As filed with the Securities and Exchange Commission on July 29, 2008

                                        Securities Act Registration No. 33-74470
                                Investment Company Act Registration No. 811-8312

                       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. 21                     [X]

                                     and/or

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


                                Amendment No. 21                             [X]

                        (Check appropriate box or boxes)

                                DAILY INCOME FUND
               (Exact Name of Registrant as Specified in Charter)
                     C/O REICH & TANG ASSET MANAGEMENT, LLC
                                600 FIFTH AVENUE
                            NEW YORK, NEW YORK 10020
               (Address of Principal Executive Offices) (Zip Code)

       Registrant's Telephone Number, including Area Code: (212) 830-5200

                                 CHRISTINE MANNA

                     C/O REICH & TANG ASSET MANAGEMENT, LLC
                                600 FIFTH AVENUE
                            NEW YORK, NEW YORK 10020
                     (Name and Address of Agent for Service)

                        Copy to: MICHAEL R. ROSELLA, ESQ.
                                 Paul, Hastings, Janofsky & Walker LLP
                                 75 East 55th Street
                                 New York, New York 10022
                                 (212) 318-6800

Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.

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


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


If appropriate, check the following box:

[  ] This post-effective amendment designates a new effective date for a
     previously filed post-effective amendment.

<PAGE>

--------------------------------------------------------------------------------
DAILY INCOME FUND                                     600 FIFTH AVENUE
INSTITUTIONAL CLASS SHARES                            NEW YORK, NY 10020
INSTITUTIONAL SERVICE CLASS SHARES                   (212) 830-5345
                                                     (800) 433-1918 (TOLL FREE)
================================================================================
PROSPECTUS

July 29, 2008

The investment objective of the Money Market Portfolio, U.S. Treasury Portfolio
and the U.S. Government Portfolio is to seek as high a level of current income
to the extent consistent with the preservation of capital and the maintenance of
liquidity.


The investment objective of the Municipal Portfolio is to seek as high a level
of tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S> <C>                                         <C>   <C>

 2  Risk/Return Summary: Investments, Risks      18   Management, Organization
    and Performance                                   and Capital Structure

 9  Risk/Return Summary: Fee Table               19   Shareholder Information

 13 Investment Objectives, Principal Investment  29   Distribution Arrangements
    Strategies and Related Risks                 31   Financial Highlights
</TABLE>

The Notice of the Reich & Tang Privacy Policy is included with this Prospectus
but is not part of the Prospectus.

<PAGE>
I. RISK/RETURN SUMMARY: INVESTMENTS,
   RISKS AND PERFORMANCE

Investment Objectives
-------------------------------------------------------------------------------

     The Fund is composed of four portfolios - the Money Market Portfolio, the
U.S. Treasury Portfolio, the U.S. Government Portfolio and the Municipal
Portfolio (each a "Portfolio" and collectively, the "Portfolios").

     The investment objective of the Money Market Portfolio, the U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.


     The investment objective of the Municipal Portfolio is to seek as high a
level of tax-exempt current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.

     There is no assurance that the Portfolios will achieve their investment
objectives.

Principal Investment Strategies
-------------------------------------------------------------------------------

     The Fund intends to achieve its investment objectives through four separate
Portfolios. Each Portfolio is a money market portfolio that invests in high
quality, short-term debt instruments. The Fund seeks to maintain investment
portfolios with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolios at amortized cost and maintain a net asset value of
$1.00 per share.

     Each Portfolio's strategy is as follows:

The Money Market Portfolio


     The Money Market Portfolio seeks to achieve its objective by investing
principally in short-term money market obligations with maturities of 397 days
or less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, loan participation interests,
securities issued or guaranteed by the United States Government, state agencies
or instrumentalities, and repurchase agreements calling for resale in 397 days
or less backed by the foregoing securities. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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 U.S. Treasury Portfolio

     The U.S. Treasury Portfolio seeks to achieve its objective by investing
only in obligations backed by the full faith and credit of the United States
government with maturities of 397 days or less and repurchase agreements which
are collateralized by such obligations calling for resale in 397 days or less.

The U.S. Government Portfolio


     The U.S. Government Portfolio seeks to achieve its objective by investing
at least 80% of its net assets in short-term, marketable securities and
instruments issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, ("Government Securities") with maturities of 397 days or
less, and repurchase agreements which are collateralized by the foregoing
securities. For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy.

The Municipal Portfolio

     The Municipal Portfolio seeks to achieve its objective by investing at
least 80% of its net assets in obligations issued by states, territories and
possessions of the United States and its political subdivisions, public
authorities and other entities authorized to issue debt, including Participation
Certificates therein, the interest on

                                       2
<PAGE>
which is exempt from regular federal income tax. For purposes of this test only,
net assets include borrowings for investment purposes. The Fund will provide
shareholders with at least 60 days' prior notice of any change in this policy.
The maturities of variable rate demand instruments held in the Portfolio will be
deemed to be the longer of the period required before the Portfolio 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.


Principal Risks

Risks Common to all Portfolios:

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

Risks of Investing in the Money Market Portfolio:

o    The Money Market Portfolio may contain securities issued by foreign
     governments, or any of their political subdivisions, agencies or
     instrumentalities, and by foreign branches of domestic banks, foreign
     subsidiaries of domestic banks, domestic and foreign branches of foreign
     banks, and commercial paper issued by foreign issuers. Foreign securities
     may be subject to investment risks which may include adverse economic and
     political developments as well as lack of uniform accounting and financial
     reporting standards.

o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

Risks of Investing in the U.S. Treasury Portfolio:

o    The U.S. Treasury Portfolio's investment policy of only investing in U.S.
     Treasury obligations and other obligations that are issued or guaranteed by
     the United States Government (including repurchase agreements), while
     minimizing risk of loss, may produce a lower yield than a policy of
     investing in other types of instruments. The yield and total return of the
     U.S. Treasury Portfolio is likely to be lower than that of the Money Market
     Portfolio.

Risks of Investing in the U.S Government Portfolio:


o    The U.S. Government Portfolio is exposed to the credit risk of the
     institutions that issue Government Securities. Changes in the credit
     quality of the issuers could affect their ability to meet their payment
     obligations of interest or principal. Any failure to make such payments
     could adversely affect the value of the security and your investment in the
     Fund.


Risks of Investing in the Municipal Portfolio:


o    The Municipal Portfolio invests in municipal debt obligations. The value of
     these municipal obligations may be affected by uncertainties in the
     municipal debt market related to taxation. In addition, the payment of
     interest and preservation of capital are dependent upon the continuing
     ability of issuers and/or obligors of state, municipal and public authority
     debt obligations to meet these payment obligations.


                                       3
<PAGE>
Risk/Return Bar Chart And Table
-------------------------------------------------------------------------------

The following bar charts and tables may assist you in deciding whether to invest
in a Portfolio of the Fund. The bar charts show the change in the average annual
total returns of the Money Market Portfolio (Institutional Class shares) for the
last ten calendar years, the U.S. Treasury Portfolio (Institutional Service
Class shares) for the last ten calendar years, the U.S. Government Portfolio
(Advantage Shares) (which is not offered by this prospectus) for the last
calendar year and the Municipal Portfolio (Advantage Shares) (which is not
offered by this prospectus) for the last calendar year. The table for the Money
Market Portfolio shows the average annual total returns of the Institutional
Class and the Institutional Service Class of the Portfolio for the last one
year, five year, ten year and since inception periods. The table for the U.S.
Treasury Portfolio shows the average annual total returns of the Institutional
Class and the Institutional Service Class of the Portfolio for the last one
year, five year, ten year and since inception periods. The tables for the U.S.
Government and Municipal Portfolios show the average annual total returns of the
Advantage Shares Class of the Portfolios (which is not offered by this
prospectus) for the last one year and since inception periods, and for the
Institutional Class and the Institutional Service Class of the Portfolio since
inception periods. While analyzing this information, please note that the
Portfolios' past performance is not an indication of how the Fund will perform
in the future. The current 7-day yield for the Money Market Portfolio, U.S.
Treasury Portfolio, U.S. Government Portfolio and Municipal Portfolio may be
obtained by calling the Fund at (212) 830-5345 or toll free at (800) 433-1918.

                                       4
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
Money Market Portfolio - Institutional Class  (1)(2)(3)
<S>                     <C>

Calendar Year End       % Total Return
2007                    5.23%
2006                    4.98%
2005                    3.12%
2004                    1.26%
2003                    1.08%
2002                    1.73%
2001                    4.15%
2000                    6.45%
1999                    5.19%
1998                    5.54%

<FN>


(1)  As of June 30, 2008, the Money Market Portfolio Institutional Class shares
     had a year-to-date return of 1.70%.

(2)  The Money Market Portfolio Institutional Class shares' highest quarterly
     return was 1.65% for the quarter ended September 30, 2000; the lowest
     quarterly return was 0.23% for the quarter ended March 31, 2004.


(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>

   Average Annual Total Returns - For the periods ended December 31, 2007


<S>                  <C>                      <C>

                     Institutional Class      Institutional Service Class

One Year                 5.23%                      4.97%
Five Years               3.12%                      2.85%
Ten Years                3.85%                      3.59%
Since Inception*         4.30%                      3.97%

<FN>

*    The inception date for the Money Market Portfolio Institutional Class
     shares was April 14, 1994, and for the Money Market Portfolio Institutional
     Service Class shares was April 6, 1995
</FN>
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
U.S. Treasury Portfolio - Institutional Service Class  (1)(2)(3)
<S>                     <C>


Calendar Year End       % Total Return
2007                    4.52%
2006                    4.54%
2005                    2.70%
2004                    0.87%
2003                    0.74%
2002                    1.47%
2001                    3.78%
2000                    5.88%
1999                    4.59%
1998                    5.07%

<FN>
(1)  As of June 30, 2008, the U.S. Treasury Portfolio Institutional Service
     Class shares had a year-to-date return of 0.99%.

(2)  The U.S. Treasury Portfolio Institutional Service Class shares' highest
     quarterly return was 1.53% for the quarter ended December 31, 2000; the
     lowest quarterly return was 0.14% for the quarter ended March 31, 2004.

(3) Investors purchasing or redeeming shares through a Participating
    Organization may be charged a fee in connection with such service and,
    therefore, the net return to such investors may be less than the net
    return by investing in the Fund directly.

  Average Annual Total Returns - For the periods ended December 31, 2007
</FN>
</TABLE>

<TABLE>
<CAPTION>

<S>                    <C>                      <C>

                      Institutional Class       Institutional Service Class
One Year                 4.78%                     4.52%
Five Years               2.91%                     2.66%
Ten Years                3.66%                     3.40%
Since Inception*         3.83%                     3.69%

<FN>
*    The inception date for the U.S. Treasury Portfolio Institutional Class
     shares was November 18, 1996, and for the U.S. Treasury Portfolio
     Institutional Service Class shares was November 29, 1995.
</FN>

</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

U.S. Government Portfolio - Advantage Government Liquidity Fund ("Advantage
Shares") (1)(2)(3)(4)
<S>                     <C>

Calendar Year End       % Total Return
2007                    4.17%
<FN>
(1)  The chart shows returns for the U.S. Government Portfolio Advantage Shares
     class of the Fund (which is not offered by this Prospectus) since, as of
     December 31, 2007, U.S. Government Portfolio Institutional Class shares and
     Institutional Service Class shares issued by the Fund were not in existence
     for at least one calendar year. All Classes of the U.S. Government
     Portfolio will have substantially similar annual returns because the shares
     are invested in the same portfolio of securities and the annual returns
     differ only to the extent that the Classes do not have the same expenses.
     Since the expenses of the Institutional Class and Institutional Service
     Class shares are lower than the U.S. Government Portfolio Advantage Shares
     class, your returns would have been higher.

(2)  As of June 30, 2008, the U.S. Government Portfolio Institutional Service
     Class shares had a year-to-date return of 1.20%.

(3)  The U.S. Government Portfolio Advantage Shares' highest quarterly return
     was 1.07% for the quarter ended June 30, 2007; the lowest quarterly return
     was 0.31% for the quarter ended June 30, 2008. As of June 30, 2008, the
     U.S. Government Portfolio Advantage Shares had a year-to-date return of
     0.92%.

(4)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.

</FN>
</TABLE>

<TABLE>
<CAPTION>

     Average Annual Total Returns - For the period ended December 31, 2007
<S>                 <C>                  <C>                     <C>
                    Advantage Shares     Institutional Class    Institutional
                                                                Service Class
 One Year           4.17%                  N/A                       N/A
 Since Inception*   4.20%                  4.96%                     4.72%
<FN>
*    The inception date for the U.S. Government Portfolio Advantage shares was
     November 2, 2006. The inception date of the U.S. Government Portfolio
     Institutional and Institutional Service Class shares was March 19, 2007.

</FN>
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

Municipal Portfolio - Advantage Municipal Liquidity Fund ("Advantage Shares")
(1)(2)(3)(4)
<S>                     <C>

Calendar Year End       % Total Return
2007                    2.72%

<FN>
(1)  The chart shows returns for the Municipal Portfolio Advantage Shares class
     of the Fund (which is not offered by this Prospectus) since, as of
     December 31, 2007, Municipal Portfolio Institutional Class shares and
     Institutional Service Class shares issued by the Fund were not in existence
     for at least one calendar year. All Classes of the Municipal Portfolio will
     have substantially similar annual returns because the shares are invested
     in the same portfolio of securities and the annual returns differ only to
     the extent that the Classes do not have the same expenses. Since the
     expenses of the Institutional Class and Institutional Service Class shares
     are lower than the Municipal Portfolio Advantage Shares class, your returns
     would have been higher.

(2)  As of June 30, 2008, the Municipal Portfolio Institutional Class shares had
     a year-to-date return of 1.18%.

(3)  The Municipal Portfolio Advantage Shares' highest quarterly return was
     0.70% for the quarter ended June 30, 2007; the lowest quarterly return was
     0.31% for the quarter ended June 30, 2008. As of June 30, 2008, the
     Municipal Portfolio Advantage Shares had a year-to-date return of 0.77%.

(4)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.

</FN>
</TABLE>

<TABLE>
<CAPTION>

    Average Annual Total Returns - For the period ended December 31, 2007

<S>                  <C>                <C>                        <C>
                     Advantage Shares   Institutional Class        Institutional
                                                                   Service Class
 One Year               2.72%              N/A                       N/A
 Since Inception*       2.71%              3.57%                     3.31%

<FN>
*    The inception date for the Municipal Portfolio Advantage Shares was
     November 2, 2006. The inception date of the Municipal Portfolio
     Institutional and Institutional Service Class shares was March 19, 2007.
</FN>

</TABLE>

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Money Market Portfolio.

Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>

Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>

* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                Money Market Portfolio
                                              Institutional  Institutional
                                                Class        Service Class
<S>                                         <C>   <C>      <C>   <C>

Management Fees ..........................        0.12%          0.12%
Distribution and Service (12b-1) Fees.....        0.00%          0.25%
Other Expenses............................        0.11%          0.11%

  Administration Fees.....................  0.05%           0.05%
                                                 -----           -----
Total Annual Fund Operating Expenses*.....        0.23%          0.48%
<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.20% for the Institutional Class and 0.45% for the
     Institutional Service Class, through July 31, 2008. The Fund's investment
     manager and distributor have further agreed that they will not modify or
     terminate these fee waiver arrangements through July 31, 2009, without
     prior approval of the Fund's Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the Money
Market Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Money Market Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:

          <S>                            <C>           <C>            <C>            <C>
                                        1 Year         3 Years        5 Years        10 Years

          Institutional Class:           $24           $74            $130           $293
          Institutional Service Class:   $49           $154           $269           $604

</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                    FEE TABLE


This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Treasury Portfolio.

<S>                                                          <C>

Shareholder Fees
(fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>


<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                               U. S. Treasury Portfolio
                                             Institutional   Institutional
                                                 Class       Service Class
<S>                                        <C>    <C>      <C>  <C>

Management Fees ........................          0.12%          0.12%
Distribution and Service (12b-1) Fees...          0.00%          0.25%
Other Expenses..........................          0.11%          0.11%

  Administration Fees...................    0.05%           0.05%
                                                 ------          ------
Total Annual Fund Operating Expenses*...          0.23%          0.48%
<FN>
*  The Fund's investment manager and distributor contractually agreed to waive
   fees and/or reimburse expenses in order to maintain Total Annual Operating
   Expenses at 0.20% for the Institutional Class and 0.45% for the Institutional
   Service Class, through July 31, 2008. The Fund's investment manager and
   distributor have further agreed that they will not modify or terminate these
   fee waiver arrangements through July 31, 2009, without prior approval of the
   Fund's Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>

Example

This Example is intended to help you compare the cost of investing in the U.S.
Treasury Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Treasury Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
                 <S>                                      <C>            <C>           <C>           <C>
                                                          1 Year         3 Years       5 Years       10 Years

                 Institutional Class:                     $24            $74           $130          $293
                 Institutional Service Class:             $49            $154          $269          $604

</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE


This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Government Portfolio.

<S>                                                         <C>
Shareholder Fees
(fees paid directly from your investment)

Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>


<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                                U.S. Government   Portfolio
                                               Institutional    Institutional
                                                 Class          Service Class

<S>                                        <C>   <C>       <C>   <C>

Management Fees ..........................        0.12%          0.12%
Distribution and Service (12b-1) Fees.....        0.00%          0.25%
Other Expenses............................        0.18%          0.17%
  Administration Fees.....................  0.05%           0.05%
                                                 ------          ------
Total Annual Fund Operating Expenses*.....        0.30%          0.54%
<FN>
*  The Fund's investment manager and distributor contractually agreed to waive
   fees and/or reimburse expenses in order to maintain Total Annual Operating
   Expenses at 0.20% for the Institutional Class and 0.45% for the Institutional
   Service Class, through July 31, 2008. The Fund's investment manager and
   distributor have further agreed that they will not modify or terminate these
   fee waiver arrangements through July 31, 2009, without prior approval of the
   Fund's Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>

Example

This Example is intended to help you compare the cost of investing in the U.S.
Government Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Government Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:


<S>                             <C>            <C>           <C>        <C>
                                1 Year         3 Years       5 Years    10 Years

Institutional Class:            $31             $97          $169       $381
Institutional Service Class:    $55             $173         $302       $677

</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE


This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Municipal Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                         <C>

Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                   Municipal Portfolio
                                                Institutional   Institutional
                                                   Class        Service Class

<S>                                        <C>   <C>       <C>  <C>
Management Fees ..........................        0.12%          0.12%
Distribution and Service (12b-1) Fees.....        0.00%          0.25%
Other Expenses............................        0.21%          0.22%
  Administration Fees.....................  0.05%           0.05%
                                                 ------          ------
Total Annual Fund Operating Expenses*.....        0.33%          0.59%
<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.20% for the Institutional Class and 0.45% for the
     Institutional Service Class, through July 31, 2008. The Fund's investment
     manager and distributor have further agreed that they will not modify or
     terminate these fee waiver arrangements through July 31, 2009, without
     prior approval of the Fund's Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>

Example

 This Example is intended to help you compare the cost of investing in the
 Municipal Portfolio with the cost of investing in other money market funds.

 The Example assumes that you invest $10,000 in the Municipal Portfolio for
 the time periods indicated and then redeem all of your shares at the end of
 those periods. The Example also assumes that your investment has a 5%
 return each year and that the Portfolio's operating expenses remain the
 same. Although your actual costs may be higher or lower, based on these
 assumptions your costs would be:


     <S>                                     <C>         <C>           <C>        <C>
                                             1 Year      3 Years       5 Years    10 Years
     Institutional Class:                    $34         $106          $185       $418
     Institutional Service Class:            $60         $189          $329       $738

</TABLE>


                                       12
<PAGE>
II.  INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
     Investment Objectives


     The Fund is a money market fund which seeks to achieve the following
investment objectives through its four Portfolios.

     The investment objective of the Money Market Portfolio, the U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The investment objective of the Municipal Portfolio is
to seek as high a level of tax-exempt current income to the extent consistent
with the preservation of capital and the maintenance of liquidity.

     There can be no assurance that a Portfolio will achieve its investment
objective.

     The investment objective of any Portfolio of the Fund described in this
section may only be changed upon the approval of the holders of a majority of
the outstanding shares of such Portfolio.


Principal Investment Strategies

Generally

     In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual Portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.

     The Fund will only invest in either securities which have been rated (or
whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's investment manager to be
of comparable quality.

     Each Portfolio of the Fund shall invest not more than 5% of its total
assets in securities issued by a single issuer, except for U.S. Government
Obligations.

     With respect to 75% of its total assets, each Portfolio shall invest not
more than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

     The Fund's investment manager considers the following factors when buying
and selling securities for each of the Fund's Portfolios: (i) the availability
of cash, (ii) redemption requests, (iii) yield management, and (iv) credit
management.

     As a temporary defensive measure a Portfolio may, from time to time, invest
in securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Portfolio to not achieve its
investment objective.

Money Market Portfolio

     The Money Market Portfolio intends to attain its investment objective
through investments in the following securities:

(i)  UNITED STATES GOVERNMENT SECURITIES: The Money Market Portfolio may
     purchase short-term obligations issued or guaranteed by the United States
     Government, its agencies or instrumentalities. These
     obligations include issues of the United States Treasury, such as bills,
     certificates of indebtedness, notes and bonds, and issues of certain
     agencies and instrumentalities established under the authority of an act of
     Congress. Some of these securities are supported by the full faith and
     credit of the United States, others are supported by the right of the
     issuer to borrow from the United States Treasury, and still others are

                                       13
<PAGE>
     supported only by the credit of the agency or instrumentality.

(ii) DOMESTIC AND FOREIGN BANK OBLIGATIONS: The Money Market Portfolio may
     purchase securities issued by foreign governments, or any of their
     political subdivisions or agencies or instrumentalities, certificates of
     deposit, time deposits and bankers' acceptances issued by domestic banks,
     foreign branches of domestic banks, foreign subsidiaries of domestic banks,
     and domestic and foreign branches of foreign banks. Certificates of deposit
     are certificates representing the obligation of a bank to repay funds
     deposited with it for a specified period of time. Time deposits are
     non-negotiable deposits maintained in a bank for a specified period of time
     (in no event longer than seven days) at a stated interest rate. Time
     deposits purchased by the Fund will not benefit from insurance from the
     FDIC. Bankers' acceptances are credit instruments evidencing the obligation
     of a bank to pay a draft drawn on it by a customer.

     The Money Market Portfolio limits its investments in obligations of
     domestic banks, foreign branches of domestic banks and foreign subsidiaries
     of domestic banks to banks having total assets in excess of one billion
     dollars or the equivalent in other currencies. The Money Market Portfolio
     limits its investments in obligations of domestic and foreign branches of
     foreign banks to dollar denominated obligations of such banks which at the
     time of investment have more than $5 billion, or the equivalent in other
     currencies, in total assets. These investments must also meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally."

     The Money Market Portfolio generally limits investments in bank instruments
     to (a) those which are fully insured as to principal by the FDIC or (b)
     those issued by banks which at the date of their latest public reporting
     have total assets in excess of $1.5 billion. However, the total assets of a
     bank will not be the sole factor determining the Money Market Portfolio's
     investment decisions and the Money Market Portfolio may invest in bank
     instruments issued by institutions which the investment manager believes
     present minimal credit risks.

     The Money Market Portfolio may purchase U.S. dollar-denominated obligations
     issued by foreign branches of domestic banks or foreign branches of foreign
     banks ("Eurodollar" obligations) and domestic branches of foreign banks
     ("Yankee dollar" obligations). The Money Market Portfolio will limit its
     aggregate investments in foreign bank obligations, including Eurodollar
     obligations and Yankee dollar obligations, to 25% of its total assets at
     the time of purchase, provided that there is no limitation on the Money
     Market Portfolio's investments in (a) Eurodollar obligations, if the
     domestic parent of the foreign branch issuing the obligations is
     unconditionally liable in the event that the foreign branch fails to pay on
     the Eurodollar obligation for any reason; and (b) Yankee dollar
     obligations, if the U.S. branch of the foreign bank is subject to the same
     regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
     obligations include time deposits, which are non-negotiable deposits
     maintained in a bank for a specified period of time at a stated interest
     rate. The Money Market Portfolio will limit its purchases of time deposits
     to those which mature in seven days or less, and will limit its purchases
     of time deposits maturing in two to seven days to 10% of such Portfolio's
     total assets at the time of purchase.

     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental restrictions such as exchange
     controls may be adopted which might adversely affect the payment of
     principal and interest on those obligations, (vi) the

                                       14
<PAGE>
     selection of foreign obligations may be more difficult because there may be
     less information publicly available concerning foreign issuers, (vii) there
     may be difficulties in enforcing a judgment against a foreign issuer or
     (viii) the accounting, auditing and financial reporting standards,
     practices and requirements applicable to foreign issuers may differ from
     those applicable to domestic issuers. In addition, foreign banks are not
     subject to examination by United States Government agencies or
     instrumentalities.

(iii)VARIABLE AMOUNT MASTER DEMAND NOTES: The Money Market Portfolio may
     purchase variable amount master demand notes. These instruments are
     unsecured demand notes that permit investment of fluctuating amounts of
     money at variable rates of interest pursuant to arrangements with issuers
     who meet the quality criteria discussed above under "Principal Investment
     Strategies - Generally." The interest rate on a variable amount master
     demand note is periodically adjusted according to a prescribed formula.
     Although there is no secondary market in master demand notes, the payee may
     demand payment of the principal and interest upon notice not exceeding five
     business or seven calendar days.

(iv) LOAN PARTICIPATION INTERESTS: The Money Market Portfolio may purchase
     participation interests in loans extended by banks to companies, provided
     that both such banks and such companies meet the quality standards
     applicable to bank instruments as set forth above.

(v)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Money Market Portfolio
     may purchase commercial paper or similar debt obligations. Commercial paper
     is generally considered to be short-term unsecured debt of corporations.

(vi) REPURCHASE AGREEMENTS: The Money Market Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Money Market Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

U.S.  Treasury Portfolio

     The U.S. Treasury Portfolio intends to attain its investment objective
through investments limited to obligations issued or guaranteed by the United
States Government including repurchase agreements covering those types of
obligations. Under normal circumstances the Portfolio will invest all of its net
assets, plus borrowings for investment purposes, in obligations issued or
guaranteed by the U.S. Treasury. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy.

     The Fund will enter into repurchase agreements for inclusion in the U.S.
Treasury Portfolio only if the instruments serving as collateral for the
agreements are eligible for inclusion in the U.S. Treasury Portfolio.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(ii) OTHER UNITED STATES GOVERNMENT OBLIGATIONS: Marketable securities and
     instruments issued or guaranteed by the full faith and credit of the United
     States Government. Such obligations include obligations of the Federal
     Housing Administration, the Export-Import Bank of the United States, the
     Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration.

                                       15
<PAGE>
(iii)REPURCHASE AGREEMENTS: The U.S. Treasury Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government. A repurchase agreement arises when a
     buyer purchases a security and simultaneously agrees with the vendor to
     resell the security to the vendor at an agreed upon time and price.

     The investment policies of the U.S. Treasury Portfolio may produce a lower
yield than a policy of investing in other types of instruments. The yield of the
U.S. Treasury Portfolio is likely to be lower than the yield of the Money Market
Portfolio.

U.S. Government Portfolio

     Under normal market circumstances, the U.S. Government Portfolio will
invest at least 80% of its net assets in short-term Government Securities with
maturities of 397 days or less and repurchase agreements which are
collateralized by the foregoing securities. For purposes of this test only, net
assets include borrowings for investment purposes. The Fund will provide
shareholders with at least 60 days' prior notice of any change in this policy.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(ii) OTHER OBLIGATIONS OF U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES:
     Marketable securities and instruments issued by government-sponsored
     agencies and enterprises acting under authority of Congress. Although
     obligations of federal agencies and instrumentalities are not debts of the
     U.S. Treasury, in some cases, payment of interest and principal on such
     obligations is guaranteed by the U.S. Government, e.g., obligations of the
     Federal Housing Administration, the Export-Import Bank of the United
     States, the Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration; in other cases payment of interest and principal is not
     guaranteed, e.g., obligation of the Federal Home Loan Bank System and the
     Federal Farm Credit Bank. The Fund will invest in the securities of those
     agencies that are not guaranteed or backed by the full faith and credit of
     the U.S. Government only when the Manager, in its sole discretion, is
     satisfied that the credit risk with respect to a particular agency or
     instrumentality is minimal.

(iii) Repurchase Agreements: The U.S. Government Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government or its agencies or instrumentalities. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

Municipal Portfolio

     The Municipal Portfolio intends to attain its investment objective through
investments in the following securities:

(i)  MUNICIPAL SECURITIES: The Municipal Portfolio may purchase high quality
     tax-exempt money market instruments ("Municipal Securities"), including
     debt obligations issued to obtain funds for various public purposes (e.g.,
     the construction of a wide range of public facilities), the refunding of
     outstanding obligations, the obtaining of funds for general operating
     expenses and lending such funds to other public institutions and
     facilities. The Portfolio may also invest in certain types of private
     activity bonds or industrial development bonds, issued by or on behalf of
     public authorities to obtain funds to provide for the construction,
     equipment, repair or

                                       16
<PAGE>
     improvement of privately operated facilities. Such obligations are
     considered to be Municipal Securities provided that the interest paid
     thereon generally qualifies as exempt from regular federal income tax in
     the opinion of bond counsel. Interest on certain Municipal Securities may
     give rise to federal alternative minimum tax liability and may have other
     federal income tax consequences.

(ii) REPURCHASE AGREEMENTS: The Municipal Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Municipal Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

     For a more detailed description of (i) the securities in which the Fund
will invest, (ii) fundamental investment restrictions, and (iii) industry
regulations governing credit quality and maturity, please refer to the Statement
of Additional Information.

RISKS

     The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.

     Investments in U.S. Government securities may or may not be supported by
the full faith and credit of the U.S. Government. Although many U.S. Government
securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law. The maximum potential liability of the issuers of some U.S. Government
securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers will not have the funds to meet their payment
obligations in the future. In such case, a Fund must look principally to the
agency, instrumentality or sponsored enterprise issuing or guaranteeing
the security for ultimate repayment and may not be able to assert a claim
against the U.S. Government itself in the event the agency, instrumentality or
sponsored enterprise does not meet its commitment.

     The U.S. Government securities that the Fund may purchase include:

o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored

                                       17
<PAGE>
     enterprises issuing these obligations is the Federal Farm Credit System.

     Since the Money Market Portfolio may contain securities issued by foreign
governments, or any of their political subdivisions, agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Money Market Portfolio may
be subject to additional investment risks when compared with those incurred by a
fund which invests only in domestic issuers. Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Similarly, volume in most
foreign securities markets is less than in the United States. The issuers of
some of these securities may be subject to less stringent or different
regulation than are United States issuers. In addition, there may be less
publicly available information about a non-United States issuer, and non-United
States issuers generally are not subject to uniform accounting and financial
reporting standards and requirements. Additional risks associated with foreign
investments might include adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities. Furthermore, some of these foreign securities may be subject
to stamp, withholding or other excise taxes levied by foreign governments, which
have the effect of increasing the cost of such securities and reducing the
realized gain or increasing the realized loss on such securities at the time of
sale.

     The investment policies of the U.S. Government Portfolio may produce a
lower yield than a policy of investing in other types of instruments. The yield
of the U.S. Government Portfolio is likely to be lower than the yield of the
Money Market Portfolio.

     Since the Municipal Portfolio invests in municipal debt obligations, the
value of these municipal obligations may be affected by uncertainties on the
municipal debt market related to taxation. In addition, the payment of interest
and preservation of capital are dependent upon the continuing ability of issuers
and/or obligors of state, municipal and public authority debt obligations to
meet these payment obligations.

PORTFOLIO HOLDINGS

     A schedule of each Portfolio's holdings, current as of month-end, will be
available on the Fund's website no earlier than 5 days after the end of each
month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission ("SEC") its semi-annual/annual shareholder report or
quarterly portfolio holdings report that includes such period. The most recent
schedule is available on the Fund's website at
http://www.money-funds.com/portfolioholdings or by calling toll free at (800)
433-1918. The Fund may terminate or modify this policy at any time without
further notice to shareholders. A description of the Fund's policies and
procedures with respect to the disclosure of the Fund's portfolio securities is
available in the Statement of Additional Information.

III.  MANAGEMENT, ORGANIZATION AND  CAPITAL STRUCTURE


     The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

                                       18
<PAGE>
     Pursuant to the Investment Management Contract between the Fund and the
Manager, the Manager manages each Portfolio's securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Trustees of the Fund. Pursuant to the Investment
Management Contract, each of the Portfolios pays an annual management fee of
0.12% of each Portfolio's average daily net assets. For the fiscal year ended
March 31, 2008, the Fund paid the Manager a management fee equal to 0.12% of the
Money Market, 0.12% of the U.S. Treasury, 0.08% of the U.S. Government and 0.04%
of the Municipal Portfolios' average daily net assets. A discussion regarding
the basis for the Board of Trustees approving the continuance of the Investment
Management Contract is available in the Fund's annual report for the period
ended March 31, 2008.

     Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and the Administrative Services Contract. For its
services under the Administrative Services Contract, the Fund pays the Manager
an annual fee of 0.05% of each Portfolio's average daily net assets. For the
fiscal year ended March 31, 2008, the Fund paid the Manager a fee for
administrative services equal to 0.03% of the Money Market, 0.02% of the U.S.
Treasury, 0.00% of the U.S. Government, and 0.00% of the Municipal Portfolios'
average daily net assets.

     The Manager and Distributor have agreed not to modify or terminate their
fee waiver arrangements through July 31, 2009, without the prior approval of the
Fund's Board of Trustees. Any portion of the total fees received by the Manager
and its past profits may be used to provide shareholder services and for
distribution of Fund shares.

     In addition, Reich & Tang Distributors, Inc. (the "Distributor"), receives
a servicing fee equal to 0.25% per annum of the average daily net assets of the
Institutional Service Class shares of each Portfolio under the Shareholder
Servicing Agreement. The fees are accrued daily and paid monthly.

     Investment management fees and operating expenses, which are attributable
to more than one Class of the Fund, will be allocated daily to each Class of
shares based on the percentage of shares outstanding at the end of the day.

IV.  SHAREHOLDER INFORMATION

     The Fund sells and redeems its shares on a continuing basis at their net
asset value. The Fund does not impose a charge for either purchases or
redemptions, although there may be a fee imposed on certain wire redemption
requests. All transactions in Fund shares are processed through the Fund's
transfer agent or its principal underwriter, as appropriate, which accept orders
for purchases and redemptions from Participating Organizations (see "Investments
Through Participating Organizations" for a definition of Participating
Organizations) and from investors directly.

Pricing of Fund Shares
-------------------------------------------------------------------------------

     The net asset value of each Portfolio of the Fund's shares is determined as
of 4:00 p.m., Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except (i) days on which the New York Stock
Exchange is closed for trading (i.e., national holidays) and (ii) Columbus Day
and Veterans' Day. However, on certain days that the New York Stock Exchange is
closed, the Fund, at the direction of the Manager, may be open for purchases and
redemptions and will determine its net asset value. The net asset value is
computed by dividing the value of each Portfolio'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. Each Portfolio intends to maintain a stable net asset

                                       19
<PAGE>
value at $1.00 per share although there can be no assurance that this will be
achieved.

     The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended (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. If fluctuating interest rates or credit
issues cause the market value of the securities in a Portfolio to deviate more
than 1/2 of 1% from the value determined on the basis of amortized cost, the
Board of Trustees 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 the Fund would receive if the instrument were sold.

     Shares are issued as of the first determination of the Portfolio's net
asset value per share made after acceptance of the investor's purchase order. In
order to maximize earnings on its Portfolios, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Portfolio
shares begin accruing income on the day the shares are issued to an investor.

     The Fund reserves the right to reject any purchase order of its shares. In
addition, the Fund does not accept cash, and may refuse to accept cash
equivalents (i.e., travelers cheques, money orders, cashier's checks or similar
instruments) and certain other forms of payment at its discretion. Certificates
for Fund shares will not be issued to investors.

SUBSCRIBING TO THE FUND
-------------------------------------------------------------------------------

     At the time of initial investment in the Fund, investors must elect on
their fund application the Class of shares of the Portfolio in which they wish
to invest. Subject to the Portfolios' initial investment minimums, investors may
divide their investment in the Fund between the Portfolios in any manner they
choose by submitting the Fund application with their choices. Investors may
purchase shares of the Portfolios from a Participating Organization or directly.
Certain Participating Organizations are compensated for their services by the
Manager and/or the Distributor.

     Shareholders will have a separate account with the Fund for each Portfolio
in which they invest. Certificates for Fund shares will not be issued to
investors.

PURCHASE OF FUND SHARES
-------------------------------------------------------------------------------
     The Fund does not accept a purchase order from investors investing in the
Fund directly (i.e., not through Participating Organizations) until an
investor's payment has been converted into Federal Funds and is received by the
Fund's transfer agent, or its principal underwriter, as appropriate. Orders from
these direct investors that are accompanied by Federal Funds and received after
4:00 p.m., Eastern time, on a Fund Business Day will result in the issuance of
shares on the following Fund Business Day.

     Investors may, if they wish, invest in the Fund through a Participating
Organization with which they have accounts. Generally, all other investors, and
investors who have accounts with Participating Organizations but do not wish to
invest in the Fund through them, may invest in the Fund directly. Direct
shareholders generally do not receive the benefit of the servicing functions
performed by a Participating Organization.

     The minimum initial investment in the Fund for each Portfolio is $1,000,000
for the Institutional Class and $100,000 Institutional Service Class. The
minimum amount for subsequent investments is $10,000 for the Institutional Class
and $1,000 for the Institutional Service Class. In addition, the Fund may impose
different minimum investment requirements for clients of certain financial
intermediaries with which the Distributor has entered into an agreement. The
Fund may waive any minimum purchase requirements.

     The Fund will provide each shareholder, except certain investors, with a
personalized monthly statement listing (i) the total number of

                                       20
<PAGE>
Fund shares owned as of the statement closing date, (ii) purchases and
redemptions of Fund shares, and (iii) the dividends paid on Fund shares
(including dividends paid in cash or reinvested in additional Fund shares).

INVESTMENTS THROUGH PARTICIPATING
ORGANIZATIONS
-------------------------------------------------------------------------------

     Generally, investors purchasing shares through a Participating Organization
are referred to as Participant Investors. Participating Organizations are
securities brokers, banks and financial institutions or other industry
professionals or organizations that have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by a Participant Investor to purchase or
redeem Fund shares, the Participating Organization, on behalf of the Participant
Investor, 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.

     Participating Organizations may confirm to Participant Investors each
purchase and redemption of Fund shares for their accounts. Also, Participating
Organizations may send periodic account statements to their customers showing
(i) the total number of Fund shares owned by each Participant Investor as of the
statement closing date, (ii) purchases and redemptions of Fund shares by each
Participant Investor during the period covered by the statement, and (iii) the
income earned by Fund shares of each Participant Investor 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 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. 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 applicable to shareholders who invest in the Fund
directly. Accordingly, the net yield to investors who invest through
Participating Organizations may be less than the net yield that could be
achieved by investing in the Fund directly. Participating Organizations may also
set deadlines for receipt of orders from Participant Investors that are earlier
than the order deadline of the Fund due to processing or other reasons. 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.

      Qualified Participating Organizations may transmit an investor's purchase
or redemption order to the Fund's transfer agent after 4:00 p.m., Eastern time
on the day the order is received from the investor as long as the investor has
placed his order with the Participating Organization before 4:00 p.m. Eastern
time on that day. The investor will then receive the net asset value of the
Fund's shares determined as of 4:00 p.m. Eastern time on the day he placed his
order with the qualified Participating Organization. Participating Organizations
are responsible for instituting procedures to ensure that purchase orders by
their respective clients are processed expeditiously.


INITIAL DIRECT PURCHASES OF SHARES
-------------------------------------------------------------------------------


     Investors who wish to invest in the Fund directly may obtain a current
Prospectus and the Fund application necessary to open an account by telephoning
the Fund at (212) 830-5345 or toll free at (800) 433-1918 during the hours of
8:30 a.m. to 5:30 p.m., Eastern time.


Mail and Personal Delivery

     Investors may send or deliver a check made payable to "Daily Income Fund"
along with a completed Fund application to:

                                       21
<PAGE>

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

     Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will 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. If your check is returned unpaid due to
insufficient funds, your order will be cancelled and your account will be
charged a $20.00 fee for each returned check.

Bank Wire

     To purchase shares of the Fund using the wire system for transmittal of
money among banks, an investor, prior to his or her initial purchase of shares,
should first telephone the Fund at (212) 830-5345 or toll free at (800) 433-1918
to obtain a Fund application necessary to open a new account. The investor
should complete and fax the Fund application along with any required
documentation to the Fund at (212) 315-1112. The original Fund application and
documentation should then be mailed to the address specified under "Mail and
Personal Delivery." The investor should then telephone the Fund at the above
number to obtain a new account number and then instruct a member bank of
the Federal Reserve System to wire the amount of the investment immediately to:

      The Bank of New York Mellon

      ABA # 021000018
      Reich & Tang Funds
      DDA # 890040352-7
      For Daily Income Fund
      Name of Portfolio
      Account of (Investor's Name)
                 ------------------------------
      Fund Account #
                     --------------------------

     An account will not be opened until the Fund has received the Fund
application and required documentation in proper form and has accepted the
purchase order for its shares.

      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 4:00 p.m., Eastern time, on a
Fund Business Day will be treated as a Federal Funds payment received on that
day.

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,
including 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, please contact your broker or the Fund for
the appropriate form. You may elect at any time to terminate your participation
by notifying in writing the appropriate depositing entity and/or federal agency.
Upon notification of death or legal incapacity your participation in the
Privilege will automatically terminate. Further, the Fund may terminate your
participation in the Privilege upon 30 days' notice to you.

SUBSEQUENT PURCHASES OF SHARES
-------------------------------------------------------------------------------

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

      Daily Income Fund
      c/o Reich & Tang Funds
      P.O. Box 13232
      Newark, New Jersey 07101-3232

     There is a $10,000 minimum for the Institutional Class and the $1,000 for
Institutional Service Class for subsequent purchases of shares. All payments
should clearly indicate the shareholder's account number.

     Provided that the information on the application form on file with the Fund
is still

                                       22
<PAGE>
applicable, a shareholder may reopen an account without filing a new Fund
application 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
Portfolio following receipt by the Fund's transfer agent of the redemption order
(and any supporting documentation that the Fund's transfer agent may require).
Normally, payment for redeemed shares is made on the same Fund Business Day the
redemption is effected, if the redemption proceeds are paid by wire (on the next
Fund Business Day if paid by check). However, redemption payments will not be
paid out unless the check (including a certified or cashier's check) used for
investment has been cleared for payment by the investor's bank, which could take
up to 15 days after investment. Shares redeemed are not entitled to participate
in dividends declared on the day a redemption becomes effective.

     A shareholder's original Fund application 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 Fund application 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. It should be 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.

Written Requests

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

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

      All written requests for redemption must be signed by the shareholder, in
each case with signature guaranteed, unless otherwise indicated on the Fund
application or in a subsequent written authorization.

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

Checks

     By making the appropriate election on their Fund application, shareholders
may request a supply of checks that may be used to effect redemptions from the
Class of shares of 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 $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. Investors who
purchase Fund shares by check may not receive their redemption proceeds until
the check has cleared, which can take up to 15 days following the date of
purchase.

     There is no charge to the shareholder for checks provided by the Fund,
although there may be fees charged for checks provided in connection with
certain cash management programs offered through Participating

                                       23
<PAGE>
Organizations. The Fund reserves the right to impose a charge or impose a
different minimum check amount in the future.

     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. Checks in amounts exceeding the value of the
shareholder's account at the time the check is presented for payment will not be
honored. 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. Shareholders will be charged a $16 fee for any stop payment
requests, a $15 fee if the Fund is requested to deliver a supply of checks
overnight and a $4 fee for each copy of a check requested. In addition, the Fund
reserves the right to charge the shareholder's account a fee of 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/or a post-dated check. The Fund reserves the right to terminate or
modify the check redemption procedure at any time or to impose additional fees
following notification to the Fund's shareholders.

     Corporations and other entities electing the checking option are required
to furnish a certified resolution or other evidence of authorization in
accordance with the Fund's normal practices. Individuals and joint tenants are
not required to furnish any supporting documentation. 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, the Fund will provide the
shareholder with a supply of checks.

Telephone

     The Fund accepts telephone requests for redemption from shareholders who
elect this option on their Fund application. The proceeds of a telephone
redemption may be sent to the shareholder at their address of record or, if in
excess of $1,000, to their bank accounts, both as set forth in the Fund
application or in a subsequent signature guaranteed written authorization. The
Fund may accept telephone redemption instructions from any person with respect
to accounts of shareholders who elect this service and thus such shareholders
risk possible loss of principal and interest in the event of a telephone
redemption not authorized by them. Telephone requests to wire redemption
proceeds must be for amounts in excess of $10,000. For telephone requests for
wire redemptions of less than $10,000, the Fund charges a $15 fee. 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 at the time of such redemption request. Failure
by the Fund to employ such reasonable procedures may cause the Fund to be liable
for the losses incurred by investors due to unauthorized or fraudulent telephone
redemptions.

     A shareholder making a telephone withdrawal should call the Fund at (212)
830-5345 or toll free at (800) 433-1918, 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 of
record, and (v) the name of the person requesting the redemption. Usually the
proceeds are sent to the designated bank account or address of record on the
same Fund Business Day the redemption is effected, if the redemption proceeds
are being paid by wire (on the next Fund Business Day if paid by check). The
Fund may modify or discontinue the telephone redemption option at any time and
will notify shareholders accordingly.


Generally

     There is no redemption charge, although there may be a fee charged on
certain wire redemption requests, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds

                                       24
<PAGE>
of redemptions are paid by check. 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 of his or her shares of a Portfolio, all dividends accrued to the
date of such redemption will be paid to the shareholder along with the proceeds
of the redemption. A redemption of shares may result in taxable income to the
shareholder.

     The right of redemption generally 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 (i) any period during which the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
(ii) any period during which the SEC determines that trading thereon is
restricted, (iii) 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 to fairly determine the value of its net
assets, or (iv) for such other period as the SEC may by order permit for the
protection of the shareholders of the Fund.

     The Fund and its agents reserve the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked" entities and individuals
maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii)
where the Fund or its agents detect suspicious activity or suspect
fraudulent or illegal activity, or (iii) when notice has been received by the
Fund or its agents that there is a dispute between the registered or beneficial
account owners.

     The Fund reserves the right to redeem the shares of any shareholder if the
total value of all the remaining shares in the shareholder's or its
Participating Organization's account after a withdrawal is less than $5,000 for
the Institutional Class and the Institutional Service Class. 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. The Participating Organization will be responsible
for notifying the Participant Investor of the proposed mandatory redemption. A
shareholder or Participating Organization who receives such a notice may avoid
mandatory redemption by purchasing sufficient additional shares to increase its
account value to the minimum amount during the notice period. Shareholders who
purchase shares under these circumstances are not subject to the normal minimums
for subsequent purchases.

     In addition, in accordance with applicable customer identification
regulations, the Fund reserves the right to redeem the shares of any shareholder
and close the shareholder's account if the Fund and its agents are unable to
verify the shareholder's identity within a reasonable time after the
shareholder's account is opened. If the Fund closes a shareholder's account in
this manner, the shares will be valued in accordance with the net asset value
next calculated after the Fund decides to close the account.

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 or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the date specified on the Automatic Withdrawal Authorization
form. Whenever such day of the month is not a Fund Business Day, the payment
date is the Fund Business Day preceding the day of the month specified on the
Automatic Withdrawal Authorization form. In order to make a payment, a

                                       25
<PAGE>
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 application by completing an Automatic Authorization
Withdrawal form. The election may also be made, changed or terminated at any
later time by sending a signature guaranteed written request to the Fund's
transfer agent. Because the withdrawal plan involves the redemption of Fund
shares, such withdrawals may constitute taxable events to the shareholder.
However, the Fund does not expect that there will be any realized capital gains.

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 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, at no charge, 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
reinvestment of capital gains or any taxable dividends does not avoid a taxable
event to the shareholder, even though such shareholder has not received a cash
distribution to pay the resulting tax, if any. See "Tax Consequences."

     Election to receive dividends and distributions in cash or shares is made
at the time shares are subscribed for and may be changed by notifying the Fund
in writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There are no sales or other charges in connection with
the reinvestment of dividends and capital gains distributions.

     While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, each Portfolio's net investment
income (excluding capital gains, if any) will be declared as a dividend on each
Fund Business Day. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous Fund Business Day. The Fund pays dividends monthly.
There is no fixed dividend rate, and there can be no assurance that the Fund
will pay any dividends or realize any capital gains.

      Because the Institutional Service Class shares bear the service fee under
the Fund's 12b-1 Plan, the net income of and the dividends payable to these
share classes will be lower than the net income of and dividends payable to the
Institutional Class shares of the Fund. Dividends paid to each Class of shares
of each Portfolio of the Fund will, however, be declared on the same days at the
same times and, except as noted with respect to the service fees payable under
the Fund's 12b-1 Plan, will be determined in the same manner and paid in the
same amounts.


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 that retain Reich & Tang Asset Management, LLC as
investment manager and that participate in the exchange privilege program with
the Fund. If only one Class

                                       26
<PAGE>
of shares is available in a particular exchange fund, the shareholders of the
Fund are entitled to exchange their shares for the shares available in that
exchange fund. If a particular exchange fund has more than one available class
of shares the shareholders of the Fund are entitled to exchange their shares for
a comparable class of shares available in the exchange fund. Currently the
exchange privilege program has been established between the Fund and California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, New Jersey Daily
Municipal Income Fund, Inc. and New York Daily Tax Free Income Fund, Inc. In the
future, the exchange privilege program may be extended to other investment
companies that retain Reich & Tang Asset Management, LLC as investment adviser
or manager.


     There is no charge for the exchange privilege or limitation as to frequency
of exchange. The minimum amount for an exchange is $1,000. However, 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 its
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, an investor should review the current prospectus of the
investment company into which the exchange is to be made. An exchange will be a
taxable event to an exchanging shareholder. See "Tax Consequences."

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

     Daily Income Fund
     c/o Reich & Tang Funds
     600 Fifth Avenue-8th Floor
     New York, New York 10020

or, for shareholders who have elected that option, by telephoning the Fund at
(212) 830-5345 or toll free at (800) 433-1918. The Fund reserves the right to
reject any exchange request and may modify or terminate the exchange privilege
at any time.

FREQUENT TRADING
-------------------------------------------------------------------------------

     The Reich & Tang family of funds discourages short-term or excessive
trading ("frequent trading") of their shares by shareholders (including by means
of exchanges) and maintains procedures reasonably designed to detect and deter
such frequent trading, except with respect to the money market funds as
discussed below. Frequent trading is sometimes referred to as market timing.
Market timing may take many forms but commonly refers to arbitrage activity
involving the frequent buying and selling of mutual fund shares in order to take
advantage of the fact that there may be a lag between a change in the value of a
mutual fund's portfolio securities and the reflection of that change in the
fund's share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons, frequent trading poses the
risk of lower returns for long-term shareholders of a fund. There is no
guarantee that these policies and procedures will be effective in detecting and
preventing frequent trading in whole or in part.

     Money market funds are not effective vehicles for market timing activity
since these types of funds

                                       27
<PAGE>
seek to maintain a constant net asset value of $1.00 per share. In addition, the
risks of frequent trading are not generally applicable to money market funds
because money market funds are created as cash management vehicles which
accommodate frequent inflows and outflows of cash. As a result, money market
funds are managed to accommodate such cash flows, particularly when used as
sweep vehicles, which generally eliminates the potential for disruptive trading.

    Nonetheless, as indicated under "Pricing of Fund Shares" the Fund reserves
the right to reject any purchase order for its shares for any reason and thus
may exercise such right in the event it determines that a purchase order is
disruptive to the Fund's management or otherwise. The Fund's procedures with
respect to frequent purchases and redemptions of Fund shares by shareholders are
thus limited to the Fund exercising its right to reject purchase orders it
determines in its discretion to be disruptive. The Fund may change its policies
relating to frequent trading at any time without prior notice to shareholders.

TAX CONSEQUENCES
-------------------------------------------------------------------------------


     The Fund intends to continue to qualify for the income tax treatment
applicable to a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), for each Portfolio. To qualify as a regulated
investment company, each Portfolio must meet certain tests concerning its
investments and distributions. For each year a Portfolio qualifies as a
regulated investment company, the Portfolio will not be subject to federal
income tax on its investment company taxable income (which generally consists of
ordinary income, including taxable interest, and realized net short-term capital
gains in excess of realized net long-term capital losses, if any) and net
long-term capital gains distributed to its shareholders in the form of dividends
or capital gain distributions. Additionally, each Portfolio will not be subject
to a federal excise tax if the Portfolio distributes each year at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders and
any undistributed and untaxed amounts from prior years.

     Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives, except as provided in the following paragraph,
distributions will (i) consist primarily of ordinary income, (ii) in the case of
corporate shareholders, not be eligible for the dividends received deduction,
and (iii) in the case of individual shareholders, not be eligible for the
reduced tax rate currently applicable to certain qualified dividend income.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether the shareholders receive cash or additional shares. A
shareholder who elects to reinvest in additional shares will be treated for tax
purposes as if it had received and reinvested the cash dividend.

     The Fund expects that as a result of the investment objectives of the
Municipal Portfolio, distributions by the Municipal Portfolio will be exempt
from regular federal income tax to the extent that they are derived from
Municipal Securities and designated as exempt-interest dividends, provided that
the Municipal Portfolio complies with the requirements of the Code regarding
qualification to pay exempt-interest dividends. Exempt-interest dividends
received by a shareholder may be subject to federal alternative minimum tax,
state and local tax, and other limitations applicable to certain shareholders.
Investors should consult their own tax advisors with respect to the treatment of
exempt-interest dividends based on their specific facts.


     A shareholder's initial tax basis for its shares in the Fund will be its
cost of the shares, including any fees or expenses. The sale of shares in the
Fund will be the taxable disposition of an asset, with gain or loss recognized
in an amount equal to the difference between the shareholder's adjusted tax
basis for the shares and the proceeds received on the sale. Gain or loss
generally will be treated as capital gain or loss if the shares in the Fund are
held as capital assets. Such capital gain or loss will be long-term if the
shareholder has held the shares in the Fund for more than one year, and, for
individual shareholders, may qualify for the maximum capital gain tax rate of
15% (for taxable

                                       28
<PAGE>
years beginning before January 1, 2011) rather than the tax rate applicable to
ordinary income. The exchange of shares of one Portfolio for shares of another
Portfolio, if available, will also be treated as a taxable disposition of the
shares exchanged, on which gain or loss will be recognized. In either case, loss
recognition may be affected by the loss disallowance rules of the Code.

      The Fund is required by federal law to withhold 28% of reportable payments
as backup withholding (which may include dividends, capital gain distributions
and redemptions) paid to shareholders who have not complied with Code
requirements regarding the supplying of their taxpayer identification number and
the reporting of income. In connection with this withholding requirement, a
shareholder will be asked to certify on its application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to backup withholding for various reasons including previous
underreporting to the IRS.

      Distributions from the U.S. Government Portfolio and U.S. Treasury
Portfolio that are derived from interest on certain obligations of the United
States Government and agencies thereof, and distributions from the Municipal
Portfolio that are derived from interest on certain obligations of states and
agencies thereof, may be exempt from state and local taxes in certain states.
Investors should consult their own tax advisors regarding specific questions as
to federal, state or local taxes. Additional tax information is provided in the
Statement of Additional Information.

V.   DISTRIBUTION ARRANGEMENTS

RULE 12B-1 FEES
-------------------------------------------------------------------------------

      Investors do not pay a front-end sales charge to purchase shares of the
Fund. However, the Fund pays fees in connection with distribution of shares
and/or for the provision of servicing to the Institutional Service Class
shareholders. The Fund pays these fees from its assets on an ongoing basis and
therefore, over time, the payment of these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

      The Fund's Board of Trustees has adopted a Rule 12b-1 distribution and
service plan (the "Plan"), with respect to the Institutional Service Class
shares of the Fund and, pursuant to the Plan, the Fund and the Distributor have
entered into a Distribution Agreement and Shareholder Servicing Agreement.

      As agent for the Fund, the Distributor will solicit orders for the
purchase of the Fund's shares, provided that any orders will not be binding on
the Fund until accepted by the Fund as principal. The Distributor may use the
distribution fee to pay the cost of, and to compensate others, including
Participating Organizations that provide distribution assistance with respect to
these classes. This fee is accrued daily and paid monthly.

     Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Institutional Service Class shares a service fee equal to 0.25%
annum of each Portfolio's average daily net assets (the "Shareholder Servicing
Fee") for providing personal shareholder services and for the maintenance of
shareholder accounts. This fee is accrued daily and paid monthly. Any portion of
the fees 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 Institutional Service
Class shares of each Portfolio. The Institutional Class shareholders will
generally 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 the Fund will
pay for (i) telecommunications expenses, including the cost of dedicated lines
and CRT terminals, incurred by the Distributor and Participating Organizations
in carrying out their obligations under the Shareholder Servicing Agreement with
respect to Institutional Service Class shares or the Participating Organization
agreement, as the case may be, and (ii) preparing, printing and delivering the
Fund's Prospectus to existing shareholders of the Fund

                                       29
<PAGE>
and preparing and printing Fund applications 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, administrative services
fee, and past profits for the following purposes: (i) to pay the cost of, and to
compensate others, including Participating Organizations with whom the
Distributor has entered into written agreements, for performing shareholder
servicing on behalf of the Institutional Service Class shares of the Fund; (ii)
to compensate Participating Organizations for providing assistance in
distributing the Institutional Service Class shares of the Fund; and (iii) to
pay the costs 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 of the Distributor and other persons 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 Institutional Service Class shares) and past profits, for
the purposes enumerated in (i) above. The Distributor may determine the amount
of such payments made pursuant to the Plan, provided that such payments will not
increase the amount which the Fund is required to pay to the Manager and
Distributor for any fiscal year under either the Investment Management Contract,
Administrative Services Agreement, Distribution Agreement or Shareholder
Servicing Agreement in effect for that year.

     The Distributor or an affiliate may, from time to time, at its expense and
out of its own resources (a source of which may be the 12b-1 fees paid by the
Fund under the Plan), make cash payments to some but not all Participating
Organizations for shareholder services, as an incentive to sell shares of the
Fund and/or to promote retention of their customers' assets in the Fund. These
payments may be referred to as "revenue sharing," but do not change the price
paid by investors to purchase the Fund's shares or the amount the Fund receives
as proceeds from such sales. Revenue sharing payments may be made to
Participating Organizations that provide services to the Fund or its
shareholders, including (without limitation) shareholder servicing,
administration, accounting, transfer agency and/or distribution services. The
Distributor negotiates the level of payments described above to any particular
Participating Organization with each firm, based on, among other things, the
nature and level of services provided by such Participating Organization and the
significance of the overall relationship of the Participating Organization to
the Manager and its affiliates. The amount of these payments may be significant
and may create an incentive for the Participating Organization to sell shares of
the Fund to you or to recommend one fund complex over another. Please speak with
your Participating Organization to learn more about payments made to them by the
Distributor or its affiliates. Additional information regarding these payments
can be found in the Fund's Statement of Additional Information. In addition, to
the extent allowable under the Financial Industry Regulatory Authority ("FINRA")
rules and any other applicable regulations, the Distributor or an affiliate may
contribute to sales programs for certain Participating Organizations and may
provide non-cash compensation to certain Participating Organizations like
sponsorship or funding of sales seminars, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or by giving out merchandise at industry
conferences, which may be paid for by the Distributor or an affiliate out of its
own resources.


                                       30
<PAGE>

VI.  FINANCIAL HIGHLIGHTS

These financial highlights tables are intended to help you understand the
financial performance of the Institutional Class and Institutional Service Class
of the Money Market Portfolio, the U.S. Treasury Portfolio, the U.S. Government
Portfolio and the Municipal Portfolio for the past 5 years, or since inception.
Certain information reflects financial results for a single Portfolio share. The
total returns in the tables represent the rate that an investor would have
earned on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from the Fund's financial
statements audited by PricewaterhouseCoopers LLP, whose report, along with the
Fund's financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
                                                                                        Money Market Portfolio
                                                                                    For the Years Ended March 31,
                                                                     ------------------------------------------------------------
Institutional Class Shares                                              2008        2007         2006         2005        2004
--------------------------                                           ---------   ---------    ---------    ---------    ---------
<S>                                                                      <C>         <C>           <C>          <C>        <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...............................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     ---------   ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income..........................................        0.048       0.051        0.036        0.016        0.010
  Net realized and unrealized gain(loss)  on investments.........        0.000       0.000         --          0.000        0.000
                                                                     ---------   ---------    ---------    ---------    ---------
  Total from investment operations...............................        0.048       0.051        0.036        0.016        0.010
Less distributions from:
  Dividends from net investment income...........................       (0.048)     (0.051)      (0.036)      (0.016)      (0.010)
  Net realized gain(loss) on investment..........................       (0.000)     (0.000)         --      (0.000)      (0.000)
                                                                     ---------   ---------    ---------    ---------    ---------
  Total Distributions............................................       (0.048)     (0.051)      (0.036)      (0.016)      (0.010)
                                                                     ---------   ---------    ---------    ---------    ---------
Net asset value, end of year.....................................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     =========   =========    =========    =========    =========
Total Return.....................................................        4.91%       5.19%        3.63%        1.61%        1.00%
Ratios/Supplemental Data
Net assets, end of year (000's)..................................    $ 751,532   $ 639,573    $ 372,721    $ 215,314    $ 163,829
Ratios to average net assets:
  Expenses (net of fees waived) (a)..............................        0.20%       0.20%        0.20%        0.20%        0.20%
  Net investment income..........................................        4.78%       5.10%        3.66%        1.63%        0.99%
  Management and administration fees waived......................        0.02%       0.03%        0.06%        0.06%        0.06%
  Transfer agency fees waived....................................        0.00%        --          0.02%        0.02%        0.02%
  Expenses paid indirectly.......................................        0.00%       0.00%        0.00%        0.00%        0.00%
<FN>
(a) Includes expenses paid indirectly.

</FN>

</TABLE>

                                       31
<PAGE>
VI.  FINANCIAL HIGHLIGHTS (Continued)

<TABLE>
<CAPTION>
                                                                                        Money Market Portfolio
                                                                                    For the Years Ended March 31,
                                                                     ------------------------------------------------------------
Institutional Service Class Shares                                      2008        2007         2006         2005        2004
----------------------------------                                   ---------   ---------    ---------    ---------    ---------
<S>                                                                     <C>         <C>           <C>          <C>        <C>

Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...............................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     ---------   ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income..........................................        0.046       0.048        0.033        0.013        0.007
  Net realized and unrealized gain(loss)  on investments.........        0.000       0.000         --          0.000        0.000
                                                                     ---------   ---------    ---------    ---------    ---------
  Total from investment operations...............................        0.046       0.048        0.033        0.013        0.007
Less distributions from:
  Dividends from net investment income...........................       (0.046)     (0.048)      (0.033)      (0.013)      (0.007)
  Net realized gain(loss) on investment..........................       (0.000)     (0.000)       (--)        (0.000)      (0.000)
                                                                     ---------   ---------    ---------    ---------    ---------
  Total Distributions............................................       (0.046)     (0.048)      (0.033)      (0.013)      (0.007)
                                                                     ---------   ---------    ---------    ---------    ---------
Net asset value, end of year.....................................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     =========   =========    =========    =========    =========
Total Return.....................................................        4.65%       4.92%        3.36%        1.34%        0.73%
Ratios/Supplemental Data
Net assets, end of year (000's)..................................    $ 260,609   $ 267,865    $ 224,050    $ 119,989    $  53,373
Ratios to average net assets:
  Expenses (net of fees waived) (a)..............................        0.45%       0.45%        0.47%        0.47%        0.47%
  Net investment income..........................................        4.50%       4.83%        3.39%        1.49%        0.73%
  Management and administration fees waived......................        0.02%       0.03%        0.06%        0.08%        0.06%
  Shareholder servicing fees waived..............................        0.01%        --           --           --           --
  Transfer agency fees waived....................................         --          --          0.01%        0.02%        0.00%
  Expenses paid indirectly.......................................        0.00%       0.00%        0.00%        0.00%        0.00%
<FN>
(a) Includes expenses paid indirectly.
</FN>

</TABLE>

                                       32
<PAGE>
VI.  FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>

                                                                                        U.S. Treasury Portfolio
                                                                                    For the Years Ended March 31,
                                                                     ------------------------------------------------------------
Institutional Class Shares                                              2008        2007         2006         2005        2004
--------------------------                                           ---------   ---------    ---------    ---------    ---------
<S>                                                                      <C>         <C>           <C>          <C>        <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...............................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     ---------   ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income..........................................        0.041       0.049        0.034        0.014        0.009
  Net realized and unrealized gain(loss)  on investments.........         --          --          0.000        0.000        0.000
                                                                     ---------   ---------    ---------    ---------    ---------
  Total from investment operations...............................        0.041       0.049        0.034        0.014        0.009
Less distributions from:
  Dividends from net investment income...........................       (0.041)     (0.049)      (0.034)      (0.014)      (0.009)
  Net realized gain(loss) on investment..........................        (--)         --         (0.000)      (0.000)      (0.000)
                                                                     ---------   ---------    ---------    ---------    ---------
  Total Distributions............................................       (0.041)     (0.049)      (0.034)      (0.014)      (0.009)
                                                                     ---------   ---------    ---------    ---------    ---------
Net asset value, end of year.....................................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     =========   =========    =========    =========    =========
Total Return.....................................................        4.18%       5.02%        3.48%        1.44%        0.91%
Ratios/Supplemental Data
Net assets, end of year (000's)..................................    $ 544,746   $ 590,254    $ 829,714    $ 484,434    $ 466,041
Ratios to average net assets:
  Expenses (net of fees waived) (a)..............................        0.20%       0.20%        0.20%        0.20%        0.20%
  Net investment income..........................................        4.17%       4.89%        3.51%        1.45%        0.90%
  Management and administration fees waived......................        0.03%       0.03%        0.05%        0.03%        0.04%
  Expenses paid indirectly.......................................        0.00%       0.00%        0.00%        0.00%        0.00%

<FN>
  (a) Includes expenses paid indirectly.
</FN>
</TABLE>

                                       33
<PAGE>
VI.  FINANCIAL HIGHLIGHTS (Continued)

<TABLE>
<CAPTION>
                                                                                     U.S. Treasury Portfolio
                                                                                    For the Years Ended March 31,
                                                                     ------------------------------------------------------------
Institutional Service Class Shares                                      2008        2007         2006         2005        2004
----------------------------------                                   ---------   ---------    ---------    ---------    ---------
<S>                                                                     <C>         <C>           <C>          <C>        <C>

Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...............................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     ---------   ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income..........................................        0.039       0.047        0.032        0.012        0.007
  Net realized and unrealized gain(loss)  on investments.........         --          --          0.000        0.000        0.000
                                                                     ---------   ---------    ---------    ---------    ---------
  Total from investment operations...............................        0.039       0.047        0.032        0.012        0.007
Less distributions from:
  Dividends from net investment income...........................       (0.039)     (0.047)      (0.032)      (0.012)      (0.007)
  Net realized gain(loss) on investment..........................        (--)         --         (0.000)      (0.000)      (0.000)
                                                                     ---------   ---------    ---------    ---------    ---------
  Total Distributions............................................       (0.039)     (0.047)      (0.032)      (0.012)      (0.007)
                                                                     ---------   ---------    ---------    ---------    ---------
Net asset value, end of year.....................................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     =========   =========    =========    =========    =========
Total Return.....................................................        3.92%       4.76%        3.22%        1.19%        0.66%
Ratios/Supplemental Data
Net assets, end of year (000's)..................................    $ 331,209   $ 248,962    $ 304,168    $ 236,621    $ 261,931
Ratios to average net assets:
  Expenses (net of fees waived) (a)..............................        0.45%       0.45%        0.45%        0.45%        0.45%
  Net investment income..........................................        3.76%       4.65%        3.17%        1.18%        0.66%
  Management and administration fees waived......................        0.03%       0.03%        0.05%        0.03%        0.04%
  Expenses paid indirectly.......................................        0.00%       0.00%        0.00%        0.00%        0.00%

<FN>
(a) Includes expenses paid indirectly.
</FN>
</TABLE>


                                       34
<PAGE>

VI.  FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>

                                                                     U.S. Government Portfolio
Institutional Class Shares                                                     Commencement of Operations
--------------------------                                 Year Ended            October 30, 2006 through
                                                         March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                            <C>                         <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.045                        0.009
   Net realized and unrealized gain(loss)on investments        (0.000)                       0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.045                        0.009
Less distributions from:
   Dividends from net investment income................        (0.045)                      (0.009)
   Net realized gain on investments....................          --                           --
                                                            ---------                   ----------
   Total Distributions.................................        (0.045)                      (0.009)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         4.54%                        0.88%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $      10                   $      10
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.21%                        0.20%(c)
   Net investment income...............................         4.44%                        5.10%(c)
   Management and administration fees waived...........         0.09%                        0.16%(c)
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized

</FN>
</TABLE>

                                       35
<PAGE>
VI. FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>

                                                                     U.S. Government Portfolio
Institutional Service Class Shares                                            Commencement of Operations
----------------------------------                         Year Ended            March 19, 2007 through
                                                         March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                            <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.042                        0.002
   Net realized and unrealized gain(loss)on investments        (0.000)                       0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.042                        0.002
Less distributions from:
   Dividends from net investment income................        (0.042)                      (0.002)
   Net realized gain on investments....................         --                           --
                                                            ---------                   ----------
   Total Distributions.................................        (0.042)                      (0.002)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         4.31%                        0.17%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $     336                   $      10
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.45%                        0.45%(c)
   Net investment income...............................         3.82%                        4.85%(c)
   Management and administration fees waived...........         0.09%                        0.16%(c)

<FN>
(a) Unannualized
(b) Includes expenses paid indirectly.
(c) Annualized

</FN>
</TABLE>

                                       36
<PAGE>
VI.  FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>

                                                                      Municipal Portfolio
Institutional Class Shares                                                      Commencement of Operations
--------------------------                                 Year Ended            October 30, 2006 through
                                                          March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                              <C>                        <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.033                        0.006
   Net realized and unrealized gain(loss)  on investments       0.000                         --
                                                            ---------                   ----------
   Total from investment operations....................         0.033                        0.006
                                                            ---------                   ----------
Less distributions from:
   Dividends from net investment income................        (0.033)                      (0.006)
   Net realized gain on investments....................        (0.000)                       (--)
                                                            ---------                   ----------
   Total Distributions.................................        (0.033)                      (0.006)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.35%                        0.60%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $   3,856                   $      10
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.20%                        0.20%(c)
   Net investment income...............................         2.87%                        3.44%(c)
   Management and administration fees waived...........         0.13%                        0.16%(c)
   Expenses paid indirectly............................         0.00%                         --

<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized

</FN>
</TABLE>


                                       37
<PAGE>

VI.  FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>

                                                                      Municipal Portfolio

Institutional Service Class Shares                                             Commencement of Operations
----------------------------------                         Year Ended            March 19, 2007 through
                                                          March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                            <C>                           <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.030                        0.001
   Net realized and unrealized gain(loss)  on investments       0.000                         --
                                                            ---------                   ----------
   Total from investment operations....................         0.030                        0.001
Less distributions from:
   Dividends from net investment income................        (0.030)                      (0.001)
   Net realized gain on investments....................         0.000                         --
                                                            ---------                   ----------
   Total Distributions.................................        (0.030)                      (0.001)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.09%                        0.12%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $     110                   $       10
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.45%                        0.42%(c)
   Net investment income...............................         2.81%                        3.25%(c)
   Management and administration fees waived...........         0.13%                        0.16%(c)
   Transfer Agency Accoount fees waived................         0.01%                         --
   Expenses paid indirectly............................         0.00%                         --
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized

</FN>
</TABLE>
                                       38
<PAGE>
-------------------------------------------------------------------------------

                     NOTICE OF REICH & TANG* PRIVACY POLICY

     We do not disclose to third parties nonpublic personal information about
current or former Reich & Tang customers, clients or mutual fund shareholders
other than as described below.

     We collect nonpublic personal information about you, such as your name,
address, social security number, account activity and account balances from your
account application and other forms that you may deliver to us. We use this
information to provide advisory services to you, to open an account for you, or
to process a transaction for your account. In order to service your account and
effect your transactions, we provide your nonpublic personal information to our
affiliates and to unaffiliated firms to effect or process transactions for you
or to assist us in servicing your account.

     We may also disclose nonpublic personal information about you to other
service providers who agree to protect the confidentiality of your information
and to use the information only for the purpose for which the disclosure is
made. We do not otherwise provide nonpublic personal information about you to
outside firms, organizations or individuals except as permitted by law.

     We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic and procedural safeguards that comply with
federal standards to guard your personal information.

*    For purposes of this notice, "Reich & Tang" includes: Reich & Tang Asset
     Management, LLC, Reich & Tang Distributors, Inc., Reich & Tang Services,
     Inc. and all mutual funds or other funds managed or advised by Reich & Tang
     Asset Management, LLC.

                       THIS IS NOT PART OF THE PROSPECTUS
<PAGE>
-------------------------------------------------------------------------------

A Statement of Additional Information
(SAI) dated July 29, 2008, includes
additional information about the Fund
and its investments and is incorporated
by reference into this Prospectus.
Further information about Fund
investments is available in the annual
and semi-annual shareholder reports. You
may obtain the SAI, the annual and
semi-annual reports without charge by
calling the Fund toll free at (800)
433-1918. You may also obtain the SAI
and the annual and semi-annual reports
without charge by visiting the Fund's
website at
http://www.money-funds.com/funds/index.
To request other information about the
Fund, please call your financial
intermediary or the Fund.

==========================================
                                            DAILY
                                            INCOME
                                            FUND

                                            Institutional Class Shares
                                            Institutional Service Class Shares

                                            PROSPECTUS

                                            July 29, 2008

==========================================
A current SAI has been filed with the
Securities and Exchange Commission.
Information about the Fund (including
the SAI) is also available from the
Public Reference Room of the Securities
and Exchange Commission. Information on
the operation of the Public Reference
Room may be obtained by calling the
Commission at (202) 551-8090. Fund
reports and other information about the
Fund are available on the EDGAR Database
on the Commission's Internet site at
http://www.sec.gov. Copies of this
information may be obtained, after
paying a duplicating fee, by electronic
request at publicinfo@sec.gov, or by
writing the Commission's Public
Reference Section, Washington, D.C.
20549-0104.


Investment Company Act No. 811-8312

             Reich & Tang Distributors, Inc.
                   600 Fifth Avenue
                  New York, NY 10020
                    (212) 830-5345
DIF_INS 07/08P

<PAGE>
--------------------------------------------------------------------------------
DAILY INCOME FUND                                              600 FIFTH AVENUE
                                                             NEW YORK, NY 10020
Investor Class Shares                                            (212) 830-5345
Investor Service Class Shares                         (800) 433-1918 (Toll Free)
================================================================================


PROSPECTUS
July 29, 2008

The investment objective of the Money Market Portfolio, U.S. Treasury Portfolio
and U.S. Government Portfolio is to seek as high a level of current income to
the extent consistent with the preservation of capital and the maintenance of
liquidity.


The investment objective of the Municipal Portfolio is to seek as high a level
of tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.

<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S>   <C>                                                   <C>  <C>


2     Risk/Return Summary: Investments, Risks               19   Management, Organization
      and Performance                                            and Capital Structure
9     Risk/Return Summary: Fee Table                        20   Shareholder Information
13    Investment Objectives, Principal Investment           30   Distribution Arrangements
      Strategies and Related Risks                          33   Financial Highlights
</TABLE>



THE NOTICE OF THE REICH & TANG PRIVACY POLICY IS INCLUDED WITH THIS PROSPECTUS
BUT IS NOT PART OF THE PROSPECTUS.

<PAGE>

I.   RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVES
--------------------------------------------------------------------------------


     The Fund is composed of four portfolios - the Money Market Portfolio, the
U.S. Treasury Portfolio, the U.S. Government Portfolio and the Municipal
Portfolio (each a "Portfolio" and collectively, the "Portfolios").

     The investment objective of the Money Market Portfolio, the U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.


     The investment objective of the Municipal Portfolio is to seek as high a
level of tax-exempt current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.

     There is no assurance that the Portfolios will achieve their investment
objectives.

PRINCIPAL INVESTMENT STRATEGIES
-------------------------------------------------------------------------------

     The Fund intends to achieve its investment objectives through four separate
Portfolios. Each Portfolio is a money market portfolio that invests in high
quality, short-term debt instruments. The Fund seeks to maintain investment
portfolios with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolios at amortized cost and maintain a net asset value of
$1.00 per share.

     Each Portfolio's strategy is as follows:

The Money Market Portfolio

     The Money Market Portfolio seeks to achieve its objective by investing
principally in short-term money market obligations with maturities of 397 days
or less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, loan participation interests,
securities issued or guaranteed by the United States Government, state agencies
or instrumentalities, and repurchase agreements calling for resale in 397 days
or less backed by the foregoing securities. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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 U.S. Treasury Portfolio

     The U.S. Treasury Portfolio seeks to achieve its objective by investing
only in obligations backed by the full faith and credit of the United States
government with maturities of 397 days or less and repurchase agreements which
are collateralized by such obligations calling for resale in 397 days or less.

The U.S. Government Portfolio


     The U.S. Government Portfolio seeks to achieve its objective by investing
at least 80% of its net assets in short-term, marketable securities and
instruments issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, (" Government Securities") with maturities of 397 days or
less, and repurchase agreements which are collateralized by the foregoing
securities. For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy.


The Municipal Portfolio


     The Municipal Portfolio seeks to achieve its objective by investing at
least 80% of its net assets in obligations issued by states, territories and
possessions of the United States and its political subdivisions, public
authorities and other entities authorized to issue debt, including Participation
Certificates therein, the interest on which is exempt from regular federal
income tax.

                                       2
<PAGE>

For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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.


PRINCIPAL RISKS
-------------------------------------------------------------------------------
     Risks Common to all Portfolios:

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

     Risks of Investing in the Money Market Portfolio:

o    The Money Market Portfolio may contain securities issued by foreign
     governments, or any of their political subdivisions, agencies or
     instrumentalities, and by foreign branches of domestic banks, foreign
     subsidiaries of domestic banks, domestic and foreign branches of foreign
     banks, and commercial paper issued by foreign issuers. Foreign securities
     may be subject to investment risks which may include adverse economic and
     political developments as well as lack of uniform accounting and financial
     reporting standards.

o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

     Risks of Investing in the U.S. Treasury Portfolio:

o    The U.S. Treasury Portfolio's investment policy of only investing in U.S.
     Treasury obligations and other obligations that are issued or guaranteed by
     the United States Government (including repurchase agreements), while
     minimizing risk of loss, may produce a lower yield than a policy of
     investing in other types of instruments. The yield and total return of the
     U.S. Treasury Portfolio is likely to be lower than that of the Money Market
     Portfolio.

     Risks of Investing in the U.S. Government Portfolio:

o    The U.S. Government Portfolio is exposed to the credit risk of the
     institutions that issue Government Securities. Changes in the credit
     quality of the issuers could affect their ability to meet their payment
     obligations of interest or principal. Any failure to make such payments
     could adversely affect the value of the security and your investment in the
     Fund.

     Risks of Investing in the Municipal Portfolio:

o    The Municipal Portfolio invests in municipal debt obligations. The value of
     these municipal obligations may be affected by uncertainties in the
     municipal debt market related to taxation. In addition, the payment of
     interest and preservation of capital are dependent upon the continuing
     ability of issuers and/or obligors of state, municipal and public authority
     debt obligations to meet these payment obligations.

                                       3
<PAGE>

RISK/RETURN BAR CHART AND TABLE
-------------------------------------------------------------------------------

     The following bar charts and tables may assist you in deciding whether to
invest in a Portfolio of the Fund. The bar charts show the change in the average
annual total returns of the Money Market Portfolio (Investor Class shares) for
the last calendar year, the U.S. Treasury Portfolio (Institutional Service Class
shares) (which is not offered by this prospectus) for the last ten calendar
years, the U.S. Government Portfolio (Advantage Shares) (which is not offered by
this prospectus) for the last calendar year and the Municipal Portfolio
(Advantage Shares) (which is not offered by this prospectus) for the last
calendar year, respectively. The table for the Money Market Portfolio shows the
average annual total returns of the Investor Class of the Portfolio for the last
one year and since inception periods. The table for the U.S. Treasury Portfolio
shows the average annual total returns of the Institutional Service Class of the
Portfolio (which is not offered by this prospectus) for the last one year, five
year, ten year and since inception periods and for the Investor Class of the
Portfolio since inception. The tables for the U.S. Government and Municipal
Portfolios show the average annual total returns of the Advantage Shares Class
of the Portfolios (which are not offered by this prospectus) for the last one
year and since inception periods. Performance history for the Investor Service
Class of the Money Market Portfolio and the U.S. Treasury Portfolios will be
provided in their respective tables once they issue shares and have been in
existence for a full calendar year. Performance history for the Investor Class
and the Investor Service Class of the U.S. Government Portfolio and the
Municipal Portfolio will be provided in the tables once these Classes issue
shares and have been in existence for a full calendar year. While analyzing this
information, please note that the Portfolios' past performance is not an
indication of how the Fund will perform in the future. The current 7-day yield
for the Money Market Portfolio, U.S. Treasury Portfolio, U.S. Government
Portfolio and the Municipal Portfolio may be obtained by calling the Fund at
(212) 830-5345 or toll free at (800) 433-1918.


                                       4
<PAGE>

<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

             Money Market Portfolio - Investor Class (1)(2)(3)


<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                4.76%

<FN>

(1)  As of June 30, 2008, the Money Market Portfolio Investor Class shares had a
     year-to-date return of 1.47%.

(2)  The Money Market Portfolio Investor Class shares' highest quarterly return
     was 1.20% for the quarter ended September 30, 2007; the lowest quarterly
     return was 0.61% for the quarter ended June 30, 2008.


(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS - FOR THE PERIOD ENDED DECEMBER 31, 2007

                                INVESTOR CLASS
<S>                              <C>


One Year                          4.76%
Since Inception*                  4.77%


<FN>
*    The inception date for the Money Market Portfolio Investor Class shares was
     November 28, 2006.
</FN>
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

       U.S. Treasury Portfolio - Institutional Service Class (1)(2)(3)(4)


<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                4.52%
2006                4.54%
2005                2.70%
2004                0.87%
2003                0.74%
2002                1.47%
2001                3.78%
2000                5.88%
1999                4.59%
1998                5.07%


<FN>


(1)  The chart shows returns for the U.S. Treasury Portfolio Institutional
     Service Class shares of the Fund (which are not offered by this Prospectus)
     since, as of December 31, 2007, U.S. Treasury Portfolio Investor Class
     shares were not in existence for at least one calendar year and there were
     no Investor Service Class shares issued by the Fund. All Classes of the
     U.S. Treasury Portfolio will have substantially similar annual returns
     because the shares are invested in the same portfolio of securities and the
     annual returns differ only to the extent that the Classes do not have the
     same expenses. Since the expenses of the Investor Class and Investor
     Service Class shares are higher than the U.S. Treasury Portfolio
     Institutional Service Class shares, your returns would have been lower.

(2)  As of June 30, 2008, the U.S. Treasury Investor Class shares had a
     year-to-date return of 0.90%.

(3)  The U.S. Treasury Portfolio Institutional Service Class shares' highest
     quarterly return was 1.53% for the quarter ended December 31, 2000; the
     lowest quarterly return was 0.14% for the quarter ended March 31, 2004. As
     of June 30, 2008, the U.S. Treasury Portfolio Institutional Service Class
     shares had a year-to-date return of 0.99 %.


(4)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS - FOR THE PERIODS ENDED DECEMBER 31, 2007

                        INVESTOR CLASS           INSTITUTIONAL SERVICE CLASS
<S>                     <C>                          <C>


One Year                 N/A                         4.52%
Five Years               N/A                         2.66%
Ten Years                N/A                         3.40%
Since Inception*         4.27%                       3.69%


<FN>


*    The inception date for the U.S. Treasury Portfolio Investor Class shares
     was February 21, 2007 and for the U.S. Treasury Portfolio Institutional
     Service Class shares was November 29, 1995. At this time there are no
     shares issued for the U.S. Treasury Portfolio Investor Service Class.

</FN>
</TABLE>
                                       6
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

U.S. Government Portfolio - Advantage Government Liquidity Fund ("Advantage
Shares") (1)(2)(3)(4)


<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                4.17%


<FN>


(1)  The chart shows returns for the U.S. Government Portfolio Advantage Shares
     of the Fund (which are not offered by this Prospectus) since, as of
     December 31, 2007, there were no U.S. Government Portfolio Investor Class
     shares or Investor Service Class shares issued by the Fund. All Classes of
     the U.S. Government Portfolio will have substantially similar annual
     returns because the shares are invested in the same portfolio of securities
     and the annual returns differ only to the extent that the Classes do not
     have the same expenses. Since the expenses of the Investor Class and
     Investor Service Class shares are lower than the U.S. Government Portfolio
     Advantage Shares, your returns would have been higher.

(2)  As of June 30, 2008, the U.S. Government Portfolio Advantage Shares had a
     year-to-date return of 0.92%.

(3)  The U.S. Government Portfolio Advantage Shares' highest quarterly return
     was 1.07% for the quarter ended June 30, 2007; the lowest quarterly return
     was 0.31% for the quarter ended June 30, 2008.


(4)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.

</FN>
</TABLE>

<TABLE>
<CAPTION>

Average Annual Total Returns - For the period ended December 31, 2007

                                         Advantage Shares
<S>                                           <C>
One Year                                      4.17%
Since Inception*                              4.20%
<FN>
*    The inception date for the U.S. Government Portfolio Advantage Shares was
     November 2, 2006.

</FN>
</TABLE>

                                       7
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]

Municipal Portfolio - Advantage Municipal Liquidity Fund ("Advantage Shares")
(1)(2)(3)(4)


<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                2.72%


<FN>


(1)  The chart shows returns for the Municipal Portfolio Advantage Shares of the
     Fund (which are not offered by this Prospectus) since, as of December 31,
     2007, there were no Municipal Portfolio Investor Class shares or Investor
     Service Class shares issued by the Fund. All Classes of the Municipal
     Portfolio will have substantially similar annual returns because the shares
     are invested in the same portfolio of securities and the annual returns
     differ only to the extent that the Classes do not have the same expenses.
     Since the expenses of the Investor Class and Investor Service Class shares
     are lower than the Municipal Portfolio Advantage Shares, your returns would
     have been higher.

(2)  As of June 30, 2008, the Municipal Portfolio Advantage Shares had a
     year-to-date return of 0.77%.

(3)  The Municipal Portfolio Advantage Shares' highest quarterly return was
     0.70% for the quarter ended June 30, 2007; the lowest quarterly return was
     0.31% for the quarter ended June 30, 2008.


(4)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Average Annual Total Returns - For the period ended December 31, 2007


                                        Advantage Shares
<S>                                          <C>
One Year                                      2.72%
Since Inception*                              2.71%



<FN>

*    The inception date for the Municipal Portfolio Advantage Shares was
     November 2, 2006.
</FN>
</TABLE>


                                       8
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Money Market Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>

* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)


                                                                Money Market Portfolio
                                                                ------------------------
                                                            Investor        Investor Service
                                                              Class               Class
                                                            ---------       --------------
<S>                                                     <C>    <C>          <C>    <C>
Management Fees ..................................             0.12%               0.12%
Distribution and Service (12b-1) Fees.............             0.45%               0.70%
Other Expenses....................................             0.14%               0.14%*
  Administration Fees.............................        0.05%              0.05%
                                                               ------             -------
Total Annual Fund Operating Expenses**............             0.71%               0.96%

<FN>
*    These percentages are based on estimated amounts for the current fiscal
     year for the Investor Service Class as there were no shares of the Investor
     Service Class of the Money Market Portfolio issued during the fiscal year
     ended March 31, 2008.

**   The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.65% for the Investor Class and 0.85% for the Investor Service
     Class, through July 31, 2008. The Fund's investment manager and distributor
     have further agreed that they will not modify or terminate these fee waiver
     arrangements through July 31, 2009, without prior approval of the Fund's
     Board of Trustees.
</FN>
</TABLE>


<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the Money
Market Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Money Market Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:


  <S>                           <C>             <C>             <C>        <C>
                                 1 Year         3 Years         5 Years    10 Years
   Investor Class:                 $73            $227          $395       $883
   Investor Service Class:         $98            $306          --         --

</TABLE>

                                       9
<PAGE>
<TABLE>
<CAPTION>

                                    FEE TABLE


This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Treasury Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>

* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                                               U. S. Treasury Portfolio
                                                              ---------------------------
                                                            Investor        Investor Service
                                                              Class               Class
                                                           ---------       -----------------
<S>                                                     <C>   <C>          <C>    <C>
Management Fees ..................................             0.12%               0.12%
Distribution and Service (12b-1) Fees.............             0.45%               0.70%

Other Expenses....................................             0.14%               0.14%*

  Administration Fees.............................        0.05%              0.05%
                                                               ------             -


Total Annual Fund Operating Expenses**............             0.71%               0.96%

<FN>

*    These percentages are based on estimated amounts for the current fiscal
     year for the Investor Service Class as there were no shares of the Investor
     Service Class of the U.S. Treasury Portfolio issued during the fiscal year
     ended March 31, 2008.

**   The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.63% for the Investor Class and 0.85% for the Investor Service
     Class, through July 31, 2008. The Fund's investment manager and distributor
     have further agreed that they will not modify or terminate these fee waiver
     arrangements through July 31, 2009, without prior approval of the Fund's
     Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the U.S.
Treasury Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Treasury Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:


<S>                                    <C>            <C>               <C>        <C>
                                        1 Year         3 Years          5 Years     10 Years
 Investor Class:                          $73            $227            $395        $883
 Investor Service Class:                  $98            $306              --        --

</TABLE>
                                       10
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Government Portfolio.

Shareholder Fees
(fees paid directly from your investment)
<S>                                                         <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*

<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                                              U. S. Government Portfolio
                                                              ----------------------------
                                                            Investor        Investor Service
                                                              Class               Class
                                                          ------------      ---------------
<S>                                                     <C>   <C>           <C>   <C>

Management Fees ..................................             0.12%               0.12%
Distribution and Service (12b-1) Fees.............             0.45%               0.70%

Other Expenses*...................................             0.17%               0.17%

  Administration Fees.............................        0.05%              0.05%
                                                               ------             -

Total Annual Fund Operating Expenses**............             0.74%               0.99%

<FN>
*  These percentages are based on estimated amounts for the current fiscal year
   for the Investor Class and the Investor Service Class as there were no shares
   of the Investor Class and Investor Service Class of the U.S. Government
   Portfolio issued during the fiscal year ended March 31, 2008.

** The Fund's investment manager and distributor contractually agreed to waive
   fees and/or reimburse expenses in order to maintain Total Annual Operating
   Expenses at 0.65% for the Investor Class and 0.85% for the Investor Service
   Class, through July 31, 2008. The Fund's investment manager and distributor
   have further agreed that they will not modify or terminate these fee waiver
   arrangements through July 31, 2009, without prior approval of the Fund's
   Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the U.S.
Government Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Government Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:

<S>                                     <C>           <C>

                                        1 Year         3 Years

Investor Class:                          $76            $237
Investor Service Class:                  $101           $315


</TABLE>
                                       11
<PAGE>

<TABLE>
<CAPTION>
                                    FEE TABLE


This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Municipal Portfolio.

Shareholder Fees
(fees paid directly from your investment)
<S>                                                         <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>

* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                                                  Municipal Portfolio
                                                                ------------------------
                                                            Investor        Investor Service
                                                              Class               Class
                                                          -----------      -----------------
<S>                                                     <C>   <C>           <C>   <C>
Management Fees ..................................             0.12%               0.12%
Distribution and Service (12b-1) Fees.............             0.45%               0.70%

Other Expenses*...................................             0.21%               0.21%

  Administration Fees.............................        0.05%              0.05%
                                                               ------              -----

Total Annual Fund Operating Expenses**............             0.78%               1.03%
<FN>

* These percentages are based on estimated amounts for the current fiscal year
  for the Investor Class and Investor Service Class as there were no shares of
  the Investor Class or Investor Service Class of the Municipal Portfolio issued
  during the fiscal year ended March 31, 2008.

** The Fund's investment manager and distributor contractually agreed to waive
  fees and/or reimburse expenses in order to maintain Total Annual Operating
  Expenses at 0.65% for the Investor Class and 0.85% for the Investor Service
  Class, through July 31, 2008. The Fund's investment manager and distributor
  have further agreed that they will not modify or terminate these fee waiver
  arrangements through July 31, 2009, without prior approval of the Fund's Board
  of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the
Municipal Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Municipal Portfolio for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

<S>                                     <C>           <C>
                                        1 Year         3 Years

Investor Class:                          $80            $249
Investor Service Class:                  $105           $328

</TABLE>

                                       12
<PAGE>
II.  INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS

Investment Objectives
-------------------------------------------------------------------------------

     The Fund is a money market fund which seeks to achieve the following
investment objectives through its four Portfolios.


     The investment objective of the Money Market Portfolio, U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.


     The investment objective of the Municipal Portfolio is to seek as high a
level of tax-exempt current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.

     There can be no assurance that a Portfolio will achieve its investment
objective.

     The investment objective of any Portfolio of the Fund described in this
section may only be changed upon the approval of the holders of a majority of
the outstanding shares of such Portfolio.

PRINCIPAL INVESTMENT STRATEGIES
-------------------------------------------------------------------------------

Generally

     In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual Portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.

     The Fund will only invest in either securities which have been rated (or
whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's investment manager to be
of comparable quality.

     Each Portfolio of the Fund shall invest not more than 5% of its total
assets in securities issued by a single issuer, except for U.S. Government
Obligations.

     With respect to 75% of its total assets, each Portfolio shall invest not
more than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

     The Fund's investment manager considers the following factors when buying
and selling securities for each of the Fund's Portfolios: (i) the availability
of cash, (ii) redemption requests, (iii) yield management, and (iv) credit
management.

     As a temporary defensive measure a Portfolio may, from time to time, invest
in securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Portfolio to not achieve its
investment objective.

Money Market Portfolio

     The Money Market Portfolio intends to attain its investment objective
through investments in the following securities:

(i)  UNITED STATES GOVERNMENT SECURITIES: The Money Market Portfolio may
     purchase short-term obligations issued or guaranteed by the United States
     Government, its agencies or instrumentalities. These obligations include
     issues of the United States Treasury, such as bills, certificates of
     indebtedness, notes and bonds, and issues

                                       13
<PAGE>

     of certain agencies and instrumentalities established under the authority
     of an act of Congress. Some of these securities are supported by the full
     faith and credit of the United States, others are supported by the right of
     the issuer to borrow from the United States, and still others are supported
     only by the credit of the agency or instrumentality.

(ii) DOMESTIC AND FOREIGN BANK OBLIGATIONS: The Money Market Portfolio may
     purchase securities issued by foreign governments, or any of their
     political subdivisions or agencies or instrumentalities, certificates of
     deposit, time deposits and bankers' acceptances issued by domestic banks,
     foreign branches of domestic banks, foreign subsidiaries of domestic banks,
     and domestic and foreign branches of foreign banks. Certificates of deposit
     are certificates representing the obligation of a bank to repay funds
     deposited with it for a specified period of time. Time deposits are
     non-negotiable deposits maintained in a bank for a specified period of time
     (in no event longer than seven days) at a stated interest rate. Time
     deposits purchased by the Fund will not benefit from insurance from the
     FDIC. Bankers' acceptances are credit instruments evidencing the obligation
     of a bank to pay a draft drawn on it by a customer.

     The Money Market Portfolio limits its investments in obligations of
     domestic banks, foreign branches of domestic banks and foreign subsidiaries
     of domestic banks to banks having total assets in excess of one billion
     dollars or the equivalent in other currencies. The Money Market Portfolio
     limits its investments in obligations of domestic and foreign branches of
     foreign banks to dollar denominated obligations of such banks which at the
     time of investment have more than $5 billion, or the equivalent in other
     currencies, in total assets. These investments must also meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally."

     The Money Market Portfolio generally limits investments in bank instruments
     to (a) those which are fully insured as to principal by the FDIC or (b)
     those issued by banks which at the date of their latest public reporting
     have total assets in excess of $1.5 billion. However, the total assets of a
     bank will not be the sole factor determining the Money Market Portfolio's
     investment decisions and the Money Market Portfolio may invest in bank
     instruments issued by institutions which the investment manager believes
     present minimal credit risks.

     The Money Market Portfolio may purchase U.S. dollar-denominated obligations
     issued by foreign branches of domestic banks or foreign branches of foreign
     banks ("Eurodollar" obligations) and domestic branches of foreign banks
     ("Yankee dollar" obligations). The Money Market Portfolio will limit its
     aggregate investments in foreign bank obligations, including Eurodollar
     obligations and Yankee dollar obligations, to 25% of its total assets at
     the time of purchase, provided that there is no limitation on the Money
     Market Portfolio's investments in (a) Eurodollar obligations, if the
     domestic parent of the foreign branch issuing the obligations is
     unconditionally liable in the event that the foreign branch fails to pay on
     the Eurodollar obligation for any reason; and (b) Yankee dollar
     obligations, if the U.S. branch of the foreign bank is subject to the same
     regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
     obligations include time deposits, which are non-negotiable deposits
     maintained in a bank for a specified period of time at a stated interest
     rate. The Money Market Portfolio will limit its purchases of time deposits
     to those which mature in seven days or less, and will limit its purchases
     of time deposits maturing in two to seven days to 10% of such Portfolio's
     total assets at the time of purchase.

                                       14
<PAGE>
     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental restrictions such as exchange
     controls may be adopted which might adversely affect the payment of
     principal and interest on those obligations, (vi) the selection of foreign
     obligations may be more difficult because there may be less information
     publicly available concerning foreign issuers, (vii) there may be
     difficulties in enforcing a judgment against a foreign issuer or (viii) the
     accounting, auditing and financial reporting standards, practices and
     requirements applicable to foreign issuers may differ from those applicable
     to domestic issuers. In addition, foreign banks are not subject to
     examination by United States Government agencies or instrumentalities.

(iii) VARIABLE AMOUNT MASTER DEMAND NOTES: The Money Market Portfolio may
     purchase variable amount master demand notes. These instruments are
     unsecured demand notes that permit investment of fluctuating amounts of
     money at variable rates of interest pursuant to arrangements with issuers
     who meet the quality criteria discussed above under "Principal Investment
     Strategies - Generally." The interest rate on a variable amount master
     demand note is periodically adjusted according to a prescribed formula.
     Although there is no secondary market in master demand notes, the payee may
     demand payment of the principal and interest upon notice not exceeding five
     business or seven calendar days.

(iv) LOAN PARTICIPATION INTERESTS: The Money Market Portfolio may purchase
     participation interests in loans extended by banks to companies, provided
     that both such banks and such companies meet the quality standards
     applicable to bank instruments as set forth above.

(v)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Money Market Portfolio
     may purchase commercial paper or similar debt obligations. Commercial paper
     is generally considered to be short-term unsecured debt of corporations.

REPURCHASE AGREEMENTS: The Money Market Portfolio may enter into repurchase
agreements provided that the instruments serving as collateral for the
agreements are eligible for inclusion in the Money Market Portfolio. A
repurchase agreement arises when a buyer purchases a security and simultaneously
agrees with the vendor to resell the security to the vendor at an agreed upon
time and price.

U.S. Treasury Portfolio

     The U.S. Treasury Portfolio intends to attain its investment objective
through investments limited to obligations issued or guaranteed by the United
States Government including repurchase agreements covering those types of
obligations. Under normal circumstances the Portfolio will invest all of its net
assets, plus borrowings for investment purposes, in obligations issued or
guaranteed by the U.S. Treasury. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy.

     The Fund will enter into repurchase agreements for inclusion in the U.S.
Treasury Portfolio only if the instruments serving as collateral for the
agreements are eligible for inclusion in the U.S. Treasury Portfolio.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit

                                       15
<PAGE>

     of the United States. U.S. Treasury obligations include bills, notes and
     bonds, which principally differ only in their interest rates, maturities
     and time of issuance.

(ii) OTHER UNITED STATES GOVERNMENT OBLIGATIONS: Marketable securities and
     instruments issued or guaranteed by the full faith and credit of the United
     States Government. Such obligations include obligations of the Federal
     Housing Administration, the Export-Import Bank of the United States, the
     Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration.

(iii) REPURCHASE AGREEMENTS: The U.S. Treasury Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government. A repurchase agreement arises when a
     buyer purchases a security and simultaneously agrees with the vendor to
     resell the security to the vendor at an agreed upon time and price.

     The investment policies of the U.S. Treasury Portfolio may produce a lower
yield than a policy of investing in other types of instruments. The yield of the
U.S. Treasury Portfolio is likely to be lower than the yield of the Money Market
Portfolio.

U.S. Government Portfolio


     Under normal market circumstances, the U.S. Government Portfolio will
invest at least 80% of its net assets in short-term Government Securities with
maturities of 397 days or less and repurchase agreements which are
collateralized by the foregoing securities. For purposes of this test only, net
assets include borrowings for investment purposes. The Fund will provide
shareholders with at least 60 days' prior notice of any change in this policy.


     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(ii) OTHER OBLIGATIONS OF U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES:
     Marketable securities and instruments issued by government-sponsored
     agencies and enterprises acting under authority of Congress. Although
     obligations of federal agencies and instrumentalities are not debts of the
     U.S. Treasury, in some cases, payment of interest and principal on such
     obligations is guaranteed by the U.S. Government, e.g., obligations of the
     Federal Housing Administration, the Export-Import Bank of the United
     States, the Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration; in other cases payment of interest and principal is not
     guaranteed, e.g., obligation of the Federal Home Loan Bank System and the
     Federal Farm Credit Bank. The Fund will invest in the securities of those
     agencies that are not guaranteed or backed by the full faith and credit of
     the U.S. Government only when the Manager, in its sole discretion, is
     satisfied that the credit risk with respect to a particular agency or
     instrumentality is minimal.

(iii) REPURCHASE AGREEMENTS: The U.S. Government Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government or its agencies or instrumentalities. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

                                   16
<PAGE>

Municipal Portfolio

     The Municipal Portfolio intends to attain its investment objective through
investments in the following securities:

(i)  MUNICIPAL SECURITIES: The Municipal Portfolio may purchase high quality
     tax-exempt money market instruments ("Municipal Securities"), including
     debt obligations issued to obtain funds for various public purposes (e.g.,
     the construction of a wide range of public facilities), the refunding of
     outstanding obligations, the obtaining of funds for general operating
     expenses and lending such funds to other public institutions and
     facilities. The Portfolio may also invest in certain types of private
     activity bonds or industrial development bonds, issued by or on behalf of
     public authorities to obtain funds to provide for the construction,
     equipment, repair or improvement of privately operated facilities. Such
     obligations are considered to be Municipal Securities provided that the
     interest paid thereon generally qualifies as exempt from regular federal
     income tax in the opinion of bond counsel. Interest on certain Municipal
     Securities may give rise to federal alternative minimum tax liability and
     may have other federal income tax consequences.

(ii) Repurchase Agreements: The Municipal Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Municipal Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

     For a more detailed description of (i) the securities in which the Fund
will invest, (ii) fundamental investment restrictions, and (iii) industry
regulations governing credit quality and maturity, please refer to the Statement
of Additional Information.

Risks
-------------------------------------------------------------------------------

     The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.

     Investments in U.S. Government securities may or may not be supported by
the full faith and credit of the U.S. Government. Although many U.S. Government
securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.

     The maximum potential liability of the issuers of some U.S. Government
securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers will not have the funds to meet their payment
obligations in the future. In such case, a Fund must look principally to the
agency, instrumentality or sponsored enterprise issuing or guaranteeing the
security for ultimate repayment and may not be able to assert a claim against
the U.S. Government itself in the event the agency, instrumentality or sponsored
enterprise does not meet its commitment.

     The U.S. Government securities that the Fund may purchase include:

o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

                                       17
<PAGE>

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored enterprises issuing these obligations is the Federal Farm Credit
     System.

     Since the Money Market Portfolio may contain securities issued by foreign
governments, or any of their political subdivisions, agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Money Market Portfolio may
be subject to additional investment risks when compared with those incurred by a
fund which invests only in domestic issuers. Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Similarly, volume in most
foreign securities markets is less than in the United States. The issuers of
some of these securities may be subject to less stringent or different
regulation than are United States issuers. In addition, there may be less
publicly available information about a non-United States issuer, and non-United
States issuers generally are not subject to uniform accounting and financial
reporting standards and requirements. Additional risks associated with foreign
investments might include adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities. Furthermore, some of these foreign securities may be subject
to stamp, withholding or other excise taxes levied by foreign governments, which
have the effect of increasing the cost of such securities and reducing the
realized gain or increasing the realized loss on such securities at the time of
sale.

     The investment policies of the U.S. Government Portfolio may produce a
lower yield than a policy of investing in other types of instruments. The yield
of the U.S. Government Portfolio is likely to be lower than the yield of the
Money Market Portfolio.


     Since the Municipal Portfolio invests in municipal debt obligations, the
value of these municipal obligations may be affected by uncertainties on the
municipal debt market related to taxation. In addition, the payment of interest
and preservation of capital are dependent upon the continuing ability of issuers
and/or obligors of state, municipal and public authority debt obligations to
meet these payment obligations.


PORTFOLIO HOLDINGS
-------------------------------------------------------------------------------

     A schedule of each Portfolios holdings, current as of month-end, will be
available on the Fund's website no earlier than 5 days after the end of each
month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission ("SEC") its semi-annual/annual shareholder report or

                                       18
<PAGE>

quarterly portfolio holdings report that includes such period. The most recent
schedule is available on the Fund's website at
http://www.money-funds.com/portfolioholdings or by calling toll free at (800)
433-1918. The Fund may terminate or modify this policy at any time without
further notice to shareholders. A description of the Fund's policies and
procedures with respect to the disclosure of the Fund's portfolio securities is
available in the Statement of Additional Information.

III.  MANAGEMENT, ORGANIZATION AND  CAPITAL STRUCTURE


     The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

     Pursuant to the Investment Management Contract between the Fund and the
Manager, the Manager manages each Portfolio's securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Trustees of the Fund. Pursuant to the Investment
Management Contract, each of the Portfolios pays an annual management fee of
0.12% of each Portfolio's average daily net assets. For the fiscal year ended
March 31, 2008, the Fund paid the Manager a management fee equal to 0.12% of the
Money Market and U.S. Treasury Portfolios' average daily net assets. A
discussion regarding the basis for the Board of Trustees approving the
continuance of the Investment Management Contract is available in the Fund's
annual report for the period ended March 31, 2008.

     Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and the Administrative Services Contract. For its
services under the Administrative Services Contract, the Fund pays the Manager
an annual fee of 0.05% of each Portfolio's average daily net assets. For the
fiscal year ended March 31, 2008, the Fund paid the Manager a fee for
administrative services equal to 0.03% of the Money Market and 0.02% of the U.S.
Treasury Portfolios' average daily net assets.

     The Manager and Distributor have agreed not to modify or terminate their
fee waiver arrangements through July 31, 2009, without the prior approval of the
Fund's Board of Trustees. Any portion of the total fees received by the Manager
and its past profits may be used to provide shareholder services and for
distribution of Fund shares.


     In addition, Reich & Tang Distributors, Inc. (the "Distributor"), receives
a servicing fee equal to 0.25% per annum of the average daily net assets of the
Investor Class shares and Investor Service Class shares of each Portfolio under
the Shareholder Servicing Agreement. The fees are accrued daily and paid
monthly.

     The Distributor also receives a distribution fee in an amount not to exceed
0.20% and 0.45% per annum of the average daily net assets of the Investor Class
shares and Investor Service Class shares, respectively, pursuant to the
Distribution Agreement.

     Investment management fees and operating expenses, which are attributable
to more than one Class of the Fund, will be allocated daily to each

                                       19
<PAGE>

Class of shares based on the percentage of shares outstanding at the end of the
day.

IV.  SHAREHOLDER INFORMATION


     The Fund sells and redeems its shares on a continuing basis at their net
asset value. The Fund does not impose a charge for either purchases or
redemptions, although there may be a fee imposed on certain wire redemption
requests. All transactions in Fund shares are processed through the Fund's
transfer agent or its principal underwriter, as appropriate, which accept orders
for purchases and redemptions from Participating Organizations (see "Investments
Through Participating Organizations" for a definition of Participating
Organizations) and from investors directly.


PRICING OF FUND SHARES
-------------------------------------------------------------------------------

     The net asset value of each Portfolio of the Fund's shares is determined as
of 4:00 p.m., Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except (i) days on which the New York Stock
Exchange is closed for trading (i.e., national holidays) and (ii) Columbus Day
and Veterans' Day. However, on certain days that the New York Stock Exchange is
closed, the Fund, at the direction of the Manager, may be open for purchases and
redemptions and will determine its net asset value. The net asset value is
computed by dividing the value of each Portfolio'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. Each Portfolio intends to maintain a stable net asset
value at $1.00 per share although there can be no assurance that this will be
achieved.

      The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended (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. If fluctuating interest rates or credit
issues cause the market value of the securities in a Portfolio to deviate more
than 1/2 of 1% from the value determined on the basis of amortized cost, the
Board of Trustees 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 the Fund would receive if the instrument were sold.

     Shares are issued as of the first determination of the Portfolio's net
asset value per share made after acceptance of the investor's purchase order. In
order to maximize earnings on its Portfolios, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Portfolio
shares begin accruing income on the day the shares are issued to an investor.

     The Fund reserves the right to reject any purchase order of its shares. In
addition, the Fund does not accept cash, and may refuse to accept cash
equivalents (i.e., travelers cheques, money orders, cashier's checks or similar
instruments) and certain other forms of payment at its discretion.

SUBSCRIBING TO THE FUND
-------------------------------------------------------------------------------

     At the time of initial investment in the Fund, investors must elect on
their fund application the Class of shares of the Portfolio in which they wish
to invest. Subject to the Portfolios' initial investment minimums, investors may
divide their investment in the Fund between the Portfolios in any manner they
choose by submitting the Fund application with their choices. Investors may
purchase shares of the Portfolios from a Participating Organization or directly.
Certain Participating Organizations are compensated for their services by the
Manager and/or the Distributor.

                                       20
<PAGE>

     Shareholders will have a separate account with the Fund for each Portfolio
in which they invest. Certificates for Fund shares will not be issued to
investors.


PURCHASE OF FUND SHARES
-------------------------------------------------------------------------------

     The Fund does not accept a purchase order from investors investing in the
Fund directly (i.e., not through Participating Organizations) until an
investor's payment has been converted into Federal Funds and is received by the
Fund's transfer agent, or its principal underwriter, as appropriate. Orders from
these direct investors that are accompanied by Federal Funds and received after
4:00 p.m., Eastern time, on a Fund Business Day will result in the issuance of
shares on the following Fund Business Day.

     Investors may, if they wish, invest in the Fund through a Participating
Organization with which they have accounts. Generally, all other investors, and
investors who have accounts with Participating Organizations but do not wish to
invest in the Fund through them, may invest in the Fund directly. Direct
shareholders generally do not receive the benefit of the servicing functions
performed by a Participating Organization.

     The minimum initial investment in the Fund for each Portfolio is $5,000 for
the Investor Class and the Investor Service Class. The minimum amount for
subsequent investments is $100 for the Investor Class and the Investor Service
Class. The Fund may waive any minimum purchase requirements.

     The Fund will provide each shareholder, except certain investors, with a
personalized monthly statement listing (i) the total number of Fund shares owned
as of the statement closing date, (ii) purchases and redemptions of Fund shares,
and (iii) the dividends paid on Fund shares (including dividends paid in cash or
reinvested in additional Fund shares).

INVESTMENTS THROUGH PARTICIPATING ORGANIZATIONS
-------------------------------------------------------------------------------

     Generally, investors purchasing shares through a Participating Organization
are referred to as Participant Investors. Participating Organizations are
securities brokers, banks and financial institutions or other industry
professionals or organizations that have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by a Participant Investor to purchase or
redeem Fund shares, the Participating Organization, on behalf of the Participant
Investor, 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.

     Participating Organizations may confirm to Participant Investors each
purchase and redemption of Fund shares for their accounts. Also, Participating
Organizations may send periodic account statements to their customers showing
(i) the total number of Fund shares owned by each Participant Investor as of the
statement closing date, (ii) purchases and redemptions of Fund shares by each
Participant Investor during the period covered by the statement, and (iii) the
income earned by Fund shares of each Participant Investor 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 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. 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 applicable to shareholders

                                       21
<PAGE>
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through Participating Organizations may be less than the net yield that
could be achieved by investing in the Fund directly. Participating Organizations
may also set deadlines who invest through Participating Organizations may be
less than the net yield that could be achieved by investing in the Fund
directly. Participating Organizations may also set deadlines for receipt of
orders from Participant Investors that are earlier than the order deadline of
the Fund due to processing or other reasons. 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.


     Qualified Participating Organizations may transmit an investor's purchase
or redemption order to the Fund's transfer agent after 4:00 p.m., Eastern time
on the day the order is received from the investor as long as the investor has
placed his order with the Participating Organization before 4:00 p.m. Eastern
time on that day. The investor will then receive the net asset value of the
Fund's shares determined as of 4:00 p.m. Eastern time on the day he placed his
order with the qualified Participating Organization. Participating Organizations
are responsible for instituting procedures to ensure that purchase orders by
their respective clients are processed expeditiously.


INITIAL DIRECT PURCHASES OF SHARES
-------------------------------------------------------------------------------


     Investors who wish to invest in the Fund directly may obtain a current
Prospectus and the Fund application necessary to open an account by telephoning
the Fund at (212) 830-5345 or toll free at (800) 433-1918 during the hours of
8:30 a.m. to 5:30 p.m., Eastern time.


Mail and Personal Delivery

     Investors may send or deliver a check made payable to "Daily Income Fund"
along with a completed Fund application to:

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

     Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will 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. If your check is returned unpaid due to
insufficient funds, your order will be cancelled and your account will be
charged a $20.00 fee for each returned check.

Bank Wire

     To purchase shares of the Fund using the wire system for transmittal of
money among banks, an investor, prior to his or her initial purchase of shares,
should first telephone the Fund at (212) 830-5345 or toll free at (800) 433-1918
to obtain a Fund application necessary to open a new account. The investor
should complete and fax the Fund application along with any required
documentation to the Fund at (212) 315-1112. The original Fund application and
documentation should then be mailed to the address specified under "Mail and
Personal Delivery." The investor should then telephone the Fund at the above
number to obtain a new account number and then instruct a member bank of the
Federal Reserve System to wire the amount of the investment immediately to:


      The Bank of New York Mellon

      ABA # 021000018
      Reich & Tang Funds
      DDA # 890040352-7
      For Daily Income Fund
      Name of Portfolio
      Account of (Investor's Name)
                  -----------------------------
      Fund Account #  --------------------------

     An account will not be opened until the Fund has received the Fund
application and

                                       22
<PAGE>
required documentation in proper form and has accepted the purchase order for
its shares.

     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 4:00 p.m., Eastern time, on a
Fund Business Day will be treated as a Federal Funds payment received on that
day.

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,
including 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, please contact your broker or the Fund for
the appropriate form. You may elect at any time to terminate your participation
by notifying in writing the appropriate depositing entity and/or federal agency.
Upon notification of death or legal incapacity your participation in the
Privilege will automatically terminate. Further, the Fund may terminate your
participation in the Privilege upon 30 days' notice to you.

SUBSEQUENT PURCHASES OF SHARES
-------------------------------------------------------------------------------

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


      Daily Income Fund
      c/o Reich & Tang Funds
      P.O. Box 13232
      Newark, New Jersey 07101-3232


     There is a $100 minimum for the Investor Class and the Investor Service
Class for subsequent purchases of shares. All payments should clearly indicate
the shareholder's account number.

     Provided that the information on the application form on file with the Fund
is still applicable, a shareholder may reopen an account without filing a new
Fund application 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
Portfolio following receipt by the Fund's transfer agent of the redemption order
(and any supporting documentation that the Fund's transfer agent may require).
Normally, payment for redeemed shares is made on the same Fund Business Day the
redemption is effected, if the redemption proceeds are paid by wire (on the next
Fund Business Day if paid by check). However, redemption payments will not be
paid out unless the check (including a certified or cashier's check) used for
investment has been cleared for payment by the investor's bank, which could take
up to 15 days after investment. Shares redeemed are not entitled to participate
in dividends declared on the day a redemption becomes effective.

     A shareholder's original Fund application 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 Fund application 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. It should be 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.

                                       23
<PAGE>
Written Requests

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

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

     All written requests for redemption must be signed by the shareholder, in
each case with signature guaranteed, unless otherwise indicated on the Fund
application or in a subsequent written authorization.

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

Checks

     By making the appropriate election on their Fund application, shareholders
may request a supply of checks that may be used to effect redemptions from the
Class of shares of 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 $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. Investors who
purchase Fund shares by check may not receive their redemption proceeds until
the check has cleared, which can take up to 15 days following the date of
purchase.

     There is no charge to the shareholder for checks provided by the Fund,
although there may be fees charged for checks provided in connection with
certain cash management programs offered through Participating Organizations.
The Fund reserves the right to impose a charge or impose a different minimum
check amount in the future.

     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. Checks in amounts exceeding the value of the
shareholder's account at the time the check is presented for payment will not be
honored. 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. Shareholders will be charged a $16 fee for any stop payment
requests, a $15 fee if the Fund is requested to deliver a supply of checks
overnight and a $4 fee for each copy of a check requested. In addition, the Fund
reserves the right to charge the shareholder's account a fee of 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/or a post-dated check. The Fund reserves the right to terminate or
modify the check redemption procedure at any time or to impose additional fees
following notification to the Fund's shareholders.

     Corporations and other entities electing the checking option are required
to furnish a certified resolution or other evidence of authorization in
accordance with the Fund's normal practices. Individuals and joint tenants are
not required to furnish any supporting documentation. 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, the Fund will provide the
shareholder with a supply of checks.

Telephone


     The Fund accepts telephone requests for redemption from shareholders who
elect this option on their Fund application. The proceeds of a telephone
redemption may be sent to the

                                       24
<PAGE>

shareholder at their address of record or, if in excess of $1,000, to their
bank accounts, both as set forth in the Fund application or in a subsequent
signature guaranteed written authorization. The Fund may accept telephone
redemption instructions from any person with respect to accounts of shareholders
who elect this service and thus such shareholders risk possible loss of
principal and interest in the event of a telephone redemption not authorized by
them. Telephone requests to wire redemption proceeds must be for amounts in
excess of $10,000. For telephone requests for wire redemptions of less than
$10,000, the Fund charges a $15 fee. 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
at the time of such redemption request. Failure by the Fund to employ such
reasonable procedures may cause the Fund to be liable for the losses incurred by
investors due to unauthorized or fraudulent telephone redemptions.

     A shareholder making a telephone withdrawal should call the Fund at (212)
830-5345 or toll free at (800) 433-1918, 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 of
record, and (v) the name of the person requesting the redemption. Usually the
proceeds are sent to the designated bank account or address of record on the
same Fund Business Day the redemption is effected, if the redemption proceeds
are being paid by wire (on the next Fund Business Day if paid by check). The
Fund may modify or discontinue the telephone redemption option at any time and
will notify shareholders accordingly.


Generally

     There is no redemption charge, although there may be a fee charged on
certain wire redemption requests, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. 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 of his or her shares of a Portfolio, all dividends accrued
to the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption. A redemption of shares may result in taxable income
to the shareholder.

     The right of redemption generally 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 (i) any period during which the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
(ii) any period during which the SEC determines that trading thereon is
restricted, (iii) 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 to fairly determine the value of its net
assets, or (iv) for such other period as the SEC may by order permit for the
protection of the shareholders of the Fund.

     The Fund and its agents reserve the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked" entities and individuals
maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii)
where the Fund or its agents detect suspicious activity or suspect fraudulent or
illegal activity, or (iii) when notice has been received by the Fund or its
agents that there is

                                       25
<PAGE>

agents that there is a dispute between the registered or beneficial account
owners.

     The Fund reserves the right to redeem the shares of any shareholder if the
total value of all the remaining shares in the shareholder's or its
Participating Organization's account after a withdrawal is less than $500 for
the Investor Class and the Investor Service Class. 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. The Participating Organization will be responsible
for notifying the Participant Investor of the proposed mandatory redemption. A
shareholder or Participating Organization who receives such a notice may avoid
mandatory redemption by purchasing sufficient additional shares to increase its
account value to the minimum amount during the notice period. Shareholders who
purchase shares under these circumstances are not subject to the normal minimums
for subsequent purchases.

     In addition, in accordance with applicable customer identification
regulations, the Fund reserves the right to redeem the shares of any shareholder
and close the shareholder's account if the Fund and its agents are unable to
verify the shareholder's identity within a reasonable time after the
shareholder's account is opened. If the Fund closes a shareholder's account in
this manner, the shares will be valued in accordance with the net asset value
next calculated after the Fund decides to close the account.

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 or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the date specified on the Automatic Withdrawal Authorization
form. Whenever such day of the month is not a Fund Business Day, the payment
date is the Fund Business Day preceding the day of the month specified on the
Automatic Withdrawal Authorization form. 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 application by completing an Automatic Authorization
Withdrawal form. The election may also be made, changed or terminated at any
later time by sending a signature guaranteed written request to the Fund's
transfer agent. Because the withdrawal plan involves the redemption of Fund
shares, such withdrawals may constitute taxable events to the shareholder.
However, the Fund does not expect that there will be any realized capital gains.

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 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.

                                       26
<PAGE>
     All dividends and distributions of capital gains are automatically
invested, at no charge, 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
reinvestment of capital gains or any taxable dividends does not avoid a taxable
event to the shareholder, even though such shareholder has not received a cash
distribution to pay the resulting tax, if any. See "Tax Consequences."


     Election to receive dividends and distributions in cash or shares is made
at the time shares are subscribed for and may be changed by notifying the Fund
in writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There are no sales or other charges in connection with
the reinvestment of dividends and capital gains distributions.


     While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, each Portfolio's net investment
income (excluding capital gains, if any) will be declared as a dividend on each
Fund Business Day. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous Fund Business Day. The Fund pays dividends monthly.
There is no fixed dividend rate, and there can be no assurance that the Fund
will pay any dividends or realize any capital gains.

     Because the Investor Class shares and the Investor Service Class shares
bear the service fee under the Fund's 12b-1 Plan, the net income of and the
dividends payable to this share class may be lower than the net income of and
dividends payable to other shares of the Fund. Dividends paid to each Class of
shares of each Portfolio of the Fund will, however, be declared on the same days
at the same times and, except as noted with respect to the service fees payable
under the Fund's 12b-1 Plan, will be determined in the same manner and paid in
the same amounts.


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 that retain Reich & Tang Asset Management, LLC as
investment manager and that participate in the exchange privilege program with
the Fund. If a particular exchange fund has more than one available class of
shares, the shareholders of the Fund are entitled to exchange their shares for a
comparable class of shares available in the exchange fund. Currently the
exchange privilege program has been established between the Fund and California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, New Jersey Daily
Municipal Income Fund, Inc. and New York Daily Tax Free Income Fund, Inc. In the
future, the exchange privilege program may be extended to other investment
companies that retain Reich & Tang Asset Management, LLC as investment adviser
or manager.


     There is no charge for the exchange privilege or limitation as to frequency
of exchange. The minimum amount for an exchange is $1,000. However, 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 its
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

                                       27
<PAGE>

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, an investor should review the
current prospectus of the investment company into which the exchange is to be
made. An exchange will be a taxable event to an exchanging shareholder. See "Tax
Consequences."

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


     Daily Income Fund
     c/o Reich & Tang Funds
     600 Fifth Avenue - 8th Floor
     New York, New York 10020


or, for shareholders who have elected that option, by telephoning the Fund at
(212) 830-5345 or toll free at (800) 433-1918. The Fund reserves the right to
reject any exchange request and may modify or terminate the exchange privilege
at any time.

RETIREMENT PLANS
-------------------------------------------------------------------------------


     A shareholder in the Investor Class of the Money Market portfolio may
invest their shares in a "Traditional" Individual Retirement Account ("IRA") or
a "Roth" IRA. The application for either investment may be obtained from the
Transfer Agent. The minimum investment required to open an IRA for investment in
shares of the Fund is $250. There is no minimum for additional investments in an
IRA. Investors who are self-employed may purchase shares of the Fund through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or HR 10 plans. Fund shares may also be a suitable investment for
other types of qualified pension or profit-sharing plans which are
employer-sponsored, including deferred compensation or salary reduction plans
known as "401(k) Plans", which give participants the right to defer portions of
their compensation for investment on a tax-deferred basis until distributions
are made from the plans.

     Under the Internal Revenue Code of 1986, as amended (the "Code"),
individuals may make wholly, partly, or non-tax deductible traditional IRA
contributions of up to $5,000 annually (married individuals filing joint returns
may each contribute up to $5,000 ($10,000 in the aggregate), even where one
spouse is not working, if certain other conditions are met), depending on
whether they are active participants in an employer-sponsored retirement plan
and on their income level. If you are age 50 or older, you may make wholly,
partly, or non-tax deductible traditional IRA contributions of up to $6,000
annually (married individuals filing jointly may contribute up to $11,000 if one
spouse is 50 years of age or older or $12,000 if both spouses are 50 years of
age or older). Dividends and distributions held in the account are not taxed
until withdrawn in accordance with the provisions of the Code.

     Investors satisfying statutory income level requirements may make
non-deductible contributions of up to $5,000 annually to a Roth IRA. If you are
50 years of age or older, you may make non-deductible contributions of up to
$6,000 annually to a Roth IRA. Distributions from a Roth IRA are not subject to
tax if a statutory five-year holding period requirement is satisfied and if the
distributions are made (i) on or after the owner attains age 59 1/2, (ii) to a
beneficiary or the estate of the owner on or after the owner's death, (iii) due
to the owner becoming disabled, or (iv) for certain first-time home purchases.
If you contribute to both a traditional IRA and a Roth IRA, the combined
contribution limit is $5,000 ($6,000 if you are 50 years of age or older).

     Investors should be aware that they may be subject to additional tax
penalties on contributions or withdrawals from IRAs or other retirement plans
which are not permitted by the applicable provisions of the Code. Persons
desiring information concerning investments through IRAs or other retirement
plans should write or telephone the Fund's transfer agent at


                                       28
<PAGE>
600 Fifth Avenue - 8th Floor, New York, New York 10020, (212) 830-5345, or toll
free at (800) 433-1918.

FREQUENT TRADING

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


     The Reich & Tang family of funds discourages short-term or excessive
trading ("frequent trading") of their shares by shareholders (including by means
of exchanges) and maintains procedures reasonably designed to detect and deter
such frequent trading, except with respect to the money market funds as
discussed below. Frequent trading is sometimes referred to as market timing.
Market timing may take many forms but commonly refers to arbitrage activity
involving the frequent buying and selling of mutual fund shares in order to take
advantage of the fact that there may be a lag between a change in the value of a
mutual fund's portfolio securities and the reflection of that change in the
fund's share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons, frequent trading poses the
risk of lower returns for long-term shareholders of a fund. There is no
guarantee that these policies and procedures will be effective in detecting and
preventing frequent trading in whole or in part.

     Money market funds are not effective vehicles for market timing activity
since these types of funds seek to maintain a constant net asset value of $1.00
per share. In addition, the risks of frequent trading are not generally
applicable to money market funds because money market funds are created as cash
management vehicles which accommodate frequent inflows and outflows of cash. As
a result, money market funds are managed to accommodate such cash flows,
particularly when used as sweep vehicles, which generally eliminates the
potential for disruptive trading.

     Nonetheless, as indicated under "Pricing of Fund Shares" the Fund reserves
the right to reject any purchase order for its shares for any reason and thus
may exercise such right in the event it determines that a purchase order is
disruptive to the Fund's management or otherwise. The Fund's procedures with
respect to frequent purchases and redemptions of Fund shares by shareholders are
thus limited to the Fund exercising its right to reject purchase orders it
determines in its discretion to be disruptive. The Fund may change its policies
relating to frequent trading at any time without prior notice to shareholders.

TAX CONSEQUENCES
-------------------------------------------------------------------------------


     The Fund intends to continue to qualify for the income tax treatment
applicable to a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), for each Portfolio. To qualify as a regulated
investment company, each Portfolio must meet certain tests concerning its
investments and distributions. For each year a Portfolio qualifies as a
regulated investment company, the Portfolio will not be subject to federal
income tax on its investment company taxable income (which generally consists of
ordinary income, including taxable interest, and realized net short-term capital
gains in excess of realized net long-term capital losses, if any) and net
long-term capital gains distributed to its shareholders in the form of dividends
or capital gain distributions. Additionally, each Portfolio will not be subject
to a federal excise tax if the Portfolio distributes each year at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders and
any undistributed and untaxed amounts from prior years.

                                       29
<PAGE>

     Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives, except as provided in the following paragraph,
distributions will (i) consist primarily of ordinary income, (ii) in the case of
corporate shareholders, not be eligible for the dividends received deduction,
and (iii) in the case of individual shareholders, not be eligible for the
reduced tax rate currently applicable to certain qualified dividend income.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether the shareholders receive cash or additional shares. A
shareholder who elects to reinvest in additional shares will be treated for tax
purposes as if it had received and reinvested the cash dividend.


      The Fund expects that as a result of the investment objectives of the
Municipal Portfolio, distributions by the Municipal Portfolio will be exempt
from regular federal income tax to the extent that they are derived from
Municipal Securities and designated as exempt-interest dividends, provided that
the Municipal Portfolio complies with the requirements of the Code regarding
qualification to pay exempt-interest dividends. Exempt-interest dividends
received by a shareholder may be subject to federal alternative minimum tax,
state and local tax, and other limitations applicable to certain shareholders.
Investors should consult their own tax advisors with respect to the treatment of
exempt-interest dividends based on their specific facts.


      A shareholder's initial tax basis for its shares in the Fund will be its
cost of the shares, including any fees or expenses. The sale of shares in the
Fund will be the taxable disposition of an asset, with gain or loss recognized
in an amount equal to the difference between the shareholder's adjusted tax
basis for the shares and the proceeds received on the sale. Gain or loss
generally will be treated as capital gain or loss if the shares in the Fund are
held as capital assets. Such capital gain or loss will be long-term if the
shareholder has held the shares in the Fund for more than one year, and, for
individual shareholders, may qualify for the maximum capital gain tax rate of
15% (for taxable years beginning before January 1, 2011) rather than the tax
rate applicable to ordinary income. The exchange of shares of one Portfolio for
shares of another Portfolio, if available, will also be treated as a taxable
disposition of the shares exchanged, on which gain or loss will be recognized.
In either case, loss recognition may be affected by the loss disallowance rules
of the Code.


     The Fund is required by federal law to withhold 28% of reportable payments
as backup withholding (which may include dividends, capital gain distributions
and redemptions) paid to shareholders who have not complied with Code
requirements regarding the supplying of their taxpayer identification number and
the reporting of income. In connection with this withholding requirement, a
shareholder will be asked to certify on its application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to backup withholding for various reasons including previous
underreporting to the IRS.

     Distributions from the U.S. Government Portfolio and U.S. Treasury
Portfolio that are derived from interest on certain obligations of the United
States Government and agencies thereof, and distributions from the Municipal
Portfolio that are derived from interest on certain obligations of states and
agencies thereof, may be exempt from state and local taxes in certain states.
Investors should consult their own tax advisors regarding specific questions as
to federal, state or local taxes. Additional tax information is provided in the
Statement of Additional Information.

V.   DISTRIBUTION ARRANGEMENTS

Rule 12b-1 Fees
-------------------------------------------------------------------------------

     Investors do not pay a front-end sales charge to purchase shares of the
Fund. However, the Fund pays fees in connection with distribution of shares
and/or for the provision of servicing to both the Investor Class and

                                       30
<PAGE>

Investor Service Class shareholders. The Fund pays these fees from its assets on
an ongoing basis and therefore, over time, the payment of these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.

     The Fund's Board of Trustees has adopted a Rule 12b-1 distribution and
service plan (the "Plan"), with respect to the Investor Class and Investor
Service Class shares of the Fund, and, pursuant to the Plan, the Fund and the
Distributor have entered into a Distribution Agreement and Shareholder Servicing
Agreement.

     Under the Distribution Agreement, the Distributor serves as distributor of
the Fund's shares. The Distributor receives a distribution fee not to exceed
0.20% and 0.45% per annum of the average daily net assets of the Investor Class
shares and the Investor Service Class shares, respectively. As agent for the
Fund, the Distributor will solicit orders for the purchase of the Fund's shares,
provided that any orders will not be binding on the Fund until accepted by the
Fund as principal. The Distributor may use the distribution fee to pay the cost
of, and to compensate others, including Participating Organizations that provide
distribution assistance with respect to these classes. This fee is accrued daily
and paid monthly.

     Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Investor Class shares and the Investor Service Class shares, a
service fee equal to 0.25% per annum of each Portfolio's Investor Class shares'
average daily net assets (the "Shareholder Servicing Fee") for providing
personal shareholder services and for the maintenance of shareholder accounts.
This fee is accrued daily and paid monthly. Any portion of the fees 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 Investor Class shares and Investor Service Class
shares of each Portfolio.

     The Plan and the Shareholder Servicing Agreement provide that the Fund will
pay for (i) telecommunications expenses, including the cost of dedicated lines
and CRT terminals, incurred by the Distributor and Participating Organizations
in carrying out their obligations under the Shareholder Servicing Agreement with
respect to Investor Class and Investor Service Class shares or the Participating
Organization agreement, as the case may be, and (ii) preparing, printing and
delivering the Fund's Prospectus to existing shareholders of the Fund and
preparing and printing Fund applications 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, administrative services
fee, and past profits for the following purposes: (i) to pay the cost of, and to
compensate others, including Participating Organizations with whom the
Distributor has entered into written agreements, for performing shareholder
servicing on behalf of the Investor Class and Investor Service Class shares of
the Fund; (ii) to compensate Participating Organizations for providing
assistance in distributing the Investor Class shares and the Investor Service
Class shares of the Fund; and (iii) to pay the costs 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 of the Distributor and other
persons 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 Investor Class
shares and the Investor Service Class shares) and past profits, for the purposes
enumerated in (i) above. The Distributor may determine the amount of such
payments made pursuant to the Plan, provided that such payments will not
increase the amount which the Fund is required to pay to the Manager and
Distributor for any fiscal year under either the Investment Management

                                       31
<PAGE>
Contract, Administrative Services Agreement, Distribution Agreement or
Shareholder Servicing Agreement in effect for that year.


     The Distributor or an affiliate may, from time to time, at its expense and
out of its own resources (a source of which may be the 12b-1 fees paid by the
Fund under the Plan), make cash payments to some but not all Participating
Organizations for shareholder services, as an incentive to sell shares of the
Fund and/or to promote retention of their customers' assets in the Fund. These
payments may be referred to as "revenue sharing," but do not change the price
paid by investors to purchase the Fund's shares or the amount the Fund receives
as proceeds from such sales. Revenue sharing payments may be made to
Participating Organizations that provide services to the Fund or its
shareholders, including (without limitation) shareholder servicing,
administration, accounting, transfer agency and/or distribution services. The
Distributor negotiates the level of payments described above to any particular
Participating Organization with each firm, based on, among other things, the
nature and level of services provided by such Participating Organization and the
significance of the overall relationship of the Participating Organization to
the Manager and its affiliates. The amount of these payments may be significant
and may create an incentive for the Participating Organization to sell shares of
the Fund to you or to recommend one fund complex over another. Please speak with
your Participating Organization to learn more about payments made to them by the
Distributor or its affiliates. Additional information regarding these payments
can be found in the Fund's Statement of Additional Information. In addition, to
the extent allowable under the Financial Industry Regulatory Authority ("FINRA")
rules and any other applicable regulations, the Distributor or an affiliate may
contribute to sales programs for certain Participating Organizations and may
provide non-cash compensation to certain Participating Organizations like
sponsorship or funding of sales seminars, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or by giving out merchandise at industry
conferences, which may be paid for by the Distributor or an affiliate out of its
own resources.


                                       32
<PAGE>
VI. FINANCIAL HIGHLIGHTS


These financial highlights tables are intended to help you understand the
financial performance of the Investor Class shares of the Money Market Portfolio
and the U.S. Treasury Portfolio. Certain information reflects financial results
for a single Portfolio share. There are no financial highlights available for
the Investor Service Class shares of the U.S. Treasury Portfolio or the Money
Market Portfolio; or the Investor Service Class shares or the Investor Class
shares of the U.S. Government Portfolio or the Municipal Portfolio as these
classes have no operating history. The total returns in the tables represent the
rate that an investor would have earned on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
derived from the Fund's financial statements audited by PricewaterhouseCoopers
LLP, whose report, along with the Fund's financial statements, is included in
the annual report, which is available upon request.

<TABLE>
<CAPTION>
                                                                      Money Market Portfolio
Investor shares                                                          Commencement of Operations
---------------                                            Year Ended     November 28, 2006 through
                                                         March 31, 2008        March 31, 2007
                                                         --------------        --------------
Per Share Operating Performance:
(for a share outstanding throughout the year)
<S>                                                            <C>                   <C>
Net asset value, beginning of year.....................     $   1.00             $    1.00
                                                            ---------            ----------
Income from investment operations:
   Net investment income...............................         0.044                 0.016
   Net realized and unrealized gain(loss)  on investments       0.000                 0.000
                                                            ---------            ----------
   Total from investment operations....................         0.044                 0.016
Less distributions from:
   Dividends from net investment income................        (0.044)               (0.016)
   Net realized gain on investments....................        (0.000)               (0.000)
                                                            ---------            ----------
   Total Distributions.................................        (0.044)               (0.016)
                                                            ---------            ----------
Net asset value, end of year...........................     $   1.00             $    1.00
                                                            =========            ==========
Total Return...........................................         4.44%                 1.62%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 316,547            $ 151,947
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.65%                 0.65%(c)
   Net investment income...............................         4.25%                 4.76%(c)
   Management and administration fees waived...........         0.02%                 0.03%(c)
   Distribution fees waived............................         0.04%                 --   (c)
   Transfer Agency Account fee waiver..................         --                    0.03%(c)
   Expenses paid indirectly............................         0.00%                 0.00%(c)

<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized

</FN>
</TABLE>
                                       33
<PAGE>


VI. FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
                                                                     U.S. Treasury Portfolio
Investor shares                                                                 Commencement of Operations
----------------                                           Year Ended            February 21, 2007 through
                                                           March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.037                        0.005
   Net realized and unrealized gain(loss)  on investments        --                            --
                                                            ---------                   ----------
   Total from investment operations....................         0.037                        0.005
Less distributions from:
   Dividends from net investment income................        (0.037)                      (0.005)
   Net realized gain on investments....................          --                            --
                                                            ---------                   ----------
   Total Distributions.................................        (0.037)                      (0.005)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.73%                        0.50%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 270,279                   $ 134,911
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.63%                        0.63%(c)
   Net investment income...............................         3.51%                        4.62%(c)
   Administration fees waived..........................         0.03%                        0.03%(c)
   Distribution fees waived............................         0.05%                        0.05%(c)
   Expenses paid indirectly............................         0.00%                        0.00%(c)


<FN>
(a)  Unannualized

(b)  Includes expenses paid indirectly.
(c)  Annualized
</FN>
</TABLE>
                                       34
<PAGE>

                     NOTICE OF REICH & TANG* PRIVACY POLICY

     We do not disclose to third parties nonpublic personal information about
current or former Reich & Tang customers, clients or mutual fund shareholders
other than as described below.

     We collect nonpublic personal information about you, such as your name,
address, social security number, account activity and account balances from your
account application and other forms that you may deliver to us. We use this
information to provide advisory services to you, to open an account for you, or
to process a transaction for your account. In order to service your account and
effect your transactions, we provide your nonpublic personal information to our
affiliates and to unaffiliated firms to effect or process transactions for you
or to assist us in servicing your account.

     We may also disclose nonpublic personal information about you to other
service providers who agree to protect the confidentiality of your information
and to use the information only for the purpose for which the disclosure is
made. We do not otherwise provide nonpublic personal information about you to
outside firms, organizations or individuals except as permitted by law.

     We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic and procedural safeguards that comply with
federal standards to guard your personal information.


*    For purposes of this notice, "Reich & Tang" includes: Reich & Tang Asset
     Management, LLC, Reich & Tang Distributors, Inc., Reich & Tang Services,
     Inc. and all mutual funds or other funds managed or advised by Reich & Tang
     Asset Management, LLC.

                       THIS IS NOT PART OF THE PROSPECTUS

<PAGE>
A Statement of Additional Information
(SAI) dated July 29, 2008, includes
additional information about the Fund
and its investments and is incorporated
by reference into this Prospectus.
Further information about Fund
investments is available in the annual
and semi-annual shareholder reports. You
may obtain the SAI, the annual and
semi-annual reports without charge by
calling the Fund toll free at (800)
433-1918. You may also obtain the SAI
and the annual and semi-annual reports
without charge by visiting the Fund's
website at
http://www.money-funds.com/funds/index.
To request other information about the
Fund, please call your financial
intermediary or the Fund.
========================================
                                                DAILY
                                                INCOME
                                                FUND

                                                Investor Class Shares
                                                Investor Service Class Shares

                                                PROSPECTUS

                                                July 29, 2008

========================================
A current SAI has been filed with the
Securities and Exchange Commission.
Information about the Fund (including
the SAI) is also available from the
Public Reference Room of the Securities
and Exchange Commission. Information on
the operation of the Public Reference
Room may be obtained by calling the
Commission at (202) 551-8090. Fund
reports and other information about the
Fund are available on the EDGAR Database
on the Commission's Internet site at
http://www.sec.gov. Copies of this
information may be obtained, after
paying a duplicating fee, by electronic
request at publicinfo@sec.gov, or by
writing the Commission's Public
Reference Section, Washington, D.C.
20549-0104.

Investment Company Act No. 811-8312

             Reich & Tang Distributors, Inc.
                   600 Fifth Avenue
                  New York, NY 10020
                    (212) 830-5345

DIF_INV07/08P



<PAGE>

--------------------------------------------------------------------------------
DAILY INCOME FUND                                    600 FIFTH AVENUE
SHORT TERM INCOME SHARES CLASS SHARES                NEW YORK, NY 10020
RETAIL CLASS SHARES                                  (212) 830-5345
                                                     (800) 433-1918 (TOLL FREE)
================================================================================
PROSPECTUS

July 29, 2008

The investment objective of the Money Market Portfolio, U.S. Treasury Portfolio
and U.S. Government Portfolio is to seek as high a level of current income to
the extent consistent with the preservation of capital and the maintenance of
liquidity.


The investment objective of the Municipal Portfolio is to seek as high a level
of tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

The U.S. Government Portfolio does not offer a Short Term Income Shares Class.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S> <C>                                                 <C>  <C>

2  Risk/Return Summary: Investments, Risks               19   Management, Organization
   and Performance                                            and Capital Structure
9  Risk/Return Summary: Fee Table                        20   Shareholder Information
13 Investment Objectives, Principal Investment           30   Distribution Arrangements
   Strategies and Related Risks                          32   Financial Highlights
</TABLE>

The Notice of the Reich & Tang Privacy Policy is included with this Prospectus
but is not part of the Prospectus.
<PAGE>
I.   RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objectives
-------------------------------------------------------------------------------

      The Fund is composed of four portfolios - the Money Market Portfolio, U.S.
Treasury Portfolio, the U.S. Government Portfolio and the Municipal Portfolio
(each a "Portfolio" and collectively, the "Portfolios").

      The investment objective of the Money Market Portfolio, the U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.

      The investment objective of the Municipal Portfolio is to seek as high a
level of tax-exempt current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.

      There is no assurance that the Portfolios will achieve their investment
objectives.

Principal Investment Strategies
-------------------------------------------------------------------------------
      The Fund intends to achieve its investment objectives through four
separate Portfolios. Each Portfolio is a money market portfolio that invests in
high quality, short-term debt instruments. The Fund seeks to maintain investment
portfolios with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolios at amortized cost and maintain a net asset value of
$1.00 per share.

      Each Portfolio's strategy is as follows:

The Money Market Portfolio


     The Money Market Portfolio seeks to achieve its objective by investing
principally in short-term money market obligations with maturities of 397 days
or less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, loan participation interests,
securities issued or guaranteed by the United States Government, state agencies
or instrumentalities, and repurchase agreements calling for resale in 397 days
or less backed by the foregoing securities. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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 U.S. Treasury Portfolio

      The U.S. Treasury Portfolio seeks to achieve its objective by investing
only in obligations backed by the full faith and credit of the United States
government with maturities of 397 days or less and repurchase agreements which
are collateralized by such obligations calling for resale in 397 days or less.

The U.S. Government Portfolio


      The U.S. Government Portfolio seeks to achieve its objective by investing
at least 80% of its net assets in short-term, marketable securities and
instruments issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, ("Government Securities") with maturities of 397 days or
less, and repurchase agreements which are collateralized by the foregoing
securities. For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy.


The Municipal Portfolio


     The Municipal Portfolio seeks to achieve its objective by investing at
least 80% of its net assets in obligations issued by states, territories and
possessions of the United States and its political subdivisions, public
authorities and other entities authorized to issue debt, including Participation
Certificates therein, the interest on which is exempt from

                                       2
<PAGE>
regular federal income tax. For purposes of this test only, net assets include
borrowings for investment purposes. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy. The maturities of
variable rate demand instruments held in the Portfolio will be deemed to be the
longer of the period required before the Portfolio 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.

Principal Risks
-------------------------------------------------------------------------------
Risks Common to all Portfolios:

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

Risks of Investing in the Money Market Portfolio:

o    The Money Market Portfolio may contain securities issued by foreign
     governments, or any of their political subdivisions, agencies or
     instrumentalities, and by foreign branches of domestic banks, foreign
     subsidiaries of domestic banks, domestic and foreign branches of foreign
     banks, and commercial paper issued by foreign issuers. Foreign securities
     may be subject to investment risks which may include adverse economic and
     political developments as well as lack of uniform accounting and financial
     reporting standards.

o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

Risks of Investing in the U.S. Treasury Portfolio:

o    The U.S. Treasury Portfolio's investment policy of only investing in U.S.
     Treasury obligations and other obligations that are issued or guaranteed by
     the United States Government (including repurchase agreements), while
     minimizing risk of loss, may produce a lower yield than a policy of
     investing in other types of instruments. The yield and total return of the
     U.S. Treasury Portfolio is likely to be lower than that of the Money Market
     Portfolio.

Risks of Investing in the U.S. Government Portfolio:


o    The U.S. Government Portfolio is exposed to the credit risk of the
     institutions that issue Government Securities. Changes in the credit
     quality of the issuers could affect their ability to meet their payment
     obligations of interest or principal. Any failure to make such payments
     could adversely affect the value of the security and your investment in the
     Fund.

Risks of Investing in the Municipal Portfolio:

o    The Municipal Portfolio invests in municipal debt obligations. The value of
     these municipal obligations may be affected by uncertainties in the
     municipal debt market related to taxation. In addition, the payment of
     interest and preservation of capital are

                                       3
<PAGE>
dependent upon the continuing ability of issuers and/or obligors of state,
municipal and public authority debt obligations to meet these payment
obligations.

Risk/Return Bar Chart And Table

     The following bar charts and tables may assist you in deciding whether to
invest in a Portfolio of the Fund. The bar charts show the annual total returns
of the Money Market Portfolio (Retail Class shares), the U.S. Treasury Portfolio
(Short Term Income Shares), the U.S. Government Portfolio (Retail Class shares)
and the Municipal Portfolio (Retail Class shares) each for the last calendar
year, respectively. The table for the Money Market Portfolio shows the average
annual total returns of the Short Term Income Class and the Retail Class shares
of the Portfolio for the last one year (Retail Class shares only) and since
inception periods. The table for the U.S. Treasury Portfolio shows the average
annual total returns of the Short Term Income Class and the Retail Class shares
of the Portfolio for the last one year and since inception periods. The table
for the U.S. Government Portfolio shows the average annual total returns of the
Retail Class shares for the last one year and since inception periods. The table
for the Municipal Portfolio shows the average annual total returns of the Short
Term Income Class and the Retail Class shares for the last one year (Retail
Class shares only) and since inception periods. While analyzing this
information, please note that the Portfolios' past performance is not an
indication of how the Fund will perform in the future. The current 7-day yield
for the Money Market Portfolio, the U.S. Treasury Portfolio, the U.S. Government
Portfolio and the Municipal Portfolio may be obtained by calling the Fund at
(212) 830-5345 or toll free at (800) 433-1918.


                                       4
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
Money Market Portfolio - Retail Class (1)(2)(3)
<S>                     <C>

Calendar Year End       % Total Return
2007                    4.40%

<FN>
(1)  As of June 30, 2008, the Money Market Portfolio Retail Class shares had a
     year-to-date return of 1.30%.

(2)  The Money Market Portfolio Retail Class shares' highest quarterly return
     was 1.11% for the quarter ended September 30, 2007; the lowest quarterly
     return was 0.52% for the quarter ended June 30, 2008.


(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>

 Average Annual Total Returns - For the periods ended December 31, 2007
<S>                                          <C>                           <C>
                                        Short Term Income Class         Retail Class
 One Year                                     N/A                          4.40%
 Since Inception*                            4.46%                         4.40%
<FN>
 *   The inception date for the Money Market Portfolio Short Term Income Class
     shares was February 12, 2007, and for the Money Market Portfolio Retail
     Class shares was November 28, 2006.

</FN>
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
U.S. Treasury Portfolio - Short Term Income Class (1)(2)(3)

<S>                     <C>

Calendar Year End       % Total Return
2007                    4.05%
<FN>
(1)  As of June 30, 2008, the U.S. Treasury Portfolio Short Term Income Class
     shares had a year-to-date return of 0.76%.

(2)  The U.S. Treasury Portfolio Short Term Income Class shares' highest
     quarterly return was 1.07% for the quarter ended March 31, 2007; the lowest
     quarterly return was 0.26% for the quarter ended June 30, 2008.

(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>

Average Annual Total Returns - For the periods ended December 31, 2007

                                Short Term Income Class             Retail Class
<S>                                         <C>                          <C>
One Year                                    4.05%                        3.95%
Since Inception*                            4.10%                        3.96%
<FN>
*    The inception date for the U.S. Treasury Portfolio Short Term Income Class
     shares was November 2, 2006, and for the U.S. Treasury Portfolio Retail
     Class shares was December 12, 2006.
</FN>

</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
U.S. Government Portfolio - Retail Class (1)(2)(3)

<S>                     <C>
Calendar Year End       % Total Return
2007                    4.19%

<FN>
(1)  As of June 30, 2008, the U.S. Government Portfolio Retail Class shares had
     a year-to-date return of 0.93%.

(2)  The U.S. Government Portfolio Retail Class shares' highest quarterly return
     was 1.07% for the quarter ended June 30, 2007; the lowest quarterly return
     was 0.32% for the quarter ended June 30, 2008.

(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>

Average Annual Total Returns - For the periods ended December 31, 2007
<S>                                          <C>
                                         Retail Class
One Year                                    4.19%
Since Inception                             4.20%*
<FN>
     * The inception date for the U.S. Government Portfolio Retail Class shares
       was December 12, 2006.
</FN>

</TABLE>

                                       7
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
Municipal Portfolio - Retail Class (1)(2)(3)

<S>                     <C>
Calendar Year End       % Total Return
2007                    2.74%
<FN>
(1)  As of June 30, 2008, the Municipal Portfolio Retail Class shares had a
     year-to-date return of 0.78%.

(1)  The Municipal Portfolio Retail Class shares' highest quarterly return was
     0.71% for the quarter ended June 30, 2007; the lowest quarterly return was
     0.31% for the quarter ended June 30, 2008.

(2)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>

</TABLE>

<TABLE>
<CAPTION>

Average Annual Total Returns - For the periods ended December 31, 2007
<S>                                      <C>                           <C>

                               Short Term Income Class             Retail Class
One Year                                  N/A                         2.74%
Since Inception*                         2.96%                        2.74%
<FN>
*    The inception date for the Municipal Portfolio Short Term Income Class
     shares was February 20, 2007 and for the Municipal Portfolio Retail Class
     shares was December 8, 2006.
</FN>

</TABLE>

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Money Market Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>

Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                     Money Market Portfolio
                                                     Short
                                                   Term Income        Retail
                                                      Class           Class

<S>                                             <C>   <C>      <C>    <C>

Management Fees ...............................       0.12%           0.12%
Distribution and Service (12b-1) Fees..........       0.70%           0.90%
Other Expenses.................................       0.15%           0.14%
  Administration Fees..........................  0.05%          0.05%
                                                      ------         ------
Total Annual Fund Operating Expenses*..........       0.97%           1.16%

<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.94% for the Short Term Income Class and 1.00% for the Retail
     Class, through July 31, 2008. The Fund's investment manager and distributor
     have further agreed that they will not modify or terminate these fee waiver
     arrangements through July 31, 2009, without prior approval of the Fund's
     Board of Trustees.
</FN>

</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the Money
Market Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Money Market Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
<S>                                       <C>           <C>            <C>           <C>
                                          1 Year         3 Years       5 Years       10 Years

 Short Term Income Shares Class:          $99            $309          $536          $1,190
 Retail Class:                            $118           $368          $638          $1,409

</TABLE>

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Treasury Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

                                                   U.S. Treasury Portfolio
                                                    Short
                                                 Term Income         Retail
                                                    Class            Class
<S>                                             <C>   <C>      <C>   <C>

Management Fees ...............................       0.12%           0.12%
Distribution and Service (12b-1) Fees..........       0.70%           0.90%
Other Expenses.................................       0.14%           0.14%

  Administration Fees..........................  0.05%          0.05%
                                                      ------         ------
Total Annual Fund Operating Expenses*..........       0.96%           1.16%
<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.90% for the Short Term Income Class and 1.00% (due to
     rounding, the actual total fund operating expenses were 0.99% for the
     fiscal year ended March 31, 2008) for the Retail Class, through July 31,
     2008. The Fund's investment manager and distributor have further agreed
     that they will not modify or terminate these fee waiver arrangements
     through July 31, 2009, without prior approval of the Fund's Board of
     Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the U.S.
Treasury Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Treasury Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:


<S>                                      <C>            <C>           <C>           <C>
                                         1 Year         3 Years       5 Years       10 Years

Short Term Income Shares Class:          $98            $306          $531          $1,178
Retail Class:                            $118           $368          $638          $1,409

</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's U.S. Government Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>

Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                 U.S. Government Portfolio
                                                         Retail
                                                          Class

<S>                                                  <C>   <C>

Management Fees ...............................            0.12%
Distribution and Service (12b-1) Fees..........            0.90%
Other Expenses.................................            0.20%
  Administration Fees..........................      0.05%
                                                          ------
Total Annual Fund Operating Expenses*..........            1.22%
<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 1.00% for the Retail Class, through July 31, 2008. The Fund's
     investment manager and distributor have further agreed that they will not
     modify or terminate these fee waiver arrangements through July 31, 2009,
     without prior approval of the Fund's Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>

Example

This Example is intended to help you compare the cost of investing in the U.S.
Government Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Government Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:


<S>                                    <C>             <C>          <C>            <C>
                                        1 Year         3 Years       5 years       10 Years
Retail Class:                           $124           $387           $670         $1,477

</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Municipal Portfolio.


Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
* There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                    Municipal Portfolio
                                                   Short
                                                 Term Income          Retail
                                                   Class              Class

<S>                                             <C>   <C>      <C>   <C>
Management Fees ...............................       0.12%           0.12%
Distribution and Service (12b-1) Fees..........       0.70%           0.90%
Other Expenses.................................       0.24%           0.24%
  Administration Fees..........................  0.05%          0.05%
                                                      ------         ------
Total Annual Fund Operating Expenses*..........       1.06%           1.26%

<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.76% for the Short Term Income Class and 1.00% for the Retail
     Class, through July 31, 2008. The Fund's investment manager and distributor
     have further agreed that they will not modify or terminate these fee waiver
     arrangements through July 31, 2009, without prior approval of the Fund's
     Board of Trustees.

</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the
Municipal Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Municipal Portfolio for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:


<S>                                     <C>           <C>           <C>            <C>
                                        1 Year         3 Years       5 Years       10 Years
Short Term Income Shares Class:         $108           $337           $585         $1,294
Retail Class:                           $128           $400           $692         $1,523

</TABLE>


                                       12
<PAGE>
II.  INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
Investment Objectives
-------------------------------------------------------------------------------

     The Fund is a money market fund which seeks to achieve the following
investment objectives through its four Portfolios.

     The investment objective of the Money Market Portfolio, the U.S. Treasury
Portfolio and the U.S. Government Portfolio is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.


     The investment objective of the Municipal Portfolio is to seek as high a
level of tax-exempt current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.

     There can be no assurance that a Portfolio will achieve its investment
objective.

     The investment objective of any Portfolio of the Fund described in this
section may only be changed upon the approval of the holders of a majority of
the outstanding shares of such Portfolio.

Principal Investment Strategies
-------------------------------------------------------------------------------
Generally

     In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual Portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.

     The Fund will only invest in either securities which have been rated (or
whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's investment manager to be
of comparable quality.

     Each Portfolio of the Fund shall invest not more than 5% of its total
assets in securities issued by a single issuer, except for U.S. Government
Obligations.

     With respect to 75% of its total assets, each Portfolio shall invest not
more than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

     The Fund's investment manager considers the following factors when buying
and selling securities for each of the Fund's Portfolios: (i) the availability
of cash, (ii) redemption requests, (iii) yield management, and (iv) credit
management.

     As a temporary defensive measure a Portfolio may, from time to time, invest
in securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Portfolio to not achieve its
investment objective.

Money Market Portfolio

     The Money Market Portfolio intends to attain its investment objective
through investments in the following securities:

(i)  UNITED STATES GOVERNMENT SECURITIES: The Money Market Portfolio may
     purchase short-term obligations issued or guaranteed by the United States
     Government, its agencies or instrumentalities. These obligations include
     issues of the United States Treasury, such as bills, certificates of
     indebtedness, notes and bonds, and issues of certain agencies and
     instrumentalities established under the authority of an act of Congress.
     Some of these securities are supported by the full faith and credit of the
     United States, others are supported by the

                                       13
<PAGE>
     right of the issuer to borrow from the United States, and still others are
     supported only by the credit of the agency or instrumentality.

(ii) DOMESTIC AND FOREIGN BANK: The Money Market Portfolio may purchase
     securities issued by foreign governments, or any of their political
     subdivisions or agencies or instrumentalities, certificates of deposit,
     time deposits and bankers' acceptances issued by domestic banks, foreign
     branches of domestic banks, foreign subsidiaries of domestic banks, and
     domestic and foreign branches of foreign banks. Certificates of deposit are
     certificates representing the obligation of a bank to repay funds deposited
     with it for a specified period of time. Time deposits are non-negotiable
     deposits maintained in a bank for a specified period of time (in no event
     longer than seven days) at a stated interest rate. Time deposits purchased
     by the Fund will not benefit from insurance from the FDIC. Bankers'
     acceptances are credit instruments evidencing the obligation of a bank to
     pay a draft drawn on it by a customer.

     The Money Market Portfolio limits its investments in obligations of
     domestic banks, foreign branches of domestic banks and foreign subsidiaries
     of domestic banks to banks having total assets in excess of one billion
     dollars or the equivalent in other currencies. The Money Market Portfolio
     limits its investments in obligations of domestic and foreign branches of
     foreign banks to dollar denominated obligations of such banks which at the
     time of investment have more than $5 billion, or the equivalent in other
     currencies, in total assets. These investments must also meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally."

     The Money Market Portfolio generally limits investments in bank instruments
     to (a) those which are fully insured as to principal by the FDIC or (b)
     those issued by banks which at the date of their latest public reporting
     have total assets in excess of $1.5 billion. However, the total assets of a
     bank will not be the sole factor determining the Money Market Portfolio's
     investment decisions and the Money Market Portfolio may invest in bank
     instruments issued by institutions which the investment manager believes
     present minimal credit risks.

     The Money Market Portfolio may purchase U.S. dollar-denominated obligations
     issued by foreign branches of domestic banks or foreign branches of foreign
     banks ("Eurodollar" obligations) and domestic branches of foreign banks
     ("Yankee dollar" obligations). The Money Market Portfolio will limit its
     aggregate investments in foreign bank obligations, including Eurodollar
     obligations and Yankee dollar obligations, to 25% of its total assets at
     the time of purchase, provided that there is no limitation on the Money
     Market Portfolio's investments in (a) Eurodollar obligations, if the
     domestic parent of the foreign branch issuing the obligations is
     unconditionally liable in the event that the foreign branch fails to pay on
     the Eurodollar obligation for any reason; and (b) Yankee dollar
     obligations, if the U.S. branch of the foreign bank is subject to the same
     regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
     obligations include time deposits, which are non-negotiable deposits
     maintained in a bank for a specified period of time at a stated interest
     rate. The Money Market Portfolio will limit its purchases of time deposits
     to those which mature in seven days or less, and will limit its purchases
     of time deposits maturing in two to seven days to 10% of such Portfolio's
     total assets at the time of purchase.

     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,

                                       14
<PAGE>
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental restrictions such as exchange
     controls may be adopted which might adversely affect the payment of
     principal and interest on those obligations, (vi) the selection of foreign
     obligations may be more difficult because there may be less information
     publicly available concerning foreign issuers, (vii) there may be
     difficulties in enforcing a judgment against a foreign issuer or (viii) the
     accounting, auditing and financial reporting standards, practices and
     requirements applicable to foreign issuers may differ from those applicable
     to domestic issuers. In addition, foreign banks are not subject to
     examination by United States Government agencies or instrumentalities.

(iii) VARIABLE AMOUNT MASTER DEMAND NOTES: The Money Market Portfolio may
     purchase variable amount master demand notes. These instruments are
     unsecured demand notes that permit investment of fluctuating amounts of
     money at variable rates of interest pursuant to arrangements with issuers
     who meet the quality criteria discussed above under "Principal Investment
     Strategies - Generally." The interest rate on a variable amount master
     demand note is periodically adjusted according to a prescribed formula.
     Although there is no secondary market in master demand notes, the payee may
     demand payment of the principal and interest upon notice not exceeding five
     business or seven calendar days.

(iv) LOAN PARTICIPATION INTERESTS: The Money Market Portfolio may purchase
     participation interests in loans extended by banks to companies, provided
     that both such banks and such companies meet the quality standards
     applicable to bank instruments as set forth above.

(v)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Money Market Portfolio
     may purchase commercial paper or similar debt obligations. Commercial paper
     is generally considered to be short-term unsecured debt of corporations.

(vi) REPURCHASE AGREEMENTS: The Money Market Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Money Market Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

U.S.  Treasury Portfolio

     The U.S. Treasury Portfolio intends to attain its investment objective
through investments limited to obligations issued or guaranteed by the United
States Government including repurchase agreements covering those types of
obligations. Under normal circumstances the Portfolio will invest all of its net
assets, plus borrowings for investment purposes, in obligations issued or
guaranteed by the U.S. Treasury. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy.

     The Fund will enter into repurchase agreements for inclusion in the U.S.
Treasury Portfolio only if the instruments serving as collateral for the
agreements are eligible for inclusion in the U.S. Treasury Portfolio.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(ii)  OTHER UNITED STATES GOVERNMENT OBLIGATIONS: Marketable securities and

                                       15
<PAGE>
     instruments issued or guaranteed by the full faith and credit of the United
     States Government. Such obligations include obligations of the Federal
     Housing Administration, the Export-Import Bank of the United States, the
     Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration.

(iii) REPURCHASE AGREEMENTS: The U.S. Treasury Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government. A repurchase agreement arises when a
     buyer purchases a security and simultaneously agrees with the vendor to
     resell the security to the vendor at an agreed upon time and price.

     The investment policies of the U.S. Treasury Portfolio may produce a lower
     yield than a policy of investing in other types of instruments. The yield
     of the U.S. Treasury Portfolio is likely to be lower than the yield of the
     Money Market Portfolio.

U.S.  Government Portfolio

     Under normal market circumstances, the U.S. Government Portfolio will
invest at least 80% of its net assets in short-term U.S. Government Obligations
with maturities of 397 days or less and repurchase agreements which are
collateralized by the foregoing securities. For purposes of this test only, net
assets include borrowings for investment purposes. The Fund will provide
shareholders with at least 60 days' prior notice of any change in this policy.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(ii) OTHER OBLIGATIONS OF U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES:
     Marketable securities and instruments issued by government-sponsored
     agencies and enterprises acting under authority of Congress. Although
     obligations of federal agencies and instrumentalities are not debts of the
     U.S. Treasury, in some cases, payment of interest and principal on such
     obligations is guaranteed by the U.S. Government, e.g., obligations of the
     Federal Housing Administration, the Export-Import Bank of the United
     States, the Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration; in other cases payment of interest and principal is not
     guaranteed, e.g., obligation of the Federal Home Loan Bank System and the
     Federal Farm Credit Bank. The Fund will invest in the securities of those
     agencies that are not guaranteed or backed by the full faith and credit of
     the U.S. Government only when the Manager, in its sole discretion, is
     satisfied that the credit risk with respect to a particular agency or
     instrumentality is minimal.

(iii) REPURCHASE AGREEMENTS: The U.S. Government Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government or its agencies or instrumentalities. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

Municipal Portfolio

     The Municipal Portfolio intends to attain its investment objective through
investments in the following securities:

                                       16
<PAGE>

(i)  MUNICIPAL SECURITIES: The Municipal Portfolio may purchase high quality
     tax-exempt money market instruments ("Municipal Securities"), including
     debt obligations issued to obtain funds for various public purposes (e.g.,
     the construction of a wide range of public facilities), the refunding of
     outstanding obligations, the obtaining of funds for general operating
     expenses and lending such funds to other public institutions and
     facilities. The Portfolio may also invest in certain types of private
     activity bonds or industrial development bonds, issued by or on behalf of
     public authorities to obtain funds to provide for the construction,
     equipment, repair or improvement of privately operated facilities. Such
     obligations are considered to be Municipal Securities provided that the
     interest paid thereon generally qualifies as exempt from regular federal
     income tax in the opinion of bond counsel. Interest on certain Municipal
     Securities may give rise to federal alternative minimum tax liability and
     may have other federal income tax consequences.

(ii) REPURCHASE AGREEMENTS: The Municipal Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Municipal Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

     For a more detailed description of (i) the securities in which the Fund
will invest, (ii) fundamental investment restrictions, and (iii) industry
regulations governing credit quality and maturity, please refer to the Statement
of Additional Information.

Risks
-------------------------------------------------------------------------------

     The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.

     Investments in U.S. Government securities may or may not be supported by
the full faith and credit of the U.S. Government. Although many U.S. Government
securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.

     The maximum potential liability of the issuers of some U.S. Government
securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers will not have the funds to meet their payment
obligations in the future. In such case, a Fund must look principally to the
agency, instrumentality or sponsored enterprise issuing or guaranteeing the
security for ultimate repayment and may not be able to assert a claim against
the U.S. Government itself in the event the agency, instrumentality or sponsored
enterprise does not meet its commitment.

     The U.S. Government securities that the Fund may purchase include:

o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

o    Securities issued by agencies, instrumentalities or sponsored enterprises

                                       17
<PAGE>
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored enterprises issuing these obligations is the Federal Farm Credit
     System.

     Since the Money Market Portfolio may contain securities issued by foreign
governments, or any of their political subdivisions, agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Money Market Portfolio may
be subject to additional investment risks when compared with those incurred by a
fund which invests only in domestic issuers. Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Similarly, volume in most
foreign securities markets is less than in the United States. The issuers of
some of these securities may be subject to less stringent or different
regulation than are United States issuers. In addition, there may be less
publicly available information about a non-United States issuer, and non-United
States issuers generally are not subject to uniform accounting and financial
reporting standards and requirements. Additional risks associated with foreign
investments might include adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities. Furthermore, some of these foreign securities may be subject
to stamp, withholding or other excise taxes levied by foreign governments, which
have the effect of increasing the cost of such securities and reducing the
realized gain or increasing the realized loss on such securities at the time of
sale.

     The investment policies of the U.S. Government Portfolio may produce a
lower yield than a policy of investing in other types of instruments. The yield
of the U.S. Government Portfolio is likely to be lower than the yield of the
Money Market Portfolio.

     Since the Municipal Portfolio invests in municipal debt obligations, the
value of these municipal obligations may be affected by uncertainties on the
municipal debt market related to taxation. In addition, the payment of interest
and preservation of capital are dependent upon the continuing ability of issuers
and/or obligors of state, municipal and public authority debt obligations to
meet these payment obligations.

Portfolio Holdings
-------------------------------------------------------------------------------

     A schedule of each Portfolio's holdings, current as of month-end, will be
available on the Fund's website no earlier than 5 days after the end of each
month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission ("SEC")

                                       18
<PAGE>
its semi-annual/annual shareholder report or quarterly portfolio holdings report
that includes such period. The most recent schedule is available on the Fund's
website at http://www.money-funds.com/portfolioholdings or by calling toll free
at (800) 433-1918. The Fund may terminate or modify this policy at any time
without further notice to shareholders. A description of the Fund's policies and
procedures with respect to the disclosure of the Fund's portfolio securities is
available in the Statement of Additional Information.

III.  MANAGEMENT, ORGANIZATION AND  CAPITAL STRUCTURE


     The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

     Pursuant to the Investment Management Contract between the Fund and the
Manager, the Manager manages each Portfolio's securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Trustees of the Fund. Pursuant to the Investment
Management Contract, each of the Portfolios pays an annual management fee of
0.12% of each Portfolio's average daily net assets. For the fiscal year ended
March 31, 2008, the Fund paid the Manager a management fee equal to 0.12% of the
Money Market, 0.12% of the U.S. Treasury, 0.08% of the U.S. Government and 0.04%
of the Municipal Portfolio's average daily net assets. A discussion regarding
the basis for the Board of Trustees approving the continuance of the Investment
Management Contract is available in the Fund's annual report for the period
ended March 31, 2008.

     Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and the Administrative Services Contract. For its
services under the Administrative Services Contract, the Fund pays the Manager
an annual fee of 0.05% of each Portfolio's average daily net assets. For the
fiscal year ended March 31, 2008, the Fund paid the Manager a fee for
administrative services equal to 0.03% of the Money Market, 0.02% of the U.S.
Treasury, 0.00% of the U.S. Government, and 0.00% of the Municipal Portfolios'
average daily net assets.

     The Manager and Distributor have agreed not to modify or terminate their
fee waiver arrangements through July 31, 2009, without the prior approval of the
Fund's Board of Trustees. Any portion of the total fees received by the Manager
and its past profits may be used to provide shareholder services and for
distribution of Fund shares.

     In addition, Reich & Tang Distributors, Inc. (the "Distributor"), receives
a servicing fee equal to 0.25% per annum of the average daily net assets of the
Short Term Income Shares Class shares of each Portfolio (with the exception of
the U.S. Government Portfolio) and the Retail Class shares of each Portfolio
under the Shareholder Servicing Agreement. The fees are accrued daily and paid
monthly.

     The Distributor also receives a distribution fee in an amount not to exceed
0.45% and 0.65% per annum of the average daily net assets of the

                                       19
<PAGE>
Short Term Income Shares Class shares of each Portfolio (with the exception of
the U.S. Government Portfolio) and the Retail Class shares of each Portfolio,
respectively, pursuant to the Distribution Agreement.

     Investment management fees and operating expenses, which are attributable
to more than one Class of the Fund, will be allocated daily to each Class of
shares based on the percentage of shares outstanding at the end of the day.

IV.  SHAREHOLDER INFORMATION

     The Fund sells and redeems its shares on a continuing basis at their net
asset value. The Fund does not impose a charge for either purchases or
redemptions, although there may be a fee imposed on certain wire redemption
requests. All transactions in Fund shares are processed through the Fund's
transfer agent or its principal underwriter, as appropriate, which accept orders
for purchases and redemptions from Participating Organizations (see "Investments
Through Participating Organizations" for a definition of Participating
Organizations) and from investors directly.

Pricing of Fund Shares
-------------------------------------------------------------------------------

     The net asset value of each Portfolio of the Fund's shares is determined as
of 4:00 p.m., Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except (i) days on which the New York Stock
Exchange is closed for trading (i.e., national holidays) and (ii) Columbus Day
and Veterans' Day. However, on certain days that the New York Stock Exchange is
closed, the Fund, at the direction of the Manager, may be open for purchases and
redemptions and will determine its net asset value. The net asset value is
computed by dividing the value of each Portfolio'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. Each Portfolio intends to maintain a stable net asset
value at $1.00 per share although there can be no assurance that this will be
achieved.

     The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended (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. If fluctuating interest rates or credit
issues cause the market value of the securities in a Portfolio to deviate more
than 1/2 of 1% from the value determined on the basis of amortized cost, the
Board of Trustees 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 the Fund would receive if the instrument were sold.

     Shares are issued as of the first determination of the Portfolio's net
asset value per share made after acceptance of the investor's purchase order. In
order to maximize earnings on its Portfolios, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Portfolio
shares begin accruing income on the day the shares are issued to an investor.

     The Fund reserves the right to reject any purchase order of its shares. In
addition, the Fund does not accept cash, and may refuse to accept cash
equivalents (i.e., travelers cheques, money orders, cashier's checks or similar
instruments) and certain other forms of payment at its discretion.

SUBSCRIBING TO THE FUND
-------------------------------------------------------------------------------

     At the time of initial investment in the Fund, investors must elect on
their fund application the Class of shares of the Portfolio

                                       20
<PAGE>
in which they wish to invest. Subject to the Portfolios' initial investment
minimums, investors may divide their investment in the Fund between the
Portfolios in any manner they choose by submitting the Fund application with
their choices. Investors may purchase shares of the Portfolios from a
Participating Organization or directly. Certain Participating Organizations are
compensated for their services by the Manager and/or the Distributor.

     Shareholders will have a separate account with the Fund for each Portfolio
in which they invest. Certificates for Fund shares will not be issued to
investors.

PURCHASE OF FUND SHARES
-------------------------------------------------------------------------------

     The Fund does not accept a purchase order from investors investing in the
Fund directly (i.e., not through Participating Organizations) until an
investor's payment has been converted into Federal Funds and is received by the
Fund's transfer agent or its principal underwriter, as appropriate. Orders from
these direct investors that are accompanied by Federal Funds and received after
4:00 p.m., Eastern time, on a Fund Business Day will result in the issuance of
shares on the following Fund Business Day.

     Investors may, if they wish, invest in the Fund through a Participating
Organization with which they have accounts. Generally, all other investors, and
investors who have accounts with Participating Organizations but do not wish to
invest in the Fund through them, may invest in the Fund directly. Direct
shareholders generally do not receive the benefit of the servicing functions
performed by a Participating Organization.

     The minimum initial investment in the Fund for each Portfolio is $5,000 for
the Short Term Income Shares Class and the Retail Class. The minimum amount for
subsequent investments is $100 for the Short Term Income Shares Class and the
Retail Class. The Fund may waive any minimum purchase requirements.

     The Fund will provide each shareholder, except certain investors, with a
personalized monthly statement listing (i) the total number of Fund shares owned
as of the statement closing date, (ii) purchases and redemptions of Fund shares,
and (iii) the dividends paid on Fund shares (including dividends paid in cash or
reinvested in additional Fund shares).

INVESTMENTS THROUGH PARTICIPATING
ORGANIZATIONS
-------------------------------------------------------------------------------

     Generally, investors purchasing shares through a Participating Organization
are referred to as Participant Investors. Participating Organizations are
securities brokers, banks and financial institutions or other industry
professionals or organizations that have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. When instructed by a Participant Investor to purchase or
redeem Fund shares, the Participating Organization, on behalf of the Participant
Investor, 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.

     Participating Organizations may confirm to Participant Investors each
purchase and redemption of Fund shares for their accounts. Also, Participating
Organizations may send periodic account statements to their customers showing
(i) the total number of Fund shares owned by each Participant Investor as of the
statement closing date, (ii) purchases and redemptions of Fund shares by each
Participant Investor during the period covered by the statement, and (iii) the
income earned by Fund shares of each Participant Investor 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 statements will receive them from the Fund directly.

                                       21
<PAGE>

     Participating Organizations may charge Participant Investors a fee in
connection with their use of specialized purchase and redemption procedures. 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 applicable to shareholders who invest in the Fund
directly. Accordingly, the net yield to investors who invest through
Participating Organizations may be less than the net yield that could be
achieved by investing in the Fund directly. Participating Organizations may also
set deadlines for receipt of orders from Participant Investors that are earlier
than the order deadline of the Fund due to processing or other reasons. 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.

     Qualified Participating Organizations may transmit an investor's purchase
or redemption order to the Fund's transfer agent after 4:00 p.m., Eastern time
on the day the order is received from the investor as long as the investor has
placed his order with the Participating Organization before 4:00 p.m. Eastern
time on that day. The investor will then receive the net asset value of the
Fund's shares determined as of 4:00 p.m. Eastern time on the day he placed his
order with the qualified Participating Organization. Participating Organizations
are responsible for instituting procedures to ensure that purchase orders by
their respective clients are processed expeditiously.


INITIAL DIRECT PURCHASES OF SHARES
-------------------------------------------------------------------------------

     Investors who wish to invest in the Fund directly may obtain a current
Prospectus and the Fund application necessary to open an account by telephoning
the Fund at (212) 830-5345 or toll free at (800) 433-1918 during the hours of
8:30 a.m. to 5:30 p.m., Eastern time.


Mail and Personal Delivery

     Investors may send or deliver a check made payable to "Daily Income Fund"
along with a completed Fund application to:

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

     Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will 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. If your check is returned unpaid due to
insufficient funds, your order will be cancelled and your account will be
charged a $20.00 fee for each returned check.

Bank Wire

     To purchase shares of the Fund using the wire system for transmittal of
money among banks, an investor, prior to his or her initial purchase of shares,
should first telephone the Fund at (212) 830-5345 or toll free at (800) 433-1918
to obtain a Fund application necessary to open a new account. The investor
should complete and fax the Fund application along with any required
documentation to the Fund at (212) 315-1112. The original Fund application and
documentation should then be mailed to the address specified under "Mail and
Personal Delivery." The investor should then telephone the Fund at the above
number to obtain a new account number and then instruct a member bank of the
Federal Reserve System to wire the amount of the investment immediately to:

                                       22
<PAGE>

      The Bank of New York Mellon

      ABA # 021000018
      Reich & Tang Funds
      DDA # 890040352-7
      For Daily Income Fund
      Name of Portfolio
      Account of (Investor's Name)
                 ------------------------------
      Fund Account #
                     --------------------------

     An account will not be opened until the Fund has received the Fund
application and required documentation in proper form and has accepted the
purchase order for its shares.

     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 4:00 p.m., Eastern time, on a
Fund Business Day will be treated as a Federal Funds payment received on that
day.

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,
including 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, please contact your broker or the Fund for
the appropriate form. You may elect at any time to terminate your participation
by notifying in writing the appropriate depositing entity and/or federal agency.
Upon notification of death or legal incapacity your participation in the
Privilege will automatically terminate. Further, the Fund may terminate your
participation in the Privilege upon 30 days' notice to you.

SUBSEQUENT PURCHASES OF SHARES
-------------------------------------------------------------------------------

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

      Daily Income Fund
      c/o Reich & Tang Funds
      P.O. Box 13232
      Newark, New Jersey 07101-3232

     There is a $100 minimum for the Short Term Income Shares Class and the
Retail Class for subsequent purchases of shares. All payments should clearly
indicate the shareholder's account number.

     Provided that the information on the application form on file with the Fund
is still applicable, a shareholder may reopen an account without filing a new
Fund application 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
Portfolio following receipt by the Fund's transfer agent of the redemption order
(and any supporting documentation that the Fund's transfer agent may require).
Normally, payment for redeemed shares is made on the same Fund Business Day the
redemption is effected, if the redemption proceeds are paid by wire (on the next
Fund Business Day if paid by check). However, redemption payments will not be
paid out unless the check (including a certified or cashier's check) used for
investment has been cleared for payment by the investor's bank, which could take
up to 15 days after investment. Shares redeemed are not entitled to participate
in dividends declared on the day a redemption becomes effective.

     A shareholder's original Fund application permits the shareholder to redeem
by written request and to elect one or more of the additional redemption
procedures described below. A

                                       23
<PAGE>
shareholder may only change the instructions indicated on his original Fund
application 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. It should be 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.

Written Requests

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

      Daily Income Fund
      c/o Reich & Tang Funds
      600 Fifth Avenue - 8th Floor
      New York, New York 10020

     All written requests for redemption must be signed by the shareholder, in
each case with signature guaranteed, unless otherwise indicated on the Fund
application or in a subsequent written authorization.

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

Checks

     By making the appropriate election on their Fund application, shareholders
may request a supply of checks that may be used to effect redemptions from the
Class of shares of 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 $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. Investors who
purchase Fund shares by check may not receive their redemption proceeds until
the check has cleared, which can take up to 15 days following the date of
purchase.

     There is no charge to the shareholder for checks provided by the Fund,
although there may be fees charged for checks provided in connection with
certain cash management programs offered through Participating Organizations.
The Fund reserves the right to impose a charge or impose a different minimum
check amount in the future.

     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. Checks in amounts exceeding the value of the
shareholder's account at the time the check is presented for payment will not be
honored. 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. Shareholders will be charged a $16 fee for any stop payment
requests, a $15 fee if the Fund is requested to deliver a supply of checks
overnight and a $4 fee for each copy of a check requested. In addition, the Fund
reserves the right to charge the shareholder's account a fee of 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/or a post-dated check. The Fund reserves the right to terminate or
modify the check redemption procedure at any time or to impose additional fees
following notification to the Fund's shareholders.

                                       24
<PAGE>
     Corporations and other entities electing the checking option are required
to furnish a certified resolution or other evidence of authorization in
accordance with the Fund's normal practices. Individuals and joint tenants are
not required to furnish any supporting documentation. 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, the Fund will provide the
shareholder with a supply of checks.

Telephone


     The Fund accepts telephone requests for redemption from shareholders who
elect this option on their Fund application. The proceeds of a telephone
redemption may be sent to the shareholder at their address of record or, if in
excess of $1,000, to their bank accounts, both as set forth in the Fund
application or in a subsequent signature guaranteed written authorization. The
Fund may accept telephone redemption instructions from any person with respect
to accounts of shareholders who elect this service and thus such shareholders
risk possible loss of principal and interest in the event of a telephone
redemption not authorized by them. Telephone requests to wire redemption
proceeds must be for amounts in excess of $10,000. For telephone requests for
wire redemptions of less than $10,000, the Fund charges a $15 fee. 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 at the time of such redemption request. Failure
by the Fund to employ such reasonable procedures may cause the Fund to be liable
for the losses incurred by investors due to unauthorized or fraudulent telephone
redemptions.

     A shareholder making a telephone withdrawal should call the Fund at (212)
830-5345 or toll free at (800) 433-1918, 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 of
record, and (v) the name of the person requesting the redemption. Usually the
proceeds are sent to the designated bank account or address of record on the
same Fund Business Day the redemption is effected, if the redemption proceeds
are being paid by wire (on the next Fund Business Day if paid by check). The
Fund may modify or discontinue the telephone redemption option at any time and
will notify shareholders accordingly.


Generally

     There is no redemption charge, although there may be a fee charged on
certain wire redemption requests, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. 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 of his or her shares of a Portfolio, all dividends accrued
to the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption. A redemption of shares may result in taxable income
to the shareholder.

     The right of redemption generally 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 (i) any period during which the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
(ii) any period during which the SEC determines that trading thereon is
restricted, (iii) 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 to fairly determine the value of its

                                       25
<PAGE>
net assets, or (iv) for such other period as the SEC may by order permit for the
protection of the shareholders of the Fund.

     The Fund and its agents reserve the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked" entities and individuals
maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii)
where the Fund or its agents detect suspicious activity or suspect fraudulent or
illegal activity, or (iii) when notice has been received by the Fund or its
agents that there is a dispute between the registered or beneficial account
owners.

     The Fund reserves the right to redeem the shares of any shareholder if the
total value of all the remaining shares in the shareholder's or its
Participating Organization's account after a withdrawal is less than $500 for
the Short Term Income Shares Class and the Retail Class. 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. The Participating Organization will be responsible
for notifying the Participant Investor of the proposed mandatory redemption. A
shareholder or Participating Organization who receives such a notice may avoid
mandatory redemption by purchasing sufficient additional shares to increase its
account value to the minimum amount during the notice period. Shareholders who
purchase shares under these circumstances are not subject to the normal minimums
for subsequent purchases.

     In addition, in accordance with applicable customer identification
regulations, the Fund reserves the right to redeem the shares of any shareholder
and close the shareholder's account if the Fund and its agents are unable to
verify the shareholder's identity within a reasonable time after the
shareholder's account is opened. If the Fund closes a shareholder's account in
this manner, the shares will be valued in accordance with the net asset value
next calculated after the Fund decides to close the account.

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 or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the date specified on the Automatic Withdrawal Authorization
form. Whenever such day of the month is not a Fund Business Day, the payment
date is the Fund Business Day preceding the day of the month specified on the
Automatic Withdrawal Authorization form. 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 application by completing an Automatic Authorization
Withdrawal form. The election may also be made, changed or terminated at any
later time by sending a signature guaranteed written request to the Fund's
transfer agent. Because the withdrawal plan involves the redemption of Fund
shares, such withdrawals may constitute taxable events to the shareholder.
However, the Fund does not expect that there will be any realized capital gains.

                                       26
<PAGE>
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 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, at no charge, 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
reinvestment of capital gains or any taxable dividends does not avoid a taxable
event to the shareholder, even though such shareholder has not received a cash
distribution to pay the resulting tax, if any. See "Tax Consequences."

     Election to receive dividends and distributions in cash or shares is made
at the time shares are subscribed for and may be changed by notifying the Fund
in writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There are no sales or other charges in connection with
the reinvestment of dividends and capital gains distributions.


     While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, each Portfolio's net investment
income (excluding capital gains, if any) will be declared as a dividend on each
Fund Business Day. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous Fund Business Day. The Fund pays dividends monthly.
There is no fixed dividend rate, and there can be no assurance that the Fund
will pay any dividends or realize any capital gains.

     Because the Short Term Income Shares Class and Retail shares bear the
service fee under the Fund's 12b-1 Plan, the net income of and the dividends
payable to these share classes may be lower than the net income of and dividends
payable to other shares of the Fund. Dividends paid to each Class of shares of
each Portfolio of the Fund will, however, be declared on the same days at the
same times and, except as noted with respect to the service fees payable under
the Fund's 12b-1 Plan, will be determined in the same manner and paid in the
same amounts.


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 that retain Reich & Tang Asset Management, LLC as
investment manager and that participate in the exchange privilege program with
the Fund. If only one Class of shares is available in a particular exchange
fund, the shareholders of the Fund are 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., Connecticut Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Florida Daily Municipal Income Fund, New Jersey Daily Municipal Income Fund,
Inc. and New York Daily Tax Free Income Fund, Inc. In the future, the exchange
privilege program may be extended to other investment companies that retain
Reich & Tang Asset Management, LLC as investment adviser or manager.

     There is no charge for the exchange privilege or limitation as to frequency
of exchange. The minimum amount for an exchange is $1,000. However, shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure that a sufficient number of

                                       27
<PAGE>
shares are exchanged to meet the minimum initial investment required for the
investment company into which the exchange is being made. Each Class of shares
is exchanged at its respective net asset value.

     The exchange privilege 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, an investor should review the current prospectus of the
investment company into which the exchange is to be made. An exchange will be a
taxable event to an exchanging shareholder. See "Tax Consequences."

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

     Daily Income Fund
     c/o Reich & Tang Funds
     600 Fifth Avenue-8th Floor
     New York, New York 10020

     or, for shareholders who have elected that option, by telephoning the Fund
at (212) 830-5345 or toll free at (800) 433-1918. The Fund reserves the right to
reject any exchange request and may modify or terminate the exchange privilege
at any time.

FREQUENT TRADING
-------------------------------------------------------------------------------

     The Reich & Tang family of funds discourages short-term or excessive
trading ("frequent trading") of their shares by shareholders (including by means
of exchanges) and maintains procedures reasonably designed to detect and deter
such frequent trading, except with respect to the money market funds as
discussed below. Frequent trading is sometimes referred to as market timing.
Market timing may take many forms but commonly refers to arbitrage activity
involving the frequent buying and selling of mutual fund shares in order to take
advantage of the fact that there may be a lag between a change in the value of a
mutual fund's portfolio securities and the reflection of that change in the
fund's share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons, frequent trading poses the
risk of lower returns for long-term shareholders of a fund. There is no
guarantee that these policies and procedures will be effective in detecting and
preventing frequent trading in whole or in part.

     Money market funds are not effective vehicles for market timing activity
since these types of funds seek to maintain a constant net asset value of $1.00
per share. In addition, the risks of frequent trading are not generally
applicable to money market funds because money market funds are created as cash
management vehicles which accommodate frequent inflows and outflows of cash. As
a result, money market funds are managed to accommodate such cash flows,
particularly when used as sweep vehicles, which generally eliminates the
potential for disruptive trading.

     Nonetheless, as indicated under "Pricing of Fund Shares" the Fund reserves
the right to reject any purchase order for its shares for any reason and thus
may exercise such right in the event it determines that a purchase order is
disruptive to the Fund's management or otherwise. The Fund's procedures with
respect to frequent purchases and redemptions of Fund shares by shareholders are
thus limited to the

                                       28
<PAGE>
Fund exercising its right to reject purchase orders it determines in its
discretion to be disruptive. The Fund may change its policies relating to
frequent trading at any time without prior notice to shareholders.

TAX CONSEQUENCES
-------------------------------------------------------------------------------


     The Fund intends to continue to qualify for the income tax treatment
applicable to a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), for each Portfolio. To qualify as a regulated
investment company, each Portfolio must meet certain tests concerning its
investments and distributions. For each year a Portfolio qualifies as a
regulated investment company, the Portfolio will not be subject to federal
income tax on its investment company taxable income (which generally consists of
ordinary income, including taxable interest, and realized net short-term capital
gains in excess of realized net long-term capital losses, if any) and net
long-term capital gains distributed to its shareholders in the form of dividends
or capital gain distributions. Additionally, each Portfolio will not be subject
to a federal excise tax if the Portfolio distributes each year at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders and
any undistributed and untaxed amounts from prior years.

     Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives, except as provided in the following paragraph,
distributions will (i) consist primarily of ordinary income, (ii) in the case of
corporate shareholders, not be eligible for the dividends received deduction,
and (iii) in the case of individual shareholders, not be eligible for the
reduced tax rate currently applicable to certain qualified dividend income.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether the shareholders receive cash or additional shares. A
shareholder who elects to reinvest in additional shares will be treated for tax
purposes as if it had received and reinvested the cash dividend.

     The Fund expects that as a result of the investment objectives of the
Municipal Portfolio, distributions by the Municipal Portfolio will be exempt
from regular federal income tax to the extent that they are derived from
Municipal Securities and designated as exempt-interest dividends, provided that
the Municipal Portfolio complies with the requirements of the Code regarding
qualification to pay exempt-interest dividends. Exempt-interest dividends
received by a shareholder may be subject to federal alternative minimum tax,
state and local tax, and other limitations applicable to certain shareholders.
Investors should consult their own tax advisors with respect to the treatment of
exempt-interest dividends based on their specific facts.

     A shareholder's initial tax basis for its shares in the Fund will be its
cost of the shares, including any fees or expenses. The sale of shares in the
Fund will be the taxable disposition of an asset, with gain or loss recognized
in an amount equal to the difference between the shareholder's adjusted tax
basis for the shares and the proceeds received on the sale. Gain or loss
generally will be treated as capital gain or loss if the shares in the Fund are
held as capital assets. Such capital gain or loss will be long-term if the
shareholder has held the shares in the Fund for more than one year, and, for
individual shareholders, may qualify for the maximum capital gain tax rate of
15% (for taxable years beginning before January 1, 2011) rather than the tax
rate applicable to ordinary income. The exchange of shares of one Portfolio for
shares of another Portfolio, if available, will also be treated as a taxable
disposition of the shares exchanged, on which gain or loss will be recognized.
In either case, loss recognition may be affected by the loss disallowance rules
of the Code.

     The Fund is required by federal law to withhold 28% of reportable payments
as backup withholding (which may include dividends, capital gains distributions
and redemptions) paid

                                       29
<PAGE>
to shareholders who have not complied with Code requirements regarding the
supplying of their taxpayer identification number and the reporting of income.
In connection with this withholding requirement, a shareholder will be asked to
certify on its application that the social security or tax identification number
provided is correct and that the shareholder is not subject to backup
withholding for various reasons including previous underreporting to the IRS.

     Distributions from the U.S. Treasury and U.S. Government Portfolio that are
derived from interest on certain obligations of the United States Government and
agencies thereof, and distributions from the Municipal Portfolio that are
derived from interest on certain obligations of states and agencies thereof, may
be exempt from state and local taxes in certain states. Investors should consult
their own tax advisors regarding specific questions as to federal, state or
local taxes. Additional tax information is provided in the Statement of
Additional Information.

V.   DISTRIBUTION ARRANGEMENTS

Rule 12b-1 Fees
-------------------------------------------------------------------------------

     Investors do not pay a front-end sales charge to purchase shares of the
Fund. However, the Fund pays fees in connection with distribution of shares
and/or for the provision of servicing to the Short Term Income Shares Class and
Retail Class shareholders. The Fund pays these fees from its assets on an
ongoing basis and therefore, over time, the payment of these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.

     The Fund's Board of Trustees has adopted a Rule 12b-1 distribution and
service plan (the "Plan"), with respect to the Short Term Income Shares Class
and Retail Class shares of the Fund, and pursuant to the Plan, the Fund and the
Distributor have entered into a Distribution Agreement and Shareholder Servicing
Agreement.

     Under the Distribution Agreement, the Distributor serves as distributor of
the Fund's shares. The Distributor receives a distribution fee not to exceed
0.45% and 0.65% per annum of the average daily net assets of the Short Term
Income Shares Class shares of each Portfolio (with the exception of the U.S.
Government Portfolio) and the Retail Class shares of each Portfolio,
respectively. As agent for the Fund, the Distributor will solicit orders for the
purchase of the Fund's shares, provided that any orders will not be binding on
the Fund until accepted by the Fund as principal. The Distributor may use the
distribution fee to pay the cost of, and to compensate others, including
Participating Organizations that provide distribution assistance with respect to
these classes. This fee is accrued daily and paid monthly.

     Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Short Term Income Shares Class and Retail Class shares, a service
fee equal to 0.25% per annum of each Portfolio's Short Term Income Shares Class
(with the exception of the U.S. Government Portfolio) and Retail Class shares'
average daily net assets (the "Shareholder Servicing Fee") for providing
personal shareholder services and for the maintenance of shareholder accounts.
This fee is accrued daily and paid monthly. Any portion of the fees 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 Short Term Income Shares Class and Retail Class
shares of each Portfolio.

     The Plan and the Shareholder Servicing Agreement provide that the Fund will
pay for (i) telecommunications expenses, including the cost of dedicated lines
and CRT terminals, incurred by the Distributor and Participating Organizations
in carrying out their obligations

                                       30
<PAGE>
under the Shareholder Servicing Agreement with respect to Short Term Income
Shares Class and Retail Class shares or the Participating Organization
agreement, as the case may be, and (ii) preparing, printing and delivering the
Fund's Prospectus to existing shareholders of the Fund and preparing and
printing Fund applications 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, administrative services
fee, and past profits for the following purposes: (i) to pay the cost of, and to
compensate others, including Participating Organizations with whom the
Distributor has entered into written agreements, for performing shareholder
servicing on behalf of the Short Term Income Shares Class and Retail Class
shares of the Fund; (ii) to compensate Participating Organizations for providing
assistance in distributing the Short Term Income Shares Class and Retail Class
shares of the Fund; and (iii) to pay the costs 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 of the Distributor and other
persons 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 Short Term
Income Shares Class and Retail Class shares) and past profits, for the purposes
enumerated in (i) above. The Distributor may determine the amount of such
payments made pursuant to the Plan, provided that such payments will not
increase the amount which the Fund is required to pay to the Manager and
Distributor for any fiscal year under either the Investment Management Contract,
Administrative Services Agreement, Distribution Agreement or Shareholder
Servicing Agreement in effect for that year.

     The Distributor or an affiliate may, from time to time, at its expense and
out of its own resources (a source of which may be the 12b-1 fees paid by the
Fund under the Plan), make cash payments to some but not all Participating
Organizations for shareholder services, as an incentive to sell shares of the
Fund and/or to promote retention of their customers' assets in the Fund. These
payments may be referred to as "revenue sharing," but do not change the price
paid by investors to purchase the Fund's shares or the amount the Fund receives
as proceeds from such sales. Revenue sharing payments may be made to
Participating Organizations that provide services to the Fund or its
shareholders, including (without limitation) shareholder servicing,
administration, accounting, transfer agency and/or distribution services. The
Distributor negotiates the level of payments described above to any particular
Participating Organization with each firm, based on, among other things, the
nature and level of services provided by such Participating Organization and the
significance of the overall relationship of the Participating Organization to
the Manager and its affiliates. The amount of these payments may be significant
and may create an incentive for the Participating Organization to sell shares of
the Fund to you or to recommend one fund complex over another. Please speak with
your Participating Organization to learn more about payments made to them by the
Distributor or its affiliates. Additional information regarding these payments
can be found in the Fund's Statement of Additional Information. In addition, to
the extent allowable under the Financial Industry Regulatory Authority ("FINRA")
rules and any other applicable regulations, the Distributor or an affiliate may
contribute to sales programs for certain Participating Organizations and may
provide non-cash compensation to certain Participating Organizations like
sponsorship or funding of sales seminars, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or by giving out merchandise at industry
conferences, which may be paid for by the Distributor or an affiliate out of its
own resources.


                                       31
<PAGE>
<TABLE>
<CAPTION>
VI.  FINANCIAL HIGHLIGHTS


These financial highlights tables are intended to help you understand the
financial performance of the Short Term Income Shares Class shares of the Money
Market Portfolio, U.S. Treasury Portfolio and Municipal Portfolio and the Retail
Class shares for the Money Market Portfolio, U.S. Treasury Portfolio, U.S.
Government Portfolio and Municipal Portfolio. Certain information reflects
financial results for a single Portfolio share. The total returns in the tables
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been derived from the Fund's financial statements audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, is included in the annual report, which is available upon request.

                                                                      Money Market Portfolio
Short Term Income Class shares                                                  Commencement of Operations
-------------------------                                  Year Ended            February 12, 2007 through
                                                         March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.041                        0.006
   Net realized and unrealized gain(loss)  on investments       0.000                        0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.041                        0.006
Less distributions from:
   Dividends from net investment income................        (0.041)                      (0.006)
   Net realized gain on investments....................         --                          (0.000)
                                                            ---------                   ----------
   Total Distributions.................................        (0.041)                      (0.006)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         4.14%                        0.59%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 297,508                   $  57,097
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.94%                        0.94%(c)
   Net investment income...............................         3.92%                        4.47%(c)
   Management and administration fees waived...........         0.02%                        0.03%(c)
   Distribution fees waived............................         0.01%                        --  (c)
   Expenses paid indirectly............................         0.00%                        0.00%(c)

<FN>
(a)      Unannualized
(b)      Includes expenses paid indirectly.
(c)      Annualized
</FN>

</TABLE>

                                       32
<PAGE>
<TABLE>
<CAPTION>

VI.  FINANCIAL HIGHLIGHTS (continued)
                                                                     Money Market Portfolio

Retail Class shares                                                             Commencement of Operations
-------------                                              Year Ended            November 28, 2006 through
                                                         March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.040                        0.015
   Net realized and unrealized gain(loss)  on investments       0.000                        0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.040                        0.015
Less distributions from:
   Dividends from net investment income................        (0.040)                      (0.015)
   Net realized gain on investments....................        (0.000)                      (0.000)
                                                            ---------                   ----------
   Total Distributions.................................        (0.040)                      (0.015)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         4.08%                        1.49%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $1,439,855                  $ 897,904
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.00%                        1.00%(c)
   Net investment income...............................         3.95%                        4.39%(c)
   Management and administration fees waived...........         0.02%                        0.03%(c)
   Distribution fees waived............................         0.14%                        0.10%(c)
   Transfer Agency Account fee waiver..................          --                          0.03%(c)
   Expenses paid indirectly............................         0.00%                        0.00%(c)

<FN>
(a) Unannualized
(b) Includes expenses paid indirectly.
(c) Annualized
</FN>

</TABLE>

                                       33
<PAGE>
<TABLE>
<CAPTION>
VI.  FINANCIAL HIGHLIGHTS (continued)

                                                                       U.S. Treasury Portfolio
                                                                                Commencement of Operations
Short Term Income Class shares                             Year Ended            November 2, 2006 through
------------------------                                 March 31, 2008               March 31, 2007
                                                         --------------               --------------
<S>                                                            <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.034                        0.018
   Net realized and unrealized gain(loss)  on investments        --                           --
                                                            ---------                   ----------
   Total from investment operations....................         0.034                        0.018
Less distributions from:
   Dividends from net investment income................        (0.034)                      (0.018)
   Net realized gain on investments....................          --                           --
                                                            ---------                   ----------
   Total Distributions.................................        (0.034)                      (0.018)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.46%                        1.80%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 174,840                   $  22,663
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.90%                        0.90%(c)
   Net investment income...............................         3.03%                        4.32%(c)
   Administration fees waived..........................         0.03%                        0.03%(c)
   Distribution fee waiver.............................         0.03%                        0.03%(c)
   Expenses paid indirectly............................         0.00%                        0.00%(c)
<FN>
(a)      Unannualized
(b)      Includes expenses paid indirectly
(c)      Annualized
</FN>

</TABLE>

                                       34
<PAGE>
<TABLE>
<CAPTION>

VI.  FINANCIAL HIGHLIGHTS (continued)
                                                                     U.S. Treasury Portfolio
                                                                                Commencement of Operations
Retail Class shares                                        Year Ended            December 12, 2006 through
                                                          March 31,2008               March 31, 2007
-------------------                                       -------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
 (for a share outstanding throughout the period)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   -------------
Income from investment operations:

    Net investment income..............................         0.033                        0.013
    Net realized and unrealized gain(loss)  on investments      0.000                        0.000
                                                                  -----                 ----------
    Total from investment operations...................         0.033                        0.013
Less distributions from:
    Dividends from net investment income...............        (0.033)                      (0.013)
    Net realized gain on investments...................        (0.000)                      (0.000)
                                                            ----------                  -----------
    Total Distributions................................        (0.033)                      (0.013)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   =============
Total Return...........................................         3.36%                        1.28%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $  20,976                   $     371
Ratios to average net assets:
    Expenses (net of fees waived) (b)..................         0.99%                        1.00%(c)
    Net investment income..............................         1.90%                        4.22%(c)
    Administration fees waived.........................         0.03%                        0.03%(c)
    Distribution fees waived...........................         0.14%                        0.10%(c)
    Transfer Agency Account fees waived................         0.00%                        0.03%(c)
    Expenses paid indirectly...........................         0.00%                        0.00%(c)

<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
</TABLE>

                                       35
<PAGE>
<TABLE>
<CAPTION>
VI.  FINANCIAL HIGHLIGHTS (continued)

                                                                    U.S. Government Portfolio
                                                                                Commencement of Operations
                                                           Year Ended            December 12, 2006 through
Retail Class shares                                       March 31,2008               March 31, 2007
-------------------                                       -------------               --------------
<S>                                                             <C>                          <C>

Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.037                        0.013
   Net realized and unrealized gain(loss)on investments        (0.000)                       0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.037                        0.013
Less distributions from:
   Dividends from net investment income................        (0.037)                      (0.013)
   Net realized gain on investments....................          --                           --
                                                            ---------                   ----------
   Total Distributions.................................        (0.037)                      (0.013)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.73%                        1.30%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $159,269                    $  57,051
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.00%                        1.00%(c)
   Net investment income...............................         3.38%                        4.29%(c)
   Management and administration fees waived...........         0.09%                        0.16%(c)
   Distribution fees waived............................         0.13%                        0.10%(c)
   Transfer Agency Account fees waived.................          --                          0.03%(c)
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>

</TABLE>

                                       36
<PAGE>
<TABLE>
<CAPTION>

VI.  FINANCIAL HIGHLIGHTS (continued)
                                                                        Municipal Portfolio
                                                                                Commencement of Operations
                                                           Year Ended            February 20, 2007 through
Short Term Income Class shares                            March 31,2008               March 31, 2007
------------------------------                            -------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.027                        0.003
   Net realized and unrealized gain(loss)  on investments       0.000                         --
                                                            ---------                   ----------
   Total from investment operations....................         0.027                        0.003
                                                            ---------                   ----------
Less distributions from:
   Dividends from net investment income................        (0.027)                      (0.003)
   Net realized gain on investments....................        (0.000)                       (--)
                                                            ---------                   ----------
   Total Distributions.................................        (0.027)                      (0.003)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         2.78%                        0.29%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $  93,233                   $   57,915
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         0.76%                        0.76%(c)
   Net investment income...............................         2.74%                        2.89%(c)
   Management and administration fees waived...........         0.13%                        0.16%(c)
   Distribution fees waived............................         0.17%                        0.17%(c)
   Expenses paid indirectly............................         0.00%                         --
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly.
(c) Annualized
</FN>

</TABLE>

                                       37
<PAGE>
<TABLE>
<CAPTION>
VI.  FINANCIAL HIGHLIGHTS (continued)

                                                                       Municipal Portfolio
                                                                                  Commencement of Operations
                                                             Year Ended            December 8, 2006 through
Retail Class shares                                         March 31,2008               March 31, 2007
-------------------                                         -------------               --------------
<S>                                                             <C>                          <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.025                        0.008
   Net realized and unrealized gain(loss)  on investments       0.000                         --
                                                            ---------                   ----------
   Total from investment operations....................         0.025                        0.008
                                                            ---------                   ----------
Less distributions from:
   Dividends from net investment income................        (0.025)                      (0.008)
   Net realized gain on investments....................         --                           (--)
                                                            ---------                   ----------
   Total Distributions.................................        (0.025)                      (0.008)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         2.54%                        0.84%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 170,909                   $   41,817
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.00%                        1.00%(c)
   Net investment income...............................         2.38%                        2.65%(c)
   Management and administration fees waived...........         0.13%                        0.16%(c)
   Distribution fees waived............................         0.13%                        0.10%(c)
   Transfer Agency Account fees waived.................          --                          0.03%(c)
   Expenses paid indirectly............................         0.00%                         --
<FN>
(a)      Unannualized
(b)      Includes expenses paid indirectly
(c)      Annualized
</FN>

</TABLE>


                                       38
<PAGE>

                     NOTICE OF REICH & TANG* PRIVACY POLICY

     We do not disclose to third parties nonpublic personal information about
current or former Reich & Tang customers, clients or mutual fund shareholders
other than as described below.

     We collect nonpublic personal information about you, such as your name,
address, social security number, account activity and account balances from your
account application and other forms that you may deliver to us. We use this
information to provide advisory services to you, to open an account for you, or
to process a transaction for your account. In order to service your account and
effect your transactions, we provide your nonpublic personal information to our
affiliates and to unaffiliated firms to effect or process transactions for you
or to assist us in servicing your account.

     We may also disclose nonpublic personal information about you to other
service providers who agree to protect the confidentiality of your information
and to use the information only for the purpose for which the disclosure is
made. We do not otherwise provide nonpublic personal information about you to
outside firms, organizations or individuals except as permitted by law.

     We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic and procedural safeguards that comply with
federal standards to guard your personal information.


*    For purposes of this notice, "Reich & Tang" includes: Reich & Tang Asset
     Management, LLC, Reich & Tang Distributors, Inc., Reich & Tang Services,
     Inc. and all mutual funds or other funds managed or advised by Reich & Tang
     Asset Management, LLC.

                       THIS IS NOT PART OF THE PROSPECTUS
<PAGE>


A Statement of Additional Information
(SAI) dated July 29, 2008,
includesadditional information about the
Fund and its investments and is
incorporated by reference into this
Prospectus. Further information about
Fund investments is available in the
annual and semi-annual shareholder
reports. You may obtain the SAI, the
annual and semi-annual reports without
charge by calling the Fund toll free at
(800) 433-1918. You may also obtain the
SAI and the annual and semi-annual
reports without charge by visiting the            DAILY
Fund's website at                                 INCOME
http://www.money-funds.com/funds/index.           FUND
To request other information about the            Short Term Income Shares Class
Fund, please call your financial                  Shares
intermediary or the Fund.                         Retail Class Shares

=========================================




=========================================
A current SAI has been filed with the
Securities and Exchange Commission.
Information about the Fund (including
the SAI) is also available from the
Public Reference Room of the Securities
and Exchange Commission. Information on
the operation of the Public Reference
Room may be obtained by calling the
Commission at (202) 551-8090. Fund                PROSPECTUS
reports and other information about the           July 29, 2008
Fund are available on the EDGAR Database
on the Commission's Internet site at
http://www.sec.gov. Copies of this
information may be obtained, after
paying a duplicating fee, by electronic
request at publicinfo@sec.gov, or by
writing the Commission's Public
Reference Section, Washington, D.C.
20549-0104.


Investment Company Act No. 811-8312

              Reich & Tang Distributors, Inc.
                   600 Fifth Avenue
                  New York, NY 10020
                    (212) 830-5345
DIF_07/08
<PAGE>
[GRAPHIC OMITTED]
PINNACLE

Pinnacle Class of ShareS
DAILY INCOME FUND

PROSPECTUS

July 29, 2008


<PAGE>

--------------------------------------------------------------------------------
DAILY INCOME FUND                                              600 FIFTH AVENUE
                                                             NEW YORK, NY 10020
                                                     (800) 750-7862 (Toll Free)
Pinnacle Class of Shares - Distributed through Mutual Securities, Inc.
================================================================================

PROSPECTUS

July 29, 2008

The investment objective of the Money Market Portfolio and the U.S. Treasury
Portfolio is to seek as high a level of current income to the extent consistent
with the preservation of capital and the maintenance of liquidity.


The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.

<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S>   <C>                                                  <C>   <C>

2     Risk/Return Summary: Investments, Risks               12   Management, Organization
      and Performance                                            and Capital Structure
6     Risk/Return Summary: Fee Table                        13   Shareholder Information
8     Investment Objectives, Principal Investment           20   Distribution Arrangements
      Strategies and Related Risks                          21   Financial Highlights

</TABLE>

The Notice of the Reich & Tang Privacy Policy is included with this Prospectus
but is not part of the Prospectus.

<PAGE>
I.  RISK/RETURN SUMMARY: INVESTMENTS,RISKS AND PERFORMANCE
INVESTMENT OBJECTIVES
-------------------------------------------------------------------------------


     The investment objective of the Money Market Portfolio and the U.S.
Treasury Portfolio is to seek as high a level of current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.

     There is no assurance that the Money Market Portfolio and the U.S. Treasury
Portfolio (each a "Portfolio" and collectively, the "Portfolios") will achieve
their investment objectives.


PRINCIPAL INVESTMENT STRATEGIES
-------------------------------------------------------------------------------

     Each Portfolio is a money market portfolio that invests in high quality,
short-term debt instruments. The Fund seeks to maintain investment portfolios
with a dollar-weighted average maturity of 90 days or less, to value its
investment portfolios at amortized cost and maintain a net asset value of $1.00
per share.

     Each Portfolio's strategy is as follows:

The Money Market Portfolio


The Money Market Portfolio seeks to achieve its objective by investing
principally in short-term money market obligations with maturities of 397 days
or less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, loan participation interests,
securities issued or guaranteed by the United States Government, state agencies
or instrumentalities, and repurchase agreements calling for resale in 397 days
or less backed by the foregoing securities. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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 U.S. Treasury Portfolio

     The U.S. Treasury Portfolio seeks to achieve its objective by investing
only in obligations backed by the full faith and credit of the United States
government with maturities of 397 days or less and repurchase agreements which
are collateralized by such obligations calling for resale in 397 days or less.

PRINCIPAL RISKS

Risks Common to both Portfolios:

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

Risks of Investing in the Money Market Portfolio:

o    The Money Market Portfolio may contain securities issued by foreign
     governments, or any of their political subdivisions, agencies or
     instrumentalities, and by foreign branches of domestic banks, foreign
     subsidiaries of domestic banks, domestic and foreign branches of foreign
     banks, and commercial paper issued by foreign issuers. Foreign securities
     may be subject to investment risks which may include adverse economic and
     political developments as well as lack of uniform accounting and financial
     reporting standards.

                                       2
<PAGE>
o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

Risks of Investing in the U.S. Treasury Portfolio:

o    The U.S. Treasury Portfolio's investment policy of only investing in U.S.
     Treasury obligations and other obligations that are issued or guaranteed by
     the United States Government (including repurchase agreements), while
     minimizing risk of loss, may produce a lower yield than a policy of
     investing in other types of instruments. The yield and total return of the
     U.S. Treasury Portfolio is likely to be lower than that of the Money Market
     Portfolio.

RISK/RETURN BAR CHART AND TABLE
-------------------------------------------------------------------------------

     The following bar charts and tables may assist you in deciding whether to
invest in a Portfolio of the Fund. The bar charts show the change in the average
annual total returns of the Pinnacle shares of the Money Market and U.S.
Treasury Portfolios for the last eight calendar years. The tables show the
average annual total returns of the Pinnacle shares for the one year, five year
and since inception periods for both the Money Market Portfolio and the U.S.
Treasury Portfolio. While analyzing this information, please note that the
Pinnacle Class shares' past performance is not an indication of how the Fund
will perform in the future. The current 7-day yield for the Money Market and
U.S. Treasury Portfolios may be obtained by calling the Fund toll free at (800)
750-7862.


                                       3
<PAGE>
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

             MONEY MARKET PORTFOLIO - PINNACLE CLASS (1)(2)(3)
[GRAPHIC OMITTED]

<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                5.23%
2006                4.98%
2005                3.12%
2004                1.26%
2003                1.08%
2002                1.73%
2001                4.15%
2000                6.45%
<FN>

(1)  As of June 30, 2008, the Pinnacle Class shares of the Money Market
     Portfolio had a year-to-date return of 1.70%.

(2)  The Money Market Portfolio Pinnacle Class shares' highest quarterly return
     was 1.65% for the quarter ended September 30, 2000; the lowest quarterly
     return was 0.23% for the quarter ended March 31, 2004.


(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.


</FN>
</TABLE>

<TABLE>
<CAPTION>
Average Annual Total Returns - For the periods ended December 31, 2007

                                                       PINNACLE CLASS
<S>                                                     <C>
One Year                                                5.23%
Five Years                                              3.12%
Since Inception*                                        3.58%

<FN>
*    The inception date for the Pinnacle Class shares of the Money Market
     Portfolio was July 29, 1999.

</FN>
</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>
             U.S. TREASURY PORTFOLIO - PINNACLE CLASS (1)(2)(3)
[GRAPHIC OMITTED]

<S>                 <C>
Calendar Year End   % Total Return
-----------------   ---------------
2007                4.78%
2006                4.80%
2005                2.96%
2004                1.13%
2003                0.99%
2002                1.72%
2001                4.03%
2000                6.14%
<FN>
(1)  As of June 30, 2008, the Pinnacle Class shares of the U.S. Treasury
     Portfolio had a year-to-date return of 1.11%.

(2)  The U.S. Treasury Portfolio Pinnacle Class shares' highest quarterly return
     was 1.59% for the quarter ended December 31, 2000; the lowest quarterly
     return was 0.21% for the quarter ended September 30, 2003.

(3)  Investors purchasing or redeeming shares through a Participating
     Organization may be charged a fee in connection with such service and,
     therefore, the net return to such investors may be less than the net return
     by investing in the Fund directly.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Average Annual Total Returns - For the periods ended December 31, 2007

                            PINNACLE CLASS
                            --------------
<S>                            <C>
One Year                        4.78%
Five Years                      2.91%
Since Inception*                3.39%

<FN>
*    The inception date for the Pinnacle Class shares of the U.S. Treasury
     Portfolio was July 29, 1999.

</FN>
</TABLE>

                                       5

<PAGE>
                                    FEE TABLE
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

This table describes the fees and expenses that you may pay if you buy and hold
shares in the Fund's Money Market Portfolio.

Shareholder Fees
(fees paid directly from your investment)
<S>                                                           <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*
<FN>
*    There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

<S>                                                   <C>        <C>
                                                            -----------------
                                                             Pinnacle Class
                                                             Money Market
                                                             Portfolio
                                                           ----------------
Management Fees..................................               0.12%
Distribution and Service (12b-1) Fees............               None
Other Expenses...................................               0.11%
Administration Fees............................        0.05%    _____
Total Annual Fund Operating Expenses*............               0.23%

<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.20%, through July 31, 2008. The Fund's investment manager and
     distributor have further agreed that they will not modify or discontinue
     these fee waiver arrangements through July 31, 2009, without prior approval
     of the Fund's Board of Trustees.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the Fund's
Money Market Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the Money Market Portfolio of the
Fund for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Portfolio's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<S>                          <C>               <C>             <C>           <C>
                              1 Year           3 Years          5 Years       10 Years
Pinnacle Class:               $24              $74              $130          $293

</TABLE>

                                       6
<PAGE>
                                    FEE TABLE
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

This table describes the fees and expenses that you may pay if you buy and
hold shares in the Fund's U.S. Treasury Portfolio.

Shareholder Fees
(fees paid directly from your investment)
<S>                                                          <C>
Sales Charge (Load) Imposed on Purchases..........           None
Wire Redemption Fee...............................           $15.00*

<FN>
*    There is a $15 fee for all wire redemptions of less than $10,000.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
                                                            Pinnacle Class
                                                             U.S. Treasury
                                                             Portfolio
                                                            -------------
<S>                                                      <C>    <C>
Management Fees...................................              0.12%
Distribution and Service (12b-1) Fees.............              None
Other Expenses....................................              0.11%
  Administration Fees.............................       0.05%
                                                                ------
Total Annual Fund Operating Expenses*.............              0.23%

<FN>
*    The Fund's investment manager and distributor contractually agreed to waive
     fees and/or reimburse expenses in order to maintain Total Annual Operating
     Expenses at 0.20%, through July 31, 2008. The Fund's investment manager and
     distributor have further agreed that they will not modify or discontinue
     these fee waiver arrangements through July 31, 2009, without prior approval
     of the Fund's Board of Trustees.
</FN>
</TABLE>

<TABLE>
<CAPTION>
Example

This Example is intended to help you compare the cost of investing in the Fund's
U.S. Treasury Portfolio with the cost of investing in other money market funds.

The Example assumes that you invest $10,000 in the U.S. Treasury Portfolio of
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Portfolio's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<S>                               <C>            <C>              <C>           <C>
                                  1 Year          3 Years          5 Years       10 Years
Pinnacle Class:                   $24             $74              $130          $293

</TABLE>

                                       7
<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
-------------------------------------------------------------------------------
INVESTMENT OBJECTIVES

     The Fund is a money market fund which seeks to achieve the following
investment objectives through its Portfolios.


     The investment objective of the Money Market Portfolio and the U.S.
Treasury Portfolio is to seek as high a level of current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.


     There can be no assurance that a Portfolio will achieve its investment
objective.

     The investment objective of any Portfolio of the Fund described in this
section may only be changed upon the approval of the holders of a majority of
the outstanding shares of such Portfolio.

PRINCIPAL INVESTMENT STRATEGIES

GENERALLY

     In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual Portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.

     The Fund will only invest in either securities which have been rated (or
whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's investment manager to be
of comparable quality.

     Each Portfolio of the Fund shall invest not more than 5% of its total
assets in securities issued by a single issuer, except for U.S. Government
Obligations.

     With respect to 75% of its total assets, each Portfolio shall invest not
more than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

     The Fund's investment manager considers the following factors when buying
and selling securities for each of the Fund's Portfolios: (i) the availability
of cash, (ii) redemption requests, (iii) yield management, and (iv) credit
management.

     As a temporary defensive measure a Portfolio may, from time to time, invest
in securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Portfolio to not achieve its
investment objective.

Money Market Portfolio

     The Money Market Portfolio intends to attain its investment objective
through investments in the following securities:

(i)  UNITED STATES GOVERNMENT SECURITIES: The Money Market Portfolio may
     purchase short-term obligations issued or guaranteed by the United States
     Government, its agencies or instrumentalities. These obligations include
     issues of the United States Treasury, such as bills, certificates of
     indebtedness, notes and bonds, and issues of certain agencies and
     instrumentalities established under the authority of an act of Congress.
     Some of these securities are supported by the full faith and credit of the
     United States, others are supported by the right of the issuer to borrow
     from the United States Treasury,

                                       8
<PAGE>
     and still others are supported only by the credit of the agency or
     instrumentality.

(ii) DOMESTIC AND FOREIGN BANK OBLIGATIONS: The Money Market Portfolio may
     purchase securities issued by foreign governments, or any of their
     political subdivisions or agencies or instrumentalities, certificates of
     deposit, time deposits and bankers' acceptances issued by domestic banks,
     foreign branches of domestic banks, foreign subsidiaries of domestic banks,
     and domestic and foreign branches of foreign banks. Certificates of deposit
     are certificates representing the obligation of a bank to repay funds
     deposited with it for a specified period of time. Time deposits are
     non-negotiable deposits maintained in a bank for a specified period of time
     (in no event longer than seven days) at a stated interest rate. Time
     deposits purchased by the Fund will not benefit from insurance from the
     FDIC. Bankers' acceptances are credit instruments evidencing the obligation
     of a bank to pay a draft drawn on it by a customer.

     The Money Market Portfolio limits its investments in obligations of
     domestic banks, foreign branches of domestic banks and foreign subsidiaries
     of domestic banks to banks having total assets in excess of one billion
     dollars or the equivalent in other currencies. The Money Market Portfolio
     limits its investments in obligations of domestic and foreign branches of
     foreign banks to dollar denominated obligations of such banks which at the
     time of investment have more than $5 billion, or the equivalent in other
     currencies, in total assets. These investments must also meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally."

     The Money Market Portfolio generally limits investments in bank instruments
     to (a) those which are fully insured as to principal by the FDIC or (b)
     those issued by banks which at the date of their latest public reporting
     have total assets in excess of $1.5 billion. However, the total assets of a
     bank will not be the sole factor determining the Money Market Portfolio's
     investment decisions and the Money Market Portfolio may invest in bank
     instruments issued by institutions which the investment manager believes
     present minimal credit risks.

     The Money Market Portfolio may purchase U.S. dollar-denominated obligations
     issued by foreign branches of domestic banks or foreign branches of foreign
     banks ("Eurodollar" obligations) and domestic branches of foreign banks
     ("Yankee dollar" obligations). The Money Market Portfolio will limit its
     aggregate investments in foreign bank obligations, including Eurodollar
     obligations and Yankee dollar obligations, to 25% of its total assets at
     the time of purchase, provided that there is no limitation on the Money
     Market Portfolio's investments in (a) Eurodollar obligations, if the
     domestic parent of the foreign branch issuing the obligations is
     unconditionally liable in the event that the foreign branch fails to pay on
     the Eurodollar obligation for any reason; and (b) Yankee dollar
     obligations, if the U.S. branch of the foreign bank is subject to the same
     regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank
     obligations include time deposits, which are non-negotiable deposits
     maintained in a bank for a specified period of time at a stated interest
     rate. The Money Market Portfolio will limit its purchases of time deposits
     to those which mature in seven days or less, and will limit its purchases
     of time deposits maturing in two to seven days to 10% of such Portfolio's
     total assets at the time of purchase.

     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental

                                       9
<PAGE>

     restrictions such as exchange controls may be adopted which might adversely
     affect the payment of principal and interest on those obligations, (vi) the
     selection of foreign obligations may be more difficult because there may be
     less information publicly available concerning foreign issuers, (vii) there
     may be difficulties in enforcing a judgment against a foreign issuer or
     (viii) the accounting, auditing and financial reporting standards,
     practices and requirements applicable to foreign issuers may differ from
     those applicable to domestic issuers. In addition, foreign banks are not
     subject to examination by United States Government agencies or
     instrumentalities.

(iii) VARIABLE AMOUNT MASTER DEMAND NOTES: The Money Market Portfolio may
     purchase variable amount master demand notes. These instruments are
     unsecured demand notes that permit investment of fluctuating amounts of
     money at variable rates of interest pursuant to arrangements with issuers
     who meet the quality criteria discussed above under "Principal Investment
     Strategies - Generally." The interest rate on a variable amount master
     demand note is periodically adjusted according to a prescribed formula.
     Although there is no secondary market in master demand notes, the payee may
     demand payment of the principal and interest upon notice not exceeding five
     business or seven calendar days.

(iv) LOAN PARTICIPATION INTERESTS: The Money Market Portfolio may purchase
     participation interests in loans extended by banks to companies, provided
     that both such banks and such companies meet the quality standards
     applicable to bank instruments as set forth above.

(v)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Money Market Portfolio
     may purchase commercial paper or similar debt obligations. Commercial paper
     is generally considered to be short term unsecured debt of corporations.

(vi) Repurchase Agreements: The Money Market Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Money Market Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

     For a more detailed description of (i) the securities in which the Fund
will invest, (ii) fundamental investment restrictions, and (iii) industry
regulations governing credit quality and maturity, please refer to the Statement
of Additional Information.

U.S. Treasury Portfolio

     The U.S. Treasury Portfolio intends to attain its investment objective
through investments limited to obligations issued or guaranteed by the United
States Government including repurchase agreements covering those types of
obligations. Under normal circumstances the Portfolio will invest all of its net
assets, plus borrowings for investment purposes, in obligations issued or
guaranteed by the U.S. Treasury. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy.

     The Fund will enter into repurchase agreements for inclusion in the U.S.
Treasury Portfolio only if the instruments serving as collateral for the
agreements are eligible for inclusion in the U.S. Treasury Portfolio.

     The Portfolio's investments may include the following securities:

(i)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

                                       10
<PAGE>

(ii) OTHER UNITED STATES GOVERNMENT OBLIGATIONS: Marketable securities and
     instruments issued or guaranteed by the full faith and credit of the United
     States Government. Such obligations include obligations of the Federal
     Housing Administration, the Export-Import Bank of the United States, the
     Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration.

(iii) REPURCHASE AGREEMENTS: The U.S. Treasury Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government. A repurchase agreement arises when a
     buyer purchases a security and simultaneously agrees with the vendor to
     resell the security to the vendor at an agreed upon time and price.

     The investment policies of the U.S. Treasury Portfolio may produce a lower
yield than a policy of investing in other types of instruments. The yield of the
U.S. Treasury Portfolio is likely to be lower than the yield of the Money Market
Portfolio.

RISKS
-------------------------------------------------------------------------------

     The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.

     Investments in U.S. Government securities may or may not be supported by
the full faith and credit of the U.S. Government. Although many U.S. Government
securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.

     The maximum potential liability of the issuers of some U.S. Government
securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers will not have the funds to meet their payment
obligations in the future. In such case, a Fund must look principally to the
agency, instrumentality or sponsored enterprise issuing or guaranteeing the
security for ultimate repayment and may not be able to assert a claim against
the U.S. Government itself in the event the agency, instrumentality or sponsored
enterprise does not meet its commitment.

     The U.S. Government securities that the Fund may purchase include:

o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

                                       11
<PAGE>

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored enterprises issuing these obligations is the Federal Farm Credit
     System.

     Since the Money Market Portfolio may contain securities issued by foreign
governments, or any of their political subdivisions, agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Money Market Portfolio may
be subject to additional investment risks when compared with those incurred by a
fund which invests only in domestic issuers. Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Similarly, volume in most
foreign securities markets is less than in the United States. The issuers of
some of these securities may be subject to less stringent or different
regulation than are United States issuers. In addition, there may be less
publicly available information about a non-United States issuer, and non-United
States issuers generally are not subject to uniform accounting and financial
reporting standards and requirements. Additional risks associated with foreign
investments might include adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities. Furthermore, some of these foreign securities may be subject
to stamp, withholding or other excise taxes levied by foreign governments, which
have the effect of increasing the cost of such securities and reducing the
realized gain or increasing the realized loss on such securities at the time of
sale.

PORTFOLIO HOLDINGS
-------------------------------------------------------------------------------

     A schedule of each Portfolio's holdings, current as of month-end, will be
available on the Fund's website no earlier than 5 days after the end of each
month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission ("SEC") its semi-annual/annual shareholder report or
quarterly portfolio holdings report that includes such period. The most recent
schedule is available on the Fund's website at
http://www.money-funds.com/portfolioholdings or by calling toll free at (800)
433-1918. The Fund may terminate or modify this policy at any time without
further notice to shareholders. A description of the Fund's policies and
procedures with respect to the disclosure of the Fund's portfolio securities is
available in the Statement of Additional Information.

III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE


     The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

    Pursuant to the Investment Management Contract between the Fund and the
Manager, the Manager manages each Portfolio's securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control

                                       12
<PAGE>

of the Board of Trustees of the Fund. Pursuant to the Investment
Management Contract, each of the Portfolios pays an annual management fee of
0.12% of each Portfolio's, average daily net assets. For the fiscal year ended
March 31, 2008, the Fund paid the Manager a fee equal to 0.12% of the Money
Market and 0.12% of the U.S. Treasury Portfolio's average daily net assets. A
discussion regarding the basis for the Board of Trustees approving the
continuance of the Investment Management Contract is available in the Fund's
annual report for the period ended March 31, 2008.

     Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and Administrative Services Contract. For its
services under the Administrative Services Contract, the Fund pays the Manager
an annual fee of 0.05% of each Portfolio's average daily net assets. For the
fiscal year ended March 31, 2008, the Fund paid the Manager a fee for
administrative services equal to 0.03% of the Money Market and 0.02% of the U.S.
Treasury Portfolios' average daily net assets.

     The Manager and Distributor have agreed not to modify or terminate their
fee waiver arrangements through July 31, 2009, without the prior approval of the
Fund's Board of Trustees. Any portion of the total fees received by the Manager
and its past profits may be used to provide shareholder services and for
distribution of Fund shares.


     Investment management fees and operating expenses, which are attributable
to more than one Class of the Fund, will be allocated daily to each Class of
shares based on the percentage of shares outstanding at the end of the day.

IV.  SHAREHOLDER INFORMATION

     The Fund sells and redeems its shares on a continuing basis at their net
asset value. The Fund does not impose a charge for either purchases or
redemptions. All transactions in Fund shares are processed through the Fund's
transfer agent or its principal underwriter, as appropriate, which accepts
orders for purchases and redemptions from Participating Organizations, Mutual
Securities, Inc. ("MSI") and from dealers with whom MSI has entered into
agreements for these purposes. (See "Investments Through Participating
Organizations" for a definition of Participating Organizations).

PRICING OF FUND SHARES
-------------------------------------------------------------------------------

     The net asset value of each Portfolio of the Fund's shares is determined as
of 4:00 p.m., Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except (i) days on which the New York Stock
Exchange is closed for trading (i.e., national holidays) and (ii) Columbus Day
and Veterans' Day. However, on certain days that the New York Stock Exchange is
closed, the Fund, at the direction of the Manager, may be open for purchases and
redemptions and will determine its net asset value. The net asset value is
computed by dividing the value of each Portfolio'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. Each Portfolio intends to maintain a stable net asset
value at $1.00 per share although there can be no assurance that this will be
achieved.

     The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the Investment Company Act of
1940, as amended (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. If fluctuating interest

                                       13
<PAGE>
rates or credit issues cause the market value of the securities in a
Portfolio to deviate more than 1/2 of 1% from the value determined on the basis
of amortized cost, the Board of Trustees 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 the Fund would receive if the instrument were
sold.

     Shares are issued as of the first determination of the Portfolio's net
asset value per share made after acceptance of the investor's purchase order. In
order to maximize earnings on its Portfolios, the Fund normally has its assets
as fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Portfolio
shares begin accruing income on the day the shares are issued to an investor.

     The Fund reserves the right to reject any purchase order of its shares. In
addition, the Fund does not accept cash, and may refuse to accept cash
equivalents (i.e., travelers cheques, money orders, cashier's checks or similar
instruments) and certain other forms of payment at its discretion.

SUBSCRIBING TO THE FUND
-------------------------------------------------------------------------------

     At the time of initial investment in the Fund, investors must elect on
their fund application the Class of shares of the Portfolio in which they wish
to invest. Subject to the Portfolios' initial investment minimums, investors may
divide their investment in the Fund between the Portfolios in any manner they
choose by submitting the Fund application with their choices.

     Subject to the suggested minimum balance of $250,000 for an existing
account, shareholders in the Fund may transfer all or a portion of their shares
from one open Portfolio account to another open Portfolio account at any time.
Any transfer into a Portfolio in which the shareholder does not have an open
account must satisfy the Portfolio's initial investment minimum of $1,000,000.
Shareholders will have a separate account with the Fund for each Portfolio in
which they invest. Certificates for Fund shares will not be issued to investors.

PURCHASE OF PINNACLE SHARES
-------------------------------------------------------------------------------

     Only Pinnacle shares are offered through this Prospectus. Investors may
invest in Pinnacle shares through MSI and through dealers with whom MSI has
entered into agreements for the purposes described herein. The Manager pays the
expenses incurred in the distribution of Pinnacle Class shares. Participating
Organizations (other than MSI) whose clients become Pinnacle Class shareholders
will not receive compensation from the Manager or Distributor for the servicing
they may provide to their clients.

     With respect to all Classes of shares, the minimum initial investment in
the Fund with respect to each Portfolio is $1,000,000. The minimum amount for
subsequent investments is $10,000 for all shareholders. The Fund may waive any
minimum purchase requirements.

INVESTMENTS THROUGH PARTICIPATING
ORGANIZATIONS
-------------------------------------------------------------------------------

     Investors may invest in the Pinnacle Class of the Fund through the
Participating Organizations, such as MSI, with which they have accounts.
Participating Organizations are securities brokers, banks and financial
institutions or other industry professionals or organizations that have entered
into shareholder servicing agreements with the Distributor 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.

                                       14
<PAGE>

     Participating Organizations through its clearing agents or affiliated
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 through its clearing agents or affiliated
organizations may send periodic account statements to their customers showing
(i) the total number of Fund shares owned by each customer as of the statement
closing date, (ii) purchases and redemptions of Fund shares by each customer
during the period covered by the statement, and (iii) the income earned by Fund
shares of each customer during the statement period (including dividends paid in
cash or reinvested in additional Fund shares). Investors whose Participating
Organizations have not undertaken to provide such statements will receive them
from the Fund directly.

     Participating Organizations may charge investors a fee in connection with
their use of specialized purchase and redemption procedures. Participating
Organizations may arrange for its clearing agents or affiliated organizations to
received payment in consideration of providing clerical services in the
facilitation of specialized purchase and redemption of Fund shares. 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 applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than the net yield that could be achieved by investing in the Fund
directly. Participating Organizations may also set deadlines for receipt of
orders from their customers that are earlier than the order deadline of the Fund
due to processing or other reasons. Investors 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.


     Qualified Participating Organizations may transmit an investor's purchase
or redemption order to the Fund's transfer agent after 4:00 p.m., Eastern time,
on the day the order is received from the investor as long as the investor has
placed his order with the Participating Organization before 4:00 p.m., Eastern
time on that day. The investor will then receive the net asset value of the
Fund's shares determined as of 4:00 p.m., Eastern time on the day he placed his
order with the qualified Participating Organization. Participating Organizations
are responsible for instituting procedures to ensure that purchase orders by
their respective clients are processed expeditiously.


Initial Purchases of Pinnacle Shares
-------------------------------------------------------------------------------

     Investors who wish to invest in the Fund may obtain a current prospectus
and the Fund application necessary to open an account by telephoning the Fund
toll free at (800) 750-7862.

Mail

     Investors may send or deliver a check made payable to "National Financial
Services" for initial purchases to:

    Pinnacle Shares of Daily Income Fund
    c/o Mutual Securities, Inc.
    P.O. Box 2308 Agoura Hills, CA 91376

     Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will 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.

Bank Wire

     To purchase shares of the Fund using the wire system for transmittal of
money among banks, an investor, prior to his or her initial purchase of shares,
should first telephone Mutual Securities, Inc. at (818) 706-8170 or toll

                                       15
<PAGE>
free at (800) 750-7862 to obtain a new account number and then instruct a member
bank to wire his money immediately to:

    Chase Manhattan Bank, New York, NY
    ABA # 021000021
    Account of National Financial
    Acct. #066196-221
    for further credit to: (Brokerage Account No.)
    Customer name:      -------------------------

     An account will not be opened until the Fund has received the Fund
application and required documentation in proper form and has accepted the
purchase order for its shares.

     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 4:00 p.m., Eastern time, on a
Fund Business Day will be treated as a Federal Funds payment received on that
day.

SUBSEQUENT PURCHASES OF SHARES
-------------------------------------------------------------------------------
     Subsequent purchases can be made by bank wire, as indicated above, or by
mailing a check to:

    Pinnacle Shares of Daily Income Fund
    c/o Mutual Securities, Inc.
    P.O. Box 2308 Agoura Hills, CA 91376


     There is a $10,000 minimum for the Pinnacle Class shares for subsequent
purchases. All payments should clearly indicate the shareholder's account
number.


     Provided that the information on the application form on file with the Fund
is still applicable, a shareholder may reopen an account without filing a new
Fund application 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
Portfolio following receipt by the Fund's transfer agent of the redemption order
(and any supporting documentation that the Fund's transfer agent may require).
Normally, payment for redeemed shares is made on the same Fund Business Day the
redemption is effected, if the redemption proceeds are paid by wire (on the next
Fund Business Day if paid by check). However, redemption payments will not be
paid out unless the check (including a certified or cashier's check) used for
investment has been cleared for payment by the investor's bank, which could take
up to 15 days after investment. Shares redeemed are not entitled to participate
in dividends declared on the day a redemption becomes effective.

     A shareholder's original Fund application 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 Fund application 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. It should be 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.

Written Requests

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

    Pinnacle Shares of Daily Income Fund
    c/o Mutual Securities, Inc.
    P.O. Box 2308 Agoura Hills, CA 91376

                                       16
<PAGE>

     All written requests for redemption must be signed by the shareholder, in
each case with signature guaranteed, unless otherwise indicated on the Fund
application or in a subsequent written authorization.

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

Telephone

     The Fund accepts telephone requests for redemption from shareholders who
elect this option on their Fund application. The proceeds of a telephone
redemption may be sent to the shareholder at their address of record or, if in
excess of $1,000, to their bank accounts, both as set forth in the Fund
application or in a subsequent signature guaranteed written authorization. The
Fund may accept telephone redemption instructions from any person with respect
to accounts of shareholders who elect this service and thus such shareholders
risk possible loss of principal and interest in the event of a telephone
redemption not authorized by them. Telephone requests to wire redemption
proceeds must be for amounts in excess of $10,000. 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 at the time of such redemption request. Failure by
the Fund to employ such reasonable procedures may cause the Fund to be liable
for the losses incurred by investors due to unauthorized or fraudulent telephone
redemptions.

     A shareholder making a telephone withdrawal should call the Fund at (818)
706-8170 or toll free at (800) 750-7862, 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, if the redemption proceeds are being paid by wire (on
the next Fund Business Day if paid by check). The Fund may modify or discontinue
the telephone redemption option at any time and will notify shareholders
accordingly.

Generally

     There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. 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 of his shares, of a Portfolio all dividends accrued to the
date of such redemption will be paid to the shareholder along with the proceeds
of the redemption. A redemption of shares may result in taxable income to the
shareholder.

     The right of redemption generally 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 (i) any period during which the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
(ii) any period during which the SEC determines that trading thereon is
restricted, (iii) 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 to fairly determine the value of its net
assets, or (iv) for such other period as the SEC may by order permit for the
protection of the shareholders of the Fund.

     The Fund and its agents reserve the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked"

                                       17
<PAGE>
entities and individuals maintained pursuant to OFAC (Office of Foreign Assets
Control) regulations, (ii) where the Fund or its agents detect suspicious
activity or suspect fraudulent or illegal activity, or (iii) when notice has
been received by the Fund or its agents that there is a dispute between the
registered or beneficial account owners.

     The Fund reserves the right to redeem the shares of any shareholder if the
net asset value of all the remaining shares in the shareholder's or its
Participating Organization's account after a withdrawal is less than $250,000.
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. 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 his total net asset value to
the minimum amount. Shareholders who purchase shares under these circumstances
are not subject to the normal $10,000 minimum for subsequent purchases.

     In addition, in accordance with applicable customer identification
regulations, the Fund reserves the right to redeem the shares of any shareholder
and close the shareholder's account if the Fund and its agents are unable to
verify the shareholder's identity within a reasonable time after the
shareholder's account is opened. If the Fund closes a shareholder's account in
this manner, the shares will be valued in accordance with the net asset value
next calculated after the Fund decides to close the account.

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 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, at no charge, 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
reinvestment of capital gains or any taxable dividends does not avoid a taxable
event to the shareholder. See "Tax Consequences."

     Election to receive dividends and distributions in cash or shares is made
at the time shares are subscribed for and may be changed by notifying the Fund
in writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.


     While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, each Portfolio's net investment
income (excluding capital gains, if any) will be declared as a dividend on each
Fund Business Day. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous Fund Business Day. The Fund pays dividends monthly
after the close of business on the last calendar day of each month or after the
close of business on the previous Fund Business Day if the last calendar day of
each month is not a Fund Business Day. There is no fixed dividend rate, and
there can be no assurance that the Fund will pay any dividends or realize any
capital gains.


                                       18
<PAGE>
FREQUENT TRADING
-------------------------------------------------------------------------------

     The Reich & Tang family of funds discourages short-term or excessive
trading ("frequent trading") of their shares by shareholders (including by means
of exchanges) and maintains procedures reasonably designed to detect and deter
such frequent trading, except with respect to the money market funds as
discussed below. Frequent trading is sometimes referred to as market timing.
Market timing may take many forms but commonly refers to arbitrage activity
involving the frequent buying and selling of mutual fund shares in order to take
advantage of the fact that there may be a lag between a change in the value of a
mutual fund's portfolio securities and the reflection of that change in the
fund's share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons, frequent trading poses the
risk of lower returns for long-term shareholders of a fund. There is no
guarantee that these policies and procedures will be effective in detecting and
preventing frequent trading in whole or in part.

     Money market funds are not effective vehicles for market timing activity
since these types of funds seek to maintain a constant net asset value of $1.00
per share. In addition, the risks of frequent trading are not generally
applicable to money market funds because money market funds are created as cash
management vehicles which accommodate frequent inflows and outflows of cash. As
a result, money market funds are managed to accommodate such cash flows,
particularly when used as sweep vehicles, which generally eliminates the
potential for disruptive trading.

     Nonetheless, as indicated under "Pricing of Fund Shares" the Fund reserves
the right to reject any purchase order for its shares for any reason and thus
may exercise such right in the event it determines that a purchase order is
disruptive to the Fund's management or otherwise. The Fund's procedures with
respect to frequent purchases and redemptions of Fund shares by shareholders are
thus limited to the Fund exercising its right to reject purchase orders it
determines in its discretion to be disruptive. The Fund may change its policies
relating to frequent trading at any time without prior notice to shareholders.

TAX CONSEQUENCES
-------------------------------------------------------------------------------


     The Fund intends to continue to qualify for the income tax treatment
applicable to a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), for each Portfolio. To qualify as a regulated
investment company, each Portfolio must meet certain tests concerning its
investments and distributions. For each year a Portfolio qualifies as a
regulated investment company, the Portfolio will not be subject to federal
income tax on its investment company taxable income (which generally consists of
ordinary income, including taxable interest, and realized net short-term capital
gains in excess of realized net long-term capital losses, if any) and net
long-term capital gains distributed to its shareholders in the form of dividends
or capital gain distributions. Additionally, each Portfolio will not be subject
to a federal excise tax if the Portfolio distributes each year at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders and
any undistributed and untaxed amounts from prior years.

     Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives, distributions will (i) consist primarily of ordinary
income, (ii) in the case of corporate shareholders, not be eligible for the
dividends received deduction,

                                       19
<PAGE>

and (iii) in the case of individual shareholders, not be eligible for the
reduced tax rate currently applicable to certain qualified dividend income.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether the shareholders receive cash or additional shares. A
shareholder who elects to reinvest in additional shares will be treated for tax
purposes as if it had received and reinvested the cash dividend.

     A shareholder's initial tax basis for its shares in the Fund will be its
cost of the shares, including any fees or expenses. The sale of shares in the
Fund will be the taxable disposition of an asset, with gain or loss recognized
in an amount equal to the difference between the shareholder's adjusted tax
basis for the shares and the proceeds received on the sale. Gain or loss
generally will be treated as capital gain or loss if the shares in the Fund are
held as capital assets. Such capital gain or loss will be long-term if the
shareholder has held the shares in the Fund for more than one year, and, for
individual shareholders, may qualify for the maximum capital gain tax rate of
15% (for taxable years beginning before January 1, 2011) rather than the tax
rate applicable to ordinary income. The exchange of shares of one Portfolio for
shares of another Portfolio, if available, will also be treated as a taxable
disposition of the shares exchanged, on which gain or loss will be recognized.
In either case, loss recognition may be affected by the loss disallowance rules
of the Code.


     The Fund is required by federal law to withhold 28% of reportable payments
as backup withholding (which may include dividends, capital gain distributions
and redemptions) paid to shareholders who have not complied with Code
requirements regarding the supplying of their taxpayer identification number and
the reporting of income. In connection with this withholding requirement, a
shareholder will be asked to certify on its application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to backup withholding for various reasons including previous
underreporting to the IRS.

     Distributions from the U.S. Treasury Portfolio that are derived from
interest on certain obligations of the United States Government and agencies
thereof, may be exempt from state and local taxes in certain states. Investors
should consult their own tax advisors regarding specific questions as to
federal, state or local taxes. Additional tax information is provided in the
Statement of Additional Information.

V.  DISTRIBUTION ARRANGEMENTS

RULE 12B-1 FEES
-------------------------------------------------------------------------------

     Investors do not pay a sales charge to purchase shares of the Fund. The
Fund's Board of Trustees has adopted a Rule 12b-1 distribution and service plan
(the "Plan") and, pursuant to the Plan, the Fund and the Distributor have
entered into a Distribution Agreement, with respect to the Pinnacle Class
Shares. There are no fees chargeable to the Pinnacle Class shares under the
Plan.

     Under the Distribution Agreement, the Distributor serves as distributor of
the Pinnacle Class Shares and, for nominal consideration (i.e., $1.00) and as
agent for the Fund, the Distributor will solicit orders for the purchase of the
Fund's shares, provided that any orders will not be binding on the Fund until
accepted by the Fund as principal.

     The Plan provides that the Fund will pay for preparing, printing and
delivering the Fund's Prospectus to existing shareholders of the Fund and
preparing and printing Fund applications 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, administrative services
fee and past profits to pay the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel of the Distributor and other persons in
connection with the distribution of the Fund's shares.

                                       20
<PAGE>
-------------------------------------------------------------------------------
VI.  FINANCIAL HIGHLIGHTS

These financial highlights tables are intended to help you understand the
Pinnacle Class shares' financial performance for the past five years. Certain
information reflects financial results for a single Pinnacle Class share. The
total returns in the table represent the rate that an investor would have earned
on an investment in the Pinnacle Class shares (assuming reinvestment of all
dividends and distributions). This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP whose report, along
with the Fund's financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>

                                                                                       Money Market Portfolio
                                                                                    For the Years Ended March 31,
                                                                     ------------------------------------------------------------
Pinnacle Shares                                                        2008        2007         2006         2005        2004
---------------                                                      ---------   ---------    ---------    ---------    ---------
<S>                                                                     <C>         <C>           <C>          <C>        <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...............................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     ---------   ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income..........................................        0.048       0.051        0.036        0.016        0.010
  Net realized and unrealized gain(loss)  on investments.........        0.000       0.000         --          0.000        0.000
                                                                     ---------   ---------    ---------    ---------    ---------
  Total from investment operations...............................        0.048       0.051        0.036        0.016        0.010
Less distributions from:
  Dividends from net investment income...........................       (0.048)     (0.051)      (0.036)      (0.016)      (0.010)
  Net realized gain(loss) on investment..........................       (0.000)     (0.000)       (--)        (0.000)      (0.000)
                                                                     ---------   ---------    ---------    ---------    ---------
  Total Distributions............................................       (0.048)     (0.051)      (0.036)      (0.016)      (0.010)
                                                                     ---------   ---------    ---------    ---------    ---------
Net asset value, end of year.....................................    $   1.00    $   1.00     $   1.00     $   1.00     $   1.00
                                                                     =========   =========    =========    =========    =========
Total Return.....................................................        4.91%       5.19%        3.63%        1.61%        1.00%
Ratios/Supplemental Data
Net assets, end of year (000's)..................................    $ 178,213   $ 171,028    $ 134,682    $ 114,792    $ 122,839
Ratios to average net assets:
  Expenses (net of fees waived) (a)..............................        0.20%       0.20%        0.20%        0.20%        0.20%
  Net investment income..........................................        4.79%       5.08%        3.66%        1.63%        0.99%
  Management and administration fees waived......................        0.02%       0.03%        0.06%        0.08%        0.06%
  Transfer agency fees waived....................................        0.01%        --          0.02%        0.02%        0.02%
  Expenses paid indirectly.......................................        0.00%       0.00%        0.00%        0.00%        0.00%
<FN>
(a)      Includes expenses paid indirectly.
</FN>

</TABLE>
                                       21
<PAGE>
VI.  FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>

                                                                               U.S. Treasury Portfolio
                                                                            For the Years Ended March 31,
Pinnacle Shares                                                2008         2007         2006          2005         2004
---------------                                                ----         ----         ----          ----         ----
<S>                                                             <C>          <C>         <C>           <C>           <C>
Per Share Operating Performance:
(for a share outstanding throughout the year
Net asset value, beginning of year.....................     $   1.00     $   1.00     $    1.00      $  1.00      $  1.00
                                                            ---------    ---------    ---------      --------     --------
Income from investment operations:
   Net investment income...............................         0.041        0.049        0.034         0.014        0.009
   Net realized and unrealized gain(loss)  on investments        --           --          0.000         0.000        0.000
                                                            ---------    ---------    ---------      --------     --------
   Total from investment operations....................         0.041        0.049        0.034         0.014        0.009
Less distributions from:
   Dividends from net investment income................        (0.041)      (0.049)       (0.034)      (0.014)      (0.009)
   Net realized gain(loss) on investment...............          --           --          (0.000)      (0.000)      (0.000)
                                                            ---------    ---------    ----------     --------     --------
   Total Distributions.................................        (0.041)      (0.049)       (0.034)      (0.014)      (0.009)
                                                            ---------    ---------    ----------     --------     --------
Net asset value, end of year...........................     $   1.00     $   1.00     $    1.00      $  1.00      $  1.00
                                                            =========    =========    ==========     ========     ========
Total Return...........................................         4.18%        5.02%         3.48%        1.44%        0.91%
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $  70,632    $  39,628    $  28,505    $  39,809    $  29,252
Ratios to average net assets:
   Expenses (net of fees waived)(b)....................         0.20%        0.20%         0.20%        0.20%        0.20%
   Net investment income...............................         3.89%        4.93%         3.51%        1.45%        0.90%
   Management and administration fees waived...........         0.03%        0.03%         0.05%        0.03%        0.04%
   Expenses paid indirectly............................         0.00%        0.00%         0.00%        0.00%        0.00%
<FN>
(a)      Includes expenses paid indirectly.
</FN>

</TABLE>
                                       22
<PAGE>
-------------------------------------------------------------------------------

                     NOTICE OF REICH & TANG* PRIVACY POLICY

     We do not disclose to third parties nonpublic personal information about
current or former Reich & Tang customers, clients or mutual fund shareholders
other than as described below.

     We collect nonpublic personal information about you, such as your name,
address, social security number, account activity and account balances from your
account application and other forms that you may deliver to us. We use this
information to provide advisory services to you, to open an account for you, or
to process a transaction for your account. In order to service your account and
effect your transactions, we provide your nonpublic personal information to our
affiliates and to unaffiliated firms to effect or process transactions for you
or to assist us in servicing your account.

     We may also disclose nonpublic personal information about you to other
service providers who agree to protect the confidentiality of your information
and to use the information only for the purpose for which the disclosure is
made. We do not otherwise provide nonpublic personal information about you to
outside firms, organizations or individuals except as permitted by law.

     We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic and procedural safeguards that comply with
federal standards to guard your personal information.

*    For purposes of this notice, "Reich & Tang" includes: Reich & Tang Asset
     Management, LLC, Reich & Tang Distributors, Inc., Reich & Tang Services,
     Inc. and all mutual funds or other funds managed or advised by Reich & Tang
     Asset Management, LLC.

                       THIS IS NOT PART OF THE PROSPECTUS
<PAGE>
-------------------------------------------------------------------------------


A Statement of Additional Information (SAI) dated July 29, 2008, includes
additional information about the Fund and its investments and is incorporated by
reference into this Prospectus. Further information about Fund investments is
available in the annual and semi-annual shareholder reports. You may obtain the
SAI, the annual and semi-annual reports without charge by calling the Fund toll
free at (800) 750-7862. You may also obtain the SAI and the annual and
semi-annual reports without charge by visiting the Fund's website at
http://www.money-funds.com/funds/index. To request other information about the
Fund, call your financial intermediary or the Fund.


A current SAI has been filed with the Securities and Exchange Commission.
Information about the Fund (including the SAI) is also available from the Public
Reference Room of the Securities and Exchange Commission. Information on the
operation of the Public Reference Room may be obtained by calling the Commission
at (202) 551-8090. Fund reports and other information about the Fund are
available on the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0104.

Investment Company Act No. 811-8312


PDIF07/08


[GRAPHIC OMITTED]
Mutual Securities, Inc.
        Member FINRA, SIPC - Established 1982
        P.O. Box 2308  Agoura Hills, CA  91376

<PAGE>

ADVANTAGE PRIMARY LIQUIDITY FUND
ADVANTAGE GOVERNMENT LIQUIDITY FUND
ADVANTAGE MUNICIPAL LIQUIDITY FUND
-------------------------------------------------------------------------------

SHARES OF DAILY INCOME FUND (THE "FUND")- MONEY MARKET PORTFOLIO, U.S.
GOVERNMENT PORTFOLIO AND MUNICIPAL PORTFOLIO (EACH, A "PORTFOLIO"
COLLECTIVELY, THE "PORTFOLIOS")

     PROSPECTUS


     JULY 29, 2008


     Daily Income Fund (the "Fund") is an open-end, diversified money market
     fund designed as a cash management service for institutional customers and
     individuals.


     The investment objective of the Money Market Portfolio and the U.S.
     Government Portfolio is to seek as high a level of current income to the
     extent consistent with the preservation of capital and the maintenance of
     liquidity.


     The investment objective of the Municipal Portfolio is to seek as high a
     level of tax-exempt current income to the extent consistent with the
     preservation of capital and the maintenance of liquidity.

     This Prospectus relates exclusively to the Advantage Class of shares (the
     "Advantage Shares") of the Daily Income Fund - Money Market Portfolio, U.S.
     Government Portfolio and Municipal Portfolio.

     THE  SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
     THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
     REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     The Notice of the Reich & Tang Privacy Policy is included with this
     Prospectus but is not part of the Prospectus.

  OPPENHEIMER

  Available exclusively to customers of
  Oppenheimer & Co. Inc. and its Affiliates
  125 Broad Street
  New York, NY 10004

<PAGE>
<TABLE>
<CAPTION>

     TABLE OF CONTENTS
    <S>                                               <C>       <C>                                   <C>
    Risk/Return Summary: Investments,
    Risks and Performance                              3        Shareholder Information               19
    Fee Table                                          9        Dividends and Distributions           22
    Investment Objective, Principal Investment
       Strategies and Related Risks                    12       Tax Consequences                      24
    Management, Organization and
    Capital Structure                                  18       Distributions Arrangements            26
                                                                Financial Highlights                  28
</TABLE>

                                       2
<PAGE>
ADVANTAGE SHARES OF DAILY INCOME FUND - MONEY MARKET PORTFOLIO, U.S.
GOVERNMENT PORTFOLIO AND MUNICIPAL PORTFOLIO

RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE

INVESTMENT OBJECTIVE
-------------------------------------------------------------------------------

The investment objective of the Money Market and the U.S. Government Portfolio
is to seek as high a level of current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.


The investment objective of the Municipal Portfolio is to seek as high a level
of tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

There is no assurance that the Portfolios will achieve their investment
objectives.

PRINCIPAL INVESTMENT STRATEGIES
-------------------------------------------------------------------------------

Each Portfolio is a money market portfolio that invests in high quality,
short-term debt instruments. The Fund seeks to maintain investment portfolios
with a dollar-weighted average maturity of 90 days or less, to value its
investment portfolios at amortized cost and maintain a net asset value of $1.00
per share.

Each Portfolio's strategy is as follows:

THE MONEY MARKET PORTFOLIO


The Money Market Portfolio seeks to achieve its objective by investing
principally in short-term money market obligations with maturities of 397 days
or less, including bank certificates of deposit, time deposits, bankers'
acceptances, high quality commercial paper, loan participation interests
securities issued or guaranteed by the United States Government, state agencies
or instrumentalities, and repurchase agreements calling for resale in 397 days
or less backed by the foregoing securities. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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 U.S. GOVERNMENT PORTFOLIO


The U.S. Government Portfolio seeks to achieve its objective by investing at
least 80% of its net assets in short-term, marketable securities and instruments
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, ("Government Securities") with maturities of 397 days or
less, and repurchase agreements which are collateralized by the foregoing
securities. For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy.


THE MUNICIPAL PORTFOLIO


The Municipal Portfolio seeks to achieve its objective by investing at least 80%
of its net assets in obligations issued by states, territories and possessions
of the United States and its political subdivisions, public authorities and
other entities authorized to issue debt, including Participation Certificates
therein the interest on which is exempt from regular federal income tax.

                                       3
<PAGE>

For purposes of this test only, net assets include borrowings for
investment purposes. The Fund will provide shareholders with at least 60 days'
prior notice of any change in this policy. The maturities of variable rate
demand instruments held in the Portfolio will be deemed to be the longer of the
period required before the Portfolio 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.


RISKS
-------------------------------------------------------------------------------
RISKS COMMON TO ALL PORTFOLIOS:

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

RISKS OF INVESTING IN THE MONEY MARKET PORTFOLIO:

o    The Money Market Portfolio may contain securities issued by foreign
     governments, or any of their political subdivisions, agencies or
     instrumentalities, and by foreign branches of domestic banks, foreign
     subsidiaries of domestic banks, domestic and foreign branches of foreign
     banks, and commercial paper issued by foreign issuers. Foreign securities
     may be subject to investment risks which may include adverse economic and
     political developments as well as lack of uniform accounting and financial
     reporting standards.

o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

RISKS OF INVESTING IN THE U.S GOVERNMENT PORTFOLIO:


o    The U.S. Government Portfolio is exposed to the credit risk of the
     institutions that issue Government Securities. Changes in the credit
     quality of the issuers could affect their ability to meet their payment
     obligations of interest or principal. Any failure to make such payments
     could adversely affect the value of the security and your investment in the
     Fund


RISKS OF INVESTING IN THE MUNICIPAL PORTFOLIO:


o    The Municipal Portfolio invests in municipal debt obligations. The value of
     these municipal obligations may be affected by uncertainties in the
     municipal debt market related to taxation. In addition, the payment of
     interest and preservation of capital are dependent upon the continuing
     ability of issuers and/or obligors of state, municipal and public authority
     debt obligations to meet these payment obligations.

                                       4
<PAGE>
RISK/RETURN BAR CHART AND TABLE
-------------------------------------------------------------------------------


The following bar charts and tables may assist you in deciding whether to invest
in the Advantage Shares of the Money Market, U.S. Government and Municipal
Portfolios. The bar chart shows the average annual total returns of the
Advantage Shares of the Money Market, U.S. Government and Municipal Portfolios
for the last calendar year. The table for the Money Market, U.S. Government and
Municipal Portfolios shows the Advantage Shares' average annual total returns
for the last one year and since inception periods. While analyzing this
information, please note that the Advantage Shares' past performance is not an
indication of how the Advantage Shares will perform in the future. The current
7-day yield for the Money Market Portfolio, the U.S. Government Portfolio and
the Municipal Portfolio may be obtained by calling the Fund at (212) 830-5345 or
toll free at (800) 433-1918.


                                       5
<PAGE>
                    MONEY MARKET PORTFOLIO - ADVANTAGE SHARES (1)(2)
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]


<S>                             <C>
Calender Year End               %Total Return
2007                            4.37%
<FN>
(1)  As of June 30, 2008, the Money Market Portfolio's Advantage Shares had a
     year-to-date return of 1.29%.

(2)  The Money Market Portfolio Advantage Shares' highest quarterly return was
     1.11% for the quarter ended September 30, 2007; the lowest quarterly return
     was 0.51% for the quarter ended June 30, 2008.
</FN>
</TABLE>

<TABLE>
<CAPTION>
 AVERAGE ANNUAL TOTAL RETURNS - MONEY MARKET PORTFOLIO ADVANTAGE SHARES
 FOR THE PERIODS ENDED DECEMBER 31, 2007

       <S>                                <C>
       One Year                           4.37%
       Since Inception*                   4.38%
<FN>
*    The inception date for the Money Market Portfolio's Advantage shares was
     November 1, 2006.

</FN>
</TABLE>

                                       6
<PAGE>
                 U.S. GOVERNMENT - PORTFOLIO ADVANTAGE SHARES (1)(2)
<TABLE>
<CAPTION>

[OBJECT OMITTED]

<S>                             <C>
Calendar Year End               %Total Return
2007                            4.17%
<FN>
(1)  As of June 30, 2008, the U.S. Government Portfolio's Advantage Shares had a
     year-to-date return of 0.92%.

(2)  The U.S. Government Portfolio Advantage Shares' highest quarterly return
     was 1.07% for the quarter ended June 30, 2007; the lowest quarterly return
     was 0.31% for the quarter ended June 30, 2008.
</FN>
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS - U.S. GOVERNMENT PORTFOLIO ADVANTAGE SHARES
FOR THE PERIODS ENDED DECEMBER 31, 2007

      <S>                               <C>
       One Year                         4.17%
       Since Inception*                 4.20%
<FN>
*    The inception date for the U.S. Government Portfolio's Advantage Shares was
     November 2, 2006.

</FN>
</TABLE>

                                      7
<PAGE>
                 MUNICIPAL PORTFOLIO - ADVANTAGE SHARES (1)(2)

<TABLE>
<CAPTION>

[OBJECT OMITTED]

<S>                             <C>
Calender Year End               % Total Return
2007                            2.72%
<FN>
(1)  As of June 30, 2008, the Municipal Portfolio's Advantage shares had a
     year-to-date return of 0.77%

(2)  The Municipal Portfolio Advantage Shares' highest quarterly return was
     0.70% for the quarter ended June 30, 2007; the lowest quarterly return was
     0.31% for the quarter ended June 30, 2008.
</FN>

</TABLE>

<TABLE>
<CAPTION>

AVERAGE ANNUAL TOTAL RETURNS - MUNICIPAL PORTFOLIO ADVANTAGE SHARES FOR THE
PERIODS ENDED DECEMBER 31, 2007

      <S>                                                     <C>
       One Year                                                2.72%
       Since Inception*                                        2.71%
<FN>
*    The inception date for the Advantage shares was November 2, 2006.
</FN>
</TABLE>


                                       8
<PAGE>
                                    FEE TABLE
-------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and hold
Advantage Shares of the Money Market Portfolio.
<TABLE>
<CAPTION>
     SHAREHOLDER FEES
     (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
    <S>                                                               <C>
     Sales Charge (Load) Imposed on Purchases                          None
</TABLE>

<TABLE>
<CAPTION>
   ANNUAL FUND OPERATING EXPENSES
   (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

                                            MONEY MARKET PORTFOLIO
                                               ADVANTAGE SHARES
   <S>                                      <C>   <C>
    Management Fees.....................          0.12%
    Distribution and Service (12b-1) Fees         1.00%
    Other Expenses....................            0.19%
       ADMINISTRATION FEES..............    0.05%
                                                 ---------
      Total Annual Fund Operating Expenses*      1.31%
<FN>
*  The Fund's investment manager voluntarily waived a portion of the
   Administration Fees. After such waivers, the Administration Fees were 0.03%.
   The Fund's distributor voluntarily waived a portion of the Distribution and
   Service (12b-1) Fees. After such waiver, the Distribution and Service (12b-1)
   Fees were 0.83%. The Fund's transfer agent voluntarily waived certain fees
   included in Other Expenses. After such waiver and the Fund's investment
   manager's waiver of a portion of the Administration Fees, Other Expenses were
   0.07%. As a result, the actual Total Annual Fund Operating Expenses were
   1.02%. These fee waiver arrangements may be modified or discontinued from
   time to time by the Fund's investment manager, distributor and /or transfer
   agent without prior notice.
</FN>

</TABLE>

<TABLE>
<CAPTION>
EXAMPLE


This Example is intended to help you compare the cost of investing in the
Advantage Shares of the Money Market Portfolio with the cost of investing in
other money market funds.

The Example assumes that you invest $10,000 in the Advantage Shares of the Money
Market Portfolio for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Advantage Shares' operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

  <S>                                                   <C>             <C>              <C>              <C>
                                                        1 YEAR           3 YEARS          5 YEARS          10 YEARS
   MONEY MARKET PORTFOLIO - ADVANTAGE SHARES            $133              $415            $718              $1,579
</TABLE>


                                       9
<PAGE>
<TABLE>
<CAPTION>
                                    FEE TABLE
-------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and
hold Advantage Shares of the U.S. Government Portfolio.


     SHAREHOLDER FEES
     (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
    <S>                                                               <C>
     Sales Charge (Load) Imposed on Purchases                          None
</TABLE>

<TABLE>
<CAPTION>

   ANNUAL FUND OPERATING EXPENSES
   (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

                                            U.S. GOVERNMENT PORTFOLIO
                                                  ADVANTAGE SHARES
     <S>                                         <C>    <C>
      Management Fees.........................           0.12%
      Distribution and Service (12b-1) Fees.             1.00%
      Other Expenses........................             0.25%
      ADMINISTRATION FEES..................       0.05%_____
      Total Annual Fund Operating Expenses*.             1.31%

<FN>
*    The Fund's investment manager voluntarily waived a portion of the
     Management and Administration Fees. After such waivers, the Management Fees
     were 0.08% and the Administration Fees were 0.00%. The Fund's distributor
     voluntarily waived a portion of the Distribution and Service (12b-1) Fees.
     After such waiver, the Distribution and Service (12b-1) Fees were 0.84%.
     The Fund's transfer agent voluntarily waived certain fees included in Other
     Expenses. After such waiver and the Fund's investment manager's waiver of a
     portion of the Administration Fees, Other Expenses were 0.14%. As a result,
     the actual Total Annual Fund Operating Expenses were 1.02%. These fee
     waiver arrangements may be modified or discontinued from time to time by
     the Fund's investment manager, distributor and/or transfer agent without
     prior notice.
</FN>
</TABLE>

<TABLE>
<CAPTION>

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Advantage Shares of the U.S. Government Portfolio with the cost of investing in
other money market funds.

The Example assumes that you invest $10,000 in the Advantage Shares of the U.S.
Government Portfolio for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Advantage Shares' operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

<S>                                                     <C>       <C>            <C>           <C>
                                                        1 YEAR     3 YEARS        5 YEARS      10 YEARS
U.S. GOVERNMENT PORTFOLIO - ADVANTAGE SHARES            $139        $434          $750         $1,646

</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                    FEE TABLE
-------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and hold
Advantage Shares of the Municipal Portfolio.


     SHAREHOLDER FEES
     (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
    <S>                                                                <C>
     Sales Charge (Load) Imposed on Purchases                          None
</TABLE>

<TABLE>
<CAPTION>

   ANNUAL FUND OPERATING EXPENSES
   (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

                                              MUNICIPAL PORTFOLIO
                                               ADVANTAGE SHARES
     <S>                                      <C>    <C>
      Management Fees.....................          0.12%
      Distribution and Service (12b-1) Fees         1.00%
      Other Expenses......................          0.29%
       ADMINISTRATION FEES................    0.05% -------
      Total Annual Fund Operating Expenses*         1.41%
<FN>

*    The Fund's investment manager voluntarily waived a portion of the
     Management and Administration Fees. After such waivers, the Management Fees
     were 0.04% and the Administration Fees were 0.00%. The Fund's distributor
     voluntarily waived a portion of the Distribution and Service (12b-1) Fees.
     After such waiver, the Distribution and Service (12b-1) Fees were 0.84%. he
     Fund's transfer agent voluntarily waived certain fees included in Other
     Expenses. After such waiver and the Fund's investment manager's waiver of a
     portion of the Administration Fees, Other Expenses were 0.14%. As a result,
     the actual Total Annual Fund Operating Fund's investment Expenses were
     1.02%. These fee waiver arrangements may be modified or discontinued from
     time to time by the Fund's investment manager, distributor and/or transfer
     agent without prior notice.
</FN>
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE

This Example is intended to help you compare the cost of investing in the
Advantage Shares of the Municipal Portfolio with the cost of investing in other
money market funds.

The Example assumes that you invest $10,000 in the Advantage Shares of the
Municipal Portfolio for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Advantage Shares' operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

<S>                                        <C>        <C>         <C>          <C>
                                            1 Year     3 Years     5 Years      10 Years
Municipal Portfolio - Advantage Shares      $144       $446        $771         $1,691

</TABLE>

                                       11
<PAGE>
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS

INVESTMENT OBJECTIVES
-------------------------------------------------------------------------------

The investment objective of the Money Market Portfolio and the U.S. Government
Portfolio is to seek as high a level of current income to the extent consistent
with the preservation of capital and the maintenance of liquidity.


The investment objective of the Municipal Portfolio is to seek as high a level
of tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.

There can be no assurance that a Portfolio will achieve its investment
objective.

The investment objective of any Portfolio of the Fund described in this section
may only be changed upon the approval of the holders of a majority of the
outstanding shares of such Portfolio.

PRINCIPAL INVESTMENT STRATEGIES
-------------------------------------------------------------------------------
GENERALLY

In order to maintain a share price of $1.00, the Fund must comply with certain
industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual Portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.

The Fund will only invest in either securities which have been rated (or whose
issuers have been rated) in the highest short-term rating category by nationally
recognized statistical rating organizations, or are unrated securities but which
have been determined by the Fund's investment manager to be of comparable
quality.

Each Portfolio of the Fund shall invest not more than 5% of its total assets in
securities issued by a single issuer, except for U.S. Government Obligations.

With respect to 75% of its total assets, each Portfolio shall invest not more
than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

The Fund's investment manager considers the following factors when buying and
selling securities for each of the Fund's Portfolios: (i) the availability of
cash, (ii) redemption requests, (iii) yield management, and (iv) credit
management.

As a temporary defensive measure a Portfolio may, from time to time, invest in
securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Portfolio to not achieve its
investment objective.

MONEY MARKET PORTFOLIO

The Money Market Portfolio intends to attain its investment objective through
investments in the following securities:

                                       12
<PAGE>


(I)  UNITED STATES GOVERNMENT SECURITIES: The Money Market Portfolio may
     purchase short-term obligations issued or guaranteed by the United States
     Government, its agencies or instrumentalities. These obligations include
     issues of the United States Treasury, such as bills, certificates of
     indebtedness, notes and bonds, and issues of certain agencies and
     instrumentalities established under the authority of an act of Congress.
     Some of these securities are supported by the full faith and credit of the
     United States, others are supported by the right of the issuer to borrow
     from the United States Treasury, and still others are supported only by the
     credit of the agency or instrumentality.


(II) DOMESTIC AND FOREIGN BANK OBLIGATIONS: The Money Market Portfolio may
     purchase securities issued by foreign governments, or any of their
     political subdivisions or agencies or instrumentalities, certificates of
     deposit, time deposits and bankers' acceptances issued by domestic banks,
     foreign branches of domestic banks, foreign subsidiaries of domestic banks,
     and domestic and foreign branches of foreign banks. Certificates of deposit
     are certificates representing the obligation of a bank to repay funds
     deposited with it for a specified period of time. Time deposits are
     non-negotiable deposits maintained in a bank for a specified period of time
     (in no event longer than seven days) at a stated interest rate. Time
     deposits purchased by the Fund will not benefit from insurance from the
     FDIC. Bankers' acceptances are credit instruments evidencing the obligation
     of a bank to pay a draft drawn on it by a customer.

     The Money Market Portfolio limits its investments in obligations of
     domestic banks, foreign branches of domestic banks and foreign subsidiaries
     of domestic banks to banks having total assets in excess of one billion
     dollars or the equivalent in other currencies. The Money Market Portfolio
     limits its investments in obligations of domestic and foreign branches of
     foreign banks to dollar denominated obligations of such banks which at the
     time of investment have more than $5 billion, or the equivalent in other
     currencies, in total assets. These investments must also meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally."

     The Money Market Portfolio generally limits investments in bank instruments
     to (a) those which are fully insured as to principal by the FDIC or (b)
     those issued by banks which at the date of their latest public reporting
     have total assets in excess of $1.5 billion. However, the total assets of a
     bank will not be the sole factor determining the Money Market Portfolio's
     investment decisions and the Money Market Portfolio may invest in bank
     instruments issued by institutions which the investment manager believes
     present minimal credit risks.

     The Money Market Portfolio may purchase U.S. dollar-denominated obligations
     issued by foreign branches of domestic banks or foreign branches of foreign
     banks ("Eurodollar" obligations) and domestic branches of foreign banks
     ("Yankee dollar" obligations). The Money Market Portfolio will limit its
     aggregate investments in foreign bank obligations, including Eurodollar
     obligations and Yankee

                                       13
<PAGE>

     dollar obligations, to 25% of its total assets at the time of purchase,
     provided that there is no limitation on the Money Market Portfolio's
     investments in (a) Eurodollar obligations, if the domestic parent of the
     foreign branch issuing the obligations is unconditionally liable in the
     event that the foreign branch fails to pay on the Eurodollar obligation for
     any reason; and (b) Yankee dollar obligations, if the U.S. branch of the
     foreign bank is subject to the same regulation as U.S. banks. Eurodollar,
     Yankee dollar and other foreign bank obligations include time deposits,
     which are non-negotiable deposits maintained in a bank for a specified
     period of time at a stated interest rate. The Money Market Portfolio will
     limit its purchases of time deposits to those which mature in seven days or
     less, and will limit its purchases of time deposits maturing in two to
     seven days to 10% of such Portfolio's total assets at the time of purchase.

     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental restrictions such as exchange
     controls may be adopted which might adversely affect the payment of
     principal and interest on those obligations, (vi) the selection of foreign
     obligations may be more difficult because there may be less information
     publicly available concerning foreign issuers, (vii) there may be
     difficulties in enforcing a judgment against a foreign issuer or (viii) the
     accounting, auditing and financial reporting standards, practices and
     requirements applicable to foreign issuers may differ from those applicable
     to domestic issuers. In addition, foreign banks are not subject to
     examination by United States Government agencies or instrumentalities.

(III) VARIABLE AMOUNT MASTER DEMAND NOTES: The Money Market Portfolio may
     purchase variable amount master demand notes. These instruments are
     unsecured demand notes that permit investment of fluctuating amounts of
     money at variable rates of interest pursuant to arrangements with issuers
     who meet the quality criteria discussed above under "Principal Investment
     Strategies - Generally." The interest rate on a variable amount master
     demand note is periodically adjusted according to a prescribed formula.
     Although there is no secondary market in master demand notes, the payee may
     demand payment of the principal and interest upon notice not exceeding five
     business or seven calendar days.

(IV) LOAN PARTICIPATION INTEREST: The Money Market Portfolio may purchase
     participation interest in loans extended by banks to companies, provided
     that both such banks and such companies meet the quality standards
     applicable to bank instruments as set forth above.

(V)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Money Market Portfolio
     may purchase commercial paper or similar

                                       14
<PAGE>

     debt obligations. Commercial paper is generally considered to be short-term
     unsecured debt of corporations.

(VI) REPURCHASE AGREEMENTS: The Money Market Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Money Market Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

U.S. GOVERNMENT PORTFOLIO

Under normal market circumstances, the U.S. Government Portfolio will invest at
least 80% of its net assets in short-term Government Securities with maturities
of 397 days or less, and repurchase agreements which are collateralized by the
foregoing securities. For purposes of this test only, net assets include
borrowings for investment purposes. The Fund will provide shareholders with at
least 60 days' prior notice of any change in this policy.

The Portfolio's investments may include the following securities:

(I)  UNITED STATES TREASURY OBLIGATIONS: Obligations issued by the full faith
     and credit of the United States. U.S. Treasury obligations include bills,
     notes and bonds, which principally differ only in their interest rates,
     maturities and time of issuance.

(II) OTHER OBLIGATIONS OF U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES:
     Marketable securities and instruments issued by government-sponsored
     agencies and enterprises acting under authority of Congress. Although
     obligations of federal agencies and instrumentalities are not debts of the
     U.S. Treasury, in some cases, payment of interest and principal on such
     obligations is guaranteed by the U.S. Government, E.G., obligations of the
     Federal Housing Administration, the Export-Import Bank of the United
     States, the Small Business Administration, the Government National Mortgage
     Association, the General Services Administration and the Maritime
     Administration; in other cases payment of interest and principal is not
     guaranteed, E.G., obligation of the Federal Home Loan Bank System and the
     Federal Farm Credit Bank. The Fund will invest in the securities of those
     agencies that are not guaranteed or backed by the full faith and credit of
     the U.S. Government only when the Manager, in its sole discretion, is
     satisfied that the credit risk with respect to a particular agency or
     instrumentality is minimal.

(III) REPURCHASE AGREEMENTS: The U.S. Government Portfolio may enter into
     repurchase agreements which are collateralized by obligations issued or
     guaranteed by the U.S. Government or its agencies or instrumentalities. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

MUNICIPAL PORTFOLIO

The Municipal Portfolio intends to attain its investment objective through
investments in the following securities:

                                       15
<PAGE>

(I)  MUNICIPAL SECURITIES: The Municipal Portfolio may purchase high quality
     tax-exempt money market instruments ("Municipal Securities"), including
     debt obligations issued to obtain funds for various public purposes (E.G.,
     the construction of a wide range of public facilities), the refunding of
     outstanding obligations, the obtaining of funds for general operating
     expenses and lending such funds to other public institutions and
     facilities. The Portfolio may also invest in certain types of private
     activity bonds or industrial development bonds, issued by or on behalf of
     public authorities to obtain funds to provide for the construction,
     equipment, repair or improvement of privately operated facilities. Such
     obligations are considered to be Municipal Securities provided that the
     interest paid thereon generally qualifies as exempt from regular federal
     income tax in the opinion of bond counsel. Interest on certain Municipal
     Securities may give rise to federal alternative minimum tax liability and
     may have other federal income tax consequences.

(II) REPURCHASE AGREEMENTS: The Municipal Portfolio may enter into repurchase
     agreements provided that the instruments serving as collateral for the
     agreements are eligible for inclusion in the Municipal Portfolio. A
     repurchase agreement arises when a buyer purchases a security and
     simultaneously agrees with the vendor to resell the security to the vendor
     at an agreed upon time and price.

For a more detailed description of (i) the securities in which the Fund will
invest, (ii) fundamental investment restrictions, and (iii) industry regulations
governing credit quality and maturity, please refer to the Statement of
Additional Information.

RISKS
-------------------------------------------------------------------------------

The Fund complies with industry-standard requirements on the quality, maturity
and diversification of its investments which are designed to help maintain a
$1.00 share price. A significant change in interest rates or a default on the
Fund's investments could cause its share price (and the value of your
investment) to change.

With respect to the Money Market Portfolio and the U.S. Government Portfolio,
investments in U.S. Government securities may or may not be supported by the
full faith and credit of the U.S. Government. Although many U.S. Government
Securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.

The maximum potential liability of the issuers of some U.S. Government
Securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers

                                       16
<PAGE>

will not have the funds to meet their payment obligations in the future. In such
case, a Fund must look principally to the agency, instrumentality or sponsored
enterprise issuing or guaranteeing the security for ultimate repayment and may
not be able to assert a claim against the U.S. Government itself in the event
the agency, instrumentality or sponsored enterprise does not meet its
commitment.

The U.S. Government Securities that the Fund may purchase include:


o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored enterprises issuing these obligations is the Federal Farm Credit
     System.

Since the Money Market Portfolio may contain securities issued by foreign
governments, or any of their political subdivisions, agencies or
instrumentalities, and by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the Money Market Portfolio may
be subject to additional investment risks when compared with those incurred by a
fund which invests only in domestic issuers. Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Similarly, volume in most
foreign securities markets is less than in the United States. The issuers of
some of these securities may be subject to less stringent or different
regulation than are United States issuers. In addition, there may be less
publicly available information about a non-United States issuer, and non-United
States issuers generally are not subject to uniform accounting and financial
reporting standards and requirements. Additional risks associated with foreign
investments might include adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities. Furthermore, some of these foreign securities may be subject
to stamp,

                                       17
<PAGE>

withholding or other excise taxes levied by foreign governments, which
have the effect of increasing the cost of such securities and reducing the
realized gain or increasing the realized loss on such securities at the time of
sale.

The investment policies of the U.S. Government Portfolio may produce a lower
yield than a policy of investing in other types of instruments. The yield of the
U.S. Government Portfolio is likely to be lower than the yield of the Money
Market Portfolio.

Since the Municipal Portfolio invests in municipal debt obligations, the value
of these municipal obligations may be affected by uncertainties on the municipal
debt market related to taxation. In addition, the payment of interest and
preservation of capital are dependent upon the continuing ability of issuers
and/or obligors of state, municipal and public authority debt obligations to
meet these payment obligations.

PORTFOLIO HOLDINGS

A schedule of each Portfolio holdings, current as of month-end, will be
available on the Fund's website no earlier than 5 days after the end of each
month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission ("SEC") its semi-annual/annual shareholder report or
quarterly portfolio holdings report that includes such period. The most recent
schedule is available on the Fund's website at
http://www.money-funds.com/portfolioholdings or by calling toll free at (800)
433-1918. The Fund may terminate or modify this policy at any time without
further notice to shareholders. A description of the Fund's policies and
procedures with respect to the disclosure of the Fund's portfolio securities is
available in the Statement of Additional Information.

III.  MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE

The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

Pursuant to the Investment Management Contract between the Fund and the Manager,
the Manager manages each Portfolio's securities and makes decisions with respect
to the purchase and sale of investments, subject to the general control of the
Board of Trustees of the Fund. Pursuant to the Investment Management Contract,
each of the Portfolios pays an annual management fee of 0.12% of each
Portfolio's average daily net assets. For the fiscal year ended March 31, 2008,

                                       18
<PAGE>

the Fund paid the Manager a management fee equal to 0.12% of the
Money Market, 0.08% of the U.S. Government, and 0.04% of the Municipal
Portfolios' average daily net assets. A discussion regarding the basis for the
Board of Trustees approving the continuance of the Investment Management
Contract is available in the Fund's annual report for the period ended March 31,
2008.

Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and the Administrative Services Contract. For its
services under the Administrative Services Contract, the Fund pays the Manager
an annual fee of 0.05% of each Portfolio's average daily net assets. For the
fiscal year ended March 31, 2008, the Fund paid the Manager a fee for
administrative services equal to 0.03% of the Money Market, 0.00% of the U.S.
Government and 0.00% of the Municipal Portfolios' average daily net assets.

The Manager, at its discretion, may voluntarily waive all or a portion of the
investment management and the administrative services fees. Any portion of the
total fees received by the Manager and its past profits may be used to provide
shareholder services and for distribution of Fund shares.

In addition, Reich & Tang Distributors, Inc. (the "Distributor"), receives a
servicing fee equal to 0.25% per annum of the average daily net assets of the
Advantage Shares of each Portfolio under the Shareholder Servicing Agreement and
a distribution fee in an amount not to exceed 0.75% per annum of the average
daily net assets of the Advantage Shares under the Distribution Agreement. The
fees are accrued daily and paid monthly.

Investment management fees and operating expenses, which are attributable to
more than one Class of the Fund, will be allocated daily to each Class of shares
based on the percentage of shares outstanding at the end of the day.

SHAREHOLDER INFORMATION

Each Portfolio sells and redeems its shares on a continuing basis at its net
asset value and does not impose a charge for either purchases or redemptions.
All transactions in the Fund are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions from (i) Oppenheimer & Co. Inc. for
orders placed through Oppenheimer & Co. Inc.'s sweep service or through
Oppenheimer & Co. Inc. securities account, and (ii) the retirement plan sponsor
or administrator for orders placed through the Oppenheimer & Co. Inc. retirement
plan.

                                       19
<PAGE>

PURCHASE AND REDEMPTION OF SHARES
-------------------------------------------------------------------------------

Only the Advantage Shares of the Portfolios are offered through this Prospectus.
All Fund shares are held in an omnibus account at the Fund through Oppenheimer &
Co. Inc., or through Oppenheimer & Co. Inc. retirement plan sponsors or
administrators which will maintain individual investor accounts.

Oppenheimer & Co. Inc. and its affiliates and the Oppenheimer & Co. Inc.
retirement plan sponsors or administrators may impose account fees separate from
any fees charged by the Fund and may also set deadlines for receipt of orders
from investors that are earlier than the deadline of the Fund due to processing
and other reasons. Investors should read this prospectus in conjunction with the
materials provided by Oppenheimer & Co. Inc. and any plan sponsors or
administrators.

Oppenheimer & Co. Inc. may transmit an investor's purchase or redemption order
to the Fund's transfer agent after 4:00 p.m., Eastern time on the day the order
is received from the investor as long as the investor has placed his order with
Oppenheimer & Co. Inc. before 4:00 p.m., Eastern time on that day. The investor
will then receive the net asset value of the Fund's shares determined as of 4:00
p.m., Eastern time on the day he placed his order with Oppenheimer & Co. Inc.
Oppenheimer & Co. Inc. is responsible for instituting procedures to ensure that
purchase orders by its respective clients are processed expeditiously.

Orders placed through the Oppenheimer & Co. Inc. retirement plan will receive
the net asset value of the Fund's shares next determined after the Fund's
transfer agent receives the orders from the retirement plan sponsors or
administrators.

There is no minimum initial or subsequent investment for Advantage Shares.

INITIAL INVESTMENTS (PURCHASES)
-------------------------------------------------------------------------------

Contact your Financial Advisor to arrange for an initial investment in a
Portfolio. You may use a Portfolio either as the money market fund tied to your
Oppenheimer& Co. Inc. securities account through Oppenheimer & Co. Inc.'s sweep
service or as an additional investment position held in your securities account.

The "sweep" means that cash is automatically invested in a Fund when the cash
becomes available in your Oppenheimer & Co. Inc. securities account from any
source such as proceeds from securities sales, receipt of dividends or interest
income, or a check deposit from you. Amounts of $10,000 or more are invested on
the next business day; amounts less than $10,000 are invested once a week on the
first business day of the following week. The sweep automatically withdraws cash
from the Fund when appropriate to cover purchases or other activities in your
account.

Participants in the Oppenheimer & Co. Inc. retirement plan should contact their
plan sponsor to arrange for an initial investment in the Fund.

SUBSEQUENT INVESTMENTS (PURCHASES)
-------------------------------------------------------------------------------
Mail or deliver your check, payable to Oppenheimer & Co. Inc., to your Financial
Advisor. Please write your securities account

                                       20
<PAGE>

number and the Fund name on the check. If you wish to make an investment by
sending a wire from your bank, contact your Financial Advisor to obtain wiring
instructions.

Participants in the Oppenheimer & Co. Inc. retirement plan should contact their
plan sponsor to arrange for subsequent investments in the Fund.

GENERAL INFORMATION ON PURCHASES
-------------------------------------------------------------------------------
Advantage Shares of the Portfolios may be purchased through Oppenheimer & Co.
Inc. The net asset value of each Portfolio of the Fund's shares is determined as
of 4:00 p.m., Eastern time, on each Fund Business Day. Fund Business Day means
weekdays (Monday through Friday) except (i) days on which the New York Stock
Exchange is closed for trading (I.E., national holidays) and (ii) Columbus Day
and Veterans' Day. However, on certain days that the New York Stock Exchange is
closed, the Fund, at the direction of the Manager, may be open for purchases and
redemptions and will determine its net asset value. The net asset value is
computed by dividing the value of each Portfolio'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. Each Portfolio intends to maintain a stable net asset
value at $1.00 per share although there can be no assurance that this will be
achieved.

The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the Investment Company Act of 1940, as
amended (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. If fluctuating interest rates or credit
issues cause the market value of the securities in a Portfolio to deviate more
than 1/2 of 1% from the value determined on the basis of amortized cost, the
Board of Trustees 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 the Fund would receive if the instrument were sold.

Shares are issued as of the first determination of the Portfolio's net asset
value per share made after acceptance of the investor's purchase order. In order
to maximize earnings on its Portfolios, the Fund normally has its assets as
fully invested as is practicable. Many securities in which the Fund invests
require the immediate settlement in funds of Federal Reserve member banks on
deposit at a Federal Reserve Bank (commonly known as "Federal Funds"). Portfolio
shares begin accruing income on the day the shares are issued to an investor.

The Fund reserves the right to reject any purchase order of its shares. In
addition, the Fund does not accept cash, and may refuse to accept cash
equivalents (I.E., travelers cheques, money orders, cashier's checks or similar
instruments) and certain other forms of payment at its discretion. Certificates
for Fund shares will not be issued to investors.

                                       21
<PAGE>
WITHDRAWALS (REDEMPTIONS)
-------------------------------------------------------------------------------
For withdrawals other than those automatically activated by the sweep, please
instruct your Financial Advisor as to the withdrawal amount and the delivery of
the proceeds.

Participants in the Oppenheimer & Co. Inc. retirement plan should contact their
plan sponsor to arrange for redemptions of shares held in the Fund.

GENERAL INFORMATION ON REDEMPTIONS
-------------------------------------------------------------------------------
You may redeem your shares, in whole or in part, on any day on which a
Portfolio's net asset value is calculated. Shares are redeemed at the net asset
value next determined after receipt of proper notice of redemption. If you
redeem all of your shares, you will receive payment of all dividends declared
but unpaid through the date of redemption. If you redeem only a portion of the
shares in your account, the dividends declared but unpaid on the shares redeemed
will not be distributed to you until the next regular dividend payment date. If
your redemption order is received prior to 4:00 p.m. Eastern time, the
redemption will be effective on that day and the Fund will endeavor to transmit
payment that same business day. If the notice of redemption is received after
4:00 p.m. Eastern time, the redemption will be made on the next business day.

The Fund and its agents reserves the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked" entities and individuals
maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii)
where the Fund or its agents detect suspicious activity or suspect fraudulent or
illegal activity, or (iii) when notice has been received by the Fund or its
agents that there is a dispute between the registered or beneficial account
owners.

In addition, in accordance with applicable customer identification regulations,
the Fund reserves the right to redeem the shares of any shareholder and close
the shareholder's account if the Fund and its agents are unable to verify the
shareholder's identity within a reasonable time after the shareholder's account
is opened. If a Fund closes a shareholder's account in this manner, the shares
will be valued in accordance with the net asset value next calculated after the
Fund decides to close the account.

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 pays dividends monthly. There is no fixed dividend rate.
In computing these dividends, interest earned and expenses are accrued daily.

                                       22
<PAGE>


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, at
no charge, 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 reinvestment of
capital gains or any taxable dividends does not avoid a taxable event to the
shareholder, even though such shareholder has not received a cash distribution
to pay the resulting tax, if any. See "Tax Consequences."

Election to receive dividends and distributions in cash or shares is made at the
time shares are subscribed for and may be changed by notifying the Fund in
writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.


While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, each Portfolio's net investment
income (excluding capital gains, if any) will be declared as a dividend on each
Fund Business Day. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous Fund Business Day. The Fund pays dividends monthly.
There is no fixed dividend rate, and there can be no assurance that the Fund
will pay any dividends or realize any capital gains.


FREQUENT TRADING
-------------------------------------------------------------------------------
The Reich & Tang family of funds discourages short-term or excessive trading
("frequent trading") of their shares by shareholders (including by means of
exchanges) and maintains procedures reasonably designed to detect and deter such
frequent trading, except with respect to the money market funds as discussed
below. Frequent trading is sometimes referred to as market timing. Market timing
may take many forms but commonly refers to arbitrage activity involving the
frequent buying and selling of mutual fund shares in order to take advantage of
the fact that there may be a lag between a change in the value of a mutual
fund's portfolio securities and the reflection of that change in the fund's
share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons,

                                       23
<PAGE>
frequent trading poses the risk of lower returns for long-term shareholders of a
fund. There is no guarantee that these policies and procedures will be effective
in detecting and preventing frequent trading in whole or in part.

Money market funds are not effective vehicles for market timing activity since
these types of funds seek to maintain a constant net asset value of $1.00 per
share. In addition, the risks of frequent trading are not generally applicable
to money market funds because money market funds are created as cash management
vehicles which accommodate frequent inflows and outflows of cash. As a result,
money market funds are managed to accommodate such cash flows, particularly when
used as sweep vehicles, which generally eliminates the potential for disruptive
trading.

Nonetheless, as indicated under "General Information on Purchases," the Fund
reserves the right to reject any purchase order for its shares for any reason
and thus may exercise such right in the event it determines that a purchase
order is disruptive to the Fund's management or otherwise. The Fund's procedures
with respect to frequent purchases and redemptions of Fund shares by
shareholders are thus limited to the Fund exercising its right to reject
purchase orders it determines in its discretion to be disruptive. The Fund may
change its policies relating to frequent trading at any time without prior
notice to shareholders.

TAX CONSEQUENCES

The Fund intends to continue to qualify for the income tax treatment applicable
to a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), for each Portfolio. To qualify as a regulated investment
company, each Portfolio must meet certain tests concerning its investments and
distributions. For each year a Portfolio qualifies as a regulated investment
company, the Portfolio will not be subject to federal income tax on its
investment company taxable income (which generally consists of ordinary income,
including taxable interest, and realized net short-term capital gains in excess
of realized net long-term capital losses, if any) and net long-term capital
gains distributed to its shareholders in the form of dividends or capital gain
distributions. Additionally, each Portfolio will not be subject to a federal
excise tax if the Portfolio distributes each year at least 98% of its ordinary
income and 98% of its capital gain income to its shareholders and any
undistributed and untaxed amounts from prior years.

Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives, except as provided in the following paragraph,
distributions will (i) consist primarily of ordinary income, (ii) in the case of
corporate shareholders, not be eligible for the dividends received deduction,
and (iii) in the case of individual shareholders, not be eligible for the
reduced tax rate currently applicable to certain

                                       24
<PAGE>
qualified dividend income. Dividends and distributions are treated in the same
manner for federal income tax purposes whether the shareholders receive cash or
additional shares. A shareholder who elects to reinvest in additional shares
will be treated for tax purposes as if it had received and reinvested the cash
dividend.


The Fund expects that as a result of the investment objectives of the Municipal
Portfolio, distributions by the Municipal Portfolio will be exempt from regular
federal income tax to the extent that they are derived from Municipal Securities
and designated as exempt-interest dividends, provided that the Municipal
Portfolio complies with the requirements of the Code regarding qualification to
pay exempt-interest dividends. Exempt-interest dividends received by a
shareholder may be subject to federal alternative minimum tax, state and local
tax, and other limitations applicable to certain shareholders. Investors should
consult their own tax advisors with respect to the treatment of exempt-interest
dividends based on their specific facts.

A shareholder's initial tax basis for its shares in the Fund will be its cost of
the shares, including any fees or expenses. The sale of shares in the Fund will
be the taxable disposition of an asset, with gain or loss recognized in an
amount equal to the difference between the shareholder's adjusted tax basis for
the shares and the proceeds received on the sale. Gain or loss generally will be
treated as capital gain or loss if the shares in the Fund are held as capital
assets. Such capital gain or loss will be long-term if the shareholder has held
the shares in the Fund for more than one year, and, for individual shareholders,
may qualify for the maximum capital gain tax rate of 15% (for taxable years
beginning before January 1, 2011) rather than the tax rate applicable to
ordinary income. The exchange of shares of one Portfolio for shares of another
Portfolio, if available, will also be treated as a taxable disposition of the
shares exchanged, on which gain or loss will be recognized. In either case, loss
recognition may be affected by the loss disallowance rules of the Code.


The Fund is required by federal law to withhold 28% of reportable payments as
backup withholding (which may include dividends, capital gain distributions and
redemptions) paid to shareholders who have not complied with Code requirements
regarding the supplying of their taxpayer identification number and the
reporting of income. In connection with this withholding requirement, a
shareholder will be asked to certify on its application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to backup withholding for various reasons including previous
underreporting to the IRS.

Distributions from the U.S. Government Portfolio that are derived from interest
on certain obligations of the United States Government and agencies thereof, and
distributions from the Municipal Portfolio that are derived from interest on
certain obligations of states and agencies thereof, may be exempt from state and
local taxes in certain states. Investors should consult their own tax advisors
regarding specific questions as to federal, state or local taxes. Additional tax
information is provided in the Statement of Additional Information.

                                       25
<PAGE>
DISTRIBUTION ARRANGEMENTS

RULE 12B-1 FEES
-------------------------------------------------------------------------------
Investors do not pay a front-end sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and/or
for the provision of servicing to the Advantage Shares shareholders. The Fund
pays these fees from its assets on an ongoing basis and therefore, over time,
the payment of these fees will increase the cost of your investment and may cost
you more than paying other types of sales charges.

The Fund's Board of Trustees has adopted a Rule 12b-1 distribution and
service plan (the "Plan"), with respect to the Advantage Shares of the Fund and,
pursuant to the Plan, the Fund and the Distributor have entered into a
Distribution Agreement and a Shareholder Servicing Agreement.

Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares. The Distributor receives a distribution fee not to exceed 0.75%
per annum of the Advantage Shares' average daily net assets (the "Distribution
Fee") for providing distribution related services and for making payments to
Oppenheimer & Co. Inc. for providing assistance in distributing the Advantage
Shares. As agent for the Fund, the Distributor will solicit orders for the
purchase of the Fund's shares, provided that any orders will not be binding on
the Fund until accepted by the Fund as principal. This fee is accrued daily and
paid monthly.

Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Advantage Shares, a service fee equal to 0.25% per annum of each
Portfolio's Advantage Shares' average daily net assets (the "Shareholder
Servicing Fee") for providing personal shareholder services and for the
maintenance of shareholder accounts. The fees are accrued daily and paid
monthly. Any portion of the fee may be deemed to be used by the Distributor for
payments to Oppenheimer & Co. Inc. with respect to its provision of such
services to its clients or customers who are Advantage shareholders of each
Portfolio.

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
Distributor and Oppenheimer & Co. Inc. in carrying out their obligations under
the Shareholder Servicing Agreement with respect to Advantage Shares or the
Participating Organization agreement, as the case may be, and (ii) preparing,
printing and delivering the Fund's Prospectus to existing shareholders of the
Fund and preparing and printing Fund applications 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, administrative services
fee, and past profits for the following purposes: (i) to pay the cost of, and to
compensate others, including Oppenheimer & Co. Inc. with whom the Distributor
has entered into written agreements, for performing shareholder servicing on
behalf of the Advantage

                                       26
<PAGE>
Shares of the Fund; (ii) to compensate Oppenheimer & Co. Inc. for providing
assistance in distributing the Advantage Shares of the Fund; and (iii) to pay
the costs 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 of the Distributor and other persons 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 and past profits, for the purposes enumerated in (i) above. The Distributor
may determine the amount of such payments made pursuant to the Plan, provided
that such payments will not increase the amount which the Fund is required to
pay to the Manager and Distributor for any fiscal year under either the
Investment Management Contract, Administrative Services Agreement, Distribution
Agreement or Shareholder Servicing Agreement in effect for that year.


Oppenheimer & Co. Inc. receives distribution and servicing payments from the
Distributor with respect to the Advantage Shares in amounts that exceed the
payments the Distributor receives from the Fund pursuant to the Plan,
Distribution Agreement and Shareholder Servicing Agreement with respect to such
shares. The excess of such payments over the total payments the Distributor
receives from the Fund represents payments made out of the Manager's and/or
Distributor's own resources. These payments may be referred to as "revenue
sharing" but do not change the price paid by investors to purchase the Fund's
shares or the amount the Fund receives as proceeds from such sales. Revenue
sharing payments may be made to Oppenheimer & Co. Inc. for providing services to
the Fund or its shareholders, including, without limitation, shareholder
servicing, administration, accounting, transfer agency and/or distribution
service. The amount of these payments may create an incentive for Oppenheimer &
Co. Inc., and its affiliates to sell shares of the Fund to you or to recommend
one Fund complex over another. Please speak with your financial advisor to learn
more about these payments. Additional information regarding these payments can
be found in the Fund's Statement of Additional Information. In addition, to the
extent allowable under the Financial Industry Regulatory Authority ("FINRA")
rules and any other applicable regulations, the Distributor or an affiliate may
contribute to sales programs for Oppenheimer & Co. Inc. and may provide non-cash
compensation to Oppenheimer & Co. Inc. like sponsorship or funding of sales
seminars, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or by giving out merchandise at industry conferences, which may be paid
for by the Distributor or an affiliate out of its own resources.


                                       27
<PAGE>
IV. FINANCIAL HIGHLIGHTS


These financial highlights tables are intended to help you understand the
financial performance of the Advantage Shares of the Money Market Portfolio,
U.S. Government Portfolio and Municipal Portfolios since inception. Certain
information reflects financial results for a single Portfolio share. The total
returns in the tables represent the rate that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from the Fund's financial
statements audited by PricewaterhouseCoopers LLP, whose report, along with the
Fund's financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
                                                                       MONEY MARKET PORTFOLIO
Advantage shares                                                                Commencement of Operations
----------------                                           Year Ended            November 1, 2006 through
                                                           March 31, 2008               March 31, 2007
                                                         --------------               --------------
Per Share Operating Performance:
(for a share outstanding throughout the year)
<S>                                                             <C>                        <C>
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.040                        0.018
   Net realized and unrealized gain(loss)on investments         0.000                        0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.040                        0.018
Less distributions from:
   Dividends from net investment income................        (0.040)                      (0.018)
   Net realized gain on investments....................        (0.000)                      (0.000)
                                                            ---------                   ----------
   Total Distributions.................................        (0.040)                      (0.018)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         4.06%                        1.81%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $3,451,676                  $3,113,588
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.02%                        1.02%(c)
   Net investment income...............................         3.95%                        4.35%(c)
   Management and administration fees waived...........         0.02%                        0.03%(c)
   Distribution fees waived............................         0.17%                        0.16%(c)
   Sub-Accounting fees waived..........................         0.10%                        0.10%(c)
   Expenses paid indirectly............................         0.00%                        0.00%(c)
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>

</TABLE>

                                       28
<PAGE>
IV. FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
                                                                   U.S. GOVERNMENT PORTFOLIO
<S>                                                             <C>                          <C>

Advantage shares                                                               Commencement of Operations
----------------                                          Year Ended            December 2, 2006 through
Per Share Operating Performance:                         March 31, 2008               March 31, 2007
                                                         --------------               --------------
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.036                        0.018
   Net realized and unrealized gain(loss)on investments        (0.000)                       0.000
                                                            ---------                   ----------
   Total from investment operations....................         0.036                        0.018
Less distributions from:
   Dividends from net investment income................        (0.036)                      (0.018)
   Net realized gain on investments....................         --                           --
                                                            ---------                   ----------
   Total Distributions.................................        (0.036)                      (0.018)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         3.71%                        1.77%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 662,379                   $ 193,827
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.02%                        1.02%(c)
   Net investment income...............................         3.37%                        4.26%(c)
   Management and administration fees waived...........         0.09%                        0.16%(c)
   Distribution fees waived............................         0.16%                        0.16%(c)
   Sub-Accounting fees waived..........................         0.10%                        0.10%(c)
<FN>
(a) Unannualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
</TABLE>

                                       29
<PAGE>
IV. FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
                                                                          MUNICIPAL PORTFOLIO

                                                                                COMMENCEMENT OF OPERATIONS
                                                           YEAR ENDED            NOVEMBER 2, 2006 THROUGH
ADVANTAGE SHARES                                         MARCH 31, 2008               MARCH 31, 2007
----------------                                         --------------               --------------
<S>                                                            <C>                           <C>
PER SHARE OPERATING PERFORMANCE:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00                    $    1.00
                                                            ---------                   ----------
Income from investment operations:
   Net investment income...............................         0.025                        0.011
   Net realized and unrealized gain(loss)  on investments       0.000                         --
                                                            ---------                   ----------
   Total from investment operations....................         0.025                        0.011
Less distributions from:
   Dividends from net investment income................        (0.025)                      (0.011)
   Net realized gain on investments....................        (0.000)                       (--)
                                                            ---------                   ----------
   Total Distributions.................................        (0.025)                      (0.011)
                                                            ---------                   ----------
Net asset value, end of year...........................     $   1.00                    $    1.00
                                                            =========                   ==========
Total Return...........................................         2.52%                        1.09%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 221,862                   $ 136,546
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.02%                        1.02%(c)
   Net investment income...............................         2.41%                        2.65%(c)
   Management and administration fees waived...........         0.13%                        0.16%(c)
   Distribution fees waived............................         0.16%                        0.16%(c)
   Sub-Accounting fees waived..........................         0.10%                        0.10%(c)
   Expenses paid indirectly............................         0.00%                         --
<FN>
(a)      Unannualized
(b)      Include expenses paid indirectly
(c)      Annualized
</FN>
</TABLE>
                                       30
<PAGE>
                     NOTICE OF REICH & TANG* PRIVACY POLICY

         WE DO NOT DISCLOSE TO THIRD PARTIES NONPUBLIC PERSONAL INFORMATION
ABOUT CURRENT OR FORMER REICH & TANG CUSTOMERS, CLIENTS OR MUTUAL FUND
SHAREHOLDERS OTHER THAN AS DESCRIBED BELOW.

         WE COLLECT NONPUBLIC PERSONAL INFORMATION ABOUT YOU, SUCH AS YOUR NAME,
ADDRESS, SOCIAL SECURITY NUMBER, ACCOUNT ACTIVITY AND ACCOUNT BALANCES FROM YOUR
ACCOUNT APPLICATION AND OTHER FORMS THAT YOU MAY DELIVER TO US. WE USE THIS
INFORMATION TO PROVIDE ADVISORY SERVICES TO YOU, TO OPEN AN ACCOUNT FOR YOU, OR
TO PROCESS A TRANSACTION FOR YOUR ACCOUNT. IN ORDER TO SERVICE YOUR ACCOUNT AND
EFFECT YOUR TRANSACTIONS, WE PROVIDE YOUR NONPUBLIC PERSONAL INFORMATION TO OUR
AFFILIATES AND TO UNAFFILIATED FIRMS TO EFFECT OR PROCESS TRANSACTIONS FOR YOU
OR TO ASSIST US IN SERVICING YOUR ACCOUNT.

         WE MAY ALSO DISCLOSE NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO OTHER
SERVICE PROVIDERS WHO AGREE TO PROTECT THE CONFIDENTIALITY OF YOUR INFORMATION
AND TO USE THE INFORMATION ONLY FOR THE PURPOSE FOR WHICH THE DISCLOSURE IS
MADE. WE DO NOT OTHERWISE PROVIDE NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO
OUTSIDE FIRMS, ORGANIZATIONS OR INDIVIDUALS EXCEPT AS PERMITTED BY LAW.

         WE RESTRICT ACCESS TO NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO THOSE
EMPLOYEES WHO NEED TO KNOW THAT INFORMATION TO PROVIDE PRODUCTS OR SERVICES TO
YOU. WE MAINTAIN PHYSICAL, ELECTRONIC AND PROCEDURAL SAFEGUARDS THAT COMPLY WITH
FEDERAL STANDARDS TO GUARD YOUR PERSONAL INFORMATION.
------------------

*    FOR PURPOSES OF THIS NOTICE, "REICH & TANG" INCLUDES: REICH & TANG ASSET
     MANAGEMENT, LLC, REICH & TANG DISTRIBUTORS, INC., REICH & TANG SERVICES,
     INC. AND ALL MUTUAL FUNDS OR OTHER FUNDS MANAGED OR ADVISED BY REICH & TANG
     ASSET MANAGEMENT, LLC.

             THIS PAGE IS NOT PART OF THE PRECEDING FUND PROSPECTUS

<PAGE>
SHARES OF DAILY INCOME FUND -
MONEY MARKET PORTFOLIO
U.S. GOVERNMENT PORTFOLIO
MUNICIPAL PORTFOLIO

A Statement of Additional Information
(SAI) dated July 29, 2008, includes
additional information about the Fund
and its investments and is incorporated
by reference into this Prospectus.
Further information about each
Portfolio's investments is available in
the Fund's annual and semi-annual
reports to shareholders. You may obtain
the SAI and the annual and semi-annual
reports without charge by calling the
Fund at (212) 830-5345 or toll-free at
(800) 433-1918. You may also obtain the
SAI and the annual and semi-annual
reports without charge by visiting the
Fund's website at
http://www.money-funds.com/funds/AdvantageLiquidity.
To request other information about the
Fund, please call your financial
intermediary or the Fund.

                                          OPPENHEIMER [GRAPHIC OMITTED]
                                          AVAILABLE EXCLUSIVELY TO CUSTOMERS OF:
                                          OPPENHEIMER & CO. AND ITS AFFILIATES

                                          ADVANTAGE PRIMARY
                                          LIQUIDITY FUND

                                          ADVANTAGE GOVERNMENT
                                          LIQUIDITY FUND

                                          ADVANTAGE MUNICIPAL
                                          LIQUIDITY FUND

                                          PROSPECTUS
                                          JULY 29, 2008

A current SAI has been filed with the
Securities and Exchange Commission.
Information about the Fund (including
the SAI) is also available from the
Public Reference Room of the Securities
and Exchange Commission. Information on
the operation of the Public Reference
Room may be obtained by calling the
Commission at (202) 551-8090. Fund
reports and other information about the
Fund are available on the EDGAR Database
on the Commission's Internet site at
http://www.sec.gov. Copies of this
information may be obtained, after
paying a duplicating fee, by electronic
request at publicinfo@sec.gov, or by
writing the Commission's Public
Reference Section, Washington, D.C.
20549-0104.

Investment Company Act No. 811-8312

                         REICH & TANG DISTRIBUTORS, INC.
                                600 FIFTH AVENUE
                               NEW YORK, NY 10020
                                 (212) 830-5220


 ADV_DIF07/08P

<PAGE>

MONEY MARKET XPRESS FUND
SHARES OF DAILY INCOME FUND - MONEY MARKET PORTFOLIO
================================================================================
PROSPECTUS

JULY 29, 2008


Daily Income Fund - Money Market Portfolio (the "Fund") is an open-end,
diversified money market fund designed as a cash management service for
institutional customers and individuals. The Money Market Portfolio's investment
objective is to seek as high a level of current income to the extent consistent
with the preservation of capital and the maintenance of liquidity. This
Prospectus relates exclusively to the money market Xpress fund class of shares
(the "Xpress Shares") of the Daily Income Fund - Money Market Portfolio offered
exclusively by optionsXpress, Inc. and brokersXpress, LLC.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

THE NOTICE OF THE REICH & TANG PRIVACY POLICY IS INCLUDED WITH THIS PROSPECTUS
BUT IS NOT PART OF THE PROSPECTUS.

AVAILABLE THROUGH:
------------------------------------
optionsXpress
311 W. Monroe Suite 1000
Chicago, IL 60606

brokersXpress, LLC.
311 W. Monroe Suite 1000
Chicago, Illinois 60606-4661

 optionsXpress, Inc.:(888) 280-8020
 brokersXpress, LLC.:(888) 280-7030
<PAGE>
<TABLE>
<CAPTION>
     TABLE OF CONTENTS


<S>                                                                             <C>
     Risk/Return Summary: Investments, Risks and Performance                    3
     Fee Table                                                                  6
     Investment Objective, Principal Investment Strategies and Related Risks    7
     Management, Organization and Capital Structure                            12
     Shareholder Information                                                   13
     Dividends and Distributions                                               15
     Tax Consequences                                                          17
     Distribution Arrangements                                                 18
     Financial Highlights                                                      21

</TABLE>
                                       2
<PAGE>
RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------

The investment objective of the Fund is to seek as high a level of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity.

There is no assurance that the Fund will achieve its investment objective.

PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------------------------------------------

The Fund is a money market Fund that invests in high quality, short-term debt
instruments. The Fund seeks to maintain investment portfolios with a
dollar-weighted average maturity of 90 days or less, to value its investment
portfolios at amortized cost and maintain a net asset value of $1.00 per share.


The Fund seeks to achieve its objective by investing principally in short-term
money market obligations with maturities of 397 days or less, including bank
certificates of deposit, time deposits, bankers' acceptances, high quality
commercial paper, loan participation interests, securities issued or guaranteed
by the United States Government, state agencies or instrumentalities, and
repurchase agreements calling for resale in 397 days or less backed by the
foregoing securities. The maturities of variable rate demand instruments held in
the Fund 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.


PRINCIPAL RISKS
--------------------------------------------------------------------------------

o    Although the Fund seeks to preserve the value of your investment at $1.00
     per share, it is possible to lose money by investing in the Fund.

o    The value of the Fund's shares and the securities held by the Fund can each
     decline in value.

o    The amount of income the Fund generates will vary with changes in
     prevailing interest rates.

o    An investment in the Fund is not a bank deposit and is not insured or
     guaranteed by the Federal Deposit Insurance Corporation (the "FDIC") or any
     other governmental agency.

o    The Fund may contain securities issued by foreign governments, or any of
     their political subdivisions, agencies or instrumentalities, and by foreign
     branches of domestic banks, foreign subsidiaries of domestic banks,
     domestic and foreign branches of foreign banks, and commercial paper issued
     by foreign issuers. Foreign securities may be subject to investment risks
     which may include adverse economic and political developments as well as
     lack of uniform accounting and financial reporting standards.

o    The payment of interest and preservation of capital are dependent upon the
     continuing ability of issuers to meet payment obligations.

                                       3
<PAGE>

RISK/RETURN BAR CHART AND TABLE
--------------------------------------------------------------------------------


The following bar chart and table provide information on the Institutional Class
shares of the Money Market Portfolio (the "Institutional Shares") (which is not
offered by this prospectus) and may assist you in deciding whether to invest in
the Xpress Shares of the Fund. The bar chart shows the change in the average
annual total returns of the Institutional Shares of the Money Market Portfolio
for the last ten calendar years. The table for the Money Market Portfolio shows
the average annual total returns of the Xpress Shares and the Institutional
Shares of the Portfolio for the last one year, five year and ten year
(Institutional Shares only) and since inception periods. Performance history for
the Xpress Shares will be provided in the table once this Class has been in
existence for a full calendar year. While analyzing this information, please
note that past performance is not an indication of how either the Institutional
Shares or the Xpress Shares will perform in the future. Moreover, the
performance figures in the bar chart and table for the Institutional Shares are
based on the Institutional Shares' expenses, which are less than the Xpress
Shares' expenses. The Xpress Shares current 7-day yield for the Money Market
Portfolio may be obtained by calling either optionsXpress, Inc. or
brokersXpress, LLC. toll-free at the numbers listed below:


optionsXpress, Inc.:(888) 280-8020
brokersXpress, LLC.:(888) 280-7030

                                       4
<PAGE>
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
Money Market Portfolio - Institutional Shares  (1(2)(3)
<S>                     <C>

Calendar Year End       % Total Return
2007                    5.23%
2006                    4.98%
2005                    3.12%
2004                    1.26%
2003                    1.08%
2002                    1.73%
2001                    4.15%
2000                    6.45%
1999                    5.19%
1998                    5.54%

<FN>
(1)  The chart shows returns for the Institutional Shares of the Money Market
     Portfolio (which is not offered by this Prospectus) since, as of December
     31, 2007, the Xpress Shares were not in existence for at least one calendar
     year. All classes of the Money Market Portfolio will have substantially
     similar annual returns because the shares are invested in the same
     portfolio of securities and the annual returns differ only to the extent
     that the classes do not have the same expenses. Since the expenses of the
     Xpress Shares are higher than the Institutional Shares, your returns would
     have been lower.

(3)  As of June 30, 2008, the Money Market Portfolio Xpress Class shares' had a
     year to date return of 1.17%

(2)  The Money Market Portfolio Institutional Shares' highest quarterly return
     was 1.65% for the quarter ended September 30, 2000; the lowest quarterly
     return was 0.23% for the quarter ended March 31, 2004. As of June 30, 2008,
     the Money Market Portfolio Institutional Class shares' had a year-to-date
     return of 1.70%.

</FN>
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS

FOR THE PERIODS ENDED DECEMBER 31, 2007

                                                      Institutional Shares     Xpress Shares
<S>                                                     <C>                        <C>
One Year                                                5.23%                      N/A
Five Years                                              3.12%                      N/A
Ten Years                                               3.85%                      N/A
Since Inception*                                        4.30%                     4.05%
<FN>
*    The inception date for the Institutional Shares was April 14, 1994 and the
     inception date for Xpress Shares was June 20, 2007.

</FN>
</TABLE>
                                       5
<PAGE>
                                    FEE TABLE
--------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and hold
Xpress Shares of the Fund.

<TABLE>
<CAPTION>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<S>                                                                    <C>
     Sales Charge (Load) Imposed on Purchases                          None
</TABLE>

<TABLE>
<CAPTION>
   ANNUAL FUND OPERATING EXPENSES
   (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
                                                                XPRESS SHARES

<S>                                                     <C>        <C>
   Management Fees............................                     0.12%
   Distribution and Service (12b-1) Fees...                        1.00%
   Other Expenses*..............................                   0.19%
         ADMINISTRATION FEES...................         0.05%      -----
   Total Annual Fund Operating Expenses                            1.31%
<FN>
*    The Fund's investment manager voluntarily waived a portion of the
     Administration Fees. After such waiver, the Administration Fees were 0.03%
     for the Xpress Shares. In addition, the Fund's transfer agent voluntarily
     waived certain fees included in Other Expenses. After such waiver and the
     Fund's investment manager's waiver of a portion of the Administration Fees,
     Other Expenses were 0.13%. As a result, the actual Total Fund Operating
     Expenses for the Xpress Shares were 1.25%. These fee waiver arrangements
     may be modified or discontinued from time to time by the Fund's investment
     manager and/or transfer agent without prior notice.

</FN>
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE

This Example is intended to help you compare the cost of investing in the Xpress
Shares of the Fund with the cost of investing in other money market funds. The
Example assumes that you invest $10,000 in the Xpress Shares of the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Xpress Shares' operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:


                  1 YEAR            3 YEARS           5 YEARS      10 YEARS
<S>               <C>               <C>               <C>          <C>
XPRESS SHARES     $133              $415              $718         $1,579

</TABLE>

                                       6
<PAGE>
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------

The investment objective of the Fund is to seek as high a level of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity.

There can be no assurance that the Fund will achieve its investment objective.

The investment objective of the Fund described in this section may only be
changed upon the approval of the holders of a majority of the outstanding shares
of such Fund.

PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------------------------------------------

In order to maintain a share price of $1.00, the Fund must comply with certain
industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in the Fund, on a dollar-weighted basis, will be 90 days or less.

The Fund will only invest in either securities which have been rated (or whose
issuers have been rated) in the highest short-term rating category by nationally
recognized statistical rating organizations, or are unrated securities but which
have been determined by the Fund's investment manager to be of comparable
quality.

The Fund shall invest not more than 5% of its total assets in securities issued
by a single issuer, except for U.S. Government Obligations.

With respect to 75% of its total assets, the Fund shall invest not more than 10%
of its total assets in securities backed by a demand feature or guarantee from
the same institution, except for U.S. Government Obligations.

The Fund's investment manager considers the following factors when buying and
selling securities for the Fund: (i) the availability of cash, (ii) redemption
requests, (iii) yield management, and (iv) credit management.

As a temporary defensive measure the Fund may, from time to time, invest in
securities that are inconsistent with its principal investment strategies or
remain uninvested in an attempt to respond to adverse market, economic,
political or other conditions as determined by the Fund's investment manager.
Such a temporary defensive position may cause the Fund to not achieve its
investment objective.

The Fund intends to attain its investment objective through investments in the
following securities:

(I)  UNITED STATES GOVERNMENT SECURITIES: The Fund may purchase short-term
     obligations issued or guaranteed by the United States Government, its
     agencies or instrumentalities. These obligations include issues of the
     United States Treasury, such as bills, certificates of indebtedness, notes
     and bonds, and issues of certain agencies and instrumentalities

                                       7
<PAGE>
     established under the authority of an act of Congress. Some of these
     securities are supported by the full faith and credit of the United States,
     others are supported by the right of the issuer to borrow from the United
     States Treasury, and still others are supported only by the credit of the
     agency or instrumentality.

(II) DOMESTIC AND FOREIGN BANK OBLIGATIONS: The Fund may purchase securities
     issued by foreign governments, or any of their political subdivisions or
     agencies or instrumentalities, certificates of deposit, time deposits and
     bankers' acceptances issued by domestic banks, foreign branches of domestic
     banks, foreign subsidiaries of domestic banks, and domestic and foreign
     branches of foreign banks. Certificates of deposit are certificates
     representing the obligation of a bank to repay funds deposited with it for
     a specified period of time. Time deposits are non-negotiable deposits
     maintained in a bank for a specified period of time (in no event longer
     than seven days) at a stated interest rate. Time deposits purchased by the
     Fund will not benefit from insurance from the FDIC. Bankers' acceptances
     are credit instruments evidencing the obligation of a bank to pay a draft
     drawn on it by a customer.

     The Fund limits its investments in obligations of domestic banks, foreign
     branches of domestic banks and foreign subsidiaries of domestic banks to
     banks having total assets in excess of one billion dollars or the
     equivalent in other currencies. The Fund limits its investments in
     obligations of domestic and foreign branches of foreign banks to dollar
     denominated obligations of such banks which at the time of investment have
     more than $5 billion, or the equivalent in other currencies, in total
     assets. These investments must also meet the quality criteria discussed
     above under "Principal Investment Strategies - Generally."

     The Fund generally limits investments in bank instruments to (a) those
     which are fully insured as to principal by the FDIC or (b) those issued by
     banks which at the date of their latest public reporting have total assets
     in excess of $1.5 billion. However, the total assets of a bank will not be
     the sole factor determining the Fund's investment decisions and the Fund
     may invest in bank instruments issued by institutions which the investment
     manager believes present minimal credit risks.

     The Fund may purchase U.S. dollar-denominated obligations issued by foreign
     branches of domestic banks or foreign branches of foreign banks
     ("Eurodollar" obligations) and domestic branches of foreign banks ("Yankee
     dollar" obligations). The Fund will limit its aggregate investments in
     foreign bank obligations, including Eurodollar obligations and Yankee
     dollar obligations, to 25% of its total assets at the time of purchase,
     provided that there is no limitation on the Fund's investments in (a)
     Eurodollar obligations, if the domestic parent of the foreign branch
     issuing the obligations is unconditionally liable in the event that the
     foreign branch fails to pay on the Eurodollar obligation for any reason;

                                       8
<PAGE>
     and (b) Yankee dollar obligations, if the U.S. branch of the foreign bank
     is subject to the same regulation as U.S. banks. Eurodollar, Yankee dollar
     and other foreign bank obligations include time deposits, which are
     non-negotiable deposits maintained in a bank for a specified period of time
     at a stated interest rate. The Fund will limit its purchases of time
     deposits to those which mature in seven days or less, and will limit its
     purchases of time deposits maturing in two to seven days to 10% of the
     Fund's total assets at the time of purchase.

     Eurodollar and other foreign obligations involve special investment risks,
     including the possibility that (i) liquidity could be impaired because of
     future political and economic developments, (ii) the obligations may be
     less marketable than comparable domestic obligations of domestic issuers,
     (iii) a foreign jurisdiction might impose withholding taxes on interest
     income payable on those obligations, (iv) deposits may be seized or
     nationalized, (v) foreign governmental restrictions such as exchange
     controls may be adopted which might adversely affect the payment of
     principal and interest on those obligations, (vi) the selection of foreign
     obligations may be more difficult because there may be less information
     publicly available concerning foreign issuers, (vii) there may be
     difficulties in enforcing a judgment against a foreign issuer or (viii) the
     accounting, auditing and financial reporting standards, practices and
     requirements applicable to foreign issuers may differ from those applicable
     to domestic issuers. In addition, foreign banks are not subject to
     examination by United States Government agencies or instrumentalities.

(III) VARIABLE AMOUNT MASTER DEMAND NOTES: The Fund may purchase variable amount
     master demand notes. These instruments are unsecured demand notes that
     permit investment of fluctuating amounts of money at variable rates of
     interest pursuant to arrangements with issuers who meet the quality
     criteria discussed above under "Principal Investment Strategies -
     Generally." The interest rate on a variable amount master demand note is
     periodically adjusted according to a prescribed formula. Although there is
     no secondary market in master demand notes, the payee may demand payment of
     the principal and interest upon notice not exceeding five business or seven
     calendar days.

(IV) LOAN PARTICIPATION INTERESTS: The Fund may purchase participation interests
     in loans extended by banks to companies, provided that both such banks and
     such companies meet the quality standards applicable to bank instruments as
     set forth above.

(V)  COMMERCIAL PAPER AND CERTAIN DEBT OBLIGATIONS: The Fund may purchase
     commercial paper or similar debt obligations. Commercial paper is generally
     considered to be short-term unsecured debt of corporations.

(VI) REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements
     provided

                                       9
<PAGE>
     that the instruments serving as collateral for the agreements are eligible
     for inclusion in the Fund. A repurchase agreement arises when a buyer
     purchases a security and simultaneously agrees with the vendor to resell
     the security to the vendor at an agreed upon time and price.

 RISKS
--------------------------------------------------------------------------------

The Fund complies with industry-standard requirements on the quality, maturity
and diversification of its investments which are designed to help maintain a
$1.00 share price. A significant change in interest rates or a default on the
Fund's investments could cause its share price (and the value of your
investment) to change.

Investments in U.S. Government securities may or may not be supported by the
full faith and credit of the U.S. Government. Although many U.S. Government
securities purchased by the Fund, such as those issued by the Federal National
Mortgage Association ("Fannie Mae"), Federal Home Loan Mortgage Corporation
("Freddie Mac") and the Federal Home Loan Banks ("FHLB") may be chartered or
sponsored by Acts of Congress, their securities are neither issued nor
guaranteed by the U.S. Treasury and therefore, are not backed by the full faith
and credit of the United States. Accordingly, no assurance can be given that the
U.S. Government will provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.

The maximum potential liability of the issuers of some U.S. Government
securities held by the Fund may greatly exceed their current resources,
including their legal right to support from the U.S. Treasury and thus, it is
possible that these issuers will not have the funds to meet their payment
obligations in the future. In such case, a Fund must look principally to the
agency, instrumentality or sponsored enterprise issuing or guaranteeing the
security for ultimate repayment and may not be able to assert a claim against
the U.S. Government itself in the event the agency, instrumentality or sponsored
enterprise does not meet its commitment.

The U.S. Government securities that the Fund may purchase include:

o    U.S. Treasury bills, notes and bonds, all of which are direct obligations
     of the U.S. Government.

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     of the U.S. Government that are backed by the full faith and credit of the
     U.S. Government. Among the agencies, instrumentalities and sponsored
     enterprises issuing these obligations are the Government National Mortgage
     Association (Ginnie Mae) and the Federal Housing Administration (FHA).

o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are not backed by the full faith and credit of the U.S. Government,
     but whose issuing agency, instrumentality or sponsored enterprise has the
     right to borrow from the U.S. Treasury to meet its obligations. Among these
     agencies, instrumentalities and sponsored enterprises issuing these
     obligations are Fannie Mae, Freddie Mac and the FHLB.

                                       10
<PAGE>
o    Securities issued by agencies, instrumentalities or sponsored enterprises
     that are backed solely by the credit of the issuing agency, instrumentality
     or sponsored enterprise. Among these agencies, instrumentalities and
     sponsored enterprises issuing these obligations is the Federal Farm Credit
     System.

Since the Fund may contain securities issued by foreign governments, or any of
their political subdivisions, agencies or instrumentalities, and by foreign
branches of domestic banks, foreign subsidiaries of domestic banks, domestic and
foreign branches of foreign banks, and commercial paper issued by foreign
issuers, the Fund may be subject to additional investment risks when compared
with those incurred by a fund which invests only in domestic issuers. Foreign
securities markets generally are not as developed or efficient as those in the
United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable United States issuers. Similarly, volume
in most foreign securities markets is less than in the United States. The
issuers of some of these securities may be subject to less stringent or
different regulation than are United States issuers. In addition, there may be
less publicly available information about a non-United States issuer, and
non-United States issuers generally are not subject to uniform accounting and
financial reporting standards and requirements. Additional risks associated with
foreign investments might include adverse political and economic developments,
seizure or nationalization of foreign deposits and adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities. Furthermore, some of these foreign securities may be
subject to stamp, withholding or other excise taxes levied by foreign
governments, which have the effect of increasing the cost of such securities and
reducing the realized gain or increasing the realized loss on such securities at
the time of sale.

PORTFOLIO HOLDINGS

A schedule of the Money Market Portfolio's holdings, current as of month-end,
will be available on the Fund's website no earlier than 5 days after the end of
each month. This information will remain available on the website at least until
updated for the next month or until the Fund files with the Securities and
Exchange Commission its semi-annual/annual shareholder report or quarterly
portfolio holdings report that includes such period. The most recent schedule is
available on the Fund's website at http://www.money-funds.com/portfolioholdings
or by calling toll free at (800) 433-1918. The Fund may terminate or modify this
policy at any time without further notice to shareholders. A description of the
Fund's policies and procedures with respect to the disclosure of the Fund's
portfolio securities is available in the Statement of Additional Information.

                                       11
<PAGE>
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE


The Fund's investment manager is Reich & Tang Asset Management, LLC (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of June 30, 2008, the Manager was the investment
manager, adviser or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

Pursuant to the Investment Management Contract between the Fund and the Manager,
the Manager manages the Money Market Portfolio's securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Trustees of the Fund. Pursuant to the Investment
Management Contract, the Money Market Portfolio pays an annual management fee of
0.12% of the Money Market Portfolio's average daily net assets. For the fiscal
year ended March 31, 2008, the Money Market Portfolio paid the Manager a
management fee equal to 0.12% of the Money Market Portfolio's average daily net
assets. A discussion regarding the basis for the Board of Trustees approving the
continuance of the Investment Management Contract is available in the Fund's
annual report for the period ended March 31, 2008.

Pursuant to the Administrative Services Contract between the Fund and the
Manager, the Manager provides all management and administrative services
reasonably necessary for the Fund's operation, other than those services that
the Manager provides to the Fund pursuant to the Investment Management Contract.
The Manager also provides the Fund with personnel to perform all of the clerical
and accounting type functions not performed by the Manager pursuant to the
Investment Management Contract and Administrative Services Contract. For its
services under the Administrative Services Contract, the Money Market Portfolio
pays the Manager an annual fee of 0.05% of the Money Market Portfolio's average
daily net assets. For the fiscal year ended March 31, 2008, the Money Market
Portfolio paid the Manager a fee for administrative services equal to 0.03% of
the Money Market Portfolio's average daily net assets.


The Manager, at its discretion, may voluntarily waive all or a portion of the
investment management and the administrative services fees. Any portion of the
total fees received by the Manager and its past profits may be used to provide
shareholder services and for distribution of Fund shares.

In addition, Reich & Tang Distributors, Inc. (the "Distributor"), receives a
servicing fee equal to 0.25% per annum of the average daily net assets of the
Xpress Shares under the Shareholder Servicing Agreement and a distribution fee
in an

                                       12
<PAGE>
amount not to exceed 0.75% per annum of the average daily net assets of the
Xpress Shares under the Distribution Agreement. The fees are accrued daily and
paid monthly.

Investment management fees and operating expenses, which are attributable to
more than one Class of the Fund, will be allocated daily to each Class of shares
based on the percentage of shares outstanding at the end of the day.

SHAREHOLDER INFORMATION

The Fund sells and redeems its shares on a continuing basis at its net asset
value and does not impose a charge for either purchases or redemptions. All
transactions in the Fund are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions from optionsXpress, Inc. and
brokersXpress, LLC.

PURCHASE AND REDEMPTION OF SHARES
--------------------------------------------------------------------------------

Only the Xpress Shares of the Fund are offered through this Prospectus.

optionsXpress, Inc. and brokersXpress, LLC. and their affiliates may impose
account fees separate from any fees charged by the Fund and therefore investors
should read this prospectus in conjunction with the materials provided by
optionsXpress, Inc. and brokersXpress, LLC. and their affiliates.

optionsXpress, Inc. and brokersXpress, LLC. may transmit an investor's purchase
or redemption order to the Fund's transfer agent after 4:00 p.m., Eastern time
on the day the order is received from the investor as long as the investor has
placed his order with optionsXpress, Inc. and brokersXpress, LLC. before 4:00
p.m., Eastern time on that day. The investor will then receive the net asset
value of the Fund's shares determined as of 4:00 p.m., Eastern time on the day
he placed his order with optionsXpress, Inc. and brokersXpress, LLC. Both
optionsXpress, Inc. and brokersXpress, LLC. are responsible for instituting
procedures to ensure that purchase orders by their respective clients are
processed expeditiously.

There is no minimum initial or subsequent investment for Xpress Shares.

INITIAL INVESTMENTS (PURCHASES)
--------------------------------------------------------------------------------

Contact your Financial Advisor to arrange for an initial investment in the Fund.
You may use the Fund either as the money market fund tied to your optionsXpress,
Inc. or brokersXpress, LLC. securities account through optionsXpress, Inc. or
brokersXpress, LLC.'s sweep service or as an additional investment position held
in your securities account.

The "sweep" means that cash is automatically invested in the Fund when the cash
becomes available in your optionsXpress, Inc. or brokersXpress, LLC. securities
account from any source such as proceeds from securities sales, receipt of
dividends or interest income, or a check deposit from you. The sweep
automatically withdraws cash from the Fund when appropriate to cover purchases
or other activities in your account.

                                       13
<PAGE>
SUBSEQUENT INVESTMENTS (PURCHASES)
--------------------------------------------------------------------------------

Mail or deliver your check, payable to optionsXpress, Inc. or brokersXpress,
LLC. to your Financial Advisor. Please write your securities account number and
the Fund name on the check. If you wish to make an investment by sending a wire
from your bank, contact your Financial Advisor to obtain wiring instructions.

GENERAL INFORMATION ON PURCHASES
--------------------------------------------------------------------------------

Xpress Shares of the Fund may be purchased through optionsXpress, Inc. or
brokersXpress, LLC. Orders for purchase of shares are accepted only on a
"business day of the Fund," which means any day on which both the New York Stock
Exchange and the Bank of New York (the "Custodian"), the Fund's custodian, are
open for business. It is expected that the New York Stock Exchange and/or the
Custodian will be closed on Saturdays and Sundays, New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas. However,
on certain days that the New York Stock Exchange is closed, the Fund, at the
direction of the Manager, may be open for purchases and redemptions and will
determine its net asset value.

An order to purchase Fund shares is effective only when it is received in proper
form and payment in the form of Federal Funds (member bank deposits with the
Federal Reserve Bank) is received by the Company for investment. The Fund
reserves the right to reject any order for the purchase of shares. In addition,
the Fund does not accept cash, and may refuse cash equivalents (I.E. travelers
cheques, money orders, cashier checks or similar instruments) and certain other
forms of payment at its discretion. Fund shares are purchased or exchanged at
the net asset value next determined after receipt of the order. Net asset value
is determined as of 4:00 p.m. Eastern time on each business day of the Fund. The
net asset value 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 numbers of shares outstanding. Because the Fund uses the amortized
cost method of valuing the securities held by the Fund and rounds the Fund's per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of the Fund will remain constant at $1.00 per share.
However, the Fund makes no assurance that it can maintain a $1.00 net asset
value per share. In order to earn dividends the same day, purchase orders must
be received prior to 4:00 p.m. Eastern time; otherwise, the purchase of shares
will occur the following business day. The Fund will not issue share
certificates but will record investor holdings on the books of the Fund in
non-certificate form and regularly advise the shareholder of his ownership
position.

Purchases may be made by following the procedures specified above. If these
purchase procedures are not followed, the processing of orders may be delayed.

                                       14
<PAGE>
WITHDRAWALS (REDEMPTIONS)
--------------------------------------------------------------------------------

For withdrawals other than those automatically activated by the sweep, please
instruct your Financial Advisor as to the withdrawal amount and the delivery of
the proceeds.

GENERAL INFORMATION ON REDEMPTIONS
--------------------------------------------------------------------------------

You may redeem your shares, in whole or in part, on any day on which the Fund's
net asset value is calculated. Shares are redeemed at the net asset value next
determined after receipt of proper notice of redemption. If you redeem all of
your shares, you will receive payment of all dividends declared but unpaid
through the date of redemption. If you redeem only a portion of the shares in
your account, the dividends declared but unpaid on the shares redeemed will not
be distributed to you until the next regular dividend payment date. If your
redemption order is received prior to 4:00 p.m. Eastern time, the redemption
will be effective on that day and the Fund will endeavor to transmit payment
that same business day. If the notice of redemption is received after 4:00 p.m.
Eastern time, the redemption will be made on the next business day.

The Fund and its agents reserve the right to "freeze" or "block" (that is,
disallow any further purchases or redemptions from any account) or suspend
account services in certain instances as permitted or required by applicable
laws and regulations, including applicable anti-money laundering regulations.
Examples of such instances include, but are not limited to, (i) where an
accountholder appears on the list of "blocked" entities and individuals
maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii)
where the Fund or its agents detect suspicious activity or suspect fraudulent or
illegal activity, or (iii) when notice has been received by the Fund or its
agents that there is a dispute between the registered or beneficial account
owners.

In addition, in accordance with applicable customer identification regulations,
the Fund reserves the right to redeem the shares of any shareholder and close
the shareholder's account if the Fund and its agents are unable to verify the
shareholder's identity within a reasonable time after the shareholder's account
is opened. If the Fund closes a shareholder's account in this manner, the shares
will be valued in accordance with the net asset value next calculated after the
Fund decides to close the account.

Some of the redemption procedures described above may require you to complete
and file an authorization form in advance. If purchases are made by check,
redemption of those shares by wire, by check redemption or by telephone are
restricted for fifteen calendar days following the purchase of 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
business day of the Fund and 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.


                                       15
<PAGE>

All dividends and distributions of capital gains are automatically invested, at
no charge, 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 reinvestment of
capital gains or any taxable dividends does not avoid a taxable event to the
shareholder. See "Tax Consequences."

Election to receive dividends and distributions in cash or shares is made at the
time shares are subscribed for and may be changed by notifying the Fund in
writing at any time prior to the record date for a particular dividend or
distribution. If the shareholder makes no election, the Fund will make the
distribution in shares. There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.


While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Except as described herein, the Fund's net investment income
(excluding capital gains, if any) will be declared as a dividend on each
business day of the Fund. The Fund declares dividends for Saturdays, Sundays and
holidays on the previous business day of the Fund. The Fund pays dividends
monthly. There is no fixed dividend rate, and there can be no assurance that the
Fund will pay any dividends or realize any capital gains.


FREQUENT TRADING
--------------------------------------------------------------------------------

The Reich & Tang family of funds discourages short-term or excessive trading
("frequent trading") of their shares by shareholders (including by means of
exchanges) and maintains procedures reasonably designed to detect and deter such
frequent trading, except with respect to the money market funds as discussed
below. Frequent trading is sometimes referred to as market timing. Market timing
may take many forms but commonly refers to arbitrage activity involving the
frequent buying and selling of mutual fund shares in order to take advantage of
the fact that there may be a lag between a change in the value of a mutual
fund's portfolio securities and the reflection of that change in the fund's
share price. Frequent trading may dilute the value of fund shares held by
long-term shareholders. Frequent trading may also interfere with the efficient
management of a fund's portfolio, as it may result in a fund maintaining higher
cash balances than it otherwise would (which would result in reduced yields for
money market funds) or cause a fund to sell portfolio securities at a time it
otherwise would not. Frequent trading may further result in increased portfolio
transaction (or brokerage) costs, administrative and other operating costs and
may cause a fund to realize taxable capital gains or harvest capital losses at a
time that it otherwise would not. For these reasons, frequent trading poses the
risk of lower returns for long-term shareholders of a

                                       16
<PAGE>
fund. There is no guarantee that these policies and procedures will be effective
in detecting and preventing frequent trading in whole or in part.

Money market funds are not effective vehicles for market timing activity since
these types of funds seek to maintain a constant net asset value of $1.00 per
share. In addition, the risks of frequent trading are not generally applicable
to money market funds because money market funds are created as cash management
vehicles which accommodate frequent inflows and outflows of cash. As a result,
money market funds are managed to accommodate such cash flows, particularly when
used as sweep vehicles, which generally eliminates the potential for disruptive
trading.

Nonetheless, as indicated under "General Information on Purchases," the Fund
reserves the right to reject any purchase order for its shares for any reason
and thus may exercise such right in the event it determines that a purchase
order is disruptive to the Fund's management or otherwise. The Fund's procedures
with respect to frequent purchases and redemptions of Fund shares by
shareholders are thus limited to the Fund exercising its right to reject
purchase orders it determines in its discretion to be disruptive. The Fund may
change its policies relating to frequent trading at any time without prior
notice to shareholders.

TAX CONSEQUENCES
--------------------------------------------------------------------------------

The Fund intends to continue to qualify for the income tax treatment applicable
to a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as a regulated investment company, the Fund
must meet certain tests concerning its investments and distributions. For each
year the Fund qualifies as a regulated investment company, the Fund will not be
subject to federal income tax on its investment company taxable income (which
generally consists of ordinary income, including taxable interest, and realized
net short-term capital gains in excess of realized net long-term capital losses,
if any) and net long-term capital gains distributed to its shareholders in the
form of dividends or capital gain distributions. Additionally, the Fund will not
be subject to a federal excise tax if it distributes each year at least 98% of
its ordinary income and 98% of its capital gain income to its shareholders and
any undistributed and untaxed amounts from prior years.

Dividends of investment company taxable income are taxable to the recipient
shareholders as ordinary income. The Fund expects that as a result of its
investment objectives distributions will (i) consist primarily of ordinary
income, (ii) in the case of corporate shareholders, not be eligible for the
dividends received deduction, and (iii) in the case of individual shareholders,
not be eligible for the reduced tax rate currently applicable to certain
qualified dividend income. Dividends and distributions are treated in the same
manner for federal income tax purposes whether the shareholders receive cash or
additional shares. A shareholder who elects to reinvest in additional shares
will be treated for tax purposes as if it had received and reinvested the cash
dividend.

A shareholder's initial tax basis for its shares in the Fund will be its cost of
the shares, including

                                       17
<PAGE>
any fees or expenses. The sale of shares in the Fund will be the taxable
disposition of an asset, with gain or loss recognized in an amount equal to the
difference between the shareholder's adjusted tax basis for the shares and the
proceeds received on the sale. Gain or loss generally will be treated as capital
gain or loss if the shares in the Fund are held as capital assets. Such capital
gain or loss will be long-term if the shareholder has held the shares in the
Fund for more than one year, and, for individual shareholders, may qualify for
the maximum capital gain tax rate of 15% (for taxable years beginning before
January 1, 2011) rather than the tax rate applicable to ordinary income.


The Fund is required by federal law to withhold 28% of reportable payments as
backup withholding (which may include dividends, capital gain distributions and
redemptions) paid to shareholders who have not complied with the Code
requirements regarding the supplying of their taxpayer identification number and
the reporting of income. In connection with this withholding requirement, a
shareholder will be asked to certify on its application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to backup withholding for various reasons including previous
underreporting to the IRS.

Investors should consult their own tax advisors regarding specific questions as
to federal, state or local taxes. Additional tax information is provided in the
Statement of Additional Information.

DISTRIBUTION ARRANGEMENTS
RULE 12B-1 FEES
--------------------------------------------------------------------------------

Investors do not pay a front-end sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and/or
for the provision of servicing to the Xpress Shares shareholders. The Fund pays
these fees from its assets on an ongoing basis and therefore, over time, the
payment of these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.

The Fund's Board of Trustees has adopted a Rule 12b-1 distribution and service
plan (the "Plan"), with respect to the Xpress Shares, and, pursuant to the Plan,
the Fund and the Distributor have entered into a Distribution Agreement and a
Shareholder Servicing Agreement.

Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares. The Distributor receives a distribution fee not to exceed 0.75%
per annum of the Xpress Shares' average daily net assets (the "Distribution
Fee") for providing distribution related services and for making payments to
optionsXpress, Inc. for providing assistance in distributing the Xpress Shares.
As agent for the Fund, the Distributor will solicit orders for the purchase of
the Fund's shares, provided that

                                       18
<PAGE>
any orders will not be binding on the Fund until accepted by the Fund as
principal. This fee is accrued daily and paid monthly.

Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the Xpress Shares, a service fee equal to 0.25% per annum of the
Fund's Xpress Shares' average daily net assets (the "Shareholder Servicing Fee")
for providing personal shareholder services and for the maintenance of
shareholder accounts. The fees are accrued daily and paid monthly. Any portion
of the fees may be deemed to be used by the Distributor for payments to
optionsXpress, Inc. with respect to its provision of such services to its
clients or customers who are Xpress Shares Shareholders of the Fund.

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
Distributor and optionsXpress, Inc. in carrying out their obligations under the
Shareholder Servicing Agreement with respect to Xpress Shares or the
Participating Organization agreement, as the case may be, and (ii) preparing,
printing and delivering the Fund's Prospectus to existing shareholders of the
Fund and preparing and printing Fund applications 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, administrative services
fee, and past profits for the following purposes: (i) to pay the cost of, and to
compensate others, including optionsXpress, Inc. with whom the Distributor has
entered into written agreements, for performing shareholder servicing on behalf
of the Xpress Shares of the Fund; (ii) to compensate optionsXpress, Inc. for
providing assistance in distributing the Xpress Shares of the Fund; and (iii) to
pay the costs 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 of the Distributor and other persons 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 and past profits, for the purposes enumerated in (i) above. The Distributor
may determine the amount of such payments made pursuant to the Plan, provided
that such payments will not increase the amount which the Fund is required to
pay to the Manager and Distributor for any fiscal year under either the
Investment Management Contract, Administrative Services Agreement, Distribution
Agreement or Shareholder Servicing Agreement in effect for that year.


optionsXpress, Inc. receives distribution and servicing payments from the
Distributor with respect to the Xpress Shares in amounts that exceed the
payments the Distributor receives from the Fund pursuant to the Plan,
Distribution Agreement and Shareholder Servicing Agreement with respect to such
shares. The excess of such payments over the

                                       19
<PAGE>
total payments the Distributor receives from the Fund represents payments made
out of the Manager's and/or Distributor's own resources. These payments may be
referred to as "revenue sharing" but do not change the price paid by investors
to purchase the Fund's shares or the amount the Fund receives as proceeds from
such sales. Revenue sharing payments may be made to optionsXpress, Inc. for
providing services to the Fund or its shareholders, including, without
limitation, shareholder servicing, administration, accounting, transfer agency
and distribution services. The amount of these payments may create an incentive
for optionsXpress, Inc., and its affiliates to sell shares of the Fund to you or
to recommend one Fund complex over another. Please speak with your financial
advisor to learn more about these payments. Additional information regarding
these payments can be found in the Fund's Statement of Additional Information.
In addition, to the extent allowable under the Financial Industry Regulatory
Authority ("FINRA") rules and any other applicable regulations, the Distributor
or an affiliate may contribute to sales programs for optionsXpress, Inc. and may
provide non-cash compensation to optionsXpress, Inc. like sponsorship or funding
of sales seminars, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or by giving out merchandise at industry conferences, which may be paid
for by the Distributor or an affiliate out of its own resources.


                                       20
<PAGE>

VI.  FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the financial
performance of the money market Xpress Class shares of the Money Market
Portfolio since inception. The total returns in the tables represent the rate
that an investor would have earned on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
derived from the Fund's financial statements audited by PricewaterhouseCoopers
LLP, whose report, along with the Fund's financial statements, is included in
the annual report, which is available upon request.
<TABLE>
<CAPTION>
XPRESS  SHARES
                                                   Commencement of Operations
                                                      June 20, 2007 through
                                                           March 31, 2008
                                                         --------------
<S>                                                             <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.....................     $   1.00
                                                            ---------
Income from investment operations:
   Net investment income...............................         0.028
   Net realized and unrealized gain(loss)  on investments       0.000
                                                            ---------
   Total from investment operations....................         0.028
Less distributions from:
   Dividends from net investment income................        (0.028)
   Net realized gain on investments....................          --
                                                            ---------
   Total Distributions.................................        (0.028)
                                                            ---------
Net asset value, end of year...........................     $   1.00
                                                            =========
Total Return...........................................         2.88%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)........................     $ 272,213
Ratios to average net assets:
   Expenses (net of fees waived) (b)...................         1.25%(c)
   Net investment income...............................         3.82%(c)
   Administration fees waived..........................         0.02%(c)
   Sub-Accounting fees waived..........................         0.04%(c)
   Expenses paid indirectly............................         0.00%(c)

<FN>
(a)      Unannualized
(b)      Includes expenses paid indirectly.
(c)      Annualized
</FN>
</TABLE>


                                       21
<PAGE>

                      This page intentionally left blank.

<PAGE>

                     NOTICE OF REICH & TANG* PRIVACY POLICY

WE DO NOT DISCLOSE TO THIRD PARTIES NONPUBLIC PERSONAL INFORMATION ABOUT CURRENT
OR FORMER REICH & TANG CUSTOMERS, CLIENTS OR MUTUAL FUND SHAREHOLDERS OTHER THAN
AS DESCRIBED BELOW.

WE COLLECT NONPUBLIC PERSONAL INFORMATION ABOUT YOU, SUCH AS YOUR NAME, ADDRESS,
SOCIAL SECURITY NUMBER, ACCOUNT ACTIVITY AND ACCOUNT BALANCES FROM YOUR ACCOUNT
APPLICATION AND OTHER FORMS THAT YOU MAY DELIVER TO US. WE USE THIS INFORMATION
TO PROVIDE ADVISORY SERVICES TO YOU, TO OPEN AN ACCOUNT FOR YOU, OR TO PROCESS A
TRANSACTION FOR YOUR ACCOUNT. IN ORDER TO SERVICE YOUR ACCOUNT AND EFFECT YOUR
TRANSACTIONS, WE PROVIDE YOUR NONPUBLIC PERSONAL INFORMATION TO OUR AFFILIATES
AND TO UNAFFILIATED FIRMS TO EFFECT OR PROCESS TRANSACTIONS FOR YOU OR TO ASSIST
US IN SERVICING YOUR ACCOUNT.

WE MAY ALSO DISCLOSE NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO OTHER SERVICE
PROVIDERS WHO AGREE TO PROTECT THE CONFIDENTIALITY OF YOUR INFORMATION AND TO
USE THE INFORMATION ONLY FOR THE PURPOSE FOR WHICH THE DISCLOSURE IS MADE. WE DO
NOT OTHERWISE PROVIDE NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO OUTSIDE FIRMS,
ORGANIZATIONS OR INDIVIDUALS EXCEPT AS PERMITTED BY LAW.

WE RESTRICT ACCESS TO NONPUBLIC PERSONAL INFORMATION ABOUT YOU TO THOSE
EMPLOYEES WHO NEED TO KNOW THAT INFORMATION TO PROVIDE PRODUCTS OR SERVICES TO
YOU. WE MAINTAIN PHYSICAL, ELECTRONIC AND PROCEDURAL SAFEGUARDS THAT COMPLY WITH
FEDERAL STANDARDS TO GUARD YOUR PERSONAL INFORMATION.

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

*    FOR PURPOSES OF THIS NOTICE, "REICH & TANG" INCLUDES: REICH & TANG ASSET
     MANAGEMENT, LLC, REICH & TANG DISTRIBUTORS, INC., REICH & TANG SERVICES,
     INC. AND ALL MUTUAL FUNDS OR OTHER FUNDS MANAGED OR ADVISED BY REICH & TANG
     ASSET MANAGEMENT, LLC.

             THIS PAGE IS NOT PART OF THE PRECEDING FUND PROSPECTUS

<PAGE>

Shares of Daily Income Fund - A
Statement of Additional Information
(SAI) dated July 29, 2008 includes
additional information about the Fund
and its investments and is incorporated
by reference into this Prospectus.
Further information about the Fund's
investments is available in the Fund's
annual and semi-annual reports to
shareholders. You may obtain the SAI and
the annual and semi-annual reports
without charge by calling the Fund at
(212) 830-5345 or toll-free at (800)
433-1918. You may also obtain the SAI
and the annual and semi-annual reports
without charge by visiting the Fund's
website at
http://www.money-funds.com/funds/mmXpress.
To request other information about the
Fund, please call your financial
intermediary or the Fund.

==========================================
                                                                      PROSPECTUS

                                                                   JULY 29, 2008

                                             Money Market
                                               XPRESS
                                                FUND
==========================================

A current SAI has been filed with the
Securities and Exchange Commission.
Information about the Fund (including
the SAI) is also available from the
Public Reference Room of the Securities
and Exchange Commission. Information on
the operation of the Public Reference
Room may be obtained by calling the
Commission at (202) 551-8090. Fund
reports and other information about the
Fund are available on the EDGAR Database
on the Commission's Internet site at
http://www.sec.gov. Copies of this
information may be obtained, after
paying a duplicating fee, by electronic
request at publicinfo@sec.gov, or by
writing the Commission's Public
Reference Section, Washington, D.C.
20549-0104.

Investment Company Act No. 811-8312

            REICH & TANG DISTRIBUTORS, INC.
                      600 FIFTH AVENUE

                    NEW YORK, NY 10020

                      (212) 830-5220


  OPX_T07/08P


<PAGE>

--------------------------------------------------------------------------------
DAILY INCOME FUND
                                            600 FIFTH AVENUE, NEW YORK, NY 10020
                                                                  (212) 830-5345
                                                      (800) 433-1918 (TOLL FREE)
================================================================================

                       STATEMENT OF ADDITIONAL INFORMATION


                                  JULY 29, 2008

 MONEY MARKET PORTFOLIO, U.S TREASURY PORTFOLIO, U.S. GOVERNMENT PORTFOLIO AND
                 MUNICIPAL PORTFOLIO RELATING TO THE FOLLOWING

                                  PROSPECTUSES:

      THE INSTITUTIONAL CLASS SHARES AND INSTITUTIONAL SERVICE CLASS SHARES
             INVESTOR CLASS SHARES AND INVESTOR SERVICE CLASS SHARES
          SHORT TERM INCOME SHARES CLASS SHARES AND RETAIL CLASS SHARES
                THE PINNACLE CLASS OF SHARES ("PINNACLE SHARES")
THE ADVANTAGE PRIMARY LIQUIDITY FUND SHARES, ADVANTAGE GOVERNMENT LIQUIDITY FUND
   SHARES AND ADVANTAGE MUNICIPAL LIQUIDITY FUND SHARES ("ADVANTAGE SHARES")
              THE money market Xpress FUND SHARES ("XPRESS SHARES")

                               DATED JULY 29, 2008


This Statement of Additional Information (SAI) is not a Prospectus. The SAI
expands upon and supplements the information contained in the current
Prospectuses of the Daily Income Fund (the "Fund"), and should be read in
conjunction with each Prospectus.

A Prospectus for the Institutional Class, Institutional Service Class, Investor
Class, Investor Service Class, Short Term Income Shares Class and Retail Class
shares may be obtained from any Participating Organization or by writing or
calling the Fund toll free at (800) 433-1918.

If you wish to invest in the Pinnacle Shares of the Fund you should obtain a
Prospectus by writing to Pinnacle Shares of Daily Income Fund, c/o Mutual
Securities, Inc., P.O. Box 2308, Agoura Hills, CA 91376 or calling toll free at
(800) 750-7862.

If you wish to invest in the Advantage Shares of the Fund you should obtain a
Prospectus by writing to Oppenheimer & Co. Inc., 125 Broad Street, New York, NY
10004 or calling toll free at (800) 433-1918.

If you wish to invest in the Xpress Shares of the Fund you should obtain a
Prospectus by writing to optionsXpress, Inc. or brokersXpress, LLC, 311 W.
Monroe - Suite 1000, Chicago, Illinois 60606-4661 or calling toll free at (888)
280-8020 (optionsXpress, Inc.) or (888) 280-7030 (brokersXpress, LLC).

The audited Financial Statements of the Fund have been incorporated by reference
into the SAI from the Fund's Annual Report. The Annual Report is available,
without charge, upon request by calling the toll free number provided. The
material relating to the purchase, redemption and pricing of shares has been
incorporated by reference into the SAI from the Fund's Prospectuses.

This SAI is incorporated by reference into each Prospectus in its entirety.
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
----------------------------------------------------------------------------------------------------------------------

<S>                                                <C>    <C>                                                     <C>
Fund History...................................... 2      Brokerage Allocation and Other PraCtices.................29
Description of the Fund and Its Investments and           Capital Stock and Other Securities.......................29
  Risks........................................... 2      Purchase, Redemption and Pricing of Shares...............30
Management of the Fund............................11      Taxation of the Fund.....................................31
Control Persons and Principal Holders of                  Underwriters.............................................32
  Securities......................................16      Financial Statements.....................................32
Investment Advisory and Other Services............20      Description of Ratings...................................33
----------------------------------------------------------------------------------------------------------------------

</TABLE>
<PAGE>
I.  FUND HISTORY

The Fund was formed on January 20, 1994, in the Commonwealth of Massachusetts.

II.  DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS

The Fund is a diversified, open-end management investment company consisting of
four managed portfolios of money market instruments (the "Portfolios"). The
investment objective of the Fund's Portfolios is to seek as high a level of
current income (or tax-exempt current income for the Municipal Portfolio) to the
extent consistent with preservation of capital and maintenance of liquidity. The
Portfolios were designed to meet the short-term investment needs of corporate
and institutional investors. There can be no assurance that the Portfolios will
achieve their investment objectives.

The following discussion expands upon the description of the Fund's investment
objectives and policies in each of the Prospectuses.


The Money Market Portfolio may only purchase high quality money market
instruments and the Municipal Portfolio may only purchase high quality
tax-exempt money market instruments ("Municipal Securities") that have been
determined by Reich & Tang Asset Management, LLC (the "Manager") to present
minimal credit risks and that are First Tier Eligible Securities at the time of
acquisition so that the Portfolios are able to employ the amortized cost method
of valuation. The term First Tier Eligible Securities means: (i) securities
which have remaining maturities of 397 days or less and are rated in the highest
short-term rating category by any two nationally recognized statistical rating
organizations ("NRSROs") or in such category by the only NRSRO that has rated
the Securities (collectively, the "Requisite NRSROs"); (ii) a security that has
a remaining maturity of 397 days or less and is an unrated security that is
determined by the Manager to be of comparable quality; (iii) a security
otherwise meeting the requirements set forth in clauses (i) or (ii) and having a
Guarantee as such term is defined in Rule 2a-7 of the Investment Company Act of
1940, as amended (the "1940 Act"), which has received a rating from the
Requisite NRSROs in the highest short-term rating category for debt obligations;
(iv) a security issued by a registered investment company that is a money market
fund; or (v) a government security. Where the issuer of a long-term security
with a remaining maturity which would otherwise qualify it as a First Tier
Eligible Security does not have rated short-term debt outstanding, the long-term
security is treated as unrated but may not be purchased if it has a long-term
rating from any NRSRO that is below the three highest long-term categories. A
determination of comparability by the Manager 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
securities. 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, Inc. ("S&P"), and Moody's Investors Service, Inc.
("Moody's"). The two highest ratings are "AAA" and "AA" by S&P or "Aaa" and
"Aa1" by Moody's in the case of long term bonds; "SP-1" and "SP-2" by S&P, or
"MIG-1" and "MIG-2" by Moody's in the case of notes; and "A1+" and "A1" by S&P,
or "Prime-1" and "Prime-2" by Moody's in the case of commercial paper. The
highest rating in the case of variable and floating demand notes is "VMIG-1" by
Moody's or "A1+" by S&P. Such instruments may produce a lower yield than would
be available from less highly rated instruments.


The U.S. Treasury Portfolio seeks to achieve its objectives by investing only in
U.S. Treasury obligations and other obligations that are issued or guaranteed by
the U.S. Government which have effective maturities of 397 days or less that
enable it to employ the amortized cost method of valuation. Under normal
circumstances the Portfolio will invest all of its net assets, plus borrowings
for investment purposes, in obligations issued or guaranteed by the U.S.
Treasury although the exact amount may vary from time to time. The Fund will
provide shareholders with at least 60 days' prior notice of any change in this
policy.


The U.S. Government Portfolio seeks to achieve its objectives by, under normal
market circumstances, investing at least 80% of its net assets in short-term
marketable securities and instruments issued or guaranteed by the U.S.
Government or by its agencies or instrumentalities, ("Government Securities")
with maturities of 397 days or less, and repurchase agreements which are
collateralized by the foregoing securities. The Fund will provide shareholders
with at least 60 days' prior notice of any change in this policy.


All investments purchased 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.

Subsequent to its purchase by the Fund, a rated security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Fund. If this occurs, the Manager shall promptly reassess whether the security
presents minimal credit risks and shall cause the Fund to take such action as it
determines is in the best interest of the

                                       2
<PAGE>

Fund and its shareholders. However, reassessment 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 Trustees is
subsequently notified of the Manager's actions.

In addition, in the event that a security (i) is in default, (ii) ceases to be
an Eligible Security under Rule 2a-7 of the 1940 Act or (iii) 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 Trustees that disposal of the security
would not be in the best interests of the Fund. Disposal of the security 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
Securities and Exchange Commission ("SEC") of such fact and of the actions that
the Fund intends to take in response to the situation.

Each Portfolio shall invest not more than 5% of its total assets (determined at
the time of the proposed investment and giving effect thereto) in the securities
of any one issuer other than the United States Government, its agencies or
instrumentalities.

With respect to 75% of its total assets, each Portfolio shall invest not more
than 10% of its total assets in securities backed by a demand feature or
guarantee from the same institution, except for U.S. Government Obligations.

FOREIGN SECURITIES

The Money Market Portfolio may invest in certain foreign securities. Investment
in obligations of foreign issuers and in foreign branches of domestic banks
involves somewhat different investment risks from those affecting obligations of
United States domestic issuers. There may be limited publicly available
information with respect to foreign issuers and foreign issuers are not
generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to domestic companies. There may
also be less government supervision and regulation of foreign securities
exchanges, brokers and listed companies than in the United States. Foreign
securities markets have substantially less volume than national securities
exchanges and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. Brokerage commissions
and other transaction costs on foreign securities exchanges are generally higher
than in the United States. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes, which may decrease the net
return on foreign investments as compared to dividends and interest paid to the
Money Market Portfolio by domestic companies. Additional risks include future
political and economic developments, the possibility that a foreign jurisdiction
might impose or change withholding taxes on income payable with respect to
foreign securities, the possible seizure, nationalization or expropriation of
the foreign issuer or foreign deposits and the possible adoption of foreign
governmental restrictions such as exchange controls.

REPURCHASE AGREEMENTS

All Portfolios may invest in repurchase agreements. Investments by the Fund in
repurchase agreements are made in accordance with procedures established by the
Fund providing that the securities serving as collateral for each repurchase
agreement are delivered to the Fund's custodian either physically or in book
entry form and that the collateral is marked to the market with sufficient
frequency to ensure that each repurchase agreement is fully collateralized at
all times.

A buyer of a repurchase agreement runs the risk of loss with respect to its
investment in the event of a default by the issuer if, at the time of default,
the value of the collateral securing the agreement is less than the price paid
for the repurchase agreement. Were a default to occur, the Fund would look to
the collateral securing the repurchase agreement to recover its entire
investment. In the event that a vendor defaults on its repurchase obligation,
the Fund might suffer a loss to the extent that the proceeds from the sale of
the collateral are less than the repurchase price. If the vendor becomes
bankrupt, the Fund might be delayed, or may incur costs or possible losses in
selling the collateral.

The U.S. Treasury Portfolio may only enter into repurchase agreements which are
collateralized by obligations issued or guaranteed by the U.S. Government. All
Portfolios may enter into repurchase agreements only with member banks of the
Federal Reserve System, and "primary dealers" (as designated by the Federal
Reserve Bank of New York) in United States government securities whose
creditworthiness has been reviewed and found to meet the investment criteria of
the Portfolio or with other entities that the Manager has determined are
creditworthy. Although the securities subject to the repurchase agreement might
bear maturities exceeding 397 days, settlement for the repurchase would never be
more than one year after the Portfolio's acquisition of the securities and
normally would be within a shorter period of time. The resale price will be in
excess of the purchase price, reflecting an agreed upon market rate effective
for the period of time the Portfolio's money will be invested in the security,
and will not be related to the coupon rate of the purchased security. At the
time a Portfolio enters into a repurchase agreement the value of the underlying
security, including accrued interest, will be equal to or exceed the value of
the repurchase agreement and, in the case of a repurchase agreement

                                       3
<PAGE>

exceeding one day, the seller will agree that the value of the underlying
security, including accrued interest, will at all times be equal to or exceed
the value of the repurchase agreement. Each Portfolio may engage in a repurchase
agreement with respect to any security in which that Portfolio is authorized to
invest, even though the underlying security may mature in more than one year.
The collateral securing the seller's obligation must be of a credit quality at
least equal to the Portfolio's investment criteria for Portfolio securities and
will be held by the Portfolio's custodian or in the Federal Reserve Book Entry
System.

Each Portfolio may invest no more than 10% of its net assets in illiquid
securities including repurchase agreements maturing in more than seven days. See
"Investment Restrictions" herein. A Portfolio may, however, enter into
"continuing contract" or "open" repurchase agreements under which the seller is
under a continuing obligation to repurchase the underlying obligation from the
Portfolio on demand and the effective interest rate is negotiated on a daily
basis.

In the view of the management of the Fund, the restrictions and procedures
described above which govern the Fund's investments in repurchase agreements
substantially minimize the Fund's risk of losses in making those investments.
Repurchase agreements may be considered to be loans under the 1940 Act.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements involve the sale of securities held by a Portfolio
pursuant to an agreement to repurchase the securities at an agreed upon price
and date. The U.S. Treasury Portfolio and U.S. Government Portfolio are
permitted to enter into reverse repurchase agreements for liquidity purposes or
when it is able to purchase other securities which will produce more income than
the cost of the agreement. Each Portfolio that is permitted to enter into
reverse repurchase agreements may do so only with member banks of the Federal
Reserve System, and "primary dealers" (as designated by the Federal Reserve Bank
of New York) in United States government securities whose creditworthiness has
been reviewed and found to meet the investment criteria of the Portfolio or with
other entities that the Manager has determined are creditworthy. When engaging
in reverse repurchase transactions, the Fund will maintain, in a segregated
account with its custodian, securities equal in value to those subject to the
agreement. These agreements are considered to be borrowings and therefore are
included in the asset restriction contained under "Investment Restrictions"
relating to borrowings which allows a Portfolio to borrow money from banks for
extraordinary or emergency purposes and to engage in reverse repurchase
agreements provided that such in the aggregate do not exceed one-third of the
value of the total assets of that Portfolio less its liabilities. Any Portfolio
that utilizes reverse repurchase agreements to this extent may be considered to
be leveraging its portfolio; however, since the Portfolios are required to
maintain segregated accounts to cover their positions on these reverse
repurchase agreements, the risks inherent in this leveraging technique are
minimized.

The Portfolio could experience delays in recovering securities in the event of
the bankruptcy of the other party to a reverse repurchase agreement and could
experience a loss to the extent that the value of the securities may have
decreased in the meantime.

VARIABLE RATE DEMAND INSTRUMENTS

The Money Market Portfolio and Municipal Portfolio may purchase variable rate
demand instruments. Variable rate demand instruments that the Portfolios will
purchase are tax exempt Municipal Securities or taxable (variable amount master
demand notes) debt 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, guarantee, insurance or other credit facility issued with
respect to such instrument.

The variable rate demand instruments in which the Portfolios may invest are
payable on not more than thirty calendar days' notice either on demand or at
specified intervals not exceeding one year 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 one year and their
adjustments are based upon an appropriate interest rate adjustment index as
provided in the respective instruments or a negotiated market rate. The Fund
will decide which variable rate demand instruments it will purchase in
accordance with procedures prescribed by its Board of Trustees to minimize
credit risks. A Portfolio utilizing the amortized cost method of valuation may
only purchase variable rate demand instruments if (i) the instrument is subject
to an unconditional demand feature, exercisable by the Portfolio in the event of
default in the payment of principal or interest on the underlying securities,
which itself qualifies as a First Tier Eligible Security or (ii) the instrument
is not subject to an unconditional demand feature but does qualify as a First
Tier 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 Manager. If an instrument is ever deemed to be
of less than high quality, the Portfolio either will sell in the market or
exercise the demand feature.

                                       4
<PAGE>


The variable rate demand instruments in which that the Portfolios may invest
include participation certificates purchased by the Portfolios from banks,
insurance companies or other financial institutions in fixed or variable rate,
tax-exempt Municipal Securities (expected to be concentrated in IRBs) or taxable
debt obligations (variable amount master demand notes) owned by such
institutions or affiliated organizations. A participation certificate gives the
Portfolios an undivided interest in the obligation in the proportion that the
Portfolio's participation interest bears to the total principal amount of the
obligation and provides the demand repurchase feature described below. Where the
institution issuing the participation does not meet the Portfolio's high quality
standards, the participation is backed by an irrevocable letter of credit or
guaranty of a bank (which may be a bank issuing a confirming letter of credit,
or a bank serving as agent of the issuing bank with respect to the possible
repurchase of the certificate of participation or a bank serving as agent of the
issuer with respect to the possible repurchase of the issue) or insurance policy
of an insurance company that the Manager of the Fund has determined meets the
prescribed quality standards for the Portfolio. The Portfolio has the right to
sell the participation certificate back to the institution and, where
applicable, draw on the letter of credit, guarantee or insurance after no more
than 30 days' notice either on demand 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 Portfolio's participation interest in the
security, plus accrued interest. The Portfolios intend to exercise the demand
only (1) upon a default under the terms of the bond documents, (2) as needed to
provide liquidity to the Portfolio in order to make redemptions of the Portfolio
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 (where applicable) 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 Portfolio. The total fees generally range from 5% to 15% of the
applicable "prime rate" or other interest rate index. With respect to insurance,
the Portfolios will attempt to have the issuer of the participation certificate
bear the cost of the insurance, although the Portfolios retain the option to
purchase insurance if necessary, in which case the cost of insurance will be an
expense of the Portfolio subject to the expense limitation on investment company
expenses prescribed by any state in which the Portfolio's shares are qualified
for sale. The Manager has been instructed by the Fund's Board of Trustees to
continually monitor the pricing, quality and liquidity of the variable rate
demand instruments held by the Portfolio, 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 Portfolio may
subscribe. Although these instruments may be sold by the Portfolio, the
Portfolio intends to hold them until maturity, except under the circumstances
stated above.


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 values of securities
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 Portfolios may contain variable rate demand instruments
on which stated minimum or maximum rates, or maximum rates set by state law
limit the degree to which interest on such variable rate demand instruments may
fluctuate; to the extent it does, increases or decreases in value may be
somewhat greater than would be the case without such limits. Additionally, the
Portfolios may contain variable rate demand participation certificates in fixed
rate Municipal Securities and taxable debt obligations (the Portfolios will not
acquire variable note demand participation certificates in fixed rate municipal
securities without an opinion of counsel). The fixed rate of interest on these
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 obligations, the obligations could no longer
be valued at par and this may cause the Portfolios to take corrective action,
including the elimination of the instruments. Because the adjustment of interest
rates on the variable rate demand instruments is made in relation to movements
of the applicable bank's prime rate, 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 or
obligations of comparable quality with similar maturities.

For purposes of determining whether a variable rate demand instrument held by a
Portfolio 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 Portfolio 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 Portfolios'
dollar-weighted average portfolio maturity. If a variable rate demand instrument
ceases to meet the investment criteria of the Portfolio, it will be sold in the
market or through exercise of the repurchase demand.

LOAN PARTICIPATION INTERESTS

The Money Market Portfolio may invest in loan participation interests. A loan
participation interest represents a pro rata undivided interest in an underlying
bank loan. Participation interests, like the underlying loans, may have fixed,
floating, or variable rates of interest. The bank selling a participation
interest generally acts as a mere conduit between its borrower and the
purchasers of interests in the loan. The purchaser of an interest, meaning the
Money Market Portfolio,

                                       5
<PAGE>

generally does not have recourse against the bank in the event of a default on
the underlying loan. Therefore, the credit risk associated with such instruments
is governed by the creditworthiness of the underlying borrowers and not by the
banks selling the interests. If the Money Market Portfolio invests in loan
participation interests that can be sold within a seven-day period, the
interests are deemed by the Manager to be liquid investments. If the Money
Market Portfolio invests in loan participation interests that are restricted
from being sold within a seven-day period, the interests are deemed by the
Manager to be illiquid investments and therefore subject to the Money Market
Portfolio's fundamental restriction limiting investments in illiquid securities
to not more than 10% of net assets.

WHEN-ISSUED SECURITIES

All Portfolios may purchase debt obligations offered on a "when-issued" or
"delayed delivery" basis. When so offered, the price, which is generally
expressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for the when-issued securities take place at a
later date. Normally, the settlement date occurs within one month of the
purchase of debt obligations; during the period between purchase and settlement,
no payment is made by the purchaser to the issuer and no interest accrues to the
purchaser. To the extent that assets of a Portfolio are not invested prior to
the settlement of a purchase of securities, that Portfolio will earn no income;
however, it is intended that each Portfolio will be fully invested to the extent
practicable and subject to the policies stated above. While when-issued
securities may be sold prior to the settlement date, it is intended that each
Portfolio will purchase such securities with the purpose of actually acquiring
them unless a sale appears desirable for investment reasons. At the time the
Portfolio makes the commitment to purchase a debt obligation on a when-issued
basis, it will record the transaction and reflect the value of the security in
determining its net asset value. The Fund does not believe that the net asset
value or income of the Portfolios' securities will be adversely affected by
their purchase of debt obligations on a when-issued basis. Each Portfolio will
establish a segregated account in which it will maintain cash and marketable
securities equal in value to commitments for when-issued securities. Such
segregated securities either will mature or, if necessary, be sold on or before
the settlement date.

PARTICIPATION CERTIFICATES

The Money Market Portfolio and Municipal Portfolio may purchase from banks
participation certificates in all or part of specific holdings of municipal or
other debt obligations (including corporate loans). Where the institution
issuing the participation certificates does not meet the Portfolio's quality
standards, the participation certificates may be backed by an irrevocable letter
of credit or guarantee that the Manager has determined meets the prescribed
quality standards of each Portfolio. Thus, even if the credit of the selling
bank does not meet the quality standards of a Portfolio, the credit of the
entity issuing the credit enhancement will. Each Portfolio will have the right
to sell the participation certificates back to the bank for the full principal
amount of the Portfolio's interest in the municipal or debt obligation plus
accrued interest, but only (1) as required to provide liquidity to that
Portfolio, (2) to maintain the quality standards of each Portfolio's investment
portfolio or (3) upon a default under the terms of the debt obligation. The
selling bank may receive a fee from a Portfolio in connection with the
arrangement. When purchasing bank participation certificates, the Portfolio will
treat both the bank and the underlying borrower as the issuer of the instrument
for the purpose of complying with the diversification requirement of the
investment restrictions discussed below.

DOMESTIC AND FOREIGN BANK OBLIGATIONS, CERTIFICATES OF DEPOSIT AND BANKERS'
ACCEPTANCES

The Money Market Portfolio and Municipal Portfolio may purchase certificates of
deposit, time deposits, bankers' acceptances, commercial paper and other
obligations issued or guaranteed by the 50 largest banks in the United States.
For this purpose banks are ranked by total deposits as shown by their most
recent annual financial statements. The "other obligations" in which the
Portfolios may invest include instruments (such as bankers' acceptances,
commercial paper and certificates of deposit) issued by United States
subsidiaries of the 50 largest banks in the United States where the instruments
are guaranteed as to principal and interest by such banks. At the time the
Portfolio invests in any certificate of deposit, bankers' acceptance or other
bank obligation, the issuer or its parent must have its debt rated within the
quality standards of the Portfolio or, if unrated, be of comparable quality as
determined by the Manager.

PRIVATELY PLACED SECURITIES

The Money Market Portfolio and Municipal Portfolio may invest in securities
issued as part of privately negotiated transactions between an issuer and one or
more purchasers. Except with respect to certain commercial paper issued in
reliance on the exemption from regulations in Section 4(2) of the Securities Act
of 1933 (the "Securities Act") and securities subject to Rule 144A of the
Securities Act which are discussed below, these securities are typically not
readily marketable, and therefore are considered illiquid securities. The price
these Portfolios pay for illiquid securities, and any price received upon
resale, may be lower than the price paid or received for similar securities with
a more liquid market. Accordingly, the valuation of privately placed securities
by these Portfolios will reflect any limitations on their liquidity. As a matter
of policy, none of the Portfolios will invest more than 10% of the market value
of the total assets of the Portfolio

                                       6
<PAGE>

in repurchase agreements maturing in over seven days and other illiquid
investments. The Portfolios may purchase securities that are not registered
("restricted securities") under the Securities Act, but can be offered and sold
to "qualified institutional buyers" under Rule 144A of the Securities Act. The
Portfolios may also purchase certain commercial paper issued in reliance on the
exemption from regulations in Section 4(2) of the Securities Act ("4(2) Paper").
However, each Portfolio will not invest more than 10% of its net assets in
illiquid investments, which include securities for which there is no ready
market, securities subject to contractual restriction on resale, certain
investments in asset-backed and receivable-backed securities and restricted
securities (unless, with respect to these securities and 4(2) Paper, the Fund's
Trustees continuously determine, based on the trading markets for the specific
restricted security, that it is liquid). The Trustees may adopt guidelines and
delegate to the Manager the daily function of determining and monitoring
liquidity of restricted securities and 4(2) Paper. The Trustees, however, will
retain sufficient oversight and be ultimately responsible for the
determinations.

Since it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Trustees will carefully monitor the Portfolios' investments in these securities,
focusing on such factors, among others, as valuation, liquidity and availability
of information. This investment practice could have the effect of increasing the
level of illiquidity in the Portfolios to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.

DESCRIPTION OF MUNICIPAL OBLIGATIONS (MUNICIPAL PORTFOLIO)

(1)  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 full faith and 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 authorizations 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 or on
     behalf of 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 federal income tax pursuant to Section 103(a) of
     the Code, provided the issuer and corporate obligor thereof continue to
     meet certain conditions. (See "Taxation of the Fund" 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 not an established secondary
     market for the IRBs, the IRBs will be supported by letters of credit,
     guarantees, insurance or other credit facilities that meet the high quality
     criteria of the Municipal Portfolio stated in each Prospectus and provide a
     demand feature which may be exercised by the Portfolio to provide
     liquidity. In accordance with the investment restrictions, the Municipal
     Portfolio is permitted to invest up to 10% of the portfolio in high
     quality, short-term Municipal Securities (including IRBs) that may not be
     readily marketable or have a liquidity feature.

(2)  The principal kinds of Municipal Notes include tax anticipation notes, bond
     anticipation notes, revenue anticipation notes and grant anticipation
     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.

(3)  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, are issued by state and local
     governments and authorities to acquire a wide variety of equipment and
     facilities such

                                       7
<PAGE>

     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
     purchases or conditional sale contracts (which normally provide for title
     to the leased asset to pass eventually to the government 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. These types of municipal leases may be considered illiquid and
     subject to the 10% limitation of investment in illiquid securities set
     forth under "Investment Restrictions" contained herein. The Board of
     Trustees 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 or Manager determines that any municipal
     leases are illiquid, such leases will be subject to the 10% limitation on
     investments in illiquid securities. The Board or Manager is also
     responsible for determining the credit quality of municipal leases, on an
     ongoing basis, including an assessment of the likelihood that the lease
     will not be canceled.

(5)  The Fund expects that, on behalf of the Municipal Portfolio, it will not
     invest more than 25% of the Portfolio's total assets in municipal
     obligations whose issuers are located in the same state or more than 25% of
     the Portfolio's total assets in municipal obligations the security of which
     is derived from any one category. There could be economic, business or
     political developments which might affect all municipal obligations of a
     similar type. However, the Fund believes that the most important
     consideration affecting risk is the quality of particular issues of
     municipal obligations rather than factors affecting all, or broad classes
     of, municipal obligations.

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

STAND-BY COMMITMENTS

The amount payable to the Municipal Portfolio upon its exercise of a stand-by
commitment normally would be (1) the acquisition cost of the Municipal
Securities (excluding any accrued interest that the Portfolio paid on the
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Portfolio 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 Portfolio. Absent unusual
circumstances relating to a change in market value, the Portfolio would value
the underlying Municipal Security 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
Security.

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

The Manager expects that stand-by commitments generally will be available
without the payment of any direct or indirect consideration. However, if
necessary and advisable, the Portfolio 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 Portfolio would not
exceed 1/2 of 1% of the value of the Portfolio's total assets calculated
immediately after each stand-by commitment was acquired.

The Municipal Portfolio 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 issuer of the Municipal Obligation meets the
investment criteria of the Municipal Portfolio. The Municipal Portfolio's
reliance upon the credit of these banks and broker-dealers would be supported by
the value of the underlying Municipal Securities held by the Portfolio that were
subject to the commitment.

The Municipal Portfolio 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
Municipal Portfolio to be fully invested in securities the interest on which is
exempt from federal income taxes while preserving the necessary

                                       8
<PAGE>

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 Securities which will continue to
be valued in accordance with the amortized cost method. Stand-by commitments
acquired by the Municipal Portfolio would be valued at zero in determining net
asset value. In those cases in which the Portfolio 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
Portfolio. Stand-by commitments would not affect the dollar weighted average
maturity of the 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 Municipal Portfolio 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 Portfolio, and that the maturity of the
underlying security will generally be different from that of the commitment.

In addition, the Municipal Portfolio may apply to the Internal Revenue Service
("IRS") 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 "Taxation of the Fund" herein). In the absence of a
favorable tax ruling or opinion of counsel, the Municipal Portfolio will not
engage in the purchase of securities subject to stand-by commitments.

PUT OPTIONS

The Municipal Portfolio may purchase municipal bonds or notes with the right to
resell them at an agreed price or yield within a specified period prior to
maturity to facilitate portfolio liquidity. This right to resell is known as a
"put." The aggregate price paid for securities with puts may be higher than the
price which otherwise would be paid. Consistent with the investment objectives
of this Portfolio and subject to the supervision of the Trustees, the purpose of
this practice is to permit the Portfolio to be fully invested in tax-exempt
securities while maintaining 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 put. The principal risk of
puts is that the put writer may default on its obligation to repurchase. The
Manager will monitor each writer's ability to meet its obligations under puts.
See "Investment Restrictions" herein and "Tax Consequences" in the Prospectus.

The amortized cost method is used by the Money Market Portfolio and the
Municipal Portfolio to value any Municipal Securities; no value is assigned to
any puts on such Municipal Securities. The cost of any such put is carried as an
unrealized loss from the time of purchase until it is exercised or expires.

GENERAL

The Fund intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). For the Fund to
so qualify, at the close of each quarter of the taxable year, in addition to
other requirements, at least 50% of the value of its total assets must consist
of cash, government securities, regulated investment company securities and
other securities. The other securities must be 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 the 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 (other than Government
securities or regulated investment company securities) of one issuer or of two
or more issuers which the Fund controls and which are determined to be engaged
in the same or similar trades or businesses or related trades or businesses. The
limitations described in this paragraph regarding qualification as a "regulated
investment company" are not fundamental policies and may be revised if
applicable federal income tax requirements are revised. (See "Taxation of the
Fund" herein.)

In addition to the above description of securities in which the Portfolios of
the Fund may invest, the Fund may if permitted by applicable law and/or pursuant
to exemptive relief, sell its shares to investment companies that are advised by
the Manager for investment of such investment companies daily cash balances.

INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment restrictions. They may
not be changed unless approved by a majority of the outstanding shares of each
Portfolio of the Fund that would be effected by such a change. The term
"majority of the outstanding shares" of a Portfolio means the vote of the lesser
of (i) 67% or more of the shares of the Portfolio present at a meeting, if the
holders of more than 50% of the outstanding shares of the Portfolio are present
or represented by proxy, or (ii) more than 50% of the outstanding shares of the
Portfolio. The Fund may not:

(a)  invest in securities of companies that have conducted operations for less
     than three years, including the operations of predecessors;

                                       9
<PAGE>

(b)  invest in or hold securities of any issuer if officers and Trustees of the
     Fund or Natixis Global Asset Management, L.P., the managing member of the
     Manager, individually own beneficially more than 1/2 of 1% of the issuer's
     securities or in the aggregate own more than 5% of the issuer's securities;
     and

(c)  (1) make investments for the purpose of exercising control over any issuer
     or other person; (2) purchase securities having voting rights at the time
     of purchase; (3) purchase securities of other investment companies, except
     in connection with a merger, acquisition, consolidation or reorganization
     involving the Fund; (4) invest in real estate (other than debt obligations
     secured by real estate or interests therein or debt obligations issued by
     companies which invest in real estate or interests therein), commodities,
     commodity contracts, commodity options, interests in oil or gas or
     interests in other mineral exploration or development programs; (5) invest
     in commodities, commodity contracts, commodity options, interests and
     leases in oil, gas or other mineral exploration or development programs (a
     Fund may, however, purchase and sell securities of companies engaged in the
     exploration, development, production, refining, transporting and marketing
     of oil, gas or minerals); (6) purchase restricted securities in excess of
     the percentage limitations set forth in restriction (c)(10) below;
     provided, however, that restricted securities shall not include privately
     placed securities that are exempt from registration under Section 4(2) or
     Rule 144A of the Securities Act, or purchase securities on margin; (7) make
     short sales of securities or intentionally maintain a short position in any
     security or write, purchase or sell puts, calls, straddles, spreads or any
     combination thereof; (8) act as an underwriter of securities; (9) issue
     senior securities, except insofar as the Fund may be deemed to have issued
     a senior security in connection with any permitted borrowings; (10) acquire
     securities that are not readily marketable or repurchase agreements calling
     for resale within more than seven days if, as a result thereof, more than
     10% of the value of its net assets would be invested in such illiquid
     securities; (11) invest more than 5% of the total market value of any
     Portfolio's assets (determined at the time of the proposed investment and
     giving effect thereto) in the securities of any one issuer other than the
     United States Government, its agencies or instrumentalities; (12) with
     respect to the U.S. Treasury Portfolio, U.S. Government Portfolio and the
     Money Market Portfolio, invest more than 25% of the value of the
     Portfolio's total assets in securities of companies in the same industry
     (excluding United States government securities and, as to the Money Market
     Portfolio only, certificates of deposit and bankers' acceptances of
     domestic banks) and, with respect to the Municipal Portfolio, purchase (i)
     pollution control and industrial revenue bonds or (ii) securities which are
     not Municipal Obligations if in either case the purchase would cause more
     than 25% of the value of the Portfolio's total assets to be invested in
     companies in the same industry (for the purpose of this restriction
     wholly-owned finance companies are considered to be in the industry of
     their parents if their activities are similarly related to financing the
     activities of their parents); (13) with respect to 75% of the value of a
     Portfolio's total assets, the Fund may not invest more than 10% of a
     Portfolio's assets in securities that are subject to underlying puts from
     the same institution, and no single bank shall issue its letter of credit
     and no single financial institution shall issue a credit enhancement
     covering more than 10% of the total assets of the Fund. However, the
     Portfolio may only invest more that 10% of its assets in securities subject
     to puts from the same institution if such puts are issued by a
     non-controlled person (as defined in the 1940 Act); (14) with respect to
     the Money Market Portfolio, the Money Market Portfolio may not make loans
     except through (i) the purchase of debt obligations in accordance with its
     investment objectives and policies, (ii) the lending of its portfolio
     securities, (iii) the use of repurchase agreements, or (iv) the making of
     loans to affiliated funds as permitted by the 1940 Act, the rules and
     regulations thereunder, or by guidance regarding, and interpretations of,
     or exemptive orders under, the 1940 Act; as to the U.S. Treasury Portfolio,
     U.S. Government Portfolio and Municipal Portfolio, these Portfolios may not
     make loans, except that these Portfolios may purchase for a Portfolio the
     debt securities described above under "Description of the Fund and Its
     Investments and Risks" and may enter into repurchase agreements as therein
     described; (15) borrow money, unless (i) the borrowing does not exceed 10%
     of the total market value of the assets of the Portfolio with respect to
     which the borrowing is made (determined at the time of borrowing but
     without giving effect thereto) and the money is borrowed from one or more
     banks as a temporary measure for extraordinary or emergency purposes or to
     meet unexpectedly heavy redemption requests and furthermore each Portfolio
     will not make additional investments when borrowings exceed 5% of the value
     of a Portfolio's net assets or (ii) with respect to the U.S. Treasury
     Portfolio and U.S. Government Portfolio, as otherwise provided herein and
     permissible under the 1940 Act; and (16) pledge, mortgage, assign or
     encumber any of a Portfolio's assets except to the extent necessary to
     secure a borrowing permitted by clause (13) made with respect to the
     Portfolio.

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 a Fund's portfolio's assets will not
constitute a violation of such restriction.

                                       10
<PAGE>

DISCLOSURE OF PORTFOLIO HOLDINGS

The Fund's Board of Trustees has adopted the Manager's policies and procedures
relating to the disclosure of Fund portfolio holdings information (the
"Policy"). The Policy prohibits the disclosure of portfolio holdings unless: (1)
the disclosure is in response to a regulatory request and the Chief Compliance
Officer ("CCO") of the Fund has authorized such disclosure; (2) the disclosure
is to a mutual fund rating or statistical agency or person performing similar
functions where there is a legitimate business purpose for such disclosure and
such entity has signed a confidentiality or similar agreement, where available,
with the Fund or its agents and the CCO of the Fund has authorized such
disclosure (procedures to monitor the use of any non-public information by these
entities may include (a) annual certifications relating to the confidentiality
of such information or (b) the conditioning of the receipt of such information
upon the entity agreeing to maintain the confidentiality of the information,
along with other representations, where such representations accompany the
transmittal of the information); (3) the disclosure is made to parties involved
in the investment process, administration or custody of the Fund, including its
Board of Trustees; (4) the disclosure is in connection with (a) a quarterly,
semi-annual or annual report that is available to the public or (b) other
periodic disclosure that is publicly available; or (5) the disclosure is made
pursuant to prior written approval of the CCO of the Fund. The Manager shall not
accept on behalf of itself, its affiliates or the Fund any compensation or other
consideration in connection with the disclosure of portfolio holdings of such
Fund. Any disclosure made pursuant to Item 5 above is reported to the Board at
the next quarterly meeting. This Policy may change at any time without prior
notice to shareholders.

Subject to the Fund's policies described in Item 2 above, the Manager and/or the
Fund maintain ongoing arrangements with the following rating or statistical
agencies or agencies providing similar functions pursuant to which non-public
information about the Fund's portfolio securities holdings, including
information derived from such holdings (e.g., breakdown of portfolio holdings by
securities type, percentage of holdings subject to alternative minimum tax,
weighted average maturity of the portfolio, etc.), may be provided:

<TABLE>
<CAPTION>
ENTITY AND TYPE OF INFORMATION                                                  FREQUENCY                 LAG TIME

<S>                                                                             <C>                     <C>
iMoneyNet, Inc. (information derived from the portfolio)                        Weekly                  1 business day lag
Investment Company Institute (information derived from the portfolio)           Monthly                10 business day lag
Lipper, Inc. (information derived from the portfolio)                           Quarterly              15 calendar day lag
</TABLE>

In addition, portfolio holdings information may be provided to the Fund's
service providers on an as-needed basis in connection with the services provided
to the Fund by such service providers. Information may be provided to these
parties without a time lag. Service providers that may be provided with
information concerning the Fund's portfolio holdings include the Manager and its
affiliates, legal counsel, independent registered public accounting firm,
custodian, fund accounting agent, and financial printers. Portfolio holdings
information may also be provided to the Fund's Board of Trustees.

The entities to whom the Fund provides portfolio holdings information, either by
explicit arrangement or by virtue of their respective duties to the Fund, are
required to maintain the confidentiality of the information provided. Neither
the Fund nor the Manager or its affiliates receives any compensation or other
consideration in connection with these ongoing arrangements. There can be no
guarantee that the Policy will be effective in preventing the potential misuse
of confidential information regarding the Fund's portfolio holdings by
individuals or entities in possession of such information.

III.  MANAGEMENT OF THE FUND

The Fund's Board of Trustees, which is responsible for the overall management
and supervision of the Fund, employs the Manager to serve as investment manager
of the Fund. The Manager provides persons satisfactory to the Fund's Board of
Trustees to serve as officers of the Fund. Due to the services performed by the
Manager, the Fund currently has no employees and its officers are not required
to devote their full-time to the affairs of the Fund.


The Board has an Audit Committee that meets at least annually to assist the
Board in selecting, overseeing and setting the compensation of the Fund's
independent registered public accounting firm. The Audit Committee is
responsible for pre-approving all audit or non-audit services performed by the
independent registered public accounting firm for the Fund and for pre-approving
certain non-audit services performed by the independent registered public
accounting firm for the Manager and certain control persons of the Manager. The
Audit Committee also meets with the Fund's independent registered public
accounting firm to review the Fund's financial statements and to report on its
findings to the Board, and to provide the independent registered public
accounting firm the opportunity to report on various other matters. The Audit

                                       11
<PAGE>

Committee is chaired by Edward A. Kuczmarski, with Albert R. Dowden, Dr. W.
Giles Mellon and James L. Schultz serving as members. The Audit Committee met
five times during the fiscal year ended March 31, 2008.

The Board also has a Nominating Committee comprised of Albert R. Dowden, Carl
Frischling, Edward A. Kuczmarski, William Lerner, Dr. W. Giles Mellon, James L.
Schultz, Robert Straniere and Dr. Yung Wong to whose discretion the selection
and nomination of Trustees who are not "interested persons," as defined in the
1940 Act, of the Fund is committed. The Nominating Committee held one meeting
during the fiscal year ended March 31, 2008. Nominees recommended by
shareholders are considered by the Nominating Committee to the extent required
by applicable law.

The Board also has a Compliance Oversight Committee. The Compliance Oversight
Committee is chaired by William Lerner, with Carl Frischling and Robert
Straniere serving as members. The Compliance Oversight Committee is responsible
for reviewing compliance related matters raised by the Fund's Chief Compliance
Officer. The Compliance Oversight Committee met five times during the fiscal
year ended March 31, 2008.


In addition to serving on the Fund's Nominating Committee, Dr. Yung Wong, the
Fund's Lead Independent Trustee, will attend Audit Committee meetings and
Compliance Oversight Committee meetings at his discretion.

The following table shows the Trustees and executive Officers of the Fund and
their principal occupations during the past five years. Unless otherwise
specified, the address of each of the following persons is 600 Fifth Avenue, New
York, New York 10020.
<TABLE>
<CAPTION>
                        TRUSTEES AND OFFICERS INFORMATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>            <C>          <C>                                               <C>                 <C>
   NAME, ADDRESS,  POSITION(S)    TERM OF      PRINCIPAL OCCUPATION(S)                           NUMBER OF           OTHER
      AND AGE       HELD WITH     OFFICE             DURING PAST                               PORTFOLIOS IN       DIRECTORSHIPS
                      FUND      AND LENGTH             5 YEARS                                  FUND COMPLEX        HELD BY
                                  OF TIME                                                       OVERSEEN BY         TRUSTEE
                                  SERVED (1)                                                      TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------

Albert R. Dowden,  Trustee     Since 2006    Corporate Director/Trustee for Annuity & Life Re   Director/Trustee    Director/Trustee
Age 66                                       (Holdings) Ltd., Boss Group, Ltd., Homeowners of   of seven Portfolios for Annuity &
                                             American Holding Corporation, AIM Funds and                            Life Re
                                             CompuDyne Corporation.                                                 (Holdings)
                                                                                                                    Ltd., Boss
                                                                                                                    Group, Ltd.,
                                                                                                                    Homeowners of
                                                                                                                    America Holding
                                                                                                                    Corporation,
                                                                                                                    AIM Funds and
                                                                                                                    CompuDyne
                                                                                                                    Corporation.
------------------------------------------------------------------------------------------------------------------------------------
Carl Frischling,   Trustee     Since 2006    Partner of Kramer Levin Naftalis & Frankel LLP    Director/Trustee     Director of AIM
Esq., Age 71                                 (a law firm) with which he has been associated    of seven Portfolios  Funds.
                                             with since 1994.
------------------------------------------------------------------------------------------------------------------------------------
Edward A.          Trustee     Since 2006    Certified Public Accountant and Partner of Hays   Director/Trustee     Trustee of the
Kuczmarski,                                  & Company LLP since 1980.                         of eleven            Empire Builder
Age 58                                                                                         Portfolios           Tax Free Bond
                                                                                                                    Fund and
                                                                                                                    Director of ISI
                                                                                                                    Funds.
------------------------------------------------------------------------------------------------------------------------------------
William Lerner,    Trustee     Since 2006    Self-employed consultant to business entities     Director/Trustee     Director of MTM
Esq., Age 72                                 and entrepreneurs for corporate governance and    of seven Portfolios  Technologies,
                                             corporate secretarial services.                                        Inc. and Coach
                                                                                                                    Industries
                                                                                                                    Group, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Dr. W. Giles       Trustee     Since 1987    Professor Emeritus of Business Administration     Director/Trustee of  None
 Mellon, Age 77                              in the Graduate School of Management, Rutgers     ten Portfolios
                                             University with which he has been associated
                                             since 1966.
------------------------------------------------------------------------------------------------------------------------------------
James L. Schultz,  Trustee     Since 2006    Self-employed as a consultant. Formerly           Director/Trustee of  Director of
Age 71                                       President of Computer Research, Inc. from 1975    seven Portfolios     Computer
                                             to 2001.                                                               Research, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Robert Straniere,  Trustee     Since 1987    Owner, Straniere Law Firm since 1980, NYS         Director/Trustee of  Director of the
Esq.,                                        Assemblyman from 1981 to 2004.  Partner,          ten Portfolios       Sparx Japan
Age 67                                       Hantor-Davidoff law firm since May, 2006.                              Funds.
                                             Partner, Gotham Global Group since June, 2005.
                                             President, NYC Hot Dog Co., since November,
                                             2005. Partner, Gotham
                                             Strategies since May 2005.
                                             Counsel at Fisher & Fisher
                                             from 1995 to 2006.
------------------------------------------------------------------------------------------------------------------------------------
Dr. Yung Wong,     Trustee     Since 1987    Managing Director of Abacus Associates, an        Director/Trustee of  Director of
Age 69                                       investment firm, since 1996.                      ten Portfolios       KOAH, Inc.,
                                                                                                                    Director of the
                                                                                                                    Senior Network
                                                                                                                    and Director of
                                                                                                                    Texion, Inc.
------------------------------------------------------------------------------------------------------------------------------------

                                       12
<PAGE>

                  TRUSTEES AND OFFICERS INFORMATION (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
   NAME, ADDRESS,  POSITION(S)    TERM OF      PRINCIPAL OCCUPATION(S)                               NUMBER OF           OTHER
      AND AGE       HELD WITH     OFFICE             DURING PAST                                   PORTFOLIOS IN       DIRECTORSHIPS
                      FUND      AND LENGTH             5 YEARS                                      FUND COMPLEX        HELD BY
                                  OF TIME                                                            OVERSEEN BY         TRUSTEE
                                  SERVED (1)                                                           TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
------------------------------------------------------------------------------------------------------------------------------------
Steven W. Duff,    Trustee(2)  Since 1994    President and Chief Executive Officer of Reich & Tang     Director/Trust     None
Age 54                                       Asset Management, LLC (the "Manager"), a registered       of ten
                                             Investment Advisor and Chief Investment Officer of        Portfolios
                                             the Mutual Funds Division of the Manager.  Mr. Duff
                                             has been associated with the Manager since August
                                             1994.  Mr. Duff is also Director/Trustee of six other
                                             funds in the Reich & Tang Fund Complex.  Prior to
                                             December 2007,  Mr. Duff was President of the Fund
                                             and President of eight other funds in the Reich &
                                             Tang Fund Complex, Director of Pax World Money Market
                                             Fund, Inc., Principal Executive Officer of Delafield
                                             Fund, Inc. and President and Chief Executive Officer
                                             of Tax Exempt Proceeds Fund, Inc.   Mr. Duff also
                                             serves as a Director of Reich & Tang Services, Inc.
                                             and Director, Chief Executive Officer and President
                                             of Reich & Tang Distributors, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Michael Lydon,     President    Since 2007   Executive Vice President of the Manager and President     Director/Trust     N/A
Age 44             and                       and Chief Executive Officer of the Mutual Funds           of nine
                   Trustee (2)               division of the Manager.  Mr. Lydon was Vice              Portfolios
                                             President at Automatic Data Processing from July 2000
                                             to December 2004.   Mr. Lydon is also President and
                                             Director/Trustee of four other funds in the Reich &
                                             Tang Fund Complex, President to New York Daily Tax
                                             Free Income Fund, Inc., Director of Pax World Money
                   Vice                      Market Fund, Inc., Principal Executive Officer of
                   President    2005 - 2007  Delafield Fund, Inc. and President and Chief
                                             Executive Officer of Tax Exempt Proceeds Fund, Inc.
                                             Mr. Lydon also serves as President and Chief
                                             Executive Officer for Reich & Tang Services, Inc.
                                             Prior to December 2007, Mr. Lydon was Vice President
                                             of eleven other Funds in the Reich & Tang Fund Complex.
------------------------------------------------------------------------------------------------------------------------------------
Christopher        Chief        Since 2007   Vice President, Chief Compliance Officer, AML Officer     N/A                N/A
Brancazio,                                   and Secretary of the Manager since September 2007.
Age 42                                       Mr. Brancazio is also Chief Compliance Officer and
                   Compliance                AML Officer of eight other funds in the Reich & Tang
                                             Fund Complex.  From February 2007 to August 2007, Mr.
                                             Brancazio was a Compliance Officer at Bank of New
                   Officer                   York Asset Management. From March 2002 to February
                   and AML                   2007 Mr. Brancazio served as Vice President, Chief
                   Officer                   Compliance Officer, and AML Officer of Trainer
                                             Wortham & Co. Inc., and the Trainer Wortham Mutual
                                             Funds.  Mr. Brancazio also serves as Vice President,
                                             Chief Compliance Officer, AML Officer and Secretary
                                             of Reich & Tang Services, Inc. and Reich & Tang
                                             Distributors, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Richard DeSanctis, Vice         Since 2005   Executive Vice President and Chief Operating Officer      N/A                N/A
Age 51             President                 of the Manager and of Reich & Tang Services, Inc.
                                             Associated with the Manager since 1990. Mr. De
                                             Sanctis is also Vice President of eight other funds
                                             in the Reich & Tang Fund Complex and serves as
                                             Executive Vice President and Chief Financial Officer
                                             of Reich & Tang Distributors, Inc.  Prior to December
                   Treasurer                 2004, Mr. De Sanctis was Treasurer and Assistant
                   and                       Secretary of eleven funds in the Reich & Tang Fund
                   Assistant    1994 - 2004  Complex and Vice President, Treasurer and Assistant
                   Secretary                 Secretary of Cortland Trust, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Joseph Jerkovich,  Treasurer    Since 2008   Senior Vice President and Chief Financial Officer of      N/A                N/A
Age 40             and                       the Manager and of Reich & Tang Services, Inc.
                   Assistant                 Associated with the Manager since September 2004.
                   Secretary                 Mr. Jerkovich is Vice President of eight other funds
                                             in the Reich & Tang Fund Complex and is also Senior
                   Vice                      Vice President and Controller of Reich & Tang
                   President    2007 - 2008  Distributors, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Christine Manna,   Secretary    Since 2007   Vice President and Assistant Secretary of the              N/A               N/A
Age 38                                       Manager. Ms. Manna is also Secretary of eight other
                                             funds in the Reich & Tang Complex.  Ms. Manna has
                                             been associated with the Manager and its predecessors
                                             since June 1995.  Ms. Manna is also Vice President
                                             and Assistant Secretary of Reich & Tang Services,
                                             Inc. and Reich & Tang Distributors, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Robert Rickard,    Vice         Since 2007   Senior Vice President of the Manager. Associated with      N/A               N/A
Age 39             President                 the Manager since December 1991. Mr. Rickard is also
                                             Vice President of eight other funds in the Reich &
                                             Tang Fund Complex and is also Senior Vice President
                                             of Reich & Tang Distributors, Inc.
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Each Trustee will hold office for an indefinite term until the earliest of
     (i) the next meeting of shareholders, if any, called for the purpose of
     considering the election or re-election of such Trustee and until the
     election and qualification of his or her successor, if any, elected at such
     meeting, or (ii) the date a Trustee resigns or retires, or a Trustee is
     removed by the Board of Trustees or shareholders, in accordance with the
     Fund's Declaration of Trust, as amended, and Amended and Restated By-Laws.
     Each officer will hold office for an indefinite term until the date he or
     she resigns or retires or until his/her successor is elected and qualifies.

(2)  Steven W. Duff and Michael P. Lydon may be deemed interested persons of the
     Fund, as defined in the 1940 Act, due to their affiliation with the
     Manager.
</FN>

</TABLE>

                                       13
<PAGE>

<TABLE>
<CAPTION>
The following table shows the dollar range of Fund shares beneficially owned by
each Trustee as of December 31, 2007:

                                                                                AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
                                        DOLLAR RANGE OF EQUITY SECURITIES IN   ALL FUNDS OVERSEEN OR TO BE OVERSEEN BY TRUSTEE
NAME OF TRUSTEE                                       THE FUND                   OR NOMINEE IN FAMILY OF INVESTMENT COMPANIES
------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES:

<S>                                                     <C>                                          <C>
Albert R. Dowden                                        None                                         None

Carl Frischling                                  $50,001 - $100,000                           $50,001 - $100,000
                                              (Money Market Portfolio)

Edward A. Kuczmarski                              $10,001 - $50,000                           $10,001 - $50,000
                                              (Money Market Portfolio)

William Lerner                                          None                                         None

Dr. W. Giles Mellon                               $10,001 - $50,000                             Over $100,000
                                              (Money Market Portfolio)

                                                 $50,001 - $100,000
                                              (U.S. Treasury Portfolio)

                                                  $10,001 - $50,000
                                                (Municipal Portfolio)

James L. Schultz                                    $1 - $10,000                                 $1 - $10,000
                                                (Municipal Portfolio)

Robert Straniere                                    $1 - $10,000                              $50,001 - $100,000
                                              (Money Market Portfolio)

Dr. Yung Wong                                       Over $100,000                               Over $100,000
                                              (Money Market Portfolio)

INTERESTED TRUSTEE:
Steven W. Duff                                      $1 - $10,000                                Over $100,000
                                              (Money Market Portfolio)

                                                  $10,001 - $50,000
                                                (Municipal Portfolio)

Michael P. Lydon                                  $10,001 - $50,000                             Over $100,000
                                              (Money Market Portfolio)

</TABLE>


The Fund paid an aggregate remuneration of $502,160 to its Trustees with respect
to the period ended March 31, 2008, all of which consisted of Trustees' fees
paid to the eight disinterested Trustees, pursuant to the terms of the
Investment Management Contract (See "Investment Advisory and Other Services"
herein).

Effective January 1, 2008, the Directors of the Fund not affiliated with the
Manager will be paid a fee that is to be allocated among multiple funds, as
defined below. Each Independent Director will receive an annual retainer of
$60,000 and a fee of $3,000 for each Board of Directors meeting attended. Each
Independent Director will also receive a fee of up to $1,500 at the discretion
of the Lead Independent Director for telephonic Board meetings and committee

                                       14
<PAGE>

meetings that are not held on the same day as a Board Meeting. In addition, the
Lead Independent Director will receive an additional annual fee of $13,800,
payable quarterly and the Audit Committee Chairman and Compliance Committee
Chairman will each receive an additional annual fee of $9,200, payable
quarterly. Each Independent Director will also be reimbursed for all
out-of-pocket expenses relating to attendance at such meetings. The fees noted
above are to be allocated at the discretion of the Manager among certain funds
in the Reich & Tang Fund complex. The Independent Directors' fees will be
allocated among the Fund, the California Daily Tax Free Income Fund, Inc., the
Connecticut Daily Tax Free Income Fund, the Florida Daily Municipal Income Fund,
and the New Jersey Municipal Income Fund, Inc. in accordance with the Manager's
discretion. Directors who are affiliated with the Manager do not receive
compensation from the Fund. (See "Compensation Table.")

<TABLE>
<CAPTION>
                               COMPENSATION TABLE

NAME OF PERSON,          AGGREGATE COMPENSATION    PENSION OR RETIREMENT       ESTIMATED ANNUAL        TOTAL COMPENSATION FROM
POSITION                      FROM THE FUND       BENEFITS ACCRUED AS PART  BENEFITS UPON RETIREMENT  FUND AND FUND COMPLEX PAID
                                                     OF FUND EXPENSES                                       TO TRUSTEES*
<S>                               <C>                     <C>                       <C>                         <C>

Albert R. Dowden,
Trustee                         $58,940                    $0                        $0                 $72,000 (5 Funds)

Carl Frischling,
Trustee                         $57,501                    $0                        $0                 $69,640 (5 Funds)

Edward A. Kuczmarski
Trustee                         $68,726                    $0                        $0                $113,575 (10 Funds)

William Lerner,
Trustee                         $65,342                    $0                        $0                 $78,800 (5 Funds)

Dr. W. Giles Mellon,
Trustee                         $58,804                    $0                        $0                 $86,000 (9 Funds)

James L. Schultz,
Trustee                         $58,940                    $0                        $0                 $72,000 (5 Funds)

Robert Straniere,
Trustee                         $61,634                    $0                        $0                 $90,400 (9 Funds)

Dr. Yung Wong,
Trustee                         $72,273                    $0                        $0                 $104,850 (9 Funds)
<FN>
*    The total compensation paid to such persons by the Fund and Fund Complex
     for the fiscal year ended March 31, 2008. The parenthetical number
     represents the number of investment companies (including the Fund) from
     which the Trustees receive compensation. A Fund is considered to be in the
     same Fund complex if among other things, it shares a common investment
     adviser with the Fund.
</FN>

</TABLE>

INFORMATION ABOUT PROXY VOTING

Information regarding the Fund's proxy voting record for the 12 month period
ending June 30 of each year is filed with the SEC on Form N-PX no later than
August 31 of each year. The Fund's Form N-PX is available without charge, upon
request, by calling the Fund toll free at (800) 433-1918 and on the SEC's
website (http//www.sec.gov). The Fund does not presently invest in voting
securities and has therefore not adopted proxy voting policies and procedures.

                                       15
<PAGE>

IV.  CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
<TABLE>
<CAPTION>

On June 30, 2008, the shares outstanding for each class in each Portfolio was as
follows:
                                                              PORTFOLIOS
--------------------------------------- ------------------- ------------------- ------------------ ----------------
<S>                                             <C>                <C>                 <C>               <C>
                                           MONEY MARKET       U.S. TREASURY      U.S. GOVERNMENT      MUNICIPAL
               CLASSES                      PORTFOLIO           PORTFOLIO           PORTFOLIO         PORTFOLIO
--------------------------------------- ------------------- ------------------- ------------------ ----------------
INSTITUTIONAL CLASS                        439,247,296         540,974,890           10,525           3,904,019
--------------------------------------- ------------------- ------------------- ------------------ ----------------
INSTITUTIONAL SERVICE CLASS                385,131,143         287,303,960           255,321           139,454
--------------------------------------- ------------------- ------------------- ------------------ ----------------
INVESTOR CLASS                             285,632,075         287,178,950              -                 -
--------------------------------------- ------------------- ------------------- ------------------ ----------------
INVESTOR SERVICE CLASS                          -                   -                   -                 -
--------------------------------------- ------------------- ------------------- ------------------ ----------------
SHORT TERM INCOME SHARES CLASS             271,569,199         181,419,772             N/A           87,079,196
--------------------------------------- ------------------- ------------------- ------------------ ----------------
RETAIL CLASS                              1,444,667,636         20,166,245         131,110,351       163,029,049
--------------------------------------- ------------------- ------------------- ------------------ ----------------
PINNACLE SHARES                            170,540,794          76,960,265             N/A               N/A
--------------------------------------- ------------------- ------------------- ------------------ ----------------
ADVANTAGE SHARES                          2,487,969,596            N/A             896,140,882       196,620,464
--------------------------------------- ------------------- ------------------- ------------------ ----------------
XPRESS SHARES                              274,511,779             N/A                 N/A               N/A
--------------------------------------- ------------------- ------------------- ------------------ ----------------

</TABLE>
<PAGE>

As of June 30, 2008, the amount of shares owned by all officers and Trustees of
the Fund, as a group, was less than 1% of the outstanding shares. Set forth
below is certain information as to persons who owned 5% or more of the Fund's
outstanding shares as of June 30, 2008:

<TABLE>
<CAPTION>

<S>                                                            <C>                       <C>
NAME AND ADDRESS                                             % OF CLASS                OWNERSHIP
----------------                                             ----------                ---------
Money Market Portfolio- Institutional Class Shares
--------------------------------------------------
Delafield Fund                                                  28.73%                  Record
600 Fifth Avenue - 8th Floor
New York, NY 10020

Natixis Global Asset                                            22.89%                  Record
Attn:  Susan B. Furtado
399 Boylston Street - 13th Floor
Boston, MA 02116

CDC IXIS Asset Mgmt. Distributors, L.P.                          8.30%                  Record
Attn:  Marilyn Rosh
399 Boylston Street - 8th Floor
Boston, MA 02116


Money Market Portfolio - Institutional Service Class Shares
-----------------------------------------------------------

BNP Paribas Brokerage Services                                  52.19%                  Record
As Agent FAO Customers
555 Croton Road
King of Prussia, PA  19406

Pershing LLC                                                     9.33%                  Record
One Pershing Plaza
Jersey City, NJ 07399

Money Market Portfolio- Investor Class Shares
---------------------------------------------

Pershing LLC                                                    63.35%                  Record
Attn: Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

                                       16
<PAGE>

NAME AND ADDRESS                                             % OF CLASS                OWNERSHIP
----------------                                             ----------                ---------

Money Market Portfolio- Short Term Income Class Shares
------------------------------------------------------

M.L. Stern LLC                                                  24.21%                  Record
FBO Various Clients
8350 Wilshire Blvd.
Beverly Hills, CA 90211


Bank of New York                                                10.06%                  Record
Attn:  STIF/Master Note
One Wall Street - 2nd Floor
New York, NY 10286

CIBC World Markets                                               5.69%                  Record
Various Customers
417 Fifth Avenue - 4th Floor
New York, NY 10016

Money Market Portfolio- Retail Class Shares
-------------------------------------------

Pershing LLC                                                    63.42%                  Record
Attn:  Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

Penson Financial Services, Inc.                                 10.83%                  Record
1700 Pacific Avenue - Suite 1400
Dallas, TX 75201

Money Market Portfolio - Pinnacle Shares
----------------------------------------

NFSC as agent for the Exclusive                                 100.00%                 Record
Benefit of Customers in Pinnacle Shares
200 Liberty Street
New York, NY  10281

Money Market Portfolio- Advantage Class Shares
----------------------------------------------

Oppenheimer & Co.                                               99.98%                  Record
For the Benefit of Various Customers
125 Broad Street
New York, NY 10004

Money Market Portfolio - Xpress fund shares
-------------------------------------------

OPTIONSXPRESS                                                   100.00%                 Record
39 S. LaSalle Street
Chicago, IL 60603

U.S. Treasury Portfolio - Institutional Class Shares
----------------------------------------------------

Pershing LLC                                                    91.46%                  Record
Attn:  Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

U.S. Treasury Portfolio - Institutional Service Class Shares
------------------------------------------------------------

Lehman Brothers for the Exclusive                               24.72%                  Record
Benefit of Customers
70 Hudson Street - 7th Floor
Jersey City, NJ 07302

Pershing LLC                                                    19.20%                  Record
Attn: Cash Management Dept. One Pershing Plaza
Jersey City, NJ 07399

                                       17
<PAGE>

NAME AND ADDRESS                                             % OF CLASS                OWNERSHIP
----------------                                             ----------                ---------
U.S. Treasury Portfolio - Institutional Service Class Shares
------------------------------------------------------------

Diiehaus Profit Sharing Cash                                    10.80%                  Record
Attn: Diane Wallace
25 E. Erie Street
Chicago, IL 60611-2735

Driehaus Assoc Fund Cash Mgmt.                                  10.79%                  Record
Financial Services
25 E. Erie Street
Chicago, IL 60611-2735

Driehaus Investments LLC                                        10.40%                  Record
25 E. Erie Street
Chicago, IL 60611-2735

Driehaus Family Partnership                                     5.87%                   Record
Attn: Diane Wallace
25 E. Erie Street
Chicago, IL 60611-2735


U.S. Treasury Portfolio- Investor Class Shares
-----------------------------------------------

Pershing LLC                                                    57.39%                  Record
Attn:  Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

U.S. Treasury Portfolio - Short Term Income Class Shares
--------------------------------------------------------

Oppenheimer & Co.                                               26.14%                  Record
For the Benefit of Various Customers
125 Broad Street
New York, NY 10004


U.S. Treasury Portfolio- Retail Class Shares
--------------------------------------------

Pershing LLC                                                    94.52%                  Record
Attn:  Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

U.S. Treasury Portfolio - Pinnacle Shares
-----------------------------------------

NFSC as agent for the exclusive                                 100.00%                 Record
Benefit of Customers in Pinnacle Shares
200 Liberty Street
New York, NY  10281

U.S. Government Portfolio - Institutional Class Shares
------------------------------------------------------

Reich & Tang Asset Management L.P.                              100.00%                 Record
Attn:  Corporate Accounting - 10th Floor
600 Fifth Avenue
New York, NY 10020-2302

U.S. Government Portfolio - Institutional Service Class Shares
--------------------------------------------------------------

Catharine St. Leger Curren                                      87.50%                  Beneficial
878 Peachtree Street - NE (Apt. 328)
Atlanta, GA 30309

Gregory Goldberg Revocable Trust                                6.96%                   Beneficial
Gregory Goldberg TTEE
348 West 38th Street #9B
New York, NY 10018

                                       18
<PAGE>

NAME AND ADDRESS                                             % OF CLASS                OWNERSHIP
----------------                                             ----------                ---------

U.S. Government Portfolio - Retail Class Shares
-----------------------------------------------

Pershing LLC                                                    41.23%                  Record
Attn: Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399

Penson Financial Services                                       14.00%                  Record
1700 Pacific Avenue - Suite 1400
Dallas, TX 75201


Crews & Associates, Inc.                                        5.97%                   Record
First Security Center
521 President Clinton Avenue - Ste. 800
Little Rock 72201

Riggs Qualified Partners LLC                                    5.60%                   Record
C\O Philip J. Timyan
4324 Central Avenue
Western Springs, IL 60558-1332

U.S. Government Portfolio - Advantage Class Shares
--------------------------------------------------

Oppenheimer & Co.                                               100.00%                  Record
For the Benefit of Various Customers
125 Broad Street
New York, NY 10004


Municipal Portfolio - Institutional Class Shares
------------------------------------------------

Sally Grant Morse                                               100.00%                  Beneficial
176 East 71st Street
New York, NY 10021-5159

Municipal Portfolio - Institutional Service Class Shares
--------------------------------------------------------

Catharine St. Leger Curren                                      100.00%                  Beneficial
878 Peachtree Street - NE (Apt. 328)
Atlanta, GA 30309

Municipal Portfolio - Short Term Income Class Shares
----------------------------------------------------

Pershing LLC                                                    28.40 %                 Record
Attn: Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399-0002

Robert L. Stone A/C 2                                           15.96%                  Record
100 Hill Province Road
P.O. Box 233
Williamton, MA 01267-0233

Garrett Thornburg, TTEE                                         15.19%                  Record
Revocable Living Trust U/T/A DTD 7/27/90
119 East Marcy Street - Suite 202
Santa Fe, NM 87501-2046

Lehman Brothers for the Exclusive                               11.06%                  Record
Benefit of Customers
70 Hudson St. - 7th Floor
Jersey City, NJ 07302

                                       19
<PAGE>

NAME AND ADDRESS                                             % OF CLASS                OWNERSHIP
----------------                                             ----------                ---------

Municipal Portfolio - Retail Class Shares
-----------------------------------------
Pershing LLC                                                    20.14%                  Record
Attn: Cash Management Dept.
One Pershing Plaza
Jersey City, NJ 07399-0002

Bank of New York                                                14.41%                  Record
Attn:  STIF/Master Note
One Wall Street - 2nd Floor
New York, NY 10286

FMSBonds, Inc.                                                  9.54%                   Record
301 Yamato Road - Ste. 1100
Boca Raton, FL 33431

Southwest Securities Inc.                                       5.35%                   Record
1201 Elm Street - ste. 4300
Dallas, TX 75270

Municipal Portfolio - Advantage Class Shares
--------------------------------------------

Oppenheimer & Co.                                               100.00%                 Record
For the Benefit of Various Customers
125 Broad Street
New York, NY 10004

</TABLE>

V.  INVESTMENT ADVISORY AND OTHER SERVICES


The investment manager for the Fund is Reich & Tang Asset Management, LLC, a
Delaware limited liability company with principal offices at 600 Fifth Avenue,
New York, New York 10020. The Manager was as of June 30, 2008, investment
manager, adviser, or sub-adviser with respect to assets aggregating in excess of
$16.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager or sub-adviser of seventeen portfolios of registered
investment companies, of which it acts as administrator for twelve. The Manager
also advises high net worth individuals, private funds, pension trusts,
profit-sharing trusts and endowments.

The Manager is a direct subsidiary of Natixis Global Asset Management, L.P.
(formerly IXIS Asset Management US Group, L.P.) which owns, in addition to the
Manager, a number of other asset management and distribution and service
entities. Natixis Global Asset Management, L.P. is part of Natixis Global Asset
Management (formerly IXIS Asset Management Group), an international asset
management group based in Paris, France, that is ultimately owned principally,
directly or indirectly, by three large French financial services entities:
Natixis, an investment banking and financial services firm; the Caisse Nationale
des Caisses d'Epargne ("CNCE"), a financial institution owned by French regional
savings banks known as the Caisses d'Epargne; and Banque Federale des Banques
Populaires ("BFBP"), a financial institution owned by regional cooperative banks
known as the Banques Populaires. Natixis, CNCE and BFBP (the "Affiliated
Owners") each owns, directly or indirectly, other investment advisers
established in various jurisdictions. Natixis Global Asset Management, L.P.,
which owns the Manager and is indirectly owned by the Affiliated Owners, is the
direct and indirect owner of various investment advisers.

The fifteen affiliated asset management firms of Natixis Global Asset
Management, L.P., collectively, have more than $293.3 billion in assets under
management or administration as of June 30, 2008.

On March 11, 2008, the Board of Trustees, including a majority of the Trustees
deemed as disinterested trustees under the 1940 Act ("Disinterested Trustees"),
approved the continuance of the Investment Management Contract for a term
extending to March 31, 2009. The contract may be continued in force thereafter
for successive twelve-month periods beginning each April 1, provided that such
continuance is specifically approved annually by a majority vote of the Fund's
outstanding voting securities or its 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. The Board of Trustees,
including a majority of the Trustees who are not interested persons (as defined
in the 1940 Act) of the Fund or the Manager, approved an amendment to the
Investment Management Contract to include the U.S. Government Portfolio on July
20, 2006, for an initial term of two years.


                                       20
<PAGE>

Pursuant to the Investment Management Contract, the Manager manages the Fund's
four Portfolios 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 the Fund. The Manager also provides persons satisfactory to the Board of
Trustees of the Fund to serve as officers of the Fund. Such officers, as well as
certain other employees and trustees of the Fund, may be trustees, officers 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 a majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Trustees,
or by the Manager on sixty days' written notice, and will automatically
terminate in the event of its assignment. The Investment Management Contract
provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or of reckless disregard of its
obligations thereunder, the Manager shall not be liable for any action or
failure to act in accordance with its duties thereunder.


Under the Investment Management Contract each of the Portfolios will pay an
annual management fee of 0.12% of such Portfolio's average daily net assets. The
fees are accrued daily and paid monthly. For the fiscal year ended March 31,
2008, March 31, 2007 and March 31, 2006, the Manager received management fees
set forth in the table below:

<TABLE>
<CAPTION>
    FISCAL YEAR                                               MANAGEMENT FEES
    -----------                                 --------------------------------------------

<S>                                             <C>                            <C>                         <C>
MARCH 31, 2008                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----
----------------------------------- --------------------------------- ------------------------ -----------------------------
MONEY MARKET PORTFOLIO                         $8,332,825                       $0                      $8,332,825
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                        $1,556,757                       $0                      $1,556,757
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. GOVERNMENT PORTFOLIO                       $537,123                     $183,850                    $353,273
----------------------------------- --------------------------------- ------------------------ -----------------------------
MUNICIPAL PORTFOLIO                             $522,579                     $351,430                    $171,149
----------------------------------- --------------------------------- ------------------------ -----------------------------

MARCH 31, 2007                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----
----------------------------------- --------------------------------- ------------------------ -----------------------------
MONEY MARKET PORTFOLIO                         $2,443,086                     $35,834                   $2,407,252
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                        $1,083,718                       $0                      $1,083,718
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. GOVERNMENT PORTFOLIO                       $80,252                       $74,074                     $6,178
----------------------------------- --------------------------------- ------------------------ -----------------------------
MUNICIPAL PORTFOLIO                             $66,329                       $58,907                     $7,422
----------------------------------- --------------------------------- ------------------------ -----------------------------

MARCH 31, 2006                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----
----------------------------------- --------------------------------- ------------------------ -----------------------------
MONEY MARKET PORTFOLIO                          $737,039                     $176,161                    $560,878
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                        $1,017,534                    $100,107                    $917,427
----------------------------------- --------------------------------- ------------------------ -----------------------------

</TABLE>


The Fund's net assets as the close of $3,472,010 $1,274,289 $2,197,721 business
on March 31, 2008 totaled $6,968,153,278 for the Money Market Portfolio,
$1,412,681,309 for the U.S. Treasury Portfolio, $821,993,885 for the U.S.
Government Portfolio and $489,970,529 for the Municipal Portfolio.

Pursuant to an Administrative Services Agreement with the Fund, the Manager also
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to (i) supervise the
performance of accounting related services by The Bank of New York Mellon, the
Fund's accounting 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 an
annual fee of 0.05% of each Portfolio's average daily net assets. For the fiscal
years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Manager
received the administrative fees set forth in the table below:


                                       21
<PAGE>


<TABLE>
<CAPTION>
FISCAL YEAR                                             ADMINISTRATIVE FEES
-----------                                     ----------------------------------

MARCH 31, 2008                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----
<S>                                             <C>                            <C>                         <C>

MONEY MARKET PORTFOLIO                         $3,472,010                   $1,274,289                  $2,197,721
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                         $648,649                     $440,292                    $208,357
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. GOVERNMENT PORTFOLIO                       $223,801                     $223,801                       $0
----------------------------------- --------------------------------- ------------------------ -----------------------------
MUNICIPAL PORTFOLIO                             $217,741                     $217,741                       $0
----------------------------------- --------------------------------- ------------------------ -----------------------------

MARCH 31, 2007                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----

----------------------------------- --------------------------------- ------------------------ -----------------------------
MONEY MARKET PORTFOLIO                         $1,017,952                    $599,814                    $418,138
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                         $451,549                     $262,710                    $188,839
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. GOVERNMENT PORTFOLIO                       $33,438                       $33,438                       $0
----------------------------------- --------------------------------- ------------------------ -----------------------------
MUNICIPAL PORTFOLIO                             $27,637                       $27,637                       $0
----------------------------------- --------------------------------- ------------------------ -----------------------------

MARCH 31, 2006                                 PAYABLE                        WAIVED                      PAID
--------------                                 -------                        ------                      ----

----------------------------------- --------------------------------- ------------------------ -----------------------------
MONEY MARKET PORTFOLIO                          $307,100                     $176,160                    $130,940
----------------------------------- --------------------------------- ------------------------ -----------------------------
U.S. TREASURY PORTFOLIO                         $423,972                     $364,205                    $59,767
----------------------------------- --------------------------------- ------------------------ -----------------------------

</TABLE>
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
these fees for purposes of shareholder services and distribution of the Fund's
shares. There can be no assurance that such fees will be waived in the future.


Pursuant to a Sub-Accounting Agreement, Reich & Tang Services, Inc. performs or
sub-contracts or employs others to perform certain sub-accounting services for
the Advantage and Xpress shareholders. For its services under the Sub-Accounting
Agreement, Reich & Tang Services, Inc. receives from the Fund a fee up to 0.10%
per annum of the average daily net assets of the Advantage and Xpress shares.

For the fiscal years ended March 31, 2008 and March 31, 2007, Reich & Tang
Services, Inc. received the Sub-Accounting fees set forth in the table below:


<TABLE>
<CAPTION>
                                                      SUB-ACCOUNTING FEES
                                                      -------------------

MARCH 31, 2008                                  PAYABLE                      WAIVED                      PAID
--------------                                  -------                      ------                      ----
<S>                                               <C>                          <C>                        <C>
ADVANTAGE SHARES
----------------------------------- --------------------------------- ------------------------ --------------------
MONEY MARKET PORTFOLIO                          $3,317,775                   $3,317,775                  $0
----------------------------------- --------------------------------- ------------------------ --------------------
U.S. GOVERNMENT PORTFOLIO                       $338,271                     $338,271                    $0
----------------------------------- --------------------------------- ------------------------ --------------------
MUNICIPAL PORTFOLIO                             $171,626                     $171,626                    $0
----------------------------------- --------------------------------- ------------------------ --------------------

XPRESS SHARES                                   PAYABLE                      WAIVED                      PAID
----------------------------------- --------------------------------- ------------------------ --------------------
MONEY MARKET PORTFOLIO                          $814,456                     $325,782                    $488,674
----------------------------------- --------------------------------- ------------------------ --------------------

MARCH 31, 2007                                  PAYABLE                      WAIVED                      PAID
--------------                                  -------                      ------                      ----
ADVANTAGE SHARES
----------------------------------- --------------------------------- ------------------------ --------------------
MONEY MARKET PORTFOLIO                          $940,537                     $940,537                     $0
----------------------------------- --------------------------------- ------------------------ --------------------
U.S. GOVERNMENT PORTFOLIO                       $57,661                       $57,661                     $0
----------------------------------- --------------------------------- ------------------------ --------------------
MUNICIPAL PORTFOLIO                             $44,377                       $44,377                     $0

----------------------------------- --------------------------------- ------------------------ --------------------
</TABLE>

                                       22
<PAGE>

Investment management fees and operating expenses which are attributable to all
Classes of a Portfolio will be allocated daily to each Class based on the
percentage of outstanding shares at the end of the day. Additional expenses for
shareholder and distribution services provided by Participating Organizations to
Fund shareholders pursuant to Distribution and Service Plans may be compensated
by the Fund's distributor from its own resources, which includes the shareholder
servicing fee and past profits, or by the Manager from its own resources, which
includes the management fee, administrative services fee and past profits.
Expenses incurred in the distribution and servicing of Institutional Class and
Pinnacle Class shares shall be paid by the Manager (see "Distribution and
Service Plan" herein).

DISTRIBUTION AND SERVICE PLAN

The Fund's distributor is Reich & Tang Distributors, Inc. (the "Distributor"), a
Delaware corporation with principal offices at 600 Fifth Avenue, New York, New
York 10020, an affiliate of the Manager. 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 the Rule. The Fund's Board of Trustees has adopted
distribution and service plans (each a "Plan" and collectively, the "Plans")
and, pursuant to the Plans, the Fund has entered into Distribution Agreements
and Shareholder Servicing Agreements for certain Classes of the Fund with the
Distributor, as distributor of the Fund's shares.

Under the Distribution Agreement, the Distributor, 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. The Distributor receives a distribution fee not to exceed the
following, with respect to the Institutional Class, the Institutional Service
Class and the Pinnacle Shares Class, the Distributor receives a nominal amount
(i.e. $1.00):

Investor Class                       0.20% of average daily net assets
Investor Service Class               0.45% of average daily net assets
Short Term Income Shares Class       0.45% of average daily net assets
Retail Class                         0.65% of average daily net assets
Advantage Shares                     0.75% of average daily net assets
Xpress Shares                        0.75% of average daily net assets

Under the Shareholder Servicing Agreement, the Distributor receives from each
Portfolio a service fee equal to 0.25% per annum of the Institutional Service
Class, Investor Class, Investor Service Class, Short Term Income Shares Class,
Retail Class, Advantage Shares, and Xpress Shares average daily net assets (the
"Shareholder Servicing Fee") for providing or arranging for others to provide
personal shareholder services and for the maintenance of shareholder accounts.
The Shareholder Servicing Fee is accrued daily and paid monthly. Any portion of
the 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 Institutional Service Class, Investor Class, Investor Service Class,
Short Term Income Shares Class, Retail Class, Advantage Shares and Xpress Shares
shareholders of the Fund. The Institutional Class and Pinnacle Shares
shareholders will not be assessed a shareholder servicing fee.


The following tables provide the total fees paid by each Class of the Portfolio
pursuant to the Plans and the manner in which payments were made pursuant to the
Plans for certain types of activities for the fiscal year ended March 31, 2008:


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                         MONEY MARKET PORTFOLIO


<S>                <C>           <C>             <C>          <C>             <C>             <C>        <C>           <C>
                   INSTITUTIONAL INSTITUTIONAL   INVESTOR     SHORT TERM      RETAIL SHARES   PINNACLE   ADVANTAGE     MONEY
                   CLASS         SERVICE CLASS   CLASS        INCOME SHARES                              SHARES        MARKET
                   SHARES        SHARES          SHARES                                                                XPRESS
------------------------------------------------------------------------------------------------------------------------------------
TOTAL FEES PAID
BY EACH CLASS OF
THE FUND UNDER
THE PLANS:         $0            $632,746        $957,290     $1,568,501      $9,943,536      $0         $27,569,133   $8,144,562
------------------------------------------------------------------------------------------------------------------------------------
PAYMENTS MADE BY
THE MANAGER AND
DISTRIBUTOR TO
OR ON BEHALF OF
PARTICIPATING
ORGANIZATIONS:     $48,957       $694,848        $665,474     $1,516,804      $10,603,687     $0         $30,521,785   $9,012,535
------------------------------------------------------------------------------------------------------------------------------------
BREAKDOWN OF
PAYMENTS MADE
PURSUANT TO THE
PLANS FOR CERTAIN
TYPES OF
ACTIVITIES:
------------------------------------------------------------------------------------------------------------------------------------
ADVERTISING:       $0            $0              $0           $0              $0              $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------
PRINTING AND
MAILING OF
PROSPECTUSES TO
OTHER THAN
CURRENT
SHAREHOLDERS:      $336          $336            $3,731       $13,237         $13,237         $1,310     $5,422        $0
------------------------------------------------------------------------------------------------------------------------------------
COMPENSATION TO
UNDERWRITERS:      $0            $0              $0           $0              $0              $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------
COMPENSATION TO
BROKER-DEALERS:    $48,957       $694,848        $665,474     $1,516,804      $10,603,687     $0         $30,521,785   $9,012,535
------------------------------------------------------------------------------------------------------------------------------------
COMPENSATION TO
SALES PERSONNEL:   $73,717       $73,717         $73,717      $73,717         $73,717         $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------
INTEREST,
CARRYING OR
OTHER FINANCING
CHARGES:           $0            $0              $0             $0            $0              $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------
TRAVEL AND
ENTERTAINMENT
FOR SALES
PERSONNEL:         $5,623        $5,623          $5,623         $5,623        $5,623          $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS
EXPENSES:          $707          $707            $707           $707          $707            $0         $0            $0
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>

                                                        U.S. TREASURY PORTFOLIO
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
<S>                                             <C>             <C>             <C>           <C>         <C>            <C>
                                                          INSTITUTIONAL                    SHORT TERM
                                           INSTITUTIONAL  SERVICE CLASS       INVESTOR     INCOME       RETAIL
                                           CLASS SHARES   SHARES              CLASS        SHARES       SHARES       PINNACLE
                                           -------------- ------------------- ------------ ------------ ------------ ---------------
TOTAL FEES PAID BY EACH CLASS OF THE
FUND UNDER THE PLANS:                           $0             $637,760        $817,344    $1,008,722     $24,637          $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
PAYMENTS MADE BY THE MANAGER AND
DISTRIBUTOR TO OR ON BEHALF OF
PARTICIPATING ORGANIZATIONS:                 $380,827          $684,793        $704,921     $644,078      $28,848          $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
BREAKDOWN OF PAYMENTS MADE PURSUANT TO
THE PLANS FOR CERTAIN TYPES OF
ACTIVITIES:
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
ADVERTISING:                                     $0                $0              $0           $0           $0             $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
PRINTING AND MAILING OF PROSPECTUSES TO
OTHER THAN CURRENT SHAREHOLDERS:               $1,320            $1,320           $477        $2,700       $2,700          $587
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
COMPENSATION TO UNDERWRITERS:                    $0               $0              $0           $0           $0             $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
COMPENSATION TO BROKER-DEALERS:               $380,827         $684,793        $704,921     $644,078      $28,848          $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
COMPENSATION TO SALES PERSONNEL:               $17,623         $17,623          $17,623      $17,623      $17,623          $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
INTEREST, CARRYING OR OTHER FINANCING
CHARGES:                                         $0               $0              $0           $0           $0             $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
TRAVEL AND ENTERTAINMENT FOR SALES
PERSONNEL:                                     $1,253           $1,253          $1,253       $1,253       $1,253           $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------
MISCELLANEOUS EXPENSES:                         $178             $178            $178         $178         $178            $0
------------------------------------------ -------------- ------------------- ------------ ------------ ------------ ---------------

</TABLE>

<TABLE>
<CAPTION>
                                                      U.S. GOVERNMENT PORTFOLIO
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
<S>                                                                 <C>                  <C>                  <C>           <C>
                                                              INSTITUTIONAL      INSTITUTIONAL SERVICE
                                                              CLASS SHARES       CLASS SHARES             RETAIL SHARES  ADVANTAGE
                                                              ------------------ ------------------------ -------------- -----------

TOTAL FEES PAID BY EACH CLASS OF THE FUND UNDER THE PLANS:           $0                   $662              $840,499      $2,841,474
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
PAYMENTS MADE BY THE MANAGER AND DISTRIBUTOR TO OR ON
BEHALF OF PARTICIPATING ORGANIZATIONS:                               $0                    $0               $826,835      $3,110,744
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
BREAKDOWN OF PAYMENTS MADE PURSUANT TO THE PLANS FOR
CERTAIN TYPES OF ACTIVITIES:
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
ADVERTISING:                                                          $0                   $0                  $0             $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
PRINTING AND MAILING OF PROSPECTUSES TO OTHER THAN CURRENT
SHAREHOLDERS:                                                         $0                   $0                 $629           $274
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
COMPENSATION TO UNDERWRITERS:                                         $0                   $0                  $0             $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
COMPENSATION TO BROKER-DEALERS:                                       $0                   $0               $826,835      $3,110,744
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
COMPENSATION TO SALES PERSONNEL:                                    $7,564               $7,564              $7,564           $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
INTEREST, CARRYING OR OTHER FINANCING CHARGES:                        $0                   $0                  $0             $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
TRAVEL AND ENTERTAINMENT FOR SALES PERSONNEL:                        $578                 $578                $578            $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------
MISCELLANEOUS EXPENSES:                                               $51                  $51                 $51            $0
------------------------------------------------------------- ------------------ ------------------------ -------------- -----------

</TABLE>

                                       25
<PAGE>

<TABLE>
<CAPTION>

                                                             MUNICIPAL PORTFOLIO
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
 <S>                                                     <C>                 <C>             <C>          <C>           <C>
                                                                                          SHORT TERM
                                                    INSTITUTIONAL    INSTITUTIONAL         INCOME        RETAIL       ADVANTAGE
                                                    CLASS SHARES     SERVICE CLASS SHARES  SHARES        SHARES       SHARES
                                                    ---------------- --------------------- ------------- ------------ --------------
TOTAL FEES PAID BY EACH CLASS OF THE FUND UNDER
THE PLANS:                                                $0                 $33             $607,636    $1,136,501     $1,441,657
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
PAYMENTS MADE BY THE MANAGER AND DISTRIBUTOR TO
OR ON BEHALF OF PARTICIPATING ORGANIZATIONS:             $190                 $0             $306,244    $1,055,326     $1,578,210
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
BREAKDOWN OF PAYMENTS MADE PURSUANT TO THE PLANS
FOR CERTAIN TYPES OF ACTIVITIES:
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
ADVERTISING:                                               $0                  $0                $0           $0             $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
PRINTING AND MAILING OF PROSPECTUSES TO OTHER
THAN CURRENT SHAREHOLDERS:                                 $0                  $0               $370         $370            $83
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
COMPENSATION TO UNDERWRITERS:                              $0                 $0                $0           $0             $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
COMPENSATION TO BROKER-DEALERS:                           $190                $0             $306,244    $1,055,326     $1,578,210
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
COMPENSATION TO SALES PERSONNEL:                         $8,045             $8,045            $8,045       $8,045           $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
INTEREST, CARRYING OR OTHER FINANCING CHARGES:             $0                 $0                $0           $0             $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
TRAVEL AND ENTERTAINMENT FOR SALES PERSONNEL:             $320               $320              $320         $320            $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------
MISCELLANEOUS EXPENSES:                                    $31               $31               $31           $31            $0
--------------------------------------------------- ---------------- --------------------- ------------- ------------ --------------

</TABLE>

<TABLE>
<CAPTION>

The following table provides the total fees paid by each Class of the Portfolio
pursuant to the Plans as a percentage of the average daily net assets and which
entity was responsible for such payments for the fiscal year ended March 31,
2008:

                                                         MONEY MARKET PORTFOLIO


<S>                           <C>           <C>             <C>          <C>            <C>      <C>       <C>         <C>
                              INSTITUTIONAL INSTITUTIONAL   INVESTOR     SHORT TERM     RETAIL   PINNACLE  ADVANTAGE   MONEY
                              SHARES        SERVICE SHARES  SHARES       INCOME SHARES  SHARES                         MARKET XPRESS

TOTAL AMOUNT SPENT OF THE     0.02%         0.29%           0.32%        0.71%          0.82%    0.00%     0.92%       1.11%
AVERAGE DAILY NET ASSETS:

AMOUNT PAID BY THE FUND       0.00%         0.24%           0.41%        0.69%          0.76%    0.00%     0.83%       1.00%
TO THE DISTRIBUTOR:

AMOUNT PAID BY THE            0.02%         0.05%          -0.09%        0.02%          0.06%    0.00%     0.09%       0.11%
MANAGER:


</TABLE>

<TABLE>
<CAPTION>
                                                        U.S. TREASURY PORTFOLIO

<S>                                  <C>           <C>                 <C>        <C>              <C>         <C>
                                     INSTITUTIONAL INSTITUTIONAL       INVESTOR   SHORT TERM       RETAIL      PINNACLE
                                     SHARES        SERVICE SHARES      SHARES     INCOME SHARES    SHARES
------------------------------------ ------------- ------------------- ---------- ---------------- ----------- --------------------
TOTAL AMOUNT SPENT OF THE AVERAGE
DAILY NET ASSETS:                    0.06%         0.28%                0.35%      0.44%           1.55%        0.00%
------------------------------------ ------------- ------------------- ---------- ---------------- ----------- --------------------
AMOUNT PAID BY THE FUND TO THE
DISTRIBUTOR:                         0.00%         0.25%                0.40%      0.67%           0.75%        0.00%
------------------------------------ ------------- ------------------- ---------- ---------------- ----------- --------------------
AMOUNT PAID BY THE MANAGER:          0.06%         0.03%               -0.05%      -0.23%          0.80%        0.00%
------------------------------------ ------------- ------------------- ---------- ---------------- ----------- --------------------

</TABLE>

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                       U.S. GOVERNMENT PORTFOLIO


<S>                                                     <C>                  <C>                <C>              <C>
                                                        INSTITUTIONAL        INSTITUTIONAL      RETAIL SHARES    ADVANTAGE
                                                        SHARES               SERVICE SHARES
--------------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT SPENT OF THE AVERAGE DAILY NET ASSETS:     80.04%               3.09%              0.77%            0.92%
--------------------------------------------------------------------------------------------------------------------------
AMOUNT PAID BY THE FUND TO THE DISTRIBUTOR:              0.00%               0.25%              0.77%            0.84%
--------------------------------------------------------------------------------------------------------------------------
AMOUNT PAID BY THE MANAGER:                             80.04%               2.84%              0.00%            0.08%
--------------------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>
                                                             MUNICIPAL PORTFOLIO

<S>                                         <C>              <C>               <C>             <C>             <C>

                                            INSTITUTIONAL    INSTITUTIONAL     SHORT TERM      RETAIL SHARES   ADVANTAGE
                                            SHARES           SERVICE SHARES    INCOME SHARES
--------------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT SPENT OF THE AVERAGE DAILY     0.52%            62.61%            0.27%           0.72%           0.92%
NET ASSETS:
--------------------------------------------------------------------------------------------------------------------------
AMOUNT PAID BY THE FUND TO THE              0.00%            0.25%             0.53%           0.77%           0.84%
DISTRIBUTOR:
--------------------------------------------------------------------------------------------------------------------------
AMOUNT PAID BY THE MANAGER:                 0.52%            62.36%           -0.26%           -0.05%          0.08%
--------------------------------------------------------------------------------------------------------------------------

</TABLE>

The excess of such payments over the total payments the Distributor received
from the Fund under the Plans represents distribution and servicing expenses
funded by the Manager from its own resources, including the management and
administrative services fees.

The Plans and the Shareholder Servicing Agreements provide that, in addition to
the shareholder servicing fee, the Distributor will pay for (i)
telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor and Participating Organizations in
carrying out their obligations under the Shareholder Servicing Agreements with
respect to the Institutional Service Class, Investor Class, Investor Service
Class, Short Term Income Shares Class, Retail Class, Advantage Shares and Xpress
Shares or the Participating Organization agreement, as the case may be, and (ii)
preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing Fund application forms for
shareholder accounts.

The Plans provide that the Manager may make payments from time to time from its
own resources, which may include the management fee, administrative services fee
and past profits for the following purposes: (i) to pay 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 Institutional
Service Class, Investor Class, Investor Service Class, Short Term Income Shares
Class, Retail Class, Advantage Shares and Xpress Shares of the Fund; (ii) to
compensate certain Participating Organizations for providing assistance in
distributing the Fund's Institutional Service Class, Investor Class, Investor
Service Class, Short Term Income Shares Class, Retail Class, Advantage Shares
and Xpress Shares; and (iii) to pay the costs 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 of the Distributor and other personnel in
connection with the distribution of the Fund's shares. The Manager, at its
expense, also may from time to time provide additional promotional incentives to
Participating Organization who sell Fund shares. The Distributor may also make
payments from time to time from its own resources, which may include the
shareholder service fee and past profits for the purpose enumerated in (i)
above. The Distributor may determine the amount of such payments made pursuant
to the Plans, provided that such payments will not increase the amount which the
Fund is required to pay to the Manager or the Distributor for any fiscal year
under the Investment Management Contract, Administrative Service Agreement,
Distribution Agreement or the Shareholder Servicing Agreement in effect for that
year.


The Distributor or an affiliate may, from time to time, at its expense and out
of its own resources (a source of which may be the 12b-1 fees paid by the Fund
under the Plans), make cash payments to some but not all Participating
Organizations for shareholder services, as an incentive to sell shares of the
Fund and/or to promote retention of their customers' assets in the Institutional
Class, Institutional Service Class, Investor Class, Investor Service Class,
Short Term Income Shares Class, Retail Class, Advantage Shares and Xpress Shares
of the Fund. These payments may be referred to as "revenue sharing," but do not
change the price paid by investors to purchase the Fund's shares or the


                                       27
<PAGE>


amount the Fund receives as proceeds from such sales. Revenue sharing payments
may be to Participating Organizations that provide services to the Fund or its
shareholders, including (without limitation) shareholder servicing,
administration, accounting, transfer agency and/or distribution services. The
Distributor negotiates the level of payments described above to any particular
Participating Organization with each firm, based on, among other things, the
nature and level of services provided by such Participating Organization and the
significance of the overall relationship of the Participating Organization to
the Manager and its affiliates. The amount of these payments may be significant
and may create an incentive for the Participating Organization to sell shares of
the Fund to you or to recommend one fund complex over another. Please speak with
your Participation Organization to learn more about payments made to them by the
Distributor or its affiliates. In addition, to the extent allowable under the
Financial Industry Regulatory Authority ("FINRA") rules and any other applicable
regulations, the Distributor or an affiliate may contribute to sales programs
for certain Participating Organizations and may provide non-cash compensation to
certain Participating Organizations like sponsorship or funding of sales
seminars, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or by giving out merchandise at industry conferences, which may be paid
for by the Distributor or an affiliate out of its own resources.


In accordance with Rule 12b-1, the Plans provide that all written agreements
relating to the Plans 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 Trustees. In addition, the Plans requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended pursuant to the Plans and identifying the
activities for which those expenditures were made.


The Plans were most recently approved on March 11, 2008, to continue in effect
until March 31, 2009. Thereafter, the Plans may continue in effect for
successive annual periods commencing April 1, provided they are approved by the
shareholders or by the Board of Trustees. This includes a majority of Trustees
who are not interested persons of the Fund and who have no direct or indirect
interest in the operation of the Plans or in the agreements related to the
Plans. The Plans further provides that it may not be amended to increase
materially the costs which may be spent by the Fund pursuant to the Plan without
shareholder approval, and that other material amendments must be approved by the
Trustees including a majority of Trustees who are not interested persons of the
Fund and who have no direct or indirect interest in the operation of the Plans
or in the agreements related to the Plans. The Plans may be terminated at any
time by a vote of a majority of the disinterested Trustees of the Fund or the
Fund's shareholders, respectively.


CUSTODIAN AND TRANSFER AGENT


The Bank of New York Mellon, 2 Hanson - 7th Floor, Brooklyn, NY 11217, is
custodian for the Fund's cash and securities. Reich & Tang Services, Inc.
("Reich & Tang"), an affiliate of the Manager, located at 600 Fifth Avenue, New
York, NY 10020, is transfer agent and dividend agent for the shares of the Fund.
As transfer agent, Reich & Tang performs various functions including the
processing of shareholder purchase, redemption and exchange transactions and the
maintenance of shareholder records regarding such transactions. As dividend
agent, Reich & Tang makes dividend payments to Fund shareholders on behalf of
the Fund and performs certain recordkeeping and reporting functions regarding
such payments. Pursuant to the Transfer Agency Agreement between Reich & Tang
and the Fund, Reich & Tang, as transfer agent and dividend agent, receives a fee
of $17.40 per account per year or a minimum of (i) 0.05% of the monthly average
net assets of the Investor Class, Investor Service Class, Short Term Income
Shares Class and Retail Class of the Fund or (ii) 0.02% of monthly average net
assets of the Institutional Class, Institutional Service Class and Pinnacle
shares of the Fund. For the year ended March 31, 2008 these fees which are
account changes only, and do not include any out-of-pocket changes after waivers
amounted to:

<TABLE>
<CAPTION>
<S>                          <C>                     <C>                     <C>                      <C>
                             MONEY MARKET            U.S. TREASURY           U.S. GOVERNMENT         MUNICIPAL
                             PORTFOLIO               PORTFOLIO               PORTFOLIO               PORTFOLIO

                             AMOUNT    PERCENTAGE    AMOUNT     PERCENTAGE   AMOUNT   PERCENTAGE     AMOUNT   PERCENTAGE
-------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES         $85,564   0.01%         $125,294   0.02%        $1       *              $335     *
-------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SERVICE        $52,568   0.02%         $51,032    0.02%        $60      0.02%*         $1       *
SHARES
-------------------------------------------------------------------------------------------------------------------------
INVESTOR SHARES              $116,301  0.05%         $100,862   0.05%        $0                      $0
-------------------------------------------------------------------------------------------------------------------------
SHORT TERM INCOME SHARES     $153,042  0.05%         $76,926    0.05%        N/A                     $57,243  0.05%
-------------------------------------------------------------------------------------------------------------------------
RETAIL SHARES                $653,671  0.05%         $1,626     0.05%        $54,581  0.05%          $73,777  0.05%
-------------------------------------------------------------------------------------------------------------------------
PINNACLE SHARES              $24,273   0.01%         $11,298    0.02%        N/A                     N/A
-------------------------------------------------------------------------------------------------------------------------
<FN>
     * Charged per account.
</FN>

</TABLE>

                                       28
<PAGE>

COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Legal matters in connection with the issuance of shares of beneficial interest
of the Fund are passed upon by Paul, Hastings, Janofsky & Walker LLP, 75 East
55th Street, New York, NY 10022.

PricewaterhouseCoopers LLP, PricewaterhouseCoopers Center, 300 Madison Avenue,
New York, NY 10017, independent registered public accounting firm, have been
selected as the independent registered public accountants for the Fund.

VI.  BROKERAGE ALLOCATION AND OTHER PRACTICES

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. Thus, the Fund will select a broker
for such a transaction based upon which broker can effect the trade 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 Securities 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 to the extent prohibited by applicable law. In addition, the Fund
will not buy bankers' acceptances, certificates of deposit or commercial paper
from the Manager or its affiliates.

VII.  CAPITAL STOCK AND OTHER SECURITIES

The Fund has an unlimited authorized number of shares of beneficial interest,
having a par value of one tenth of one cent ($.01) per share. These shares are
entitled to one vote per share with proportional voting for fractional shares.
The Fund's Board of Trustees is authorized to divide the shares into separate
series of shares, one for each of the Portfolios that may be created. 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.


The Money Market Portfolio is subdivided into nine Classes of shares of
beneficial interest, Institutional Class, Institutional Service Class, Investor
Class, Investor Service Class, Short Term Income Shares Class, Retail Class,
Advantage Shares, Xpress Shares and Pinnacle Class. The U.S. Treasury Portfolio
is subdivided into seven Classes of shares of beneficial interest, Institutional
Class, Institutional Service Class, Investor Class, Investor Service Class,
Short Term Income Shares Class, Retail Class and Pinnacle Class. The U.S.
Government Portfolio is subdivided into six Classes of shares of beneficial
interest, Institutional Class, Institutional Service Class, Investor Class,
Investor Service Class, Retail Class and Advantage Shares. The Municipal Money
Market Portfolio is subdivided into seven Classes of shares of beneficial
interest, Institutional Class, Institutional Service Class, Investor Class,
Investor Service Class, Short Term Income Shares Class, Retail Class and
Advantage Shares. Each share, regardless of Class, will represent an interest in
the same portfolio of investments and will have identical voting, dividend,
liquidation and other


                                       29
<PAGE>


rights, preferences, powers, restrictions, limitations, qualifications,
designations and terms and conditions, except that: (i) each Class shares will
have different Class designations; (ii) all class shares except Institutional
Class and Pinnacle Class are assessed a service fee pursuant to the Plans of
0.25% of the Class' shares' average daily net assets; (iii) only the Investor
Class, Investor Service Class, Short Term Income Shares Class, Retail Class,
Advantage Shares and Xpress Shares will be assessed a distribution fee pursuant
to the Plans of 0.20%, 0.45%, 0.45%, 0.65%, 0.75% and 0.75%, of the average
daily net assets, respectively; (iv) only the Advantage Shares and Xpress Shares
will be assessed an additional sub-accounting fee of up to 0.10% of the average
daily net assets of the Advantage Shares and Xpress Shares of the Fund; (v) each
Class of each Portfolio will vote separately on matters relating solely to that
Class under the Plans and any related agreements in accordance with provisions
of Rule 12b-1. 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.


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

The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
Trustees can elect 100% of the Trustees if the holders choose to do so. In that
event, the holders of the remaining shares will not be able to elect any person
or persons to the Board of Trustees. 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
or special meetings only (i) for the election (or re-election) of Trustees, (ii)
for approval of the revised investment advisory contracts with respect to a
particular class or series of beneficial interest, (iii) for approval of the
Fund's distribution agreement with respect to a particular class or series of
beneficial interest, and (iv) upon the written request of shareholders entitled
to cast not less than 10% of all the votes entitled to be cast at such meeting.
Annual and other meetings may be required with respect to such additional
matters relating to the Fund as may be required by the 1940 Act, including the
removal of Fund Trustee(s) and communication among shareholders, any
registration of the Fund with the SEC or any state, or as the Trustees may
consider necessary or desirable. Each Trustee serves until his successor is
elected or qualified, or until such Trustee sooner dies, resigns, retires or is
removed by the vote of the shareholders.

VIII.  PURCHASE, REDEMPTION AND PRICING OF SHARES

The material relating to the purchase, redemption and pricing of shares for each
Class of shares is located in the Shareholder Information section of each
Prospectus and is hereby incorporated by reference.

NET ASSET VALUE

The Fund does not determine net asset value per share on (i) any day in which
the New York Stock Exchange is closed for trading (I.E., New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas) and (ii) Columbus Day and Veterans'
Day. However, on certain days that the New York Stock Exchange is closed, the
Fund, at the direction of the Manager, may be open for purchases and redemptions
and will determine its net asset value.

The net asset value of each Portfolio of the Fund's shares is determined as of
4:00 p.m., Eastern time, on each Fund Business Day (as defined in the
Prospectus). The net asset value of a Portfolio is computed by dividing the
value of the net assets for such Portfolio (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 Portfolio.

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. If fluctuating interest
rates or credit issues 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 Trustees will consider 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 Trustees has established procedures to stabilize the net
asset value at $1.00 per share. 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. 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

                                       30
<PAGE>

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
Manager determines present minimal credit risks, and will comply with certain
reporting and record keeping procedures. The Fund has also established
procedures to ensure compliance with the requirement that portfolio securities
are First Tier Eligible Securities. (See "Description of the Fund and Its
Investments and Risks" herein.)

IX.  TAXATION OF THE FUND


The Fund, for each portfolio, has elected to qualify and intends to continue to
qualify as a regulated investment company under the Code. To qualify as a
regulated investment company, each portfolio must distribute to shareholders at
least 90% of its investment company taxable income (which includes, among other
items, dividends, taxable interest and the excess of net short-term capital
gains over net long-term capital losses), and meet certain diversification of
assets, source of income, and other requirements of the Code. By meeting these
requirements, each portfolio generally will not be subject to federal income tax
on its investment company taxable income distributed to shareholders or on its
net capital gains (the excess of net long-term capital gains over net short-term
capital losses) designated by each portfolio in a notice to shareholders as
capital gain dividends and distributed to shareholders. If a portfolio does not
meet all of these Code requirements, it will be taxed as an ordinary corporation
and its distributions will generally be eligible for taxation to shareholders as
dividend income to the extent of such portfolios current or accumulated earnings
and profits. In determining the amount of net capital gains to be distributed,
any capital loss carryover from prior years will be applied against capital
gains to reduce the amount of distributions paid.

Amounts, other than tax-exempt interest, not distributed on a timely basis in
accordance with a calendar year distribution requirement may subject a portfolio
to a nondeductible 4% excise tax. To prevent imposition of the excise tax, each
portfolio must distribute for the calendar year an amount equal to the sum of
(1) at least 98% of its ordinary income (excluding any capital gains or losses)
for the calendar year, (2) at least 98% of the excess of its capital gains over
capital losses (adjusted for certain losses) for the one-year period ending
October 31 of such year, and (3) all ordinary income and capital gain net income
(adjusted for certain ordinary losses) for previous years that were not
distributed or taxed during such years.


Generally, on the sale or exchange of obligations held for more than one year,
gain realized by the Fund that is not attributable to accrued market discount
will be long-term capital gain. However, gain on the disposition of a bond
purchased at a market discount generally will be treated as ordinary income
rather than capital gain to the extent of the accrued market discount.

Distributions of investment company taxable income generally are taxable to
shareholders as ordinary income. The Municipal Portfolio intends to hold
sufficient municipal obligations that pay interest which is exempt from regular
federal income tax under Code Section 103 in order for the Municipal Portfolio
to qualify to pay exempt-interest dividends. A shareholder receiving an
exempt-interest dividend may treat it as an item of interest excludable from
gross income under Code Section 103 for purposes of calculating regular federal
income tax liability. Distributions from the Fund are not eligible for the
dividends-received deduction available to corporations. Distributions of net
capital gains, if any, designated by the Fund as capital gain dividends are
taxable to shareholders as long-term capital gains, regardless of the length of
time the Fund's shares have been held by the shareholder. All distributions are
taxable to the shareholder whether reinvested in additional shares or received
in cash. Shareholders will be notified annually as to the federal tax status of
distributions.

Upon the taxable disposition (including a sale or redemption) of shares of the
Fund, a shareholder may realize a gain or loss, depending upon its basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands, and will be long-term or
short-term, generally depending upon the shareholder's holding period for the
shares. Non-corporate shareholders are subject to tax at a maximum rate of 15%
on capital gains resulting from the disposition of shares held for more than 12
months. A loss realized by a shareholder on the disposition of Fund shares with
respect to which capital gains dividends have been paid will, to the extent of
such capital gain dividends, also be treated as long-term capital loss if such
shares have been held by the shareholder for six months or less.

Income received by the Fund from sources within foreign countries may be subject
to withholding and other similar income taxes imposed by the foreign country,
which may decrease the net return on foreign investments as compared to
dividends and interest paid by domestic issuers. The Fund does not expect to be
eligible to elect to allow shareholders to claim such foreign taxes as a credit
against their U.S. tax liability.

The Fund is required to report to the IRS all distributions to shareholders
except in the case of certain exempt shareholders. Distributions by the Fund
(other than distributions to exempt shareholders) are generally subject to

                                       31
<PAGE>

backup withholding of federal income tax at a rate of 28% if (1) the shareholder
fails to furnish the Fund with and to certify the shareholder's correct taxpayer
identification number or social security number, (2) the IRS notifies the Fund
or a shareholder that the shareholder has failed to report properly certain
interest and dividend income to the IRS and to respond to notices to that
effect, or (3) when required to do so, the shareholder fails to certify that he
or she is not subject to backup withholding. If the withholding provisions are
applicable, distributions (whether requested to be reinvested in additional
shares or taken in cash) will be reduced by the amounts required to be withheld.
Backup withholding is not an additional tax and any amounts withheld maybe
credited against a shareholder's ultimate federal income tax liability if
appropriate documentation is provided.

The foregoing discussion relates only to federal income tax law as applicable to
U.S. persons (I.E., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and the treatment of distributions under state and
local income tax laws may differ from the federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of federal, state and local taxation. Shareholders who are not U.S.
persons should consult their tax advisors regarding U.S. foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. tax at a rate of
30% (or at a lower rate under a tax treaty if one applies).

Distributions from the U.S. Treasury Portfolio and U.S. Government Portfolio
that are derived from interest on certain obligations of the United States
Government and agencies thereof may be exempt from state and local taxes in
certain states. The preceding discussion and that in the Tax Section of the
prospectus assumes that a shareholder is subject to tax as a resident of the
United States, is not subject to special taxing rules, holds its shares as
capital assets and not part of a hedge or straddle transaction. Investors should
consult their own tax advisors regarding specific questions as to federal,
state, local or foreign taxes.

X.  UNDERWRITERS

The Fund sells and redeems its shares on a continuing basis at their net asset
value. The Fund does not impose a front end sales charge for either purchases or
redemptions, although there may be a fee imposed on certain wire redemption
requests. The Distributor does not receive an underwriting commission. In
effecting sales of Fund shares under the Distribution Agreement, the
Distributor, 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. The Distribution Agreement
with respect to the Institutional Class, Institutional Service Class and
Pinnacle Class will receive nominal consideration (I.E., $1.00) for providing
such distribution related services. Pursuant to the Distribution Agreements for
the Investor Class, Investor Service Class, Short Term Income Shares Class,
Retail Class, Advantage Shares and Xpress Shares, the Distributor receives a fee
of 0.20%, 0.45%, 0.45%, 0.65%, 0.75% and 0.75% per annum of the shares' average
daily net assets, respectively, for providing distribution related services and
for making payments to Participating Organizations for providing assistance in
distributing these shares.

The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. On November 16, 1999,
President Clinton signed the Gramm-Leach-Bliley Act (the "Act"), repealing
certain provisions of the Glass-Steagall Act which have restricted affiliation
between banks and securities firms and amending the Bank Holding Company Act
thereby removing restrictions on banks and insurance companies. The Act grants
banks authority to conduct certain authorized activity through financial
subsidiaries. In the opinion of the Manager, however, based on the advice of
counsel, these laws and regulations do not prohibit such depository institutions
from providing other services for investment companies such as the shareholder
servicing and related administrative functions referred to above. The Fund's
Board of Trustees will consider appropriate modifications to the Fund's
operations, including discontinuance of any payments then being made under the
Plans to banks and other depository institutions, in the event of any future
change in such laws or regulations which may affect the ability of such
institutions to provide the above-mentioned services. It is not anticipated that
the discontinuance of payments to such an institution would result in loss to
shareholders or change in the Fund's net asset value. In addition, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.

XII.  FINANCIAL STATEMENTS


The audited financial statements for the Fund for the fiscal year ended March
31, 2008, and the report therein of PricewaterhouseCoopers LLP, are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.


                                       32
<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.

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: This designation denotes superior credit quality. Excellent protection is
afforded by established cash flows, highly reliable liquidity support, or
demonstrated broad based access to the market for refinancing.

MIG-2: This designation denotes strong credit quality. Margins of protection are
ample, although not as 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 to a 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.

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: An obligor rated A-1 has a strong capacity to meet its financial
commitments. Those issues determined to possess strong safety characteristics
will be denoted with a plus (+) sign designation.

A-2: An obligor rated A-2 has a satisfactory capacity to meet its financial
commitments. 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.

                                       33

<PAGE>
                           PART C - OTHER INFORMATION

ITEM 23. EXHIBITS.

(a)  Declaration of Trust of the Registrant filed with Post-Effective Amendment
     No. 8 to the Registration Statement on Form N-1A on July 29, 1999, and
     incorporated herein by reference.

(a.1) Amendment to the Declaration of Trust of the Registrant filed with
     Post-Effective Amendment No. 18 to the Registration Statement on Form N-1A
     on October 25, 2006, and incorporated herein by reference.

(b)  Amended and Restated By-Laws of the Registrant filed with Post-Effective
     Amendment No. 10 to the Registration Statement on Form N-1A on July 27,
     2001, and incorporated herein by reference.

(c)  Not applicable.

(d)  Investment Management Contract dated October 30, 2000, between the
     Registrant and Reich & Tang Asset Management, LLC formerly known as Reich &
     Tang Asset Management L.P. filed with Post-Effective Amendment No. 10 to
     the Registration Statement on Form N-1A on July 27, 2001, and incorporated
     herein by reference.

(d.1) Amendment to the Investment Management Contract dated July 20, 2006,
     between the Registrant and Reich & Tang Asset Management, LLC.

(e)  Form of Amended and Restated Distribution Agreement dated October 30, 2000,
     as amended and restated on July 20, 2006, September 21, 2006 and May 22,
     2007 between the Registrant and Reich & Tang Distributors, Inc. filed with
     Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A
     on May 24, 2007, and incorporated herein by reference.

(e.1) Distribution Agreement (relating to the Advantage Class Shares), dated
     July 20, 2006, between the Registrant and Reich & Tang Distributors, Inc.
     filed with Post-Effective Amendment No. 18 to the Registration Statement on
     Form N-1A on October 25, 2006, and incorporated herein by reference.

(e.2) Distribution Agreement (relating to the money market Xpress Fund Shares),
     dated July 20, 2006, between the Registrant and Reich & Tang Distributors,
     Inc. filed with Post-Effective Amendment No. 18 to the Registration
     Statement on Form N-1A on October 25, 2006, and incorporated herein by
     reference.

(f)  Not applicable.


(g)  Custody Agreement between the Registrant and The Bank of New York Mellon
     filed with Post-Effective Amendment No. 16 to the Registration Statement on
     Form N-1A on July 28, 2006, and incorporated herein by reference.

(g.1) Amendment to the Custody Agreement dated October 16, 2006, between the
     Registrant and The Bank of New York Mellon filed with Post-Effective
     Amendment No. 19 to the Registration Statement on Form N-1A on May 24,
     2007, and incorporated herein by reference.

(g.2) Amendment to Schedule I of the Custody agreement dated July 21, 2008,
     between the Registrant and The Bank of New York Mellon.

(g.3) Amendment to Schedule II of the Custody Agreement dated July 21, 2008,
     between the Registrant and the Bank of New York Mellon.


(h)  Administrative Services Agreement dated October 30, 2000, between the
     Registrant and Reich & Tang Asset Management, LLC formerly known as Reich &
     Tang Asset Management L.P. filed with Post-Effective Amendment No. 10 to
     the Registration Statement on Form N-1A on July 27, 2001, and incorporated
     herein by reference.

(h.1) Amendment to the Administrative Services Agreement dated July 20, 2006,
     between the Registrant and Reich & Tang Asset Management, LLC.

                                       C-1
<PAGE>
(h.2) Transfer Agency Agreement and Addendum to the Transfer Agency Agreement
     between Registrant and Reich & Tang Services, Inc. filed with
     Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A
     on July 28, 2003, and incorporated herein by reference.


(h.3) Fund Accounting Agreement between the Registrant and The Bank of New York
     Mellon filed with Post-Effective Amendment No. 15 to the Registration
     Statement on Form N-1A on July 29, 2005, and incorporated herein by
     reference.

(h.4) Amendment to the Fund Accounting Agreement dated October 16, 2006, between
     the Registrant and The Bank of New York Mellon filed with Post-Effective
     Amendment No. 19 to the Registration Statement on Form N-1A on May 24,
     2007, and incorporated herein by reference.

(h.5) Cash Management Agreement and Related Services Agreement between the
     Registrant and The Bank of New York Mellon filed with Post-Effective
     Amendment No. 10 to the Registration Statement on Form N-1A on July 29,
     2005, and incorporated herein by reference.

(h.6) Amendment to the Cash Management Agreement and Related Services Agreement
     dated October 16, 2006, between the Registrant and The Bank of New York
     Mellon filed with Post-Effective Amendment No. 19 to the Registration
     Statement on Form N-1A on May 24, 2007, and incorporated herein by
     reference.


(h.7) Form of Amended and Restated Expense Limitation Agreement dated May 22,
     2007 among the Registrant, on behalf of the Institutional Class,
     Institutional Service Class, Investor Class, Investor Service Class, Short
     Term Income Shares Class, Retail Class and Pinnacle Class filed with
     Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A
     on May 24, 2007, and incorporated herein by reference.


(h.8) Sub-Accounting Agreement between the Registrant and Reich & Tang Services,
     Inc., on behalf of the Advantage Class and money market Xpress Fund Shares.


(i)  Opinion of Dechert, Price & Rhoads as to the legality of the securities
     being registered filed with Post-Effective Amendment No. 8 to the
     Registration Statement on Form N-1A on July 29, 1999, and incorporated
     herein by reference.

(i.1) Consent of Paul, Hastings, Janofsky & Walker LLP to the use of their name
     in the Registration Statement.

(j) Consent of Independent Registered Public Accounting Firm filed herewith.


(k)  Audited Financial Statements for the fiscal year ended March 31, 2008 filed
     with the Annual Report on Form N-CSR on June 13, 2008, and incorporated
     herein by reference.

(l)  Written assurance of New England Investment Companies, L.P. that its
     purchase of shares of the registrant was for investment purposes without
     any present intention of redeeming or reselling filed with Post-Effective
     Amendment No. 8 to the Registration Statement on Form N-1A on July 29,
     1999, and incorporated herein by reference.


(m)  Amended and Restated Distribution and Service Plan dated January 25, 2001,
     as amended and restated on January 29, 2004, July 20, 2006 and May 22, 2007
     pursuant to Rule 12b-1 under the Investment Company Act of 1940 filed with
     Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A
     on May 24, 2007, and incorporated herein by reference.

(m.1) Distribution and Service Plan (relating to the Advantage Class Shares),
     dated July 20, 2006, between the Registrant and Reich & Tang Distributors,
     Inc. filed with Post-Effective Amendment No. 18 to the Registration
     Statement on Form N-1A on October 25, 2006, and incorporated herein by
     reference.


(m.2) Distribution and Service Plan (relating to the money market Xpress Fund
     Shares), dated July 20, 2006, between the Registrant and Reich & Tang
     Distributors, Inc. filed with Post-Effective Amendment No. 18 to the
     Registration Statement on Form N-1A on October 25, 2006, and incorporated
     herein by reference.

(m.3) Distribution Agreements between the Registrant and Reich & Tang
     Distributors, Inc. (see Exhibit e - e.2)

(m.4) Form of Amended and Restated Shareholder Servicing Agreement dated October
     30, 2000, as amended and restated on July 20, 2006 and May 22, 2007 between
     the Registrant and Reich & Tang Distributors, Inc. filed with
     Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A
     on May 24, 2007, and incorporated herein by reference.


                                       C-2
<PAGE>

(m.5) Shareholder Servicing Agreement (relating to the Advantage Class Shares),
     dated July 20, 2006, between the Registrant and Reich & Tang Distributors,
     Inc. filed with Post-Effective Amendment No. 18 to the Registration
     Statement on Form N-1A on October 25, 2006, and incorporated herein by
     reference.


(m.6) Shareholder Servicing Agreement (relating to the money market Xpress Fund
     Shares), dated July 20, 2006, between the Registrant and Reich & Tang
     Distributors, Inc. filed with Post-Effective Amendment No. 18 to the
     Registration Statement on Form N-1A on October 25, 2006, and incorporated
     herein by reference.


(n)  Amendment No. 13 to Rule 18f-3 Multi-Class Plan.


(o)  Reserved.

(p)  There are no 17j-1 Codes of Ethics applicable to the Registrant because the
     Registrant is a money market fund.


(q)  Powers of Attorney of the Trustees of the Registrant.


ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.


     The following open-end management investment companies may be considered to
be under common control with the Registrant: California Daily Tax Free Income
Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Florida Daily Municipal Income Fund, New Jersey Daily Municipal Income Fund,
Inc., New York Daily Tax Free Income Fund, Inc., Pax World Money Market Fund,
Inc. and Tax Exempt Proceeds Fund, Inc.


ITEM 25. INDEMNIFICATION.

     The Registrant incorporates herein by reference the response to Item 27 of
the Registration Statement filed with the SEC on July 28, 1997 with
Post-Effective Amendment No. 5.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.

     The description of Reich & Tang Asset Management, LLC ("RTAM") under the
caption "Management, Organization and Capital Structure" in the Prospectus and
"Investment Advisory and Other Services" and "Management of the Fund" in the
Statement of Additional Information constituting parts A and B, respectively, of
this Post-Effective Amendment to the Registration Statement are incorporated
herein by reference.


     RTAM is a limited liability company that is a wholly-owned subsidiary of
Natixis Global Asset Management, L.P. ("Natixis Global AM"). Natixis Global AM
is the managing member and direct owner of RTAM.

     Edward Adrion is a Vice President of RTAM. Mr. Adrion has been associated
with RTAM and its predecessors since November 1996.

     Mia Bottarini is a Vice President of RTAM. Ms. Bottarini has been
associated with RTAM and its predecessors since June 1984.

     Christopher Brancazio is Vice President, Chief Compliance Officer, AML
Officer and Secretary of RTAM since September 2007. Mr. Brancazio is also Chief
Compliance Officer and AML Officer of nine funds in the Reich & Tang Fund
Complex. These funds are all located at 600 Fifth Avenue, New York, NY 10020.
Mr. Brancazio was a Compliance Officer at Bank of New York Asset Management from
February 2007 to August 2007 and served as Vice President, Chief Compliance
Officer, and AML Officer of Trainer Wortham & Co. Inc., and the Trainer Wortham
Mutual Funds from March 2002 to February 2007. Mr. Brancazio is also Vice
President, Chief Compliance Officer, AML Officer and Secretary of Reich & Tang
Services, Inc. and Reich & Tang Distributors, Inc.

     J. Dennis Delafield is a Managing Director of RTAM. Mr. Delafield is the
Chief Executive Officer and Portfolio Manager/Analyst for the Delafield Asset
Management division of RTAM. Mr. Delafield has been associated with RTAM and its
predecessors since December 1991 and is also Chairman and Director of Delafield
Fund, Inc. This fund is located at 600 Fifth Avenue, New York, NY 10020.

     Richard De Sanctis is Chief Operating Officer and Executive Vice President
of RTAM. Mr. De Sanctis has been associated with RTAM and its predecessors since
December 1990. Mr. De Sanctis is also Vice President of nine funds in the Reich
and Tang Fund Complex. Mr. De Sanctis is also Director, Executive Vice President
and Chief Financial Officer of Reich & Tang Distributors, Inc. and is Director,
Executive Vice President and Chief Operating Officer of Reich & Tang Services,
Inc.

                                       C-3
<PAGE>

     Steven W. Duff is Manager, Chief Executive Officer and President of RTAM
and is Chief Investment Officer of the Mutual Funds division. Mr. Duff has been
associated with RTAM and its predecessors since August 1994. Mr. Duff is also a
Director/Trustee of seven funds in the Reich & Tang Fund Complex. These funds
are all located at 600 Fifth Avenue, New York, NY 10020. Mr. Duff also serves as
a Director, President and Chief Executive Officer of Reich & Tang Distributors,
Inc. and is a Director of Reich & Tang Services, Inc.

     Michael Fortugno is a Vice President and Controller of RTAM and Reich &
Tang Services, Inc. Mr. Fortugno was a Controller at Regulatory DataCorp from
August 2002 to April 2008 and served as Assistant Controller at Poseidon
Resources Corporation from July 1999 to August 2002. Mr. Fortugno is also a Vice
President of Reich & Tang Distributors, Inc.

     Barbara Francis is a Senior Vice President of RTAM. Ms. Francis has been
associated with RTAM and its predecessors since January 1997. Ms. Francis is
also a Vice President of Reich & Tang Services, Inc.

     Christopher Gill is a Senior Vice President of RTAM and Reich & Tang
Distributors, Inc. Mr. Gill has been associated with RTAM and its predecessors
since February 1994. Mr. Gill is also a Senior Vice President and Director of
Reich & Tang Services, Inc.

     Thomas Hernly is a Vice President of RTAM. Mr. Hernly has been associated
with RTAM and its predecessors since March 1996. Mr. Hernly is also a Vice
President of Reich & Tang Services, Inc.

     Joseph Jerkovich is a Senior Vice President and Chief Financial Officer of
RTAM and Reich & Tang Services, Inc. Mr. Jerkovich has been associated with RTAM
since September 2004. Mr. Jerkovich is also Treasurer and Assistant Secretary of
nine funds in the Reich & Tang Fund Complex and a Senior Vice President and
Controller of Reich & Tang Distributors, Inc.

     Cleo Kotis is a Vice President of RTAM. Ms. Kotis has been associated with
RTAM and its predecessors since December 1993 and is also Chief Operations
Officer and Vice President of Delafield Fund, Inc. and Delafield Asset
Management. This fund is located at 600 Fifth Avenue, New York, NY 10020.

     Robert A. Krantz is a Manager of RTAM. Mr. Krantz is also Executive Vice
President of Strategic Marketing of Natixis Advisors and Natixis Distributors
since 2004.

     Michael P. Lydon is an Executive Vice President of RTAM and President and
Chief Executive Officer of Reich & Tang Funds. Mr. Lydon has been associated
with RTAM since January 2005. Mr. Lydon is also President and Director/Trustee
of five funds in the Reich & Tang Fund Complex, President of New York Daily Tax
Free Income Fund, Inc., Director of Pax World Money Market Fund, Inc., President
and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc. and Principal
Executive Officer of Delafield Fund, Inc. These funds are all located at 600
Fifth Avenue, New York, NY 10020. Mr. Lydon is also Director, Executive Vice
President and Chief Operations Officer for Reich & Tang Distributors, Inc. and
Director, President and Chief Executive Officer of Reich & Tang Services, Inc.
Prior to December 2007, Mr. Lydon was Vice President of twelve funds in the
Reich & Tang Fund Complex.

     Christine Manna is a Vice President and Assistant Secretary of RTAM. Ms.
Manna has been associated with RTAM since June 1995. Ms. Manna is also Secretary
of nine funds in the Reich & Tang Fund Complex. These funds are all located at
600 Fifth Avenue, New York, NY 10020. Ms. Manna is also a Vice President and
Assistant Secretary of Reich & Tang Distributors, Inc. and Reich & Tang
Services, Inc.

     Andrew Mintz is a Senior Vice President of RTAM. Mr. Mintz has been
associated with RTAM and its predecessors since March 1991. Mr. Mintz is also a
Senior Vice President of Reich & Tang Services, Inc.

     Marty O'Connor is a Vice President of RTAM. Mr. O'Connor has been
associated with RTAM and its predecessors since March 1992. Mr. O'Connor is also
a Vice President of Reich & Tang Services, Inc.

     Clarwin Perillo is a Vice President of RTAM. Mr. Perillo has been
associated with RTAM and its predecessors since May 1996.

     Richard Preuss is a Vice President of RTAM. Mr. Preuss has been associated
with RTAM and its predecessors since July 1986. Mr. Preuss is also a Vice
President of Reich & Tang Services, Inc.

     Robert Rickard is Senior Vice President of RTAM. Mr. Rickard has been
associated with RTAM since December 1991. Mr. Rickard is also Vice President of
nine funds in the Reich & Tang Fund Complex. Mr. Rickard is also Senior Vice
President of Reich & Tang Distributors, Inc.

                                       C-4
<PAGE>

     Vincent Sellecchia is a Managing Director of RTAM and is Chief Investment
Officer and Chief Operating Officer of the Delafield Asset Management division
of RTAM. Mr. Sellecchia has been associated with RTAM and it's predecessors
since December 1991 and is also President of Delafield Fund, Inc. This fund is
located at 600 Fifth Avenue, New York, NY 10020.

     Naomi Friedland-Wechsler is an Executive Vice President and General Counsel
of RTAM. Ms. Friedland-Wechsler has been associated with RTAM since April 2006.

     Duncan Wilkinson is a Manager of RTAM. Mr. Wilkinson is also Senior Vice
President and Deputy Global Chief Financial Officer of Natixis Global Asset
Management, and has been associated with Natixis Global Asset Management since
2000.


         ITEM 27.  PRINCIPAL UNDERWRITERS.

     (a) Reich & Tang Distributors, Inc., the Registrant's distributor, is also
the distributor of California Daily Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund, New
Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund,
Inc., Pax World Money Market Fund, Inc. and Tax Exempt Proceeds Fund, Inc.


     (b) The following are the directors and officers of Reich & Tang
Distributors, Inc. For all persons listed below, the principal address is 600
Fifth Avenue, New York, New York 10020.

<TABLE>
<CAPTION>
Name                                Positions and Offices with the Distributor   Positions and Offices with
                                                                                 the Registrant


<S>                                 <C>                                                 <C>
Christopher Brancazio               Chief Compliance Officer, AML                       Chief Compliance Officer
                                    Officer, Vice President and Secretary               and AML Officer

Richard De Sanctis                  Director, Executive Vice President                  Vice President
                                    and Chief Financial Officer

Steven W. Duff                      Director, President and                             Trustee
                                    Chief Executive Officer

Christopher Gill                    Senior Vice President                               None

Joseph Jerkovich                    Senior Vice President                               Treasurer and
                                    and Controller                                      Assistant Secretary

Michael Lydon                       Director, Executive Vice President                  President and Trustee
                                    and Chief Operations Officer

Christine Manna                     Vice President and Assistant Secretary              Secretary

Robert Rickard                      Senior Vice President                               Vice President

</TABLE>

     (c) Not applicable.

ITEM 28.   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, LLC, 600 Fifth Avenue, New York, NY 10020, the Registrant's
manager; and at The Bank of New York Mellon , 2 Hanson Place - 7th Floor,
Brooklyn, NY 11217, the Registrant's custodian; and at Reich & Tang Services,
Inc., 600 Fifth Avenue, New York, NY 10020, the Registrant's transfer agent and
dividend disbursing agent.


ITEM 29.   MANAGEMENT SERVICES.

          Not applicable.

ITEM 30.   UNDERTAKINGS.

          Not applicable.

                                       C-5
<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that has
met 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 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 July, 2008.


                         DAILY INCOME FUND
                By:      /s/ Michael P. Lydon

                         Michael P. Lydon

                         President


     Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated on July 29, 2008.
<TABLE>
<CAPTION>
         SIGNATURE                                            TITLE             DATE

<S>                                                           <C>               <C>
(1)      Principal Executive Officer
         By: /s/ Michael P. Lydon                             President         July 29, 2008
                 Michael P. Lydon

(2)      Principal Financial and
         Accounting Officer

         By: /s/ Joseph Jerkovich                             Treasurer         July 29, 2008
                 Joseph Jerkovich

         By: /s/ Michael P. Lydon                             Trustee           July 29, 2008
                 Michael P. Lydon

(3)      By: /s/ Steven W. Duff                               Trustee           July 29, 2008
                 Steven W. Duff

         Board of Trustees
         Albert R. Dowden*                                    Trustee
         Carl Frischling*                                     Trustee
         Dr. W. Giles Mellon*                                 Trustee
         Dr. Yung Wong*                                       Trustee
         Robert Straniere*                                    Trustee
         Edward A. Kuczmarski*                                Trustee
         William Lerner*                                      Trustee
         James L. Schultz*                                    Trustee

         By: /s/ Christine Manna                                                July 29, 2008
                 Christine Manna

          Attorney-in-Fact*

*       See exhibit (q) herein for Powers of Attorney.

</TABLE>
<PAGE>
                                  EXHIBIT INDEX


(d.1) Amendment to the Investment Management Contract dated July 20, 2006,
     between the Registrant and Reich & Tang Asset Management, LLC.

(g.2) Amendment to Schedule I of the Custody agreement dated July 21, 2008,
     between the Registrant and The Bank of New York Mellon.

(g.3) Amendment to Schedule II of the Custody Agreement dated July 21, 2008,
     between the Registrant and the Bank of New York Mellon.

(h.1) Amendment to the Administrative Services Agreement dated July 20, 2006,
     between the Registrant and Reich & Tang Asset Management, LLC.

(h.8) Sub-Accounting Agreement between the Registrant and Reich & Tang Services,
     Inc., on behalf of the Advantage Class and money market Xpress Fund Shares.

(i.1) Consent of Paul, Hastings, Janofsky & Walker LLP to the use of their name
     in the Registration Statement.

(j)  Consent of Independent Registered Public Accounting Firm filed herewith.

(n)  Amendment No. 13 to Rule 18f-3 Multi-Class Plan.

(q)  Powers of Attorney of Trustees of the Registrant.