and fact as we have deemed appropriate, we advise you that, in
our opinion the portion of exempt-interest dividends paid by the Fund that is
correctly designated as derived from Connecticut Municipal Obligations is not
subject to the Connecticut Dividends and Interest Tax and that, while in light
of the explicit language of the Connecticut regulations the matter cannot be
considered entirely free from doubt, the portion of exempt-interest dividends
paid by the Fund that is correctly designated as derived from Territorial
Municipal Obligations should not be subject to the Connecticut Dividends and
Interest Tax.

We do not express any opinion with respect to the character of any
particular obligation which may be held by the Fund, nor do we express any
opinion with respect to the qualification of the Fund under Subchapter M of the
Code or its eligibility to pity exempt-interest dividends, or the taxability of
the Fund under the laws of any state.

We understand our opinion will be included in the Registration
Statement to be filed with the Securities and Exchange Commission.

Very truly yours,

Day, Berry & Howard

<PAGE>

DAY, BERRY & HOWARD
Three Landmark Square
Stanford, CT. 06901-2599
Telephone: (203) 348-3840

CONSENT OF CONNECTICUT COUNSEL

To the Board of Directors
Connecticut Daily Tax Free Income Fund, Inc.

We hereby consent to the reference to our firm under the
caption "Connecticut Income Taxes" in the Prospectus and in the Statement of
Additional Information which is part of this Registration Statement, and under
the heading "Counsel and Auditors" in the Statement of Additional Information.

Day, Berry & Howard

Stamford, Connecticut
May 13, 1985

EXHIBIT 11.2

McGLADREY & PULLEN L.L.P.
Certified Public Accountants & Consultants

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use of our report dated February 26, 1998, on the
financial statements referred to therein in Post-Effective Amendment No. 23 to
the Registration Statement on Form N-1A, File No. 2-96456 of Connecticut Daily
Tax Free Income Fund, Inc., as filed with the Securities and Exchange
Commission.

We also consent to the reference to our Firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the caption "Counsel and Auditors."

/s/McGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP

New York, New York
May 20, 1998

SIGNATURES

KNOW ALL PEOPLE BY THESE PRESENTS, that the undersigned hereby constitutes
and appoints William Berkowitz and Bernadette N. Finn, and each of them, with
full power of substitution, as his true and lawful attorney and agent to execute
in his name and on his behalf, in any and all capacities, the Registration
Statement on Form N-1A, and any and all amendments thereto (including
pre-effective amendments) filed by Connecticut Daily Tax Free Income Fund, Inc.
(the "Fund") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorney and agent deems
necessary or advisable to enable the Fund to comply with the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.

/s/ Robert Straniere
Robert Straniere

<PAGE>

SIGNATURES

/s/ Dr. W. Giles Mellon
Dr. W. Giles Mellon

<PAGE>

SIGNATURES

/s/ Yung Wong
Dr. Yung Wong

April 29, 1985

Board of Directors of
Connecticut Daily Tax Free
Income Fund, Inc.

Gentlemen:

We hereby subscribe for 100,000 shares of the Common Stock,
$.001 par value per share, of Connecticut Daily Tax Free Income Fund, Inc., a
Maryland corporation (the "Corporation"), at $1.00 per share for an aggregate
purchase price of $100,000. Our payment in full is confirmed.

We hereby represent and agree that we are purchasing these
shares of stock for investment purposes, for our own account and risk and not
with a view to any sale, division or other distribution thereof within the
meaning of the Securities Act of 1933 as amended, nor with any present intention
of distributing or selling such shares. We further agree that if any of such
shares are redeemed during the period that the deferred organizational expenses
of the Corporation are being amortized, we will reimburse the Corporation the
then unamortized organizational expenses in the same ratio as the number of
shares redeemed bears to the number of such shares held at the time of
redemption.

Very truly yours,

REICH & TANG, INC.

By: ______________________________

Confirmed and Accepted:

CONNECTICUT DAILY TAX FREE
INCOME FUND, INC.

By: ______________________________

DISTRIBUTION AGREEMENT

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
the "Fund"

600 Fifth Avenue
New York, New York 10020

_______________, 1998

Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020

Ladies and Gentlemen:

We hereby confirm our agreement with you as follows:

1. In consideration of the agreements on your part herein contained and of
the payment by us to you of a fee of $1 per year and on the terms and conditions
set forth herein, on behalf of our Fund, we have agreed that you shall be, for
the period of this agreement, a distributor, as our agent, for the unsold
portion of such number of shares of our common stock, $.001 par value per share,
as may be effectively registered from time to time under the Securities Act of
1933, as amended (the "1933 Act"). This agreement is being entered into pursuant
to the Distribution and Service Plan (the "Plan") adopted by us in accordance
with Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act").

2. We hereby agree that you will act as our agent, and hereby appoint you
our agent, to offer, and to solicit offers to subscribe to, the unsold balance
of shares of our common stock as shall then be effectively registered under the
Act. All subscriptions for shares of our common stock obtained by you shall be
directed to us for acceptance and shall not be binding on us until accepted by
us. You shall have no authority to make binding subscriptions on our behalf. We
reserve the right to sell shares of our common stock through other distributors
or directly to investors through subscriptions received by us at our principal
office in New York, New York. The right given to you under this agreement shall
not apply to shares of our common stock issued in connection with (a) the merger
or consolidation of any other investment company with us, (b) our acquisition by
purchase or otherwise of all or substantially all of the assets or stock of any
other investment company, or (c) the reinvestment in shares of our common stock
by our stockholders of dividends or
<PAGE>

other distributions or any other offering by us of securities to our
stockholders.

3. You will use your best efforts to obtain subscriptions to shares of our
common stock upon the terms and conditions contained herein and in our
Prospectus, as in effect from time to time. You will send to us promptly all
subscriptions placed with you. We shall furnish you from time to time, for use
in connection with the offering of shares of our common stock, such other
information with respect to us and shares of our common stock as you may
reasonably request. We shall supply you with such copies of our Registration
Statement and Prospectus, as in effect from time to time, as you may request.
Except as we may authorize in writing, you are not authorized to give any
information or to make any representation that is not contained in the
Registration Statement or Prospectus, as then in effect. You may use employees,
agents and other persons, at your cost and expense, to assist you in carrying
out your obligations hereunder, but no such employee, agent or other person
shall be deemed to be our agent or have any rights under this agreement. You may
sell our shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent.

With respect to the Class A Shares of the Fund, you will arrange for
organizations whose customers or clients are shareholders of our corporation
("Participating Organizations") to enter into agreements with you for the
performance of shareholder servicing and related administrative functions not
performed by you or the Transfer Agent. Pursuant to our Shareholder Servicing
Agreement with you with respect to the Class A Shares, you may make payments to
Participating Organizations for performing shareholder servicing and related
administrative functions with respect to the Class A Shares. Such payments will
be made only pursuant to written agreements approved in form and substance by
our Board of Directors to be entered into by you and the Participating
Organizations. It is recognized that we shall have no obligation or liability to
you or any Participating Organization for any such payments under the agreements
with Participating Organizations. Our obligation is solely to make payments to
you under the Shareholder Servicing Agreement (with respect to the Class A
Shares) and to the Manager under the Investment Management Contract and the
Administrative Services Contract. All sales of our shares effected through you
will be made in compliance with all applicable federal securities laws and
regulations and the Constitution, rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD").

4. We reserve the right to suspend the offering of shares of our common
stock at any time, in the absolute
<PAGE>

discretion of our Board of Directors, and upon notice of such suspension you
shall cease to offer shares of our common stock hereunder.

5. Both of us will cooperate with each other in taking such action as may
be necessary to qualify shares of our common stock for sale under the securities
laws of such states as we may designate, provided, that you shall not be
required to register as a broker-dealer or file a consent to service of process
in any such state where you are not now so registered. Pursuant to the
Investment Management Contract in effect between us and the Manager, we will pay
all fees and expenses of registering shares of our common stock under the Act
and of qualification of shares of our common stock, and to the extent necessary,
our qualification under applicable state securities laws. You will pay all
expenses relating to your broker-dealer qualification.

6. We represent to you that our Registration Statement and Prospectus have
been carefully prepared to date in conformity with the requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder. We represent and warrant to you, as
of the date hereof, that our Registration Statement and Prospectus contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained therein are or will be true and correct at the time indicated or
the effective date as the case may be; and that neither our Registration
Statement nor our Prospectus, when they shall become effective or be authorized
for use, will include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of shares of our common stock. We will
from time to time file such amendment or amendments to our Registration
Statement and Prospectus as, in the light of future development, shall, in the
opinion of our counsel, be necessary in order to have our Registration Statement
and Prospectus at all times contain all material facts required to be stated
therein or necessary to make any statements therein not misleading to a
purchaser of shares of our common stock. If we shall not file such amendment or
amendments within fifteen days after our receipt of a written request from you
to do so, you may, at your option, terminate this agreement immediately. We will
not file any amendment to our Registration Statement or Prospectus without
giving you reasonable notice thereof in advance; provided, however, that nothing
in this agreement shall in any way limit our right to file such amendments to
our Registration Statement or Prospectus, of whatever character, as we may deem
advisable, such right being in all respects absolute and unconditional. We
represent and warrant to you that any amendment to our Registration Statement or
Prospectus hereafter
<PAGE>

filed by us will be carefully prepared in conformity within the requirements of
the 1933 Act and the 1940 Act and the SEC's rules and regulations thereunder and
will, when it becomes effective, contain all statements required to be stated
therein in accordance with the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder; that all statements of fact contained therein will, when
the same shall become effective, be true and correct; and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of our
shares.

7. We agree to indemnify, defend and hold you, and any person who controls
you within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you or any such controlling person
may incur, under the 1933 Act or the 1940 Act, or under common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in our Registration Statement or Prospectus in effect from time to
time or arising out of or based upon any alleged omission to state a material
fact required to be stated in either of them or necessary to make the statements
in either of them not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect you against any
liability to us or our security holders to which you would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties under this agreement. Our agreement to indemnify you and
any such controlling person is expressly conditioned upon our being notified of
any action brought against you or any such controlling person, such notification
to be given by letter or by telegram addressed to us at our principal office in
New York, New York, and sent to us by the person against whom such action is
brought within ten days after the summons or other first legal process shall
have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to the person against whom such
action is brought other than on account of our indemnity agreement contained in
this paragraph 7. We will be entitled to assume the defense of any suit brought
to enforce any such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the defense of any such
suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case we do not elect to assume the
defense of any such suit, or in case you, in good faith, do not approve of
counsel chosen by us, we will
<PAGE>

reimburse you or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
you or them. Our indemnification agreement contained in this paragraph 7 and our
representations and warranties in this agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of you or any
controlling person and shall survive the sale of any shares of our common stock
made pursuant to subscriptions obtained by you. This agreement of indemnity will
inure exclusively to your benefit, to the benefit of your successors and
assigns, and to the benefit of any of your controlling persons and their
successors and assigns. We agree promptly to notify you of the commencement of
any litigation or proceeding against us in connection with the issue and sale of
any shares of our common stock.

8. You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which we, our officers or directors, or any such
controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to us, to our officers
<PAGE>

or directors, or to such controlling person other than on account of your
indemnity agreement contained in this paragraph 8.

9. We agree to advise you immediately:

a. of any request by the SEC for amendments to our Registration
Statement or Prospectus or for additional information,

b. of the issuance by the SEC of any stop order suspending the
effectiveness of our Registration Statement or Prospectus or the initiation
of any proceedings for that purpose,

c. of the happening of any material event which makes untrue any
statement made in our Registration Statement or Prospectus or which
requires the making of a change in either of them in order to make the
statements therein not misleading, and

d. of all action of the SEC with respect to any amendments to our
Registration Statement or Prospectus.

10. This Agreement will become effective on the date hereof and will remain
in effect thereafter for successive twelve-month periods (computed from each
____________), provided that such continuation is specifically approved at least
annually by vote of our Board of Directors and of a majority of those of our
directors who are not interested persons (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this agreement. This agreement may be terminated at any
time, without the payment of any penalty,(a) on sixty days' written notice to
you (i) by vote of a majority of our entire Board of Directors, and by a vote of
a majority of our Directors who are not interested persons (as defined in the
1940 Act) and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, or (ii) by vote of a
majority of our outstanding voting securities, as defined in the Act, or (b) by
you on sixty days' written notice to us.

11. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the SEC thereunder.
<PAGE>

12. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, the right of any
of your employees, officers or directors, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the 1940 Act,
to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another corporation,
firm, individual or association.

If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

CONNECTICUT DAILY TAX FREE INCOME
FUND, INC.

Accepted: , 1998

REICH & TANG DISTRIBUTORS, INC.

By: ____________________________

SHAREHOLDER SERVICING
AGREEMENT

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
CLASS A SHARES
(the "Fund")

600 Fifth Avenue
New York, New York 10020

, 1998

Reich & Tang Distributors, Inc. ("Distributor")
600 Fifth Avenue
New York, New York 10020

Gentlemen:

We herewith confirm our agreement with you as follows:

1. We hereby employ you, pursuant to the Distribution and Service Plan, as
amended, adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below on behalf of the Class A Shares. You will perform, or arrange for
others including organizations whose customers or clients are shareholders of
our corporation (the "Participating Organizations") to perform, all personal
shareholder servicing and related maintenance of shareholder account functions
("Shareholder Services") not performed by us or our transfer agent.

2. You will be responsible for the payment of all expenses incurred by you
in rendering the foregoing services, except that we will pay for (i)
telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor and Participating Organizations in
rendering such services to the Class A Shareholders, and (ii) preparing,
printing and delivering our prospectus to existing shareholders and preparing
and printing subscription application forms for shareholder accounts.

3. You may make payments from time to time from your own resources,
including the fees payable hereunder and past profits to compensate
Participating Organizations for providing Shareholder Services to the Class A
Shareholders of the Fund. Payments to Participating Organizations to compensate
them for
<PAGE>

providing Shareholder Services are subject to compliance by them with the terms
of written agreements satisfactory to our Board of Directors to be entered into
between the Distributor and the Participating Organizations. The Distributor
will in its sole discretion determine the amount of any payments made by the
Distributor pursuant to this Agreement, provided, however, that no such payment
will increase the amount which we are required to pay either to the Distributor
under this Agreement or to the Manager under the Investment Management Contract,
the Administrative Services Agreement, or otherwise.

4. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.

5. In consideration of your performance, the Fund will pay you a service
fee, as defined by Article III, Section 26(b)(9) of the Rules of Fair Practice,
as amended, of the National Association of Securities Dealers, Inc. at the
annual rate of two-tenths of one percent (0.20%) of the Fund's Class A Share's
average daily net assets. Your fee will be accrued by us daily, and will be
payable on the last day of each calendar month for services performed hereunder
during that month or on such other schedule as you shall request of us in
writing. You may waive your right to any fee to which you are entitled
hereunder, provided such waiver is delivered to us in writing.

6. This Agreement will become effective on the date hereof and will remain
in effect thereafter for successive twelve-month periods (computed from each
___________), provided that such continuation is specifically approved at least
annually by vote of our Board of Directors and of a majority of those of our
directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, (a) on sixty days' written notice to
you (i) by vote of a majority of our entire Board of Directors, and by a vote of
a majority of our Directors who are not interested persons (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan, or (ii) by vote of a majority
of the outstanding voting securities of the Fund's
<PAGE>

Class A Shares, as defined in the Act, or (b) by you on sixty days' written
notice to us.

7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission thereunder.

8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, the right of any
of your employees, officers or directors, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the Act, to
engage in any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to another corporation, firm,
individual or association.

If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

CONNECTICUT DAILY TAX FREE INCOME
FUND, INC.
CLASS A SHARES

By:

ACCEPTED: ______________, 1998

REICH & TANG DISTRIBUTORS, INC.

By:

ADMINISTRATIVE SERVICES CONTRACT

CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
the "Fund"

New York, New York

, 1995

Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022

Gentlemen:

We herewith confirm our agreement with you as follows:

1. We propose to engage in the business of investing and reinvesting our
assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Registration Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.

2. a. We hereby employ you as our administrator (the "Administrator") to
provide all management and administrative services reasonably necessary for our
operation, other than those services you provide to us pursuant to the
Investment Management Contract. The services to be provided by you shall include
but not be limited to those enumerated on Exhibit A hereto. The personnel
providing these services may be your employees or employees of your affiliates
or of other organizations. You shall make periodic reports to the Fund's Board
of Directors in the performance of your obligations under this Agreement and the
execution of your duties hereunder is subject to the general control of the
Board of Directors.

b. It is understood that you will from time to time employ, subcontract
with or otherwise associate with yourself, entirely at your expense, such
persons as you believe to be particularly fitted to assist you in the execution
of your duties hereunder. While this agreement is in effect, you or
<PAGE>

persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of the Fund. These shall be a president, a secretary, a
treasurer, and such additional officers and employees as may reasonably be
necessary for the conduct of our business.

c. You or your affiliates will also provide persons, who may be our
officers, to (i) supervise the performance of bookkeeping and related services
and calculation of net asset value and yield by our bookkeeping agent and (ii)
prepare reports to and the filings with regulatory authorities, and (iii)
perform such clerical, other office and shareholder services for us as we may
from time to time request of you. Such personnel may be your employees or
employees of your affiliates or of other organizations. Notwithstanding the
preceding, you shall not be required to perform any accounting services not
expressly provided for herein.

d. You or your affiliates will also furnish us such administrative and
management supervision and assistance and such office facilities as you may
believe appropriate or as we may reasonably request subject to the requirements
of any regulatory authority to which you may be subject. You or your affiliates
will also pay the expenses of promoting the sale of our shares (other than the
costs of preparing, printing and filing our Registration Statement, printing
copies of the prospectus contained therein and complying with other applicable
regulatory requirements), except to the extent that we are permitted to bear
such expenses under a plan adopted pursuant to Rule 12b-1 under the 1940 Act or
a similar rule.

3. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.

4. In consideration of the foregoing we will pay you a fee of .21% of the
Fund's average daily net assets. Your fee will be accrued by us daily, and will
be payable on the last day of each calendar month for services performed
hereunder during that month or on such other schedule as we may agree in
writing. You may use any portion of this fee for distribution of our shares, or
for making servicing payments to organizations whose
<PAGE>

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.

5. This Agreement will become effective on the date hereof and shall
continue in effect until and thereafter for successive twelve-month periods
(computed from each ), provided that such continuation is specifically approved
at least annually by our Board of Directors and by a majority of those of our
directors who are neither party to this Agreement nor, other than by their
service as directors of the corporation, interested persons, as defined in the
1940 Act, of any such person who is party to this Agreement. This Agreement may
be terminated at any time, without the payment of any penalty, by vote of a
majority of our outstanding voting securities, as defined in the 1940 Act, or 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.

6. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission.

7. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees who may also be a director, officer
or employee of ours, or of a person affiliated with us, as defined in the Act,
to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
<PAGE>

8. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act.

If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

CONNECTICUT DAILY TAX FREE INCOME
FUND, INC.

By:

ACCEPTED: , 1995

REICH & TANG ASSET MANAGEMENT L.P.

By: REICH & TANG ASSET MANAGEMENT, INC.,
General Partner

By:

<PAGE>

Exhibit A

Administration Services To Be Performed
By Reich & Tang Asset Management L.P.

Administration Services

1. In conjunction with Fund counsel, prepare and file all Post-Effective
Amendments to the Registration Statement, all state and federal tax returns
and all other required regulatory filings.

2. In conjunction with Fund counsel, prepare and file all Blue Sky filings,
reports and renewals.

3. Coordinate, but not pay for, required Fidelity Bond and Directors and
Officers Insurance (if any) and monitor their compliance with Investment
Company Act.

4. Coordinate the preparation and distribution of all materials for Directors,
including the agenda for meetings and all exhibits thereto, and actual and
projected quarterly summaries.

5. Coordinate the activities of the Fund's Manager, Custodian, Legal Counsel
and Independent Accountants.

6. Prepare and file all periodic reports to shareholders and proxies and
provide support for shareholder meetings.

7. Monitor daily and periodic compliance with respect to all requirements and
restrictions of the Investment Company Act, the Internal Revenue Code and
the Prospectus.

8. Monitor daily the Fund's bookkeeping services agent's calculation of all
income and expense accruals, sales and redemptions of capital shares
outstanding.

9. Evaluate expenses, project future expenses, and process payments of
expenses.

10. Monitor and evaluate performance of accounting and accounting related
services by Fund's bookkeeping services agent. Nothing herein shall be
construed to require you to perform any accounting services not expressly
provided for in this Agreement.

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000764901
<NAME> Connecticut Daily Tax Free Income Fund, Inc.
<SERIES>
<NUMBER> 1
<NAME> CLASS A

<S> <C>
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> JAN-31-1998
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 169039179
<INVESTMENTS-AT-VALUE> 169039179
<RECEIVABLES> 941035
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 169980214
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2196125
<TOTAL-LIABILITIES> 2196125
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167791987
<SHARES-COMMON-STOCK> 167810297
<SHARES-COMMON-PRIOR> 136638142
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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