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Registration No. 33-74470
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-
6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Institutional Daily Income Fund
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(Name of Registrant as Specified In Its Charter)
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[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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Institutional Daily Income Fund, Inc.
(the "Fund")
600 Fifth Avenue
New York, New York 10020
August 25, 2000
Dear Shareholder:
As we announced to you in July, our parent company has entered into an
agreement to be acquired by CDC Asset Management, a leading French financial
institution, as more fully described in the enclosed proxy statement. As a
result, we are soliciting your vote for approval of certain items as described
in the enclosed proxy statement. Reading this letter completely may make your
review of the proxy statement easier. We ask that you review the proxy
statement and vote your shares promptly. You can vote by returning the
enclosed card or following the instructions located on your proxy card to vote
via the Internet or touch-tone phone.
Q. What are the Proposals about?
Two proposals are described in the enclosed proxy statement. At the front of
the proxy statement is a table that indicates which proposals are relevant to
your Fund.
The first proposal relates to the advisory agreement for the Fund. The laws
governing mutual funds generally require that when an investment adviser
undergoes a change in ownership, the advisory agreement with the fund will
terminate. In order for the Fund to continue with Reich & Tang Asset
Management L.P. as the investment adviser, shareholders must approve the new
form of agreement. The proposed new agreement is substantially the same as the
current agreement. Fees will not change and no changes are planned to the
portfolio managers of your Fund.
Q. How will the CDC transaction affect the Fund?
The transaction will not affect the daily operations of the Fund or the
investment management activities of Reich & Tang Asset Management L.P. Reich &
Tang Asset Management L.P. and the Fund will continue to operate autonomously,
but will be part of a larger organization with the resources of CDC Asset
Management. We will continue to work to meet your expectations for consistent,
competitive performance and high quality customer service. The Fund's
investment objectives, strategies and portfolio managers are not expected to
change as a result of the transaction.
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Remember--Your Vote Counts!
Your vote is extremely important, even if you only own a few Fund shares.
Voting promptly is also important. If we do not receive enough votes, we will
have to resolicit shareholders, which can be time consuming and may delay the
meeting. You may receive a reminder call to return your proxy from D.F. King &
Company, a proxy solicitation firm.
Now you can use the Internet or your telephone, if you want to vote
electronically. Please see your proxy card for more information and the
instructions. If you do vote electronically, you do not need to mail your
proxy card. However, if you want to change your vote you may do so using the
proxy card, telephone or Internet.
Thank you for your cooperation in voting on these important proposals. If
you have questions, please call your financial representative. Or, if your
questions relate specifically to the proxy matters, please call our service
center representatives toll-free at 1-800-221-3079.
Sincerely,
Steven W. Duff
President
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Preliminary Proxy Materials
Institutional Daily Income Fund
(the "Fund")
600 Fifth Avenue
New York, New York 10020
(212) 830-5220
Notice of Special Meeting of Shareholders
October 10, 2000
A Special Meeting of the shareholders of the Fund will be held at 9:20 a.m.
at the offices of the Fund, 600 Fifth Avenue, New York, New York for these
purposes:
1. To approve a new Investment Management Contract with Reich & Tang
Asset Management L.P.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund for its fiscal year March 31, 2001.
3. To consider and act upon any other matters that properly come before
the meeting and any adjourned session of the meeting.
Shareholders of record at the close of business on August 15, 2000 are
entitled to notice of and to vote at the meeting and any adjourned session.
By order of the Board of Trustees
Bernadette N. Finn
Secretary of the Fund
August 25, 2000
Please respond. Your vote is important. Please complete, sign, date and
return the enclosed proxy card, whether or not you plan to attend the
meeting.
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PROXY STATEMENT
Institutional Daily Income Fund
(the "Fund")
600 Fifth Avenue
New York, New York 10020
(212) 830-5220
The Trustees of Institutional Daily Income Fund (the "Fund"), are soliciting
proxies from the shareholders of the Fund in connection with a Special Meeting
of Shareholders of the Fund (the "Meeting"). The Meeting has been called to be
held on October 10, 2000 at 9:20 a.m. at the offices of the Fund, 600 Fifth
Avenue, New York, New York. The meeting notice, this Proxy Statement and proxy
cards are being sent to shareholders of record on August 15, 2000 (the "Record
Date) beginning on or about August 25, 2000.
The only items of business that the Trustees expect will come before the
Meeting are (i) approval of a new Investment Management Contract for the Fund
(the "New Investment Management Contract") with Reich & Tang Asset Management
L.P. (the "Manager") and (ii) ratification of PricewaterhouseCoopers LLP as
independent accountants for the Fund for its current fiscal year ending March
31, 2001. As explained below, the proposed New Investment Management Contract
is identical (except for its date) to the Investment Management Contract
currently in effect for the Fund (the "Current Investment Management
Contract").
PROPOSAL 1 APPROVAL OF NEW INVESTMENT MANAGEMENT CONTRACT
The reason the Trustees are proposing the New Investment Management Contract
for the Fund is that the Current Investment Management Contract will terminate
when the Manager's parent company, Nvest Companies, L.P. ("Nvest"), is
acquired by a new parent company, CDC Asset Management ("CDC AM"). (A federal
law, the Investment Company Act of 1940, as amended (the "Investment Company
Act"), provides generally that the advisory agreements of mutual funds
automatically terminate when the investment adviser or its parent company
undergo a significant change of ownership.) The Trustees have carefully
considered the matter, and have concluded that it is appropriate to enter into
the New Investment Management Contract for the Fund, so that the Manager can
continue to manage the Fund on the same terms as are now in effect, following
the acquisition of Nvest by CDC AM.
The acquisition of Nvest by CDC AM will occur only if various conditions are
satisfied (or waived by the parties, if permitted by law). These conditions
include, among others, certain government approvals of the acquisition and
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approval of the acquisition by vote of the unitholders of Nvest and Nvest, L.P.
("Nvest, L.P."), Nvest's advising general partner. Nvest currently expects that
the acquisition will occur during the fourth calendar quarter of 2000, but the
acquisition could be delayed. If the acquisition does not occur, the New
Investment Management Contract will not be needed because the automatic
termination of the Current Investment Management Contract will not occur.
Under the Investment Company Act, the Fund cannot enter into a New Investment
Management Contract unless the shareholders of the Fund vote to approve the New
Investment Management Contract. The Meeting is being held to seek shareholder
approval of the New Investment Management Contract. No change in advisory fee
rate is being proposed.
Each share is entitled to cast one vote, and fractional shares are entitled
to a proportionate fractional vote.
The Trustees recommend that the shareholders vote to approve the New
Investment Management Contract.
Description of the New Investment Management Contract
The New Investment Management Contract is identical to the Current Investment
Management Contract, except that the date of the New Investment Management
Contract will be the date that CDC AM acquires Nvest. Appendix A to this Proxy
Statement sets forth information about the Current Investment Management
Contract, including the date of the Current Investment Management Contract and
the advisory fee rates under both the New Investment Management Contract and
the Current Investment Management Contract. Appendix B to this Proxy Statement
contains the form of the Investment Management Contract. The Current Investment
Management Contract and the New Investment Management Contract match the form
in Appendix B, except for the date of the Agreement. The next several
paragraphs briefly summarize some important provisions of the New Investment
Management Contract, but for a complete understanding of the Agreement you
should read Appendixes A and B.
The New Investment Management Contract essentially provides that the Manager,
under the Trustees' supervision, will manage the Fund's portfolio of securities
and make decisions with respect to the purchase and sale of investments,
subject to the general control of the Trustees.
The New Investment Management Contract provides that it will continue in
effect for an initial period of two years (beginning on the date CDC AM
acquires Nvest). After that, it will continue in effect from year to year as
long as the continuation is approved at least annually (i) by the Trustees or
by vote of a
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majority of the outstanding voting securities of the Fund, and (ii) by vote of
a majority of the Trustees who are not "interested persons," as that term is
defined in the Investment Company Act, of the Fund or the Manager (these
Trustees who are not "interested persons" are referred to below as the
"Independent Trustees").
The New Investment Management Contract may be terminated without penalty by
vote of the Trustees or by vote of a majority of the outstanding voting
securities of the Fund, on sixty days' written notice to the Manager, or by the
Manager upon sixty days' written notice to the Fund, and each terminates
automatically in the event of its "assignment" as defined in the Investment
Company Act. The Investment Company Act defines "assignment" to include, in
general, transactions in which a significant change in the ownership of an
investment adviser or its parent company occur (such as the acquisition of
Nvest by CDC AM).
The New Investment Management Contract provides that the Manager will not be
liable to the Fund or its shareholders, except for liability arising from the
Manager's willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Pursuant to an Administrative Services Contract with the Fund, the Manager
also performs clerical, accounting supervision and office service functions for
the Fund and provides the Fund with personnel to (i) supervise the performance
of bookkeeping related services by Investors Fiduciary Trust Company, (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.
The Manager at its discretion may waive its rights to any portion of the
management fee or the administrative services fee and may use any portion of
the management fee and the administrative services fee for purposes of
shareholder and administrative services and distribution of the Fund's shares.
There can be no assurance that such fees will be waived in the future.
Distribution and Service Plan. Pursuant to Rule 12b-1 under the Investment
Company Act, the Securities and Exchange Commission has required that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Fund's Board has adopted a distribution and service plan (the "Plan") and,
pursuant to the Plan, has entered into a Distribution Agreement and a
Shareholder Servicing Agreement (with respect to Class A shares only) with
Reich & Tang Distributors, Inc. (the "Distributor") as distributor of the
Fund's shares. Because the acquisition of Nvest by CDC AM will be considered to
result in the
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assignment of the Fund's Distribution and Shareholder Servicing Agreements
with the Distributor, causing those agreements to terminate upon the
acquisition, the Board approved a new Distribution Agreement and a new
Shareholder Servicing Agreement with Reich & Tang Distributors, Inc. to take
effect if a New Investment Management Agreement is approved by shareholders of
the Fund and upon consummation of the acquisition. The new agreements would
replace the current agreements with the Distributor and would be identical to
that agreement, except for the dates of execution and effectiveness. These new
agreements do not require the approval of the Fund's shareholders.
Basis for the Trustees' Recommendation
The Trustees determined at a meeting held on July 25, 2000 to recommend that
the Fund's shareholders vote to approve the New Investment Management
Contract.
In coming to this recommendation, the Trustees considered a wide range of
information of the type they regularly consider when determining whether to
continue the Fund's advisory agreement as in effect from year to year. The
Trustees considered information about, among other things:
. the Manager and its personnel (including particularly those personnel
with responsibilities for providing services to the Fund), resources
and investment process;
. the terms of the investment management contract (in this case, the New
Investment Management Contract);
. the scope and quality of the services that the Manager has been
providing to the Fund;
. the investment performance of the Fund and of similar funds managed by
other advisers;
. the management fee rates payable to the Manager by the Fund and by
other funds and client accounts managed by the Manager, and payable by
similar funds managed by other advisers (Appendix C to this Proxy
Statement contains information comparing the Fund's management fee
schedule to the fee schedule for other funds managed by the Manager
that have investment objectives similar to the Fund's);
. the total expense ratio of the Fund and of similar funds managed by
other advisers;
. the Manager's practices regarding the selection and compensation of
brokers and dealers that execute portfolio transactions for the Fund,
and the brokers' and dealers' provision of brokerage and research
services to the Manager (see "Certain Brokerage Matters" below for
more information about these matters); and
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. compensation payable by the Fund to affiliates of the Manager for
other services (see Appendix D to this Proxy Statement for more
information about this compensation).
In addition to reviewing these kinds of information, which the Trustees
regularly consider on an annual or more frequent basis, the Trustees gave
particular consideration to matters relating to the possible effects on the
Manager and the Fund of the acquisition of Nvest by CDC AM. Among other
things, the Trustees considered:
. the stated intention of Nvest and CDC AM that the Manager will
continue to have a high degree of managerial autonomy from its parent
organizations and from other subsidiaries of Nvest;
. the stated intention of Nvest, CDC AM and the Manager that the
acquisition not change the investment approach or process used by the
Manager in managing the Fund;
. representations of senior executives of the Manager and the portfolio
managers of the Fund that they have no intention of terminating their
employment with the Manager as a result of CDC AM's acquisition of
Nvest, and representations of the Manager, Nvest and CDC AM that they
have no intention of terminating the employment of these executives or
portfolio managers as a result of the acquisition;
. certain actions taken by CDC AM, Nvest and the Manager to help retain
and incent key personnel of Nvest and the Manager;
. assurances from the Manager that it has no plans, as a result of or in
connection with CDC AM's acquisition of Nvest, to change or
discontinue existing arrangements under which it waives fees or bears
expenses of the Fund;
. the general reputation and the financial resources of CDC AM and its
parent organizations; and
. the fact that affiliates of the Manager who currently provide transfer
agency, distribution and shareholder services to the Fund are willing
to continue to do so following the acquisition, and that the
compensation rates payable by the Fund for these services are not
expected to change as a result of the acquisition.
In addition, the Trustees considered that the agreement relating to the
acquisition of Nvest by CDC AM provides that CDC AM and its immediate parent
company will (subject to certain qualifications) use their reasonable best
efforts to assure compliance with Section 15(f) of the Investment Company Act.
Section 15(f) provides that a mutual fund investment adviser or its affiliates
can receive benefit or compensation in connection with a change of control of
the investment
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adviser (such as CDC AM's acquisition of the Manager's parent, Nvest) if two
conditions are satisfied. First, for three years after the change of control,
at least 75% of the members of the board of any registered investment company
advised by the adviser must consist of persons who are not "interested
persons," as defined in the Investment Company Act, of the adviser. (No
changes in the current composition of the Trustees are required to satisfy
this condition.) Second, no "unfair burden" may be imposed on any such
registered investment company as a result of the change of control transaction
or any express or implied terms, conditions or understandings applicable to
the transaction. "Unfair burden" means any arrangement, during the two years
after the transaction, by which the investment adviser or any "interested
person" of the adviser receives or is entitled to receive any compensation,
directly or indirectly, from such investment company or its security holders
(other than fees for bona fide investment advisory or other services) or from
any other person in connection with the purchase or sale of securities or
other property to, from or on behalf of such investment company.
After carefully considering the information summarized above, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Investment Management Contract for the Fund and to recommend that the Fund's
shareholders vote to approve the New Investment Management Contract.
Information About the Ownership of the Manager and the CDC AM/Nvest
Transaction
The Manager is a limited partnership which has one general partner, Reich &
Tang Asset Management, Inc. (the "Manager General Partner"). Mr. Steven W.
Duff is the principal executive officer of the Manager's Mutual Funds
Division. Mr. Duff's principal occupation is his position with the Manager's
Mutual Fund Division. The address of the Manager, the Manager General Partner
and Mr. Duff is 600 Fifth Avenue, New York, New York 10020. The Manager also
advises pension trusts, profit-sharing trusts and endowments. The Manager
General Partner is a direct wholly-owned subsidiary of Nvest Holdings, Inc.
("Nvest Holdings"), which in turn is a direct wholly-owned subsidiary of
Nvest. Nvest's managing general partner, Nvest Corporation, is a direct
wholly-owned subsidiary of MetLife New England Holdings, Inc. MetLife New
England Holdings, Inc. is a direct wholly-owned subsidiary of Metropolitan
Life Insurance Company ("MetLife"). Nvest Corporation is also the sole general
partner of Nvest, L.P. Nvest, L.P., Nvest's advising general partner, is a
publicly traded company listed on the New York Stock Exchange. In addition to
owning Nvest Corporation, MetLife owns, directly or indirectly, approximately
a 48% limited partnership interest in Nvest. Nvest, L.P. owns approximately
15% of Nvest. (These percentages, which are as of June 30, 2000, do not
reflect the vesting and exercise, described below, of various options held by
personnel of Nvest and of its affiliates, including the Manager, to
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acquire limited partnership units of Nvest, L.P.) If the proposed acquisition
is completed, Nvest Corporation will cease to be the managing general partner
of Nvest and the general partner of Nvest, L.P., and MetLife will cease to own
any partnership interest in Nvest. MetLife is a wholly-owned subsidiary of
MetLife, Inc., a publicly traded company listed on the New York Stock
Exchange. The address of Nvest, Nvest Corporation, Nvest Holdings and Nvest,
L.P. is 399 Boylston Street, Boston, Massachusetts 02116. The address of
MetLife New England Holdings, Inc., MetLife and MetLife, Inc. is One Madison
Avenue, New York, New York 10010.
On June 16, 2000, Nvest and CDC AM announced that they and certain of their
respective affiliated companies had entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Under the Merger Agreement, CDC AM would
acquire all of the outstanding units of partnership interest in both Nvest and
Nvest, L.P., at a price of $40 per unit. This price is subject to reduction
(but not below $34 per unit) based in part on a formula that takes into
account the investment advisory fees payable to the Manager and other Nvest
affiliates by their mutual fund and other investment advisory clients that
have consented to the transaction. Under this formula, the price per unit that
CDC AM will pay to acquire Nvest, including the price it will pay to those
Fund trustees and officers who hold or have been granted options to acquire
units (see below), could be reduced if a Fund's shareholders do not approve
the New Investment Management Contract for their Fund. Assuming a transaction
price of $40 per unit, and the number of units and options outstanding as of
June 30, 2000, the aggregate price payable by CDC AM to acquire all of the
units of Nvest will be approximately $1.5 billion, and the aggregate price
payable by CDC AM to acquire all of the units of Nvest, L.P. (including
payments with respect to units subject to options) will be approximately $375
million.
The transaction will not occur unless various conditions are satisfied (or
waived by the parties, if permitted by law). One of these conditions is
obtaining approval or consent from investment advisory clients of the Manager
and other Nvest affiliates (including mutual fund clients) whose advisory fees
represent a specified percentage of the total advisory fee revenues of the
Nvest organization. Because of this condition, approval or disapproval by the
Fund's shareholders of a New Investment Management Contract, taken together
with other clients' consents or approvals, could affect whether or not the
transaction occurs. As described below, certain trustees and officers of the
Fund will receive certain material payments or benefits if the transaction
occurs. The transaction will result in the automatic termination of the
Current Investment Management Contract. If for some reason the transaction
does not occur, the automatic termination of the Current Investment Management
Contract will not occur, and the New Investment Management Contract will not
be entered into, even if it has been approved by the Fund's shareholders.
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As a result of the acquisition, Nvest and Nvest, L.P. would become indirect
wholly-owned subsidiaries of CDC AM, which in turn is 60% owned by CDC
Finance, a wholly-owned subsidiary of Caisse des depots et Consignations
("CDC"). Founded in 1816, CDC is a major diversified financial institution
with a strong global presence in the banking, insurance, investment banking,
asset management and global custody industries. In addition to its 60%
ownership of CDC AM through CDC Finance, CDC owns 40% of CNP Assurances, the
leading French insurance company, which itself owns 20% of CDC AM. CDC also
owns 35% of Caisse National des Caisses d'Epargne, which also owns 20% of CDC
AM. CDC is 100% owned by the French state. The main place of business of CDC
AM is 7, place des Cinq Martyrs du Lycee Buffon, 75015 Paris, France. The
registered address of CDC Finance is 56 rue de Lille, 75007 Paris, France. The
registered address of CDC is 56 rue de Lille, 75007 Paris, France. The
registered address of CNP Assurances is 4, place Raoul Dautry, 75015 Paris,
France. The registered address of Caisse National des Caisses d'Epargne is 5,
rue Masseran, 75007 Paris, France. Following the acquisition, it is expected
that Nvest will be renamed CDC Asset Management--North America.
Various personnel of Nvest and of its affiliates, including the Manager,
have previously been granted options to purchase limited partnership units of
Nvest, L.P. ("Nvest L.P. Units"). The Merger Agreement provides that these
options will vest and become fully exercisable immediately before CDC AM's
acquisition of Nvest and Nvest, L.P., even though some of these options would
not otherwise have vested or been exercisable at that time. Each option will
be converted into the right to receive cash from Nvest in an amount equal to
the difference between the option's exercise price and the transaction price
of $40 per unit (subject to reduction, but not below $34 per unit, as
explained above).
Certain Relationships and Interests of Fund Trustees and Officers. Steven W.
Duff, a Trustee and officer of the Fund, and the following persons who are
officers of the Fund are also officers or employees of the Manager or
directors of the Manager General Partner: Richard De Sanctis, Molly Flewharty,
Bernadette N. Finn, Roseanne Holtzer, Lesley M. Jones and Dana E. Messina
(collectively, the "Manager Affiliates"). Some of the Manager Affiliates,
including Mr. Duff, own partnership units in Nvest or Nvest, L.P. or have the
right to acquire partnership units under options and, upon completion of CDC
AM's acquisition of Nvest, will receive the consideration provided in the
Merger Agreement for the partnership units they own or have the right to
acquire under options. Depending on the number of units a Manager Affiliate
owns or has the right to acquire, the amount of consideration he or she
receives could be substantial. Also, in connection with CDC AM's acquisition
of Nvest, CDC AM will establish a retention program under which certain
Manager Affiliates, including Mr. Duff, may receive cash retention awards
payable over one to three years. To receive these
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awards, which are in addition to regular salary and bonus payments and in some
cases may be substantial in amount, an eligible Manager Affiliate must remain
employed by the Manager and must agree to refrain from competing with the
Manager and soliciting clients of the Manager.
Certain Brokerage Matters
In their consideration of the New Investment Management Contract, the
Trustees took account of the Manager's practices regarding the selection and
compensation of brokers and dealers that execute portfolio transactions for
the Fund, and the brokers' and dealers' provision of brokerage and research
services to the Manager. The Manager has informed the Trustees that it does
not expect to change these practices as a result of CDC AM's acquisition of
Nvest. The following is a summary of these practices:
The Fund's purchases and sales of portfolio securities are usually principal
transactions. Portfolio securities are generally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There are usually 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 Obligations with a
demand feature from banks or other financial institutions at a negotiated
yield to the Fund based on the applicable interest rate adjustment index for
the security.
The interest received by the Fund is net of a fee charged by the issuing
institution for servicing the underlying obligation and issuing the
participation certificate, letter of credit, guarantee or insurance and
providing the demand repurchase feature.
Allocation of transactions, including their frequency, to various dealers is
determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities
will be given to banks or dealers that are Participating Organizations.
Investment decisions for the Fund will be made independently from those for
any other accounts or investment companies that may be or become managed by
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the Manager or its affiliates. If, however, the Fund and other investment
companies or accounts managed by the Manager are contemporaneously engaged in
the purchase or sale of the same security, the transactions may be averaged as
to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by the Fund or the size of
the position obtainable for the Fund. In addition, when purchases or sales of
the same security for 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 advantages available to large
denomination purchasers or sellers.
No portfolio transactions are executed with the Manager or its affiliates
acting as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Manager or its
affiliates.
PROPOSAL 2 RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees recommend that the shareholders ratify the selection of
PricewaterhouseCoopers LLP, independent public accountants, to audit the
accounts of each Fund for the fiscal year ending March 31, 2001.
PricewaterhouseCoopers LLP performed the audit for the Fund's fiscal year
ended March 31, 2000. The accounting firm of McGladrey & Pullen LLP or its
predecessors had audited the accounts of the Fund since inception. Effective
August 13, 1999, McGladrey & Pullen LLP resigned as the Fund's independent
accountants because its Investment Company Group had joined
PricewaterhouseCoopers LLP. At that time, PricewaterhouseCoopers LLP was
recommended to the Board by the Audit Committee and appointed as independent
accountants by the Trustees. PricewaterhouseCoopers LLP does not have any
direct financial interest or any material indirect financial interest in the
Fund.
A representative of PricewaterhouseCoopers LLP is not expected to be present
at the shareholder's meeting. If the shareholders do not ratify the Trustees'
recommendation, the Trustees will submit another proposal to the shareholders
with a recommendation for independent public accountants.
Other Information
Principal Distributor's Address. The address of the Fund's principal
distributor, Reich Tang Distributor's Inc., is 600 Fifth Avnue, New York, New
York, 10020.
Fund Annual Report. The Fund has previously sent its Annual Report to its
shareholders. You can obtain a copy of this Report without charge by writing
to the Fund at 600 Fifth Avenue, New York, New York 10020 or by calling 1-800-
221-3079.
Certain Purchases and Sales of Securities of Nvest, Nvest, L.P. and MetLife,
Inc. No Board Member had any purchases or sales of any securities of the
Manager, Nvest or MetLife, Inc. since the beginning of the Fund's most
recently completed fiscal year, except purchases or sales that represented one
percent or less of the outstanding securities of any class of those companies.
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Outstanding Shares and Significant Shareholders. Appendix E to this Proxy
Statement lists the total number of shares outstanding as of August 15, 2000
for the Fund's shares entitled to vote at the Meeting. It also identifies
holders of more than 5% of any class of shares, and contains information about
the shareholdings in the Fund of the Trustees and the executive officers of
the Fund. Only shareholders of record at the close of business on August 15,
2000 are entitled to vote at the Meeting.
Information About Proxies and the Conduct of the Meeting
Solicitation of Proxies. Proxies will be solicited primarily by mailing this
Proxy Statement and its enclosures, but proxies may also be solicited through
further mailings, telephone calls, personal interviews or e-mail by officers
of the Fund or by employees or agents of the Manager or of Nvest and its
affiliated companies. In addition, D. F. King & Co., Inc. has been engaged to
assist in the solicitation of proxies, at an estimated cost of $ .
Costs of Solicitation. All of the costs of the Meeting, including the costs
of soliciting proxies, will be paid by the Manager, Nvest or CDC AM. None of
these costs will be borne by the Fund.
Voting and Tabulation of Proxies. Shares represented by duly executed
proxies will be voted as instructed on the proxy. If no instructions are
given, the proxy will be voted in favor of the proposals. You can revoke your
proxy by sending a signed, written letter of revocation to the Secretary of
the Fund, by properly executing and submitting a later-dated proxy or by
attending the Meeting and voting in person.
Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Fund as tellers for the Meeting (the "Tellers"). A majority
of the shares outstanding on the record date, present in person or represented
by proxy, constitutes a quorum for the transaction of business by the
shareholders of the Fund at the Meeting. In determining whether a quorum is
present, the Tellers will count shares represented by proxies that reflect
abstentions, and "broker non-votes," as shares that are present and entitled
to vote. Since these shares will be counted as present, but not as voting in
favor of any proposal, these shares will have the same effect as if they cast
votes against the proposal. "Broker non-votes" are shares held by brokers or
nominees as to which (i) the broker or nominee does not have discretionary
voting power or (ii) the broker or nominee has not received instructions from
the beneficial owner or other person who is entitled to instruct how the
shares will be voted.
11
<PAGE>
Required Vote. The vote required to approve the New Investment Management
Contract is the lesser of (1) 67% of the shares of the Fund that are present at
the Meeting, if the holders of more than 50% of the shares of the Fund
outstanding as of the record date are present or represented by proxy at the
Meeting, or (2) more than 50% of the shares of the Fund outstanding on the
record date. If the required vote is not obtained, the Trustees will consider
what other actions to take in the best interests of the Fund. For the Fund, the
vote required to ratify the selection of PricewaterhouseCoopers LLP as
independent accountants is a majority of the shares of the Fund present at the
Meeting in person or by proxy.
Adjournments; Other Business. If a quorum is not present at the Meeting, or
if a quorum is present but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. In determining
whether to adjourn the Meeting, the following factors may be considered: the
nature of the proposals that are the subject of the Meeting, the percentage of
votes actually cast, the percentage of negative votes actually cast, the nature
of any further solicitation and the information to be provided to shareholders
with respect to the reasons for the solicitation. Any adjournment will require
the affirmative vote of a majority of those shares represented at the Meeting
in person or by proxy. A shareholder vote may be taken on one or more of the
proposals in this proxy statement prior to any adjournment if sufficient votes
have been received for approval.
The Meeting has been called to transact any business that properly comes
before it. The only business that management of the Fund intends to present or
knows that others will present is: (i) the approval of the New Investment
Management Contract and (ii) the ratification of the selection of independent
accountants for the Fund for its fiscal year ending March 31, 2001. If any
other matters properly come before the Meeting, and on all matters incidental
to the conduct of the Meeting, the persons named as proxies intend to vote the
proxies in accordance with their judgment, unless the Secretary of the Fund has
previously received written contrary instructions from the shareholder entitled
to vote the shares.
Shareholder Proposals at Future Meetings. The Fund does hold annual or other
regular meetings of shareholders. Shareholder proposals to be presented at any
future meeting of shareholders of the Fund must be received by the Fund in
writing a reasonable amount of time before the Fund solicits proxies for that
meeting, in order to be considered for inclusion in the proxy materials for
that meeting.
12
<PAGE>
Appendix A
<TABLE>
<CAPTION>
Description
of Board
Member
Action
Regarding
Current Date of Last
Investment Submission
Management of Current
Contract Investment
Date of Current Since Management Contract
Advisory Investment Beginning of for Shareholder
Fee Rate Management Fund's Last Approval and Reason
Name of Fund Schedule Contract Fiscal Year for Submission
------------ ---------- --------------- ------------- --------------------
<S> <C> <C> <C> <C>
Institutional Daily .12% per August 30, 1996 Continuance February 15, 1996*
Income Fund annum of approved
average July 25, 2000
daily
net assets
</TABLE>
-----------
* In 1996, the merger of New England Mutual Life Insurance Company into
Metropolitan Life Insurance Company was treated as a change of control of New
England Investment Companies, L.P., the limited partner and owner of the 99.5%
limited partnership interest in the Manager. Such a change of control resulted
in the assignment and automatic termination of the investment management
contracts. Therefore, shareholders were asked to approve new investment
management contracts.
A-1
<PAGE>
Appendix B
FORM OF INVESTMENT MANAGEMENT CONTRACT
INSTITUTIONAL DAILY INCOME FUND
the "Fund"
U.S. Government Portfolio
Money Market Portfolio
Tax Exempt Portfolio
the "Portfolios"
New York, New York
, 2000
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting our
assets in securities of the type, and in accordance with the limitations,
specified in our Declaration of Trust, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Registration Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Trustees. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment of our
assets of our Portfolios as above specified, and, without limiting the
generality of the foregoing, to provide the investment management services
specified below.
(b) Subject to the general control of our Board of Trustees, you will
make decisions with respect to all purchases and sales of the portfolio
securities of the Portfolios. To carry out such decisions, you are hereby
authorized, as our agent and attorney-in-fact for our account and at our
risk and in our name, to place orders for the investment and reinvestment
of our assets. In all purchases, sales and other transactions in our
portfolio securities
B-1
<PAGE>
you are authorized to exercise full discretion and act for us in the same
manner and with the same force and effect as our corporation itself might
or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Trustees at each meeting thereof all
changes in our portfolios since your prior report, and will also keep us
in touch with important developments affecting our portfolios and, on your
initiative, will furnish us from time to time with such information as you
may believe appropriate for this purpose, whether concerning the
individual entities whose securities are included in our portfolios, the
activities in which such entities engage, Federal income tax policies
applicable to our investments, or the conditions prevailing in the money
market or the economy generally. You will also furnish us with such
statistical and analytical information with respect to our portfolio
securities as you may believe appropriate or as we may reasonably request.
In making such purchases and sales of our portfolio securities, you will
comply with the policies set from time to time by our Board of Trustees as
well as the limitations imposed by our Declaration of Trust and by the
provisions of the Internal Revenue Code and the 1940 Act relating to
regulated investment companies and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ, subcontract
with or otherwise associate with yourself, entirely at your expense, such
persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder.
(e) You or your affiliates will also furnish us, at your own expense,
such investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of
any regulatory authority to which you may be subject. You and your
affiliates will also pay the expenses of promoting the sale of our shares
(other than the costs of preparing, printing and filing our registration
statement, printing copies of the prospectus contained therein and
complying with other applicable regulatory requirements), except to the
extent that we are permitted to bear such expenses under a plan adopted
pursuant to Rule 12b-1 under the 1940 Act or a similar rule.
3. We agree, subject to the limitations described below, to be responsible
for, and hereby assume the obligation for payment of, all our expenses,
including: (a) brokerage and commission expenses, (b) Federal, state or local
taxes, including issue and transfer taxes incurred by or levied on us, (c)
commitment fees and certain insurance premiums, (d) interest charges on
borrowings, (e) charges and expenses of our custodian, (f) charges, expenses
and payments relating to the
B-2
<PAGE>
issuance, redemption, transfer and dividend disbursing functions for us, (g)
recurring and nonrecurring legal and accounting expenses, including those of
the bookkeeping agent, (h) telecommunications expenses, (i) the costs of
organizing and maintaining our existence as a corporation, (j) compensation,
including trustees' fees, of any of our trustees, officers or employees who are
not your officers or officers of your affiliates, and costs of other personnel
providing clerical, accounting supervision and other office services to us as
we may request, (k) costs of stockholder services including, charges and
expenses of persons providing confirmations of transactions in our shares,
periodic statements to stockholders, and recordkeeping and stockholders'
services, (l) costs of stockholders' reports, proxy solicitations, and
corporate meetings, (m) fees and expenses of registering our shares under the
appropriate Federal securities laws and of qualifying such shares under
applicable state securities laws, including expenses attendant upon the initial
registration and qualification of such shares and attendant upon renewals of,
or amendments to, those registrations and qualifications, (n) expenses of
preparing, printing and delivering our prospectus to existing shareholders and
of printing shareholder application forms for shareholder accounts, (o) payment
of the fees and expenses provided for herein, under the Administrative Services
Agreement and with respect to Class A Shares only, pursuant to the Shareholder
Servicing Agreement and Distribution Agreement and (p) any other distribution
or promotional expenses contemplated by an effective plan adopted by us
pursuant to Rule 12b-1 under the Act. Our obligation for the foregoing expenses
is limited by your agreement to be responsible, while this Agreement is in
effect, for any amount by which the annual operating expenses for each
Portfolio (excluding taxes, brokerage, interest and extraordinary expenses)
exceed the limits on investment company expenses prescribed by any state in
which the shares for such Portfolio are qualified for sale.
4. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard
of your obligations and duties hereunder.
5. In consideration of the foregoing the Portfolios will pay you a fee at the
annual rate of .12% of each Portfolio's average daily net assets. Your fee will
be accrued by us daily, and will be payable on the last day of each calendar
month for services performed hereunder during that month or on such other
schedule as you shall request of us in writing. You may use any portion of this
fee for distribution of our shares, or for making servicing payments to
organizations whose customers
B-3
<PAGE>
or clients are our shareholders. You may waive your right to any fee to which
you are entitled hereunder, provided such waiver is delivered to us in writing.
Any reimbursement of our expenses, to which we may become entitled pursuant to
paragraph 3 hereof, will be paid to us at the same time as we pay you.
6. This Agreement will become effective on the date hereof and shall continue
in effect until , and thereafter for successive twelve-month periods
(computed from each ), provided that such continuation is specifically
approved at least annually by our Board of Trustees or by a majority vote of
the holders of the outstanding voting securities of each respective Portfolio
voting separately, as defined in the 1940 Act and the rules thereunder, and, in
either case, by a majority of those of our directors who are neither party to
this Agreement nor, other than by their service as directors of the
corporation, interested persons, as defined in the 1940 Act, of any such person
who is party to this Agreement. Upon the effectiveness of this Agreement, it
shall supersede all previous Agreements between us covering the subject matter
hereof. With respect to each Portfolio, this Agreement may be terminated at any
time, without the payment of any penalty, (i) by vote of a majority of the
outstanding voting securities of each respective Portfolio voting separately,
as defined in the 1940 Act and the rules thereunder, or (ii) by a vote of a
majority of our entire Board of Trustees, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your employees or the officers and directors of Reich & Tang Asset
Management, Inc., your general partner, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the 1940
Act, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
B-4
<PAGE>
If the foregoing is in accordance with your understanding, will you kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
INSTITUTIONAL DAILY INCOME FUND
U.S. Government Portfolio
Money Market Portfolio
Tax Exempt Portfolio
By: ____________________________________
ACCEPTED: , 2000
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC., General
Partner
By: _______________________________________________
B-5
<PAGE>
Appendix C
Certain Other Mutual Funds Advised by the Manager
The Manager acts as investment adviser or sub-adviser to the following other
mutual funds that have investment objectives similar to the Funds', for
compensation at the annual percentage rates of the corresponding average net
asset levels of those funds set forth below.
Institutional Daily Income Fund
<TABLE>
<CAPTION>
Manager's
Net Assets of Relationship
Other Funds to Fund
Other Fund(s) with at June 30, (Manager or
Similar Objectives 2000 Fee Rate(1) Sub-Adviser)
------------------ ------------- ----------- ------------
<S> <C> <C> <C>
California Daily Tax Free 385,720,218 .30% per annum of Manager
Income Fund, Inc. average daily net assets
Connecticut Daily Tax Free 189,697,692 .30% per annum of Manager
Income Fund, Inc. average daily net assets
Cortland Trust, Inc. 2,307,202,110 0.80% of the first $500 Manager
million of the Trust's
average daily net
assets,
0.775% of the average
daily net assets of the
Trust in excess of $500
million but less than $1
billion,
0.75% of the average
daily net assets of the
Trust in excess of $1
billion but less than
$1.5 billion,
plus 0.725% of the
Trust's average daily
net assets in excess of
$1.5 billion.
Daily Tax Free Income 725,922,546 .325% average daily net Manager
Fund, Inc. assets not in excess of
$750 million, plus .30%
of average daily net
assets in excess of $750
million
Florida Daily Municipal 79,950,196 .40% per annum of Manager
Income Fund average daily net assets
Georgia Daily Municipal 12,093,579 .40% per annum of Manager
Income Fund, Inc. average daily net assets
Michigan Daily Tax Free 14,788,365 .30% per annum of Manager
Income Fund, Inc. average daily net assets
</TABLE>
-----------
(1) .02% Investment Management fee waived for Florida, .40% for Georgia, .30%
for Michigan.
C-1
<PAGE>
<TABLE>
<CAPTION>
Manager's
Net Assets of Relationship
Other Funds to Fund
Other Fund(s) with Similar at June 30, (Manager or
Objectives 2000 Fee Rate(2) Sub-Adviser)
-------------------------- ------------- ----------- ------------
<S> <C> <C> <C>
New Jersey Daily Municipal 147,469,750 .30% per annum of Manager
Income Fund, Inc. average daily net assets
New York Daily Tax Free 428,583,548 .30% per annum of Manager
Income Fund, Inc. average daily net assets
North Carolina Daily 250,604,096 .40% per annum of Manager
Municipal Income Fund, average daily net assets
Inc.
Pennsylvania Daily 7,722,720 .40% per annum of Manager
Municipal Income Fund average daily net assets
Pax World Money Market 125,687,035 .15% per annum of Sub-Adviser
Fund, Inc. average daily net assets
Short Term Income Fund, 1,259,022,443 .30% of average daily Manager
Inc. net assets not in excess
Money Market Portfolio of $750 million, plus
.29% of average daily
net assets in excess of
$750 million but not in
excess of $1 billion,
plus .28% of such assets
in excess of $1 billion
but not in excess of
$1.5 billion, plus .27%
of such assets in excess
of $1.5 billion
Short Term Income Fund, 615,730,987 .275% of average daily Manager
Inc. net assets not in excess
U.S. Government Portfolio of $250 million, plus
.25% of such assets in
excess of $250 million
Tax Exempt Proceeds Fund, 208,002,982 .40% per annum of Manager
Inc. average daily net assets
up to $250 million; .35%
per annum of average
daily net assets between
$250 million and $500
million; and .30% per
annum of average daily
net assets over $500
million.
Virginia Daily Municipal 3,964,767 .30% per annum of Manager
Income Fund, Inc. average daily net assets
</TABLE>
-----------
(2).40% Investment Management fee waived for Pennsylvania, .40% for Virginia
C-2
<PAGE>
Appendix D
<TABLE>
<CAPTION>
Distribution and
Shareholder
Servicing (12b-1)
Management Management Administrative Administrative Fees Paid to
Fee Paid Fee Waived by Fees Paid to Fees Waived by Manager's
Name of Fund to Manager Manager Manager Manager Affiliates
------------ ---------- ------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Institutional Daily
Income Fund $472,729 $ 90,521 $196,971 $118,182 $ 398,230
Money Market Portfolio
Institutional Daily
Income Fund $809,496 $126,559 $337,290 $170,996 $1,577,248
U.S. Treasury Portfolio
</TABLE>
D-1
<PAGE>
Appendix E
Shares Outstanding and Entitled to Vote
For each class of the Fund's shares entitled to vote at the Meeting, the
number of shares outstanding as of August 15, 2000 was as follows:
<TABLE>
<CAPTION>
Name of Fund Number of Shares
------------ ----------------
<S> <C>
Institutional Daily Income Fund................................
</TABLE>
Ownership of Shares
As of July 31, 2000, the Fund believes that the Trustees and officers of the
Fund, as a group, owned less than one percent of each class of shares of the
Fund as a whole. As of July 31, 2000, the following persons owned of record or
beneficially 5% more of the noted class of shares of the noted Fund:
<TABLE>
<CAPTION>
Percentage of
Shares Outstanding
Beneficially Shares of
Fund and Class Owned Class Owned
-------------- ------------ -------------
<S> <C> <C>
Institutional Daily Income Fund.....................
Fund A..............................................
Class 1.............................................
[name and address of beneficial owner.](1)(2)....... [ ] [ ]
</TABLE>
-----------
(1) Entity owned 25% or more of the outstanding shares of beneficial interest
of the Fund, and therefore may be presumed to "control" the Fund, as that
term is defined in the Investment Company Act of 1940.
(2) Shares are believed to be held only as nominee.
E-1
<PAGE>
SAMPLE PROXY CARD
PLEASE VOTE YOUR PROXY TODAY
Prompt response will save the expense of additional solicitations
CHOOSE THE VOTING METHOD THAT IS MOST CONVENIENT FOR YOU.
1. VOTE BY MAIL: Sign and date your proxy card and return it in the enclosed
postage paid envelope. NOTE: Your proxy is not valid unless it is signed.
2. VOTE BY TOUCH-TONE PHONE: Dial 1-800-690-6903, enter the CONTROL NUMBER
printed on the upper portion of your proxy card and follow the simple
instructions. Telephone voting is available 24 hours a day, 7 days a week.
THE CALL IS TOLL-FREE. If you received more than one proxy card, you can
vote each card during the call. Each card has a different control number.
3. VOTE VIA THE INTERNET: Log on to www.proxyvote.com, enter your CONTROL
NUMBER and follow the instructions on the screen. If you received more
than one proxy card, you may vote them all during the same session. Each
card has a different control number.
IF YOU VOTE BY PHONE, FAX OR INTERNET,
PLEASE DO NOT RETURN YOUR PROXY CARD.
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-800-690-6903
OR LOG ON TO www.proxyvote.com
<PAGE>
FORM OF PROXY
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE
PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR, IF NOT MARKED TO VOTE, "FOR" EACH
PROPOSAL AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY
COME BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE
MEETING, PLEASE COMPLETE, DETACH AND MAIL THE LOWER PORTION OF THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
INSTITUTIONAL DAILY INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS--OCTOBER 10, 2000
THE UNDERSIGNED SHAREHOLDER OF INSTITUTIONAL DAILY INCOME FUND (THE "FUND")
HEREBY APPOINTS RICHARD DE SANCTIS AND BERNADETTE N. FINN, AND EACH OF THEM,
AS ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH POWER OF SUBSTITUTION, TO
VOTE ALL OF THE SHARES OF BENEFICIAL INTEREST OF THE FUND STANDING IN THE NAME
OF THE UNDERSIGNED AT THE CLOSE OF BUSINESS ON AUGUST 15, 2000 AT THE SPECIAL
MEETING OF SHAREHOLDERS OF THE FUND TO BE HELD AT THE OFFICES OF THE
CORPORATION AT 600 FIFTH AVENUE, NEW YORK, NY 10020 AT 9:20 A.M. ON OCTOBER
10, 2000, AND AT ALL ADJOURNMENTS THEREOF, WITH ALL OF THE POWERS THE
UNDERSIGNED WOULD POSSESS IF THEN AND THERE PERSONALLY PRESENT AND ESPECIALLY
(BUT WITHOUT LIMITING THE GENERAL AUTHORIZATION AND POWER THEREBY GIVEN) TO
VOTE AS INDICATED ON THE PROPOSALS. AS MORE FULLY DESCRIBED IN THE PROXY
STATEMENT FOR THE MEETING, AND VOTE AND ACT ON ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE
PROPOSALS LISTED BELOW UNLESS OTHERWISE INDICATED.
<PAGE>
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X] KEEP THIS
PORTION FOR YOUR RECORDS
-------------------------------------------------------------------------------
(DETACH HERE AND RETURN THIS PORTION ONLY)
INSTITUTIONAL DAILY INCOME FUND
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[_] [_] [_] 1. TO APPROVE A NEW INVESTMENT
MANAGEMENT CONTRACT
[_] [_] [_]
2. TO RATIFY THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE
FUND FOR ITS FISCAL YEAR ENDING
MARCH 31, 2001
-------------------------------------
------------------------------------- -------------------------------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR
SHARES AS INDICATED ABOVE, WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL
JOINT OWNERS SHOULD SIGN. PERSONS SIGNING AS EXECUTORS, ADMINISTRATORS,
TRUSTEES, ETC. SHOULD SO INDICATE.
