Florida Daily Municipal Income Fund
and
Pennsylvania Daily Municipal Income Fund
(individually, a 'Fund' and collectively, the 'Funds')
IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you are aware, each Fund is managed and advised by Reich & Tang Asset
Management L.P. (the 'Manager'). The parent company of the Manager, New
England Investment Companies, L.P., is majority-owned by New England Mutual
Life Insurance Company, which proposes to merge with Metropolitan Life
Insurance Company sometime after the first quarter of 1996.
As a shareholder, you are invited to vote on a proposal in connection with
this merger. Specifically, you are being asked to approve or disapprove a new
management/investment advisory agreement with the Manager since the above
transaction, in accordance with applicable regulations, would automatically
terminate the existing management/investment advisory agreement between the
Manager and each Fund.
What does this mean to you as a shareholder?
It is important to note that the management fee and the management and
investment advisory services to be performed under the new agreement are the
same as those under the current agreement. The other terms of the agreement
are the same in all material respects to the existing agreement. There are not
changes contemplated in the objectives or policies of the Fund, the management
or operation of the Manager relating to the Funds, the personnel managing the
Funds or the shareholder or other business activities of the Funds.
The Board of Trustees has determined that the new agreement would be in the
best interest of the Funds and their shareholders. Accordingly, the Board of
Trustees of the Funds approved the new agreement and voted to recommend it to
shareholders for approval.
We encourage you to vote promptly no matter how many shares you own. Timely
votes save money and avoid follow-up mailings. Your cooperation as we go
through the process of the transition is greatly appreciated. We are confident
that the combining of these firms will result in a structure that will better
service your needs.
Thanking you, in advance, for your patience and support.
Very truly yours,
Florida Daily Municipal Income Fund, and
Pennsylvania Daily Municipal Income Fund
- ------------------------------------------------------------------------------
Florida Daily Municipal Income Fund and
Pennsylvania Daily Municipal Income Fund
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
March 13, 1996
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600 Fifth Avenue
New York, New York 10020
(800) 676-6779
A Joint Special Meeting of Shareholders of Florida Daily Municipal Income Fund
('Florida') and Pennsylvania Daily Municipal Income Fund ('Pennsylvania')
(individually, a 'Fund' and collectively, the 'Funds'), will be held at 9:00
a.m. on March 13, 1996 at the offices of the Funds at 600 Fifth Avenue, New
York, New York for the following purposes, all of which are more fully
described in the accompanying Proxy Statement dated January 24, 1996.
1. To approve or disapprove a new Investment Management Contract to be
effective upon the merger of New England Mutual Life Insurance Company
into Metropolitan Life Insurance Company between each Fund and Reich &
Tang Asset Management L.P., the Manager, each Contract to be identical to
the Investment Management Contract in effect for each Fund immediately
prior to such merger (see page 6 of the attached Proxy Statement);
2. To elect four trustees, as the case may be, for each of the Funds, each
trustee to hold office until his successor is duly elected and qualified;
3. To ratify or reject the selection of Messrs. McGladrey & Pullen LLP as
independent accountants of each Fund for their respective fiscal years
ending August 31, 1996 for Florida and November 30, 1996 for Pennsylvania;
and
4. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on January 17, 1996 are
entitled to notice of, and to vote at, the meeting.
By Order of the Boards of Trustees
BERNADETTE N. FINN, Secretary of each of the Funds
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YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY BALLOT, DATE
AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR
YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. WE ASK
FOR YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
- ------------------------------------------------------------------------------
-2-
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<TABLE>
<CAPTION>
PROXY STATEMENT PAGE
- --------------------------------------------------------------------------------------------
<S> <C>
INTRODUCTION......................................................................... 4
Proposal 1 Approval or Disapproval of a New Investment Management Contract to be
Effective at the Time of the Merger..................................... 6
Proposal 2 Election of Trustees.................................................... 8
Proposal 3 Ratification or Rejection of Selection of Independent Accountants....... 12
Information Regarding the Manager.................................................... 12
Allocation of Portfolio Brokerage.................................................... 17
Other Matters........................................................................ 17
Exhibit A Investment Management Contract between Florida and Reich & Tang Asset
Management L.P. ........................................................ 18
Exhibit B Investment Management Contract between Pennsylvania and Reich & Tang
Asset Management L.P. .................................................. 22
Exhibit C Table of Fees for all Funds Advised by the Manager...................... 26
</TABLE>
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-3-
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FLORIDA DAILY MUNICIPAL INCOME FUND,
AND PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
600 FIFTH AVENUE
NEW YORK, NEW YORK 10020
PROXY STATEMENT
INTRODUCTION
This statement is furnished in connection with the solicitation of proxies by
the Board of Trustees of Florida Daily Municipal Income Fund ('Florida') and
Pennsylvania Daily Municipal Income Fund ('Pennsylvania') (individually, a
'Fund' and collectively, the 'Funds') for use at a Joint Special Meeting of
Shareholders to be held at the offices of the Funds at 600 Fifth Avenue, New
York, New York on March 13, 1996 at 9 A.M. Such solicitation will be made
primarily by the mailing of this statement and the materials accompanying it.
Supplemental solicitations may be made by mail, telephone, or personal
interviews by officers and representatives of the Funds. The expenses in
connection with preparing and mailing this statement and the material
accompanying it, and of such supplemental solicitations, will be borne by The
New England and Metropolitan Life (each as hereinafter defined). This Proxy
Statement and the accompanying Proxy are first being sent to shareholders on
or about January 24, 1996. The Funds' most recent annual and semi-annual
reports are available upon request.
The outstanding voting stock of the Funds as of the close of business on
January 17, 1996 consisted of 56,973,637 shares of beneficial interest of
Florida and 41,028,436 shares of beneficial interest of Pennsylvania, each
whole share being entitled to one vote and each fraction of a share being
entitled to a proportionate fraction of a vote. Only shareholders of record at
the close of business on January 17, 1996 are entitled to vote at the meeting.
Any shareholder may revoke his proxy at any time prior to its exercise by a
written notification of such revocation, which must be signed, include the
shareholder's name and account number, be addressed to the Secretary of the
Fund at its principal executive office, 600 Fifth Avenue, New York, New York
10020, and be received prior to the meeting to be effective, or by signing
another proxy of a later date, or by personally casting his vote at the
meeting of shareholders.
Among the purposes of this Joint Special Meeting of the Shareholders of the
Funds is the approval of the Merger (the 'Merger') of New England Mutual Life
Insurance Company ('The New England') into Metropolitan Life Insurance Company
('Metropolitan Life'). The Merger is being treated, for purposes of the
Investment Company Act of 1940, as amended (the '1940 Act'), as a change of
control of New England Investment Companies, L.P. ('NEIC'), the limited
partner and owner of the 99.5% limited partnership interest in Reich & Tang
Asset Management L.P. (the Corporations' 'Manager'). Reich & Tang Asset
Management, Inc. (a wholly-owned subsidiary of NEIC) is the general partner
and owner of the remaining 0.5% interest of the Manager. Under the 1940 Act,
such a change of control constitutes an 'assignment' (as defined in the 1940
Act) of the Investment Management Contract between the Manager and each of the
Funds, as well as various other investment advisory agreements under which
NEIC and its subsidiary firms serve as advisers or sub-advisers to certain
other mutual funds, and results in the automatic termination of each of those
agreements including the Investment Management Contract between each of the
Funds and the Manager, effective at the time of the Merger. The Trustees have
approved, and recommend that the shareholders of the Funds approve, a new
investment management contract with respect to their Fund. This proposed new
- ------------------------------------------------------------------------------
-4-
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contract will be in substance identical to the contract in effect immediately
prior to the Merger, and will take effect at the time of the Merger. As a
result, the Manager will continue to perform investment management services
for each of the Funds after the Merger, on the same terms as are in effect
immediately before the Merger.
In addition to the above, the other purposes for this Joint Special Meeting of
Shareholders include: (i) the election of trustees of each Fund and (ii) the
ratification of the selection of independent accountants of each Fund.
A majority of the outstanding shares of Florida and Pennsylvania, represented
in person or by proxy, shall be required to constitute a quorum at the meeting
although more than a simple majority of the outstanding shares may be required
to be present to approve a particular issue.
Any signed proxy will be voted in favor of the proposals unless a choice is
indicated to vote against or to abstain from voting on that proposal. An
abstention on any proposal will have the same legal effect as a vote against
such proposal.
If a quorum is not present at the meeting, or if a quorum is present but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies. In determining whether to adjourn the
meeting, the following factors may be considered: the nature of the proposals
that are the subject of the meeting, the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect
to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. A shareholder vote may be taken on one or more of the
proposals in this proxy statement prior to any adjournment if sufficient votes
have been received for approval. The proposals are considered
'non-discretionary' and brokers that are record or nominee holders of shares
of the Funds who have received no instructions from their clients do not have
discretion to vote on these matters. Absent voting by the particular
beneficial owners of such shares, such 'broker non-voters' will not be
considered as votes cast in determining the outcome of the proposals.
As of January 8, 1996, the following persons or entities owned as much as 5%
of each Fund's outstanding shares:
Nature of
Name & Address % of Class Ownership
- ---------------------------------------------- ----------- -----------
Florida Daily Municipal Income Fund, Inc.
Class A
NationsBanc Capital Markets, Inc. 18.46% Record
as Agent for Customers
One Nations Bank Plaza
Charlotte, NC 28255
NationsBanc Capital Markets, Inc. 5.46% Record
as Agent for Customers
One Nations Bank Plaza
Charlotte, NC 28255
- ------------------------------------------------------------------------------
-5-
- ------------------------------------------------------------------------------
Nature of
Name & Address % of Class Ownership
- ---------------------------------------------- ----------- -----------
NationsBanc Capital Markets, Inc. 5.21% Record
as Agent for Customers
One Nations Bank Plaza
Charlotte, NC 28255
Class B
NationsBanc Capital Markets, Inc. 38.22% Record
as Agent for Customers
One Nations Bank Plaza
Charlotte, NC 28255
Neuberger & Berman, as Agent 35.14% Record
605 Third Avenue
New York, NY 10158
As of January 8, 1996, the officers or trustees, collectively, of Florida,
beneficially owned, directly or indirectly (including the power to vote or to
dispose of any shares), 1.5% of the Fund's total outstanding shares.
Nature of
Name & Address % of Class Ownership
- ---------------------------------------------- ----------- -----------
Pennsylvania Daily Municipal Income Fund
PNC Securities Corp. 9.05% Record
Fifth Avenue & Wood Streets
Pittsburgh, PA 15265
Lewco Securities Corp. 8.14% Record
34 Exchange Place
Jersey City, NJ 07311
National Financial Services Corp. 5.24% Record
200 Liberty Street
1 World Financial Center
New York, NY 10281
As of January 8, 1996, the officers or directors of Pennsylvania,
collectively, beneficially owned, directly or indirectly (including the power
to vote or to dispose of any shares), less than 1% of the Fund's total
outstanding shares.
PROPOSAL 1. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT MANAGEMENT CONTRACT TO
BE EFFECTIVE AT THE TIME OF THE MERGER
The Trustees of each Fund unanimously recommend that the shareholders vote to
approve a new investment management contract for each of their respective
Funds, to be effective at the time of the Merger. The new investment
management contract will be substantially identical to the existing investment
management contract in effect for each Fund immediately prior to the time of
the Merger. As explained above, the Merger is being treated, for purposes of
the 1940 Act, as a change in control of NEIC and its subsidiary firms
including the Manager, Reich & Tang Asset Management L.P., that serve as
advisers or sub-advisers to various mutual funds including each Fund. The 1940
Act provides that such a change in control constitutes an 'assignment' of
these advisory and sub-advisory agreements under which NEIC, the Manager and
these related subsidiary firms provide advisory services to the various mutual
funds including each Fund. The 1940 Act further provides that such an
'assignment' will result in the automatic termination of each of those
agreements, at the time of the Merger.
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-6-
- ------------------------------------------------------------------------------
The Merger. In August of 1995, The New England and Metropolitan Life entered
into an agreement providing for the Merger of the two companies (the 'Merger
Agreement'). Metropolitan Life will be the surviving company following the
Merger. Both The New England and Metropolitan Life are mutual insurance
companies. The Merger will result in the insurance policyholders of The New
England becoming policyholders of Metropolitan Life. The policyholders of The
New England will not receive any other payment, property or consideration in
connection with the Merger. The Merger will not be effected unless it is
approved by the requisite vote of the policyholders of both The New England
and Metropolitan Life. The Merger also requires approval by various government
regulatory agencies. In addition, consummation of the Merger is subject to
fulfillment of a number of other conditions, although the parties may waive
some or all of these conditions. There is no assurance that the Merger will in
fact be consummated. In addition, because it is impossible to predict with
certainty when the necessary regulatory approvals will be obtained and the
other conditions to the Merger be fulfilled, it is not known, as of the date
of this Proxy Statement, when the Merger will occur. The parties currently
expect, however, that the Merger will not occur until after the end of 1995.
NEIC is organized as a limited partnership. NEIC's sole general partner, New
England Investment Companies, Inc. ('NEIC Inc.'), is a wholly-owned subsidiary
of The New England. As a result of the Merger, NEIC Inc. would become a direct
or indirect wholly-owned subsidiary of Metropolitan Life. The New England also
owns a majority of the outstanding limited partnership interests of NEIC. The
Merger would result in Metropolitan Life becoming the owner (directly or
through a wholly-owned subsidiary) of these limited partnership interests. The
Merger Agreement provides that, following the consummation of the Merger,
Metropolitan Life shall have the right to designate a majority of the board of
directors of NEIC Inc.
Under the Merger Agreement, The New England and Metropolitan Life agree that
they will use their best efforts to satisfy the conditions of Section 15(f) of
the 1940 Act. Section 15(f) provides that an investment adviser to a
registered investment company (such as the Corporation), and affiliated
persons of such investment adviser, may receive any amount or benefit in
connection with the sale of securities of, or a sale of any other interest in,
such investment adviser which results in an assignment of an investment
advisory contract with such investment company, if
(1) for a period of 3 years after the time of such action, at least 75%
of the board of such investment company are not interested persons
of such company's investment adviser or predecessor investment
adviser, and
(2) there is not imposed an unfair burden on such investment company as
a result of such transaction or any express or implied terms,
conditions, or understandings applicable thereto.
Satisfaction of condition (1) above is not expected to require any changes in
the current composition of each Fund's Board of Trustees.
Information About Metropolitan Life. Metropolitan Life was incorporated under
the laws of New York in 1866 and since 1868 has been engaged in the life
insurance business under its present name. By the early 1900s, it had become
the largest life insurance company in the United States and is currently the
second largest life insurance company in the United States in terms of total
assets. Metropolitan Life's assets as of June 30, 1995 were over $130 billion,
and its adjusted capital as of that date exceeded $8 billion. Subsidiaries of
Metropolitan Life manage over $25 billion of assets for mutual funds,
institutional and other investment advisory clients.
- ------------------------------------------------------------------------------
-7-
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Trustees' Recommendation. The Trustees unanimously recommend that shareholders
approve the new investment management contract between the Manager and each
Fund, to be effective at the time of the Merger. The new investment management
contract will be substantially identical to the investment management contract
in effect immediately before the Merger which is described on page of this
Proxy Statement. (The only difference will be that the new investment
management contract will be dated the date of the Merger and will be in effect
initially for a period of two years and from year to year thereafter provided
that its continuance is approved in accordance with the terms of the contract
and the applicable provisions of the 1940 Act.)
In coming to the recommendation set forth above, the Trustees reviewed
extensive information about each Fund, the Manager, NEIC and Metropolitan
Life. The Trustees noted that, for purposes of the 1940 Act, the Merger
constitutes a change in control of NEIC and the Manager as well as NEIC's
other subsidiaries that act as advisers or sub-advisers for various other
mutual funds. Although the Merger is being treated as a change in control of
NEIC and of the various advisers and sub-advisers that are affiliated with
NEIC, including the Manager, the Merger is not expected to result in any
change in the personnel, operations or financial condition of NEIC or of such
advisers or sub-advisers, including the Manager. NEIC has indicated that each
adviser and sub-adviser affiliated with NEIC, including the Manager, will
continue to be independently managed, as has historically been the case. Thus,
the Merger is not expected to result in any changes in the investment
approaches or styles of the advisers and sub-advisers, including the Manager.
The Trustees accordingly concluded that it is appropriate and desirable for
each Fund to continue, after the Merger, the same investment management
arrangements as is in effect immediately before the Merger. Under the 1940
Act, such continuation requires, in the case of each Fund, the approval of its
shareholders, by vote of the lesser of (1) 67% of the shares represented at
the Meeting, if more than 50% of the shares are represented at the Meeting, or
(2) more than 50% of the outstanding shares.
In order that each Fund may continue to receive investment management services
following the Merger, on the same basis as before the Merger, the Trustees
unanimously recommend that shareholders of each Fund vote in favor of Proposal
1.
If the shareholders do not approve Proposal 1, the investment management
contract will terminate at the time of the Merger although the Manager will
continue to manage the Portfolios, and each Fund will consider such
alternative actions as are in the best interest of such Fund.
PROPOSAL 2. ELECTION OF TRUSTEES
At the meeting, four trustees are to be elected, each to hold office until his
successor has been elected and has qualified. Drs. Mellon and Wong and Mr.
Straniere were elected to each Fund's Board and the respective Audit and
Nominating Committees and have served as such since inception. Mr. Duff was
elected by the Board of Trustees to serve as President and Trustee of each
Fund in October, 1994. All such persons have consented to be named in this
Proxy Statement and to serve as trustees of each Fund if elected. The Board of
Trustees, which met four times during each Fund's fiscal year ended August 31,
1995 for Florida and November 30, 1995 for Pennsylvania, has no compensation
committee. Each trustee attended at least 75% of the board meetings held. Each
Fund has an Audit Committee of the Board of Trustees, comprised of Drs. Mellon
and Wong and Mr. Straniere who are not 'interested persons' of each Fund
within the meaning of Section 2(a)(19) of the 1940 Act. The Audit Committee
meets annually to review each Fund's financial statements with the independent
accountants and to report on its findings to the Board of Trustees.
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-8-
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In addition, pursuant to a Distribution and Service Plan adopted by each Fund
in accordance with the provisions of Rule 12b-1 under the Investment Company
Act of 1940, each Fund has a Nominating Committee of the Board of Trustees
comprised of Drs. Mellon and Wong and Mr. Straniere, to whose discretion the
selection and nomination of directors who are not 'interested persons' of the
Fund is committed. The Nominating Committee met once with regard to the fiscal
year ended August 31, 1995 for Florida and November 30, 1994 for Pennsylvania
regarding the nomination of Mr. Duff. The Nominating Committee currently does
not consider nominees recommended by shareholders. The election of each
director requires the approval of a majority present at the meeting in person
or by proxy.
The following is a list of the members of the Board of Trustees, any other
positions each may now hold with each Fund, the principal occupation of each
Trustee during the past five years and the nature, amount and percentage of
shares held by each in each Fund.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Principal Occupation Ownership at
Name and Age During Preceding Five Years 12/31/95 % of Shares
- ------------------ ---------------------------------------------------- ------------------ -----------
<S> <C> <C> <C>
Steven W. Duff* President and Trustee of each Fund and President of -0- -0-
the Mutual Funds Division of the Manager since
42 September 1994. Mr. Duff was formerly Director of
Mutual Fund Administration of NationsBanc, with
which he was associated from 1981 to August 1994.
Mr. Duff is also President and a Director of
California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Fund, Inc., Michigan
Daily Tax Free Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free
Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc. and Short Term Income Fund, Inc.;
President and Trustee of Institutional Daily Income
Fund; President of Cortland Trust, Inc., Reich &
Tang Government Securities Trust and Tax Exempt
Proceeds Fund, Inc.; and Executive Vice President of
Reich & Tang Equity Fund, Inc.
W. Giles Mellon Trustee of each Fund since its formation; Professor -0- -0-
of Business Administration in the Graduate School of
64 Management, Rutgers University, with which he has
been associated since 1966. Dr. Mellon is also a
Director of California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Fund, Inc.,
Delafield Fund, Inc., Michigan Daily Tax Free Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Fund, Inc., North Carolina
Daily Municipal Income Fund, Inc., Reich & Tang
Equity Fund, Inc. and Short Term Income Fund, Inc.;
and a Trustee of Institutional Daily Income Fund and
Reich & Tang Government Securities Trust.
</TABLE>
- ----------------------------
* Such person is an 'interested person' of the Corporation within the meaning
of Section 2(a)(19) of the 1940 Act.
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-9-
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<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Principal Occupation Ownership at
Name and Age During Preceding Five Years 12/31/95 % of Shares
- ------------------ ---------------------------------------------------- ------------------ -----------
<S> <C> <C> <C>
Robert Straniere Trustee of each Fund since its formation; Member of -0- -0-
New York State Assembly; Partner, The Straniere Law
53 Firm since 1981; Director of California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free
Fund, Inc., Delafield Fund, Inc., Michigan Daily Tax
Free Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc.,
Reich & Tang Equity Fund, Inc. and Short Term Income
Fund, Inc.; Trustee of Institutional Daily Income
Fund and Reich & Tang Government Securities Trust;
and Director of Life Cycle Mutual Funds, Inc.
Dr. Yung Wong Trustee of each Fund since its formation; Director -0- -0-
of Shaw Investment Management (HK) Limited from 1994
57 to September, 1995; formerly General Partner of
Abacus Partners Limited Partnership (a general
partner of a venture capital investment firm) from
1984 to 1994; Director of California Daily Tax Free
Income Fund, Inc., Connecticut Daily Tax Free Fund,
Inc., Delafield Fund, Inc., Michigan Daily Tax Free
Fund, Inc., New Jersey Daily Municipal Income Fund,
Inc., New York Daily Tax Free Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Reich &
Tang Equity Fund, Inc. and Short Term Income Fund,
Inc.; and Trustee of Institutional Daily Income
Fund, Reich & Tang Government Securities Trust and
Eclipse Financial Asset Trust.
</TABLE>
The address of each trustee and officer of each Fund is 600 Fifth Avenue, New
York, New York 10020.
In addition to Mr. Duff, who has served as President of each Fund since
October, 1994, the officers of each Fund are:
Dana E. Messina, 38, Vice President of each Fund. Ms. Messina is an Executive
Vice President of the Manager since January, 1995 and has been associated with
the Manager and its predecessors in various capacities since December, 1980.
She is also an officer of other investment companies advised by the Manager.
Lesley M. Jones, 47, Vice President of each Fund. Ms. Jones is a Senior Vice
President of the Manager since September, 1993 and has been associated with
the Manager and its predecessors in various capacities since April, 1973. She
is also an officer of other investment companies advised by the Manager.
Bernadette N. Finn, 48, Vice President and Secretary of each Fund. Ms. Finn is
a Vice President of the Manager since September, 1993 and has been associated
with the Manager and its predecessors in various capacities since September,
1970. She is also an officer of other investment companies advised by the
Manager.
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Molly Flewharty, 44, Vice President of each Fund. Ms. Flewharty is Vice
President of the Manager since September, 1993 and has been associated with
the Manager and its predecessors in various capacities since December, 1977.
She is also an officer of other investment companies advised by the Manager.
Richard De Sanctis, 39, Treasurer of each Fund since October 1992. Mr. De
Sanctis is Treasurer of the Manager and its predecessors since December, 1990
and is an officer of other investment companies advised by the Manager.
Each Fund paid an aggregate remuneration of $24,610 and $23,107 to its
trustees and to certain employees of the Manager with respect to its fiscal
year ended August 31, 1995 for Florida and November 30, 1995 for Pennsylvania,
respectively, consisting of $12,750 in aggregate directors' fees to the three
disinterested trustees, and salaries and benefits aggregating $34,967 paid to
certain employees of the Manager pursuant to the terms of the Investment
Management Contract.
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-11-
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<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Annual Compensation
Position from each Fund Benefits Accrued Benefits upon from Funds
As Part of Fund Retirement and Fund
Expenses Complex Paid
to Directors*
<S> <C> <C> <C> <C>
Steven W. Duff, All Funds: 0 All Funds: 0 All Funds: 0 0
Trustee
W. Giles Mellon, Florida $2,000 All Funds: 0 All Funds: 0 $56,500
Trustee Pennsylvania $2,250 (13 Funds)
Robert Straniere, Florida $2,000 All Funds: 0 All Funds: 0 $56,500
Trustee Pennsylvania $2,250 (13 Funds)
Yung Wong, Florida $2,000 All Funds: 0 All Funds: 0 $56,500
Trustee Pennsylvania $2,250 (13 Funds)
</TABLE>
* The total compensation paid to such persons by the Funds and Fund Complex
for the fiscal year ending August 31, 1995 for Florida and November 30, 1995
for Pennsylvania (and, with respect to certain of the funds in the Fund
Complex, estimated to be paid during the fiscal year ending October 31, 1995).
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.
PROPOSAL 3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees recommends that the shareholders ratify the selection of
Messrs. McGladrey & Pullen LLP, independent public accountants, to audit the
accounts of each Fund for the fiscal year ending August 31, 1996 for Florida
and November 30, 1996 for Pennsylvania. Messrs. McGladrey & Pullen LLP have
audited the accounts of each Fund since their inception and do not have any
direct financial interest or any material indirect financial interest in each
Fund.
A representative of Messrs. McGladrey & Pullen LLP is not expected to be
present at the shareholders' meeting. If the shareholders do not ratify the
Board's recommendation, the Board will submit another proposal to the
shareholders with a recommendation for independent public accountants. The
ratification of selection of Independent Accountants requires the approval of
a majority present at the meeting in person or by proxy.
INFORMATION REGARDING THE MANAGER
The Manager for each 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 was at August 31, 1995 manager, adviser or supervisor
with respect to assets aggregating approximately $7.9 billion. The Manager
acts as manager of seven other investment companies and also advises pension
trust, profit sharing trusts and endowments. In addition to the Funds, the
Manager's advisory clients include, among others, California Daily Tax Free
Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland
Trust, Inc., Delafield Fund, Inc., Institutional Daily Income Fund, Michigan
Daily Tax Free Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New
York Daily Tax Free Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc., Reich & Tang Equity Fund, Inc., Reich & Tang Government Securities
Trust, Short Term Income
- ------------------------------------------------------------------------------
-12-
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Fund, Inc. and Tax Exempt Proceeds Fund, Inc. Attached as Exhibit C is a Table
of Fees for all funds advised by the Manager. The Manager also advises pension
trusts, profit-sharing trusts and endowments.
Peter S. Voss (49), G. Neal Ryland (54), Steven W. Duff (42) and Richard E.
Smith, III (45) are directors of Reich & Tang Asset Management, Inc. the
general partner of the Manager. Mr. Voss is President of Reich & Tang Asset
Management, Inc. The address of Messrs. Voss and Ryland is 399 Boylston
Street, Boston Massachusetts 02116. Mr. Duff is President of the Mutual Fund
Group of the Manager. Mr. Smith is President of the Capital Management Group
of the Manager. Their address is 600 Fifth Avenue, New York, New York 10020.
NEIC Inc. is a holding company offering a broad array of investment styles
across a wide range of asset categories through ten investment
advisory/management affiliates and two distribution subsidiaries which
include, in addition to the Manager, Loomis, Sayles & Company, L.P., Copley
Real Estate Advisors, Inc., Back Bay Advisors, L.P., Marlborough Capital
Advisors, L.P., Westpeak Investment Advisors, L.P., Draycott Partners, Ltd.,
TNE Investment Services, L.P., New England Investment Associates, Inc., an
affiliate, Capital Growth Management Limited Partnership, and Harris
Associates. These affiliates in the aggregate are investment advisors or
managers to over 42 other registered investment companies.
Pursuant to the Investment Management Contract, the Manager manages each
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 Trustees of each Fund.
The Manager provides persons satisfactory to the Board of Trustees of each
Fund to serve as officers of each Fund. Such officers, as well as certain
other employees and trustees of each 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.
Each Fund's Investment Management Contract with the Manager's predecessor was
approved by the Board of Trustees, including a majority of the Trustees who
are not interested persons (as defined in the Act) of each Fund or the Manager
and by the shareholders at a special meeting of shareholders, effective
September 15, 1993 for the Pennsylvania Fund and September 1, 1994 for the
Florida Fund. The re-execution of each Investment Management Contract with the
Manager was approved by the Board of Directors/Trustees, including a majority
of the trustees who are not interested persons of each Fund or Manager,
effective October 1, 1994. Each Investment Management Contract has a term
which extends to August 31, 1996 for Florida and July 31, 1996 for
Pennsylvania and may be continued in force thereafter for successive twelve-
month periods beginning each September 1 for Florida and August 1 for
Pennsylvania, respectively, provided that such continuance is specifically
approved annually by majority vote of each Fund's outstanding voting
securities or by their Board of Trustees, and in either case by a majority of
the Trustees 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.
Each Investment Management Contract is terminable without penalty by each Fund
on sixty days' written notice when authorized either (1) by majority vote of
its outstanding voting shares or (2) by a vote of a majority of its Board of
Trustees or (3) by the Manager on sixty days' written notice, and will
automatically terminate in the event of its assignment. Each 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.
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Under its Investment Management Contract, each Fund will pay an annual
management fee equal to .40% of each Fund's average daily net assets. The
Manager, at its discretion, may voluntarily waive all or a portion of the
management fee. The fees are accrued daily and paid monthly. Any portion of
the total fees received by the Manager may be used by the Manager to provide
shareholder services and for distribution of each Fund's shares.
Pursuant to an Administrative Services Contract with each Fund, the Manager
also performs clerical, accounting supervision, office service and related
functions for each Fund and provides each Fund with personnel to (i) supervise
the performance of bookkeeping 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
Funds may from time to time request of the Manager. The personnel rendering
such services may be employees of the Manager, of its affiliates or of other
organizations. The Board of Trustees for each Fund has approved a change in
the Administration Services Contract that ceases all reimbursements to the
Manager and increases the Administration Fee payable to the Manager by 0.01%
of each Fund's average daily net assets. For its services under the
Administrative Services Contract, the Manager will receive (after such
increase) from Florida an annual equal to .21% of the Fund's average daily net
assets. For its services under the Administrative Services Contract, the
Manager will receive (after such increase) from Pennsylvania an annual fee
equal to .21% of each Fund's average daily net assets not in excess of $1.25
million, plus .20% of such assets in excess of $1.25 million but not in excess
of $1.5 billion, plus .19% of such assets in excess of $1.5 billion. Prior to
such change, the Funds paid the Manager for such personnel and for rendering
such services at rates which were agreed upon by each Fund and the Manager,
provided that each Fund did not pay for services performed by any such persons
who were also officers of the general partner of the Manager. It was intended
that such rates would be the actual costs of the Manager. Under the
Administrative Services Contract, each Fund may reimburse the Manager for all
of such Fund's operating costs (in addition to the personnel reimbursement),
including rent, depreciation of equipment and facilities, interest and
amortization of loans financing equipment used by the Corporation and all the
expenses incurred to conduct the Fund's affairs. The amounts of such
reimbursements are to be agreed upon between each Fund and the Manager. No
such reimbursements were made.
The Manager at its discretion may waive its rights to any portion of the
management fee or the administrative services fee and may use any portion of
the management fee and the administrative services fee for purposes of
shareholder and administrative services and distribution of the Fund's shares.
There can be no assurance that such fees will be waived in the future.
Investment management fees and operating expenses which are attributable to
both Classes of Florida and Pennsylvania will be allocated daily to each Class
share based on the percentage of outstanding shares at the end of the day.
Additional shareholder services provided by Participating Organizations to
Class A shareholders pursuant to the Plan shall be compensated by the
Distributor from its shareholder servicing fee, and the Manager from its
management fee. Expenses incurred in the distribution of Class B shares of
Florida and Pennsylvania shall be paid by the Manager.
Expense Limitation. The Manager has agreed, pursuant to the Investment
Management Contract, to reimburse each 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
Funds for its excess expenses as
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described above, each Fund has, under its Investment Management Contract,
confirmed its obligation for payment of all its other expenses, including all
operating expenses, taxes, brokerage fees and commissions, commitment fees,
certain insurance premiums, interest charges and expenses of the custodian,
transfer agent and dividend disbursing agent's fees, telecommunications
expenses, auditing and legal expenses, bookkeeping agent fees, costs of
forming the corporation and maintaining corporate existence, compensation of
Trustees, officers and employees of each Fund and costs of other personnel
performing services for each Fund who are not officers of the Manager or its
affiliates, costs of investor services, shareholders' reports and corporate
meetings, Securities and Exchange Commission registration fees and expenses,
state securities laws registration fees and expenses, expenses of preparing
and printing the Funds' prospectus for delivery to existing shareholders and
of printing application forms for shareholder accounts, and the fees and
reimbursements payable to the Manager under each Investment Management
Contract and Administrative Services Contract and the Distributor under each
Shareholder Servicing Agreement.
Each 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 such Fund intends to
do so whenever it appears advantageous to such Fund. The Funds' expenses for
employees and for such services are among the expenses subject to the expense
limitation described above.
The following fees were paid to the predecessor investment managers under the
previous Investment Management Contracts or the Manager under the current
Investment Management Contract.
For Florida's fiscal year ended August 31, 1995, NEIC and the Manager received
investment management fees totaling $0 and $0. For Florida's fiscal year ended
August 31, 1995, the Manager received administration fees in the aggregate of
$0.
For Pennsylvania's fiscal year ended November 30, 1993, Reich & Tang L.P. and
its successor, NEIC, received aggregate investment management fees of $0. For
Pennsylvania's fiscal year ended November 30, 1994, NEIC and the Manager
received aggregate investment management fees totaling $67,984. For
Pennsylvania's fiscal year ended November 30, 1995, the Manager received
investment management fees totaling $92,139. For Pennsylvania's fiscal year
ended November 30, 1994, NEIC and the Manager received administration fees in
the aggregate of $0. For Pennsylvania's fiscal year ended November 30, 1995,
the Manager received administration fees of $0. No reimbursements were payable
to each Fund by the Manager or its predecessor pursuant to the expense
limitation described above with respect to any Fund's last three fiscal years.
The Manager now acts as investment manager or adviser for other persons and
entities and may under the Investment Management Contract act as investment
manager or adviser to other registered investment companies. At present, the
Manager is investment manager to fifteen registered investment companies.
Distribution and Service Plan. Pursuant to Rule 12b-1 under the Act, the
Securities and Exchange Commission has required that an investment company
which bears any direct or indirect expense of distributing its shares must do
so only in accordance with a plan permitted by the Rule. Each Fund's Board of
Trustees has adopted a distribution and service plan (the 'Plan') and,
pursuant to the Plan, each Fund and the Manager have entered into a
Distribution Agreement and a Shareholder Servicing Agreement with Reich & Tang
Distributors L.P. (the 'Distributor') as distributor of each Fund's shares.
Because the Merger will be considered to result in the assignment of the
Funds' Distribution Agreement with the Distributor, causing those agreements
to terminate upon the Merger, the Boards of Directors of the Funds approved a
new Distribution Agreement with Reich & Tang Distributors L.P. for each Fund
to take effect if a new Investment Management Agreement is approved by
shareholders of each Fund and upon consummation of the Merger.
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The new Distribution Agreement would replace the current Distribution
Agreement with the Distributor and would be identical to those agreements,
except for the dates of execution and effectiveness.
Reich & Tang Asset Management, Inc. serves as the sole general partner for
both Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P.
Reich & Tang Asset Management L.P. serves as the sole limited partner of the
Distributor. The Distributor's address is 600 Fifth Avenue, New York, New York
10020. Under the Distribution Agreement, the Distributor, for nominal
consideration and as agent for each Fund, will solicit orders for the purchase
of the Fund's shares, provided that any subscriptions and orders will not be
binding on such Fund until accepted by such Fund as principal.
Under each Plan, each Fund will enter into a Shareholder Servicing Agreement
with the Distributor, with respect to the Class A shares only. Under each
Shareholder Servicing Agreement, the Distributor receives from each Fund a
service fee equal to .20% per annum of such Fund's Class A shares' average
daily net assets (the 'Service Fee'), for providing personal shareholder
services and for the maintenance of shareholder accounts. The Service Fee is
accrued daily and paid monthly and any portion of the Service Fee may be
deemed to be used by the Distributor for payments to Participating
Organizations with respect to servicing their clients or customers who are
shareholders of the Funds, Class A only.
Each Plan provides, and with respect to Florida for the Class A shares only,
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 each Fund's Class A shares (ii) to compensate certain
Participating Organizations for providing assistance in distributing such
Fund's shares of the Class A shares; and (iii) to pay the costs of printing
and distributing such Fund's Class A shares' prospectus to prospective
investors, and to defray the cost of the preparation and printing of brochures
and other promotional materials, mailings to prospective stockholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of such
Fund's shares of the Class A shares. The Distributor may also make payments
from time to time from its own resources, which may include the Service Fee,
with respect to the Class A shares only, and past profits for the purpose
enumerated in (i) above. The Distributor will determine the amount of such
payments made pursuant to each Plan, provided that such payments will not
increase the amount which each Fund with respect to Class A shares is required
to pay to the Manager and the Distributor for any fiscal year under either the
Investment Management Contract in effect for that year, the Administrative
Services Contract in effect for that year or under the Shareholder Servicing
Agreement in effect for that year.
The following information is for each Fund, and with respect to Florida,
applies only to the Class A shares. For the fiscal year ended August 31, 1995,
and November 30, 1995, Florida and Pennsylvania each paid a Service Fee for
expenditures pursuant to the Plan in amounts aggregating $63,089 and $0,
respectively. During such period, the Manager and Distributor made payments
pursuant to the Plan to or on behalf of Participating Organizations of $87,355
and $120,409, respectively. The excess of such payments over the total
payments the manager and Distributor received from Florida Class A shares and
Pennsylvania represents distribution and servicing expenses funded by the
Manager's predecessors and Distributor from their own resources including the
management fee.
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ALLOCATION OF PORTFOLIO BROKERAGE
Each Fund's purchases and sales of securities usually are principal
transactions. Portfolio securities are generally purchased directly from the
issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases and each Fund at
present does not anticipate paying brokerage commissions. Should any Fund pay
a brokerage commission on a particular transaction, such Fund would seek to
effect the transaction at the most favorable available combination of best
execution and lowest commission. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
No portfolio transactions are executed with the Manager, or with an affiliate
of the Manager, acting either as principal or as paid broker.
The frequency of transactions and their allocation to various dealers is
determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of each Fund. The primary consideration is
prompt execution of orders in an effective manner at the most favorable price.
Investment decisions for each Fund will be made independently from those for
any other accounts or investment companies that may be or become advised or
managed by the Manager or its affiliates. If, however, any Fund and other
investment companies or accounts advised or managed by the Manager are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund. In
addition, when purchases or sales of the same security for each 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
advantages available to large denomination purchasers or sellers.
OTHER MATTERS
As Massachusetts business trusts, Florida and Pennsylvania are not required,
and do not intend, to hold regular annual meetings. Shareholders who wish to
present proposals at any future shareholder meeting must present such
proposals to the Board of the appropriate Fund at a reasonable time prior to
the solicitation of any shareholder proxy.
The management does not know of any matters to be present at this Joint
Special Meeting of Shareholders other than those mentioned in this Proxy
Statement. If any of the persons listed above is unavailable for election as a
director, an event not now anticipated, or if any other matters properly come
before the meeting, the shares represented by proxies will be voted with
respect thereto in accordance with the best judgment of the person or persons
voting the proxies.
By Order of the Boards of Trustees
BERNADETTE N. FINN, Secretary of each
of the Funds
January 24, 1996
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EXHIBIT A (INVESTMENT MANAGEMENT CONTRACT BETWEEN FLORIDA AND REICH & TANG
ASSET MANAGEMENT, L.P.)
INVESTMENT MANAGEMENT CONTRACT
FLORIDA DAILY MUNICIPAL INCOME FUND
the 'Fund'
New York, New York
___________________, 1996
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 Declaration of Trust, 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
Trustees. 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 to manage the investment and reinvestment of our
assets as above specified, and, without limiting the generality of the
foregoing, to provide the investment management services specified below.
(b) Subject to the general control of our Board of Trustees, you will make
decisions with respect to all purchases and sales of the portfolio
securities. To carry out such decisions, you are hereby authorized, as our
agent and attorney-in-fact for our account and at our risk and in our
name, to place orders for the investment and reinvestment of our assets.
In all purchases, sales and other transactions in our portfolio securities
you are authorized to exercise full discretion and act for us in the same
manner and with the same force and effect as our Fund itself might or
could do with respect to such purchases, sales or other transactions, as
well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Trustees at each meeting thereof all
changes in our portfolio since your prior report, and will also keep us in
touch with important developments affecting our portfolio and, on your
initiative, will furnish us from time to time with such information as you
may believe
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appropriate for this purpose, whether concerning the individual entities
whose securities are included in our portfolio, the activities in which
such entities engage, Federal income tax policies applicable to our
investments, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such statistical and
analytical information with respect to our portfolio securities as you may
believe appropriate or as we may reasonably request. In making such
purchases and sales of our portfolio securities, you will comply with the
policies set from time to time by our Board of Trustees as well as the
limitations imposed by our Declaration of Trust and by the provisions of
the Internal Revenue Code and the 1940 Act relating to regulated
investment companies and the limitations contained in the Registration
Statement.
(d) 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.
(e) You or your affiliates will also furnish us, at your own expense, such
investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of
any regulatory authority to which you may be subject. You and your
affiliates will also pay the expenses of promoting the sale of our shares
(other than the costs of preparing, printing and filing our registration
statement, printing copies of the prospectus contained therein and
complying with other applicable regulatory requirements), except to the
extent that we are permitted to bear such expenses under a plan adopted
pursuant to Rule 12b-1 under the 1940 Act or a similar rule.
3. We agree, subject to the limitations described below, to be responsible
for, and hereby assume the obligation for payment of, all our expenses,
including: (a) brokerage and commission expenses, (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on
us, (c) commitment fees and certain insurance premiums, (d) interest
charges on borrowings, (e) charges and expenses of our custodian, (f)
charges, expenses and payments relating to the issuance, redemption,
transfer and dividend disbursing functions for us, (g) recurring and
nonrecurring legal and accounting expenses, including those of the
bookkeeping agent, (h) telecommunications expenses, (i) the costs of
organizing and maintaining our existence as a trust, (j) compensation,
including trustees' fees, of any of our trustees, officers or employees
who are not your officers or officers of your affiliates, and costs of
other personnel providing clerical, accounting supervision and other
office services to us as we may request, (k) costs of shareholder's
services including, charges and expenses of persons providing
confirmations of transactions in our shares, periodic statements to
shareholders, and recordkeeping and shareholders' services, (l) costs of
shareholders' reports, proxy solicitations, and trust meetings, (m) fees
and expenses of registering our shares under the appropriate Federal
securities laws and of qualifying such shares under applicable state
securities laws, including expenses attendant upon the initial
registration and qualification of such shares and attendant upon renewals
of, or amendments to, those registrations and qualifications, (n) expenses
of preparing, printing and delivering our prospectus to existing
shareholders and of printing shareholder application forms for shareholder
accounts, (o) payment of the fees and expenses provided for herein, under
the Administrative Services Agreement and pursuant to the Shareholder
Servicing Agreement and Distribution Agreement, and (p) any other
distribution or promotional expenses contemplated by an effective plan
adopted by us pursuant to Rule 12b-1 under the Act. Our obligation for the
foregoing expenses is limited by your agreement to be responsible, while
this Agreement is in effect, for any amount by which our annual operating
expenses (excluding taxes,
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brokerage, interest and extraordinary expenses) exceed the limits on
investment company expenses prescribed by any state in which our shares
are qualified for sale.
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 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.
5. In consideration of the foregoing we will pay you a fee at the annual rate
of .40% 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 you shall request of us in writing. You may use any portion of
this fee for distribution of our shares, or for making servicing payments
to organizations whose customers or clients are our shareholders. You may
waive your right to any fee to which you are entitled hereunder, provided
such waiver is delivered to us in writing. Any reimbursement of our
expenses, to which we may become entitled pursuant to paragraph 3 hereof,
will be paid to us at the same time as we pay you.
6. This Agreement will become effective on the date hereof and shall continue
in effect until ______________, 1996 and thereafter for successive
twelve-month periods (computed from each ______________), provided that
such continuation is specifically approved at least annually by our Board
of Trustees or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, and, in
either case, by a majority of those of our trustees who are neither party
to this Agreement nor, other than by their service as trustees of the
trust, interested persons, as defined in the 1940 Act and the rules
thereunder, of any such person who is party to this Agreement. Upon the
effectiveness of this Agreement, it shall supersede all previous
Agreements between us covering the subject matter hereof. This Agreement
may be terminated at any time, without the payment of any penalty, (i) by
vote of a majority of our outstanding voting securities, as defined in the
1940 Act and the rules thereunder, or (ii) by a vote of a majority of our
entire Board of Trustees, on sixty days' written notice to you, or (iii)
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.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the
right of any of your employees or the officers and directors of Reich &
Tang Asset Management, Inc., your general partner, who may also be a
director, officer or employee of ours, or of a person affiliated with us,
as defined in the 1940 Act, to engage in any other business or to devote
time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services
of any kind to any other corporation, firm, individual or association.
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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,
FLORIDA DAILY MUNICIPAL INCOME FUND
By: __
Name:
Title:
ACCEPTED: , 1996
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC.,
as General Partner
By: ____________________________________
Name:
Title:
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EXHIBIT B (INVESTMENT MANAGEMENT CONTRACT BETWEEN PENNSYLVANIA AND REICH &
TANG ASSET MANAGEMENT, L.P.)
INVESTMENT MANAGEMENT CONTRACT
PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
the 'Fund'
New York, New York
___________________, 1996
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 Declaration of Trust, 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
Trustees. 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 to manage the investment and reinvestment of our
assets as above specified, and, without limiting the generality of the
foregoing, to provide the investment management services specified below.
(b) Subject to the general control of our Board of Trustees you will make
decisions with respect to all purchases and sales of the portfolio
securities. To carry out such decisions, you are hereby authorized, as our
agent and attorney-in-fact for our account and at our risk and in our
name, to place orders for the investment and reinvestment of our assets.
In all purchases, sales and other transactions in our portfolio securities
you are authorized to exercise full discretion and act for us in the same
manner and with the same force and effect as the Fund itself might or
could do with respect to such purchases, sales or other transactions, as
well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Trustees at each meeting thereof all
changes in our portfolio since your prior report, and will also keep us in
touch with important developments affecting our portfolio and, on your
initiative, will furnish us from time to time with such information as you
may believe
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appropriate for this purpose, whether concerning the individual entities
whose securities are included in our portfolio, the activities in which
such entities engage, Federal income tax policies applicable to our
investments, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such statistical and
analytical information with respect to our portfolio securities as you may
believe appropriate or as we may reasonably request. In making such
purchases and sales of our portfolio securities, you will comply with the
policies set from time to time by our Board of Trustees as well as the
limitations imposed by our Declaration of Trust and by the provisions of
the Internal Revenue Code and the 1940 Act relating to regulated
investment companies and the limitations contained in the Registration
Statement.
(d) 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.
(e) You or your affiliates will also furnish us, at your own expense, such
investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of
any regulatory authority to which you may be subject. You and your
affiliates will also pay the expenses of promoting the sale of our shares
(other than the costs of preparing, printing and filing our registration
statement, printing copies of the prospectus contained therein and
complying with other applicable regulatory requirements), except to the
extent that we are permitted to bear such expenses under a plan adopted
pursuant to Rule 12b-1 under the 1940 Act or a similar rule.
3. We agree, subject to the limitations described below, to be responsible
for, and hereby assume the obligation for payment of, all our expenses,
including: (a) brokerage and commission expenses, (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on
us, (c) commitment fees and certain insurance premiums, (d) interest
charges on borrowings, (e) charges and expenses of our custodian, (f)
charges, expenses and payments relating to the issuance, redemption,
transfer and dividend disbursing functions for us, (g) recurring and
nonrecurring legal and accounting expenses, including those of the
bookkeeping agent, (h) telecommunications expenses, (i) the costs of
organizing and maintaining our existence as a trust, (j) compensation,
including trustees' fees, of any of our trustees, officers or employees
who are not your officers or officers of your affiliates, and costs of
other personnel providing clerical, accounting supervision and other
office services to us as we may request, (k) costs of shareholders
services including, charges and expenses of persons providing
confirmations of transactions in our shares, periodic statements to
shareholders, and recordkeeping and shareholders' services, (l) costs of
shareholders' reports, proxy solicitations, and trust meetings, (m) fees
and expenses of registering our shares under the appropriate Federal
securities laws and of qualifying such shares under applicable state
securities laws, including expenses attendant upon the initial
registration and qualification of such shares and attendant upon renewals
of, or amendments to, those registrations and qualifications, (n) expenses
of preparing, printing and delivering our prospectus to existing
shareholders and of printing shareholder application forms for shareholder
accounts, (o) payment of the fees and expenses provided for herein, under
the Administrative Services Agreement and under the Shareholder Servicing
Agreement and Distribution Agreement, and (p) any other distribution or
promotional expenses contemplated by an effective plan adopted by us
pursuant to Rule 12b-1 under the Act. Our obligation for the foregoing
expenses is limited by your agreement to be responsible, while this
Agreement is in effect, for any amount by which our annual operating
expenses (excluding taxes,
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-23-
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brokerage, interest and extraordinary expenses) exceed the limits on
investment company expenses prescribed by any state in which our shares
are qualified for sale.
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 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.
5. In consideration of the foregoing we will pay you a fee at the annual rate
of .40 of 1% 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 you shall request of us in writing. You may use any portion of
this fee for distribution of our shares, or for making servicing payments
to organizations whose customers or clients are our shareholders. You may
waive your right to any fee to which you are entitled hereunder, provided
such waiver is delivered to us in writing. Any reimbursement of our
expenses, to which we may become entitled pursuant to paragraph 3 hereof,
will be paid to us at the same time as we pay you.
6. This Agreement will become effective on the date hereof and shall continue
in effect until ____________ __, 199_ and thereafter for successive
twelve-month periods (computed from each ____________), provided that such
continuation is specifically approved at least annually by our Board of
Trustees or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, and, in
either case, by a majority of those of our trustees who are neither party
to this Agreement nor, other than by their service as trustees of the
trust, interested persons, as defined in the 1940 Act and the rules
thereunder, of any such person who is party to this Agreement. Upon the
effectiveness of this Agreement, it shall supersede all previous
agreements between us covering the subject matter hereof. 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 and the rules thereunder, or by a vote of a majority of our entire
Board of Trustees, on sixty days' written notice to you, or 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.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the
right of any of your employees or the officers and directors of Reich &
Tang Asset Management, Inc., your general partner, who may also be a
director, officer or employee of ours, or of a person affiliated with us,
as defined in the 1940 Act, to engage in any other business or to devote
time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services
of any kind to any other corporation, firm, individual or association.
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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,
PENNSYLVANIA DAILY MUNICIPAL INCOME
FUND
By:
____________________________________
ACCEPTED: , 1996
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC.,
General Partner
By: ____________________________________
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EXHIBIT C (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER)
<TABLE>
<CAPTION>
FUND NAME FEES NET ASSETS (IN
MILLIONS) AT
11-30-95
<S> <C> <C>
SHORT TERM INCOME FUND,
INC.
Management Fee
.30% of average daily net assets up to $750
million
.29% of average daily net assets in excess of $750
Money Market Portfolio million up to $1 billion 895.3
.28% of average daily net assets in excess of $1
billion up to $1.5 billion
.27% of average daily net assets in excess of $1.5
billion
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Management Fee
.275% of average daily net assets up to $250
U.S. Government Portfolio million 610.4
.25% of average daily net assets in excess of $250
million
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Administrative Services Fee
.21% of average daily net assets up to $1.25
billion
.20% of average daily net assets in excess of STIF 895.3
$1.25 billion up to $1.5 billion STIG 610.4
Each Portfolio .19% of average daily net assets in excess of $1.5
billion STIF (A) 671.3
STIF (A) 504.4
Shareholder Servicing and Distribution Plan Fee
(Class A only)
.25% of average daily net assets
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Management Fee
.325% of average daily net assets up to $750
million
.30% of average daily net assets in excess of $750
million 626.7
DAILY TAX FREE INCOME FUND, Administrative Services Fee
INC. .21% of average daily net assets up to $1.25 626.7
million
.20% of average daily net assets in excess of
$1.25 million up to $1.5 billion
.19% in excess of $1.5 billion Class A 453.4
Shareholder Servicing and Distribution Plan Fee
(Class A Only)
.25% of average daily net assets
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Management Fee
REICH & TANG EQUITY FUND, .80% of average daily net assets 109.5
INC. Administrative Services Fee
.20% of average daily net assets
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Management Fee
.80% of average daily net assets
DELAFIELD FUND, INC. Administrative Services Fee 44.0
.21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
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EXHIBIT C (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
CONNECTICUT DAILY TAX FREE Administrative Services Fee 103.2
INCOME FUND, INC. .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
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Management Fee
.30% of average daily net assets
NEW YORK DAILY TAX FREE
INCOME FUND, INC. Administrative Services Fee 263.1
.21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
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Management Fee
.35% of average daily net assets
REICH & TANG GOVERNMENT Administrative Services Fee .7
SECURITIES TRUST .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
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Management Fee
.30% of average daily net assets
CALIFORNIA DAILY TAX FREE Administrative Services Fee 159.3
INCOME FUND, INC. .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
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Management Fee
.30% of average daily net assets
MICHIGAN DAILY TAX FREE Administrative Services Fee 59.7
INCOME FUND, INC. .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
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All Inclusive Management Fee*
.40% of average daily net assets up to $250
TAX EXEMPT PROCEEDS FUND, million
INC. .35% of average daily net assets in excess of $250 265.4
million up to $500 million
.30% of average daily net assets in excess of $500
million
- ----------------------------
* Management Contract requires the Manager, not the Fund to bear all other
fund expenses; therefore, the fee payable under the Management Contract is the
only expense of the Fund.
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EXHIBIT C (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
NEW JERSEY DAILY MUNICIPAL Administrative Services Fee 135.1
INCOME FUND, INC. .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
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All Inclusive Management Fee
.80% of the first $500 million
.775% of the next $500 million
.75% of the next $500 million 1,884.4
CORTLAND TRUST, INC. .735% in excess of $1.5 billion
All Portfolios
Distribution Fee
.25% of average daily net assets 1,503.3
Distribution Fee (Live Oak Shares) 381.1
.20% of average daily net assets
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Management Fee
.40% of average daily net assets
NORTH CAROLINA DAILY Administrative Services Fee 171.8
MUNICIPAL INCOME FUND, INC. .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
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Management Fee
.40% of average daily net assets
Administrative Services Fee
.21% of average daily net assets up to $1.25
PENNSYLVANIA DAILY billion
MUNICIPAL INCOME FUND .20% of average daily net assets in excess of 41.0
$1.25 billion up to 1.5 billion
.19% of average daily net assets in excess of $1.5
billion
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
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Management Fee
.40% of average daily net assets
FLORIDA DAILY MUNICIPAL Administrative Services Fee 40.6
FUND .21% of average daily net assets
Shareholder Servicing and Distribution Plan Fee Class A 19.9
(Class A Only)
.25% of average daily net assets
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Investment Management Fee
.08% of average daily net assets
INSTITUTIONAL DAILY INCOME Administrative Services Fee 350.8
FUND .05% of average daily net assets
All Portfolios
Shareholder Servicing and Distribution Plan Fee Class A 271.7
(Class A Only)
.25% of average daily net assets
PH5
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-28-
</TABLE>
