IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you are aware, each Fund is managed and advised by Reich &
Tang Asset Management L.P. (the "Manager"). The parent company of the Manager,
New England Investment Companies, Inc., is majority-owned by New England Mutual
Life Insurance Company, which proposes to merge with Metropolitan Life Insurance
Company sometime after the end of the 1995 year.
As a shareholder, you are invited to vote on a proposal in
connection with this merger. Specifically, you are being asked to approve or
disapprove a new management/investment advisory agreement with the Manager since
the above transaction, in accordance with applicable regulations, would
automatically terminate the existing management/investment advisory agreement
between the Manager and each Fund.
What does this mean to you as a shareholder?
It is important to note that the management fee and the
management and investment advisory services to be performed under the new
agreement are the same as those under the current agreement. The other terms of
the agreement are the same in all material respects to the existing agreement.
There are not changes contemplated in the objectives or policies of the Fund,
the management or operation so the Manager relating to the Funds, the personnel
managing the Funds or the shareholder or other business activities of the Funds.
The Board of Directors has determined that the new agreement
would be in the best interest of the Funds and their shareholders. Accordingly,
the Board of Directors of the Funds approved the new agreement and voted to
recommend it to shareholders for approval.
We encourage you to vote promptly no matter how many shares
you own. Timely votes save money and avoid follow-up mailings. Your cooperation
as we go through the process of the transition is greatly appreciated. We are
confident that the combining of these firms will result in a structure that will
better service your needs.
Thanking you, in advance, for your patience and support.
Very truly yours,
10506.0002 325282.1
<PAGE>
- -------------------------------------------------------------------------------
Preliminary Proxy Material For The Information of the Securities and Exchange
Commission Only
INSTITUTIONAL DAILY INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
February 15, 1996
- -------------------------------------------------------------------------------
600 Fifth Avenue
New York, New York 10020
(212) 830-5220
A Special Meeting of Shareholders of Institutional Daily Income Fund (the
"Fund") will be held at 9:00 a.m. on February 15, 1996 at the offices of the
Fund at 600 Fifth Avenue, New York, New York for the following purposes, all of
which are more fully described in the accompanying Proxy Statement dated
December , 1995.
1. To approve or disapprove a new Investment Management Contract to be
effective upon the merger of New England Mutual Life Insurance Company
into Metropolitan Life Insurance Company, such Contract to increase the
fees payable thereunder (see page 3 of the attached Proxy Statement);
2. To elect four trustees of the Fund, each to hold office until his
successor is duly elected and qualified;
3. To ratify or reject the selection of Messrs. McGladrey & Pullen LLP as
independent accountants of the Fund for its fiscal year ending March
31, 1996; and
4. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on November 28, 1995 are
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Trustees
BERNADETTE N. FINN, Secretary
- ------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY BALLOT, DATE AND
SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK FOR
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
- -------------------------------------------------------------------------------
322065.4
<PAGE>
PROXY STATEMENT
- ------------------------------------------------------------------------------
INTRODUCTION.............................................................. 1
PROPOSAL 1. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT MANAGEMENT CONTRACT
TO INCREASE THE MAXIMUM FEES PAYABLE THEREUNDER AND TO BE EFFECTIVE
AT THE TIME OF THE MERGER.................................... 3
PROPOSAL 2 ELECTION OF TRUSTEES......................................... 8
PROPOSAL 3 RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
ACCOUNTANTS.................................................. 13
INFORMATION REGARDING THE MANAGER........................................ 13
ALLOCATION OF PORTFOLIO BROKERAGE........................................ 17
OTHER MATTERS............................................................ 18
EXHIBIT A (INVESTMENT MANAGEMENT CONTRACT BETWEEN THE FUND AND REICH & TANG
ASSET MANAGEMENT, L.P.).....................................
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER)..........
322065.4
<PAGE>
INSTITUTIONAL DAILY INCOME FUND
600 FIFTH AVENUE
NEW YORK, NEW YORK 10020
PROXY STATEMENT
INTRODUCTION
This statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Institutional Daily Income Fund (the "Fund")
for use at a Special Meeting of Shareholders to be held at the offices of the
Fund at 600 Fifth Avenue, New York, New York on February 15, 1996 at 9:00 a.m.
Such solicitation will be made primarily by the mailing of this statement and
the materials accompanying it. Supplemental solicitations may be made by mail,
telephone, or personal interviews by officers and representatives of the Fund.
The expenses in connection with preparing and mailing this statement and the
material accompanying it will be borne by The New England and Metropolitan Life
(each as hereinafter defined). This Proxy Statement and the accompanying Proxy
are first being sent to shareholders on or about December __, 1995. The Fund's
most recent annual and semi-annual reports are available upon request.
The outstanding voting shares of beneficial interest (the "shares") of
the Fund as of the close of business on November 28, 1995 consisted of
__________ shares of the Money Market Portfolio; ____ shares of the U.S.
Treasury Portfolio; and ______ shares of the Municipal Portfolio (the Money
Market Portfolio, the U.S. Treasury Portfolio and the Municipal Portfolio,
including the Class A and Class B shares of each such Portfolio are together
referred to herein as the "Portfolios"), each whole share being entitled to one
vote and each fraction of a share being entitled to a proportionate fraction of
a vote. Only shareholders of record at the close of business on November 28,
1995 are entitled to vote at the meeting. Any shareholder may revoke his proxy
at any time prior to its exercise by a written notification of such revocation,
which must be signed, include the shareholder's name and account number, be
addressed to the Secretary of the Fund at its principal executive office, 600
Fifth Avenue, New York, New York 10020, and be received prior to the meeting to
be effective, or by signing another proxy of a later date, or by personally
casting his vote at the meeting of shareholders.
Among the purposes of this Special Meeting of the Shareholders of the
Fund is the approval of the Merger (the "Merger") of New England Mutual Life
Insurance Company ("The New England") into Metropolitan Life Insurance Company
("Metropolitan Life"). The Merger is being treated, for purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"), as a change of
control of New England Investment Companies, L.P. ("NEIC"), the limited partner
and owner of the 99.5% limited partnership interest in Reich & Tang Asset
Management L.P. (the "Manager"). Reich & Tang Asset Management, Inc. (a
wholly-owned subsidiary of NEIC) is the general partner and owner of the
remaining 0.5% interest of the Manager. Under the 1940 Act, such a change of
control constitutes an "assignment" (as defined in the 1940 Act) of the
Investment Management Contract between the Manager and the Fund, as well as
various other investment advisory agreements under which NEIC and its subsidiary
firms serve as advisers or sub-advisers to certain other mutual funds, and
results in the automatic termination of each of those agreements including the
Investment Management Contract between the Fund and the Manager, effective at
the time of the Merger. The Trustees have approved, and recommend that the
shareholders of the Fund approve, a new investment
1
322065.4
<PAGE>
management contract. Unrelated to the Merger, the Trustees and the Manager also
believe it is appropriate at this time, for reasons stated below, to increase
the maximum fees payable under the new management agreement which, if approved
by shareholders, will take effect at the time of the Merger.
In addition to the above, the other purposes for this Special Meeting
of Shareholders include: the election of trustees and the ratification of the
selection of independent accountants.
A majority of the outstanding shares of the Fund, represented in person
or by proxy, shall be required to constitute a quorum at the meeting although
more than a simple majority of the outstanding shares may be required to be
present to approve a particular issue.
Any signed proxy will be voted in favor of the proposals unless a
choice is indicated to vote against or to abstain from voting on that proposal.
An abstention on any proposal will have the same legal effect as a vote against
such proposal.
If a quorum is not present at the meeting, or if a quorum is present
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the meeting to
permit further solicitation of proxies. In determining whether to adjourn the
meeting, the following factors may be considered: the nature of the proposals
that are the subject of the meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of those shares represented at the meeting in person or by
proxy. A shareholder vote may be taken on one or more of the proposals in this
proxy statement prior to any adjournment if sufficient votes have been received
for approval. The proposals are considered "non-discretionary" and brokers that
are record or nominee holders of shares of the Fund who have received no
instructions from their clients do not have discretion to vote on these matters.
Absent voting by the particular beneficial owners of such shares, such "broker
non-voters" will not be considered as votes cast in determining the outcome of
the proposals.
As of November 30, 1995, the following persons or entities owned as
much as 5% of the indicated Portfolio's outstanding shares:
Nature of
Name & Address % of Class Ownership
Money Market Portfolio - Record
Class A
2
322065.4
<PAGE>
Nature of
Name & Address % of Class Ownership
Money Market Portfolio - Record
Class B
U.S. Treasury Portfolio - Record
Class A
U.S. Treasury Portfolio Record
Class B
Municipal Portfolio Record
Class A
Municipal Portfolio Record
Class B
As of November 30, 1995, the officers or trustees of the Fund, collectively,
beneficially owned, directly or indirectly (including the power to vote or to
dispose of any shares), less than 1% of the total outstanding shares of each of
the Money Market Portfolio, the U.S. Treasury Portfolio or the Municipal
Portfolio.
PROPOSAL 1. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT MANAGEMENT CONTRACT TO
INCREASE THE MAXIMUM FEES PAYABLE THEREUNDER AND TO BE EFFECTIVE
AT THE TIME OF THE MERGER
3
322065.4
<PAGE>
The Board of Trustees of the Fund unanimously recommend that the
shareholders of each Portfolio vote to approve a new investment management
contract for the Fund, on behalf of each of the Portfolios. The new management
contract is being proposed for the two reasons mentioned above: the termination
of the contract resulting from the Merger and the proposed increase in the
advisory fees. With respect to the fee increase and as explained more fully
below, at the time of the Fund's initial operation it was determined that the
Management fees should be set at rates that were low by industry standards. The
Fund has been offered to the public since and NEIC owns approximately % of its
assets. The Trustees believe that it is now appropriate to increase the fee to
one that is more in line with the fees of similar funds. As a result, they
recommend that the maximum advisory fee payable under the new investment
management contract be increased to 0.12% of each Portfolio's average daily net
assets from 0.08% of such net assets at which it was originally set. The
Trustees, after due consideration, have determined that this proposed fee is
reasonable and would permit each Portfolio to provide the Manager bona fide and
fair compensation for the advisory services rendered to each of the Fund's
Portfolio's. The Trustee's concluded they would recommend this increase whether
or not the Merger had been proposed or occurred.
As explained above, the Merger is being treated, for purposes of the
1940 Act, as a change in control of NEIC and its subsidiary firms including the
Manager, Reich & Tang Asset Management L.P., that serve as advisers or
sub-advisers to various mutual funds including the Fund. The 1940 Act provides
that such a change in control constitutes an "assignment" of these advisory and
sub-advisory agreements under which NEIC, the Manager and these related
subsidiary firms provide advisory services to the various mutual funds including
the Fund. The 1940 Act further provides that such an "assignment" will result in
the automatic termination of each of those agreements, at the time of the
Merger.
The Merger. In August of 1995, The New England and Metropolitan Life
entered into an agreement providing for the Merger of the two companies (the
"Merger Agreement"). Metropolitan Life will be the surviving company following
the Merger. Both The New England and Metropolitan Life are mutual insurance
companies. The Merger will result in the insurance policyholders of The New
England becoming policyholders of Metropolitan Life. The policyholders of The
New England will not receive any other payment, property or consideration in
connection with the Merger. The Merger will not be effected unless it is
approved by the requisite vote of the policyholders of both The New England and
Metropolitan Life. The Merger also requires approval by various government
regulatory agencies. In addition, consummation of the Merger is subject to
fulfillment of a number of other conditions, although the parties may waive some
or all of these conditions. There is no assurance that the Merger will in fact
be consummated. In addition, because it is impossible to predict with certainty
when the necessary regulatory approvals will be obtained and the other
conditions to the Merger be fulfilled, it is not known, as of the date of this
Proxy Statement, when the Merger will occur. The parties currently expect,
however, that the Merger will not occur until after the end of 1995.
NEIC is organized as a limited partnership. NEIC's sole general
partner, New England Investment Companies, Inc. ("NEIC Inc."), is a wholly-owned
subsidiary of The New England. As a result of the Merger, NEIC Inc. would become
a direct or indirect wholly-owned subsidiary of Metropolitan Life. The New
England also owns a majority of the outstanding limited partnership interests of
NEIC. The Merger would result in Metropolitan Life becoming the owner (directly
or through a wholly-owned subsidiary) of these limited partnership interests.
The Merger Agreement
4
322065.4
<PAGE>
provides that, following the consummation of the Merger, Metropolitan Life shall
have the right to designate a majority of the board of directors of NEIC Inc.
Under the Merger Agreement, The New England and Metropolitan Life agree
that they will use their best efforts to satisfy the conditions of Section 15(f)
of the 1940 Act. Section 15(f) provides that an investment adviser to a
registered investment company (such as the Fund), and affiliated persons of such
investment adviser, may receive any amount or benefit in connection with the
sale of securities of, or a sale of any other interest in, such investment
adviser which results in an assignment of an investment advisory contract with
such investment company, if
(1) for a period of 3 years after the time of such action, at
least 75% of the board of such investment company are not interested
persons of such company's investment adviser or predecessor investment
adviser, and
(2) there is not imposed an unfair burden on such investment
company as a result of such transaction or any express or implied
terms, conditions, or understandings applicable thereto.
Satisfaction of condition (1) above is not expected to require any changes in
the current composition of the Fund's Board of Trustees.
At a special meeting of the Board of Trustees held on November 29,
1995, the disinterested Trustees, as well as the entire Board of Trustees,
approved the proposed increase in the advisory fee payable by the Fund on behalf
of each of the Portfolios and recommend that it be approved by shareholders. The
Trustees considered, among other things, the level of advisory services rendered
to each of the Portfolios by the Manager, the reasons for setting the advisory
fee at its current level at the time that the Fund was initially organized, the
expectations at the time the Fund was created for achieving certain asset levels
within a relatively short time period after the Fund's commencement of
operations and the current level of advisory fees payable by the Fund in
comparison with other comparable institutional funds. As indicated, the increase
in advisory fees being recommended is not related in any way to the Merger.
In arriving at the recommendation that the new investment management
contract be approved to continue after Metropolitan Life becomes the parent of
the Manager, the Trustees reviewed extensive information about the Fund, the
Manager, NEIC and Metropolitan Life. The Trustees noted that, for purposes of
the 1940 Act, the Merger constitutes a change in control of NEIC and the Manager
as well as NEIC's other subsidiaries that act as advisers or sub-advisers for
various other mutual funds. Although the Merger is being treated as a change in
control of NEIC and of the various advisers and sub-advisers that are affiliated
with NEIC, including the Manager, the Merger is not expected to result in any
change in the personnel, operations or financial condition of NEIC or of such
advisers or sub-advisers, including the Manager. NEIC has indicated that each
adviser and sub-adviser affiliated with NEIC, including the Manager, will
continue to be independently managed, as has historically been the case. Thus,
the Merger is not expected to result in any changes in the investment approaches
or styles of the advisers and sub-advisers, including the Manger.
After due consideration, including a meeting of the disinterested
Trustees in executive session with their counsel, the disinterested Trustees
determined that the proposed increase of the advisory fee
5
322065.4
<PAGE>
to 0.12% from 0.08% of each Portfolio's average daily net assets was appropriate
and reasonable under the circumstances.
Information About Metropolitan Life. Metropolitan Life was incorporated
under the laws of New York in 1866 and since 1868 has been engaged in the life
insurance business under its present name. By the early 1900s, it had become the
largest life insurance company in the United States and is currently the second
largest life insurance company in the United States in terms of total assets.
Metropolitan Life's assets as of June 30, 1995 were over $130 billion, and its
adjusted capital as of that date exceeded $8 billion. Subsidiaries of
Metropolitan Life manage over $25 billion of assets for mutual funds,
institutional and other investment advisory clients.
The Increase in the Fees. The following table sets forth (i) the
aggregate amount of the Manager's fee paid (net of the Manager's voluntary fee
waiver) by each of the Portfolios at the end of the last fiscal year; (ii) the
aggregate amount of the Manager's fee that would have been paid by each of the
Portfolios (absent such voluntary fee waiver) at the end of the last fiscal
year; (iii) the aggregate amount that the Manager would have received from each
of the Portfolios had the proposed maximum fee been in effect during the last
fiscal year; (iv) the difference between the aggregate amounts stated in (i) and
(iii) above, as a percentage of the amount stated in response to (i) above; and
(v) the difference between the aggregate amounts stated in (ii) and (iii) above,
as a percentage of the amount stated in response to (ii) above.
[This space intentionally left blank]
6
322065.4
<PAGE>
<TABLE>
COMPARATIVE FEE TABLE
<CAPTION>
(i) (ii) (iii) (iv) (v)
Aggregate Aggregate Aggregate Difference Difference
amount of amount of amount of between (i) between (ii)
Manager's Manager's fee Manager's and (iii), as and (iii), as
fee (net of (absent fee fee had a percent- a percent-
fee waiver) waiver) for increased age of (i) age age of
for year year ended fee been in (ii)
ended 3/31/95 effect for
3/31/95 year ended
3/31/95
<S> <C> <C> <C> <C> <C>
Money Market $0 $30,505 $45,757 100% 50%
Portfolio-Class
A&B Shares
U.S. Treasury1 N/A N/A N/A N/A N/A
Portfolio-Class
A&B Shares
Municipal2 N/A N/A N/A N/A N/A
Portfolio-Class
A&B Shares
</TABLE>
Trustees' Recommendation. The Trustees unanimously recommend that
shareholders approve the new investment management contract between the Manager
and the Fund, on behalf of each of the Portfolios, to be effective at the time
of the Merger. As stated above, the new investment management contract will
include an increase to the maximum fee payable thereunder. The only other
difference will be that the new investment management contract will be dated the
date of the Merger and will be in effect initially for a period of two years and
from year to year thereafter provided that its continuance is approved in
accordance with the terms of the contract and the applicable provisions of the
1940 Act. Otherwise, such contract will be substantially identical to the
investment management contract in effect immediately before the Merger which is
described on page ___ of this Proxy Statement.
The Trustees accordingly concluded that it is appropriate and desirable
for the Fund, and each of the Portfolios, to continue after the Merger with the
same investment management arrangements (except with respect to the increase in
the maximum fee payable thereunder) as is in effect immediately before the
Merger. Under the 1940 Act, such continuation requires, in the case of the Fund,
the approval of each Portfolio's shareholders, by vote of the lesser of (1) 67%
of the shares of that
- --------
1(1) Commenced investment operations after 3/31/95; no advisory fees have
been accrued or paid to date.
2(2) Has not yet commenced investment operations.
7
322065.4
<PAGE>
Portfolio represented at the Meeting, if more than 50% of the shares of that
Portfolio are represented at the Meeting, or (2) more than 50% of the
outstanding shares of the Portfolio.
In order that each Portfolio may continue to receive investment
management services from the Manager following the Merger, the Trustees
unanimously recommend that shareholders of each Portfolio vote in favor of
Proposal 1.
If the shareholders of either Portfolio do not approve Proposal 1, the
investment management contract relating to that Portfolio will terminate at the
time of the Merger although the Manager will continue to manage the Portfolios,
and the Portfolio will consider such alternative actions as are in the best
interest of that Portfolio.
PROPOSAL 2 ELECTION OF TRUSTEES
At the meeting, four trustees are to be elected, each to hold office
until his successor has been elected and has qualified. Each of the trustees,
other than Steven W. Duff, was elected to the Board, and the Audit and
Nominating Committees and has served as such since [April 14, 1994]. Mr. Duff
was elected by the Board of Trustees to serve as President and Trustee of the
Fund in October, 1994. All such persons have consented to be named in this Proxy
Statement and to serve as trustees of the Fund if elected. The Board of
Trustees, which met four times during the Fund's fiscal year ended August 31,
1995, has no compensation committee. Each trustee attended at least 75% of the
board meetings held. The Fund has an Audit Committee of the Board of Trustees,
comprised of Drs. Mellon and Wong and Mr. Straniere who are not "interested
persons" of the Fund within the meaning of Section 2(a)(19) of the 1940 Act. The
Audit Committee meets annually to review the Fund's financial statements with
the independent accountants and to report on its findings to the Board of
Trustees. In addition, pursuant to a Distribution and Service Plan adopted by
the Fund in accordance with the provisions of Rule 12b-1 under the Investment
Company Act of 1940, the Fund has a Nominating Committee of the Board of
Trustees comprised of Drs. Mellon and Wong and Mr. Straniere, to whose
discretion the selection and nomination of trustees who are not "interested
persons" of the Fund is committed. The Nominating Committee met once with regard
to the fiscal year ended August 31, 1995 regarding the nomination of Mr. Duff.
The Nominating Committee currently does not consider nominees recommended by
shareholders. The election of each director requires the approval of a majority
present at the meeting in person or by proxy.
The following is a list of the members of the Board of Trustees, any other
positions each may now hold with the Fund, the principal occupation of each
Trustee during the past five years and the nature, amount and percentage of
shares held by each in the Fund.
8
322065.4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature
of Beneficial
Principal Occupation Ownership at % of
Name and Age During Preceding Five Years 11/30/95 Shares
<S> <C> <C> <C>
Steven W. President and Trustee of the Fund and [-0-] [-0-]
Duff* President of the mutual funds division of
the Manager since September 1994.
42 Mr. Duff was formerly Director of Mutual
Fund Administration of NationsBanc with
which he was associated from 1981 to
August 1994. Mr. Duff is also President
and a Director of California Daily Tax
Free Income Fund, Inc.; Connecticut Daily
Tax Free Income Fund, Inc.; Daily Tax
Free Income Fund, Inc.; Michigan Daily
Tax Free Income Fund, Inc.; New Jersey
Daily Municipal Income Fund, Inc.; New
York Daily Tax Free Income Fund, Inc.;
North Carolina Daily Municipal Income
Fund, Inc. and Short Term Income Fund,
Inc.; President and Trustee of Florida
Daily Municipal Income Fund and
Pennsylvania Daily Municipal Income
Fund; President of Cortland Trust, Inc.,
Reich & Tang Government Securities Trust
and Tax Exempt Proceeds Fund, Inc.;
Executive Vice President of Reich & Tang
Equity Fund, Inc.
</TABLE>
- --------
* Such person is an "interested person" of the Fund within the meaning of
Section 2(a) (19) of the 1940 Act.
9
322065.4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature
of Beneficial
Principal Occupation Ownership at % of
Name and Age During Preceding Five Years 11/30/95 Shares
<S> <C> <C> <C>
W. Giles Trustee of the Fund since its formation in [-0-] [-0-]
Mellon 1994; Professor of Business Administration
and Area Chairman of Economics and
64 Finance in the Graduate School of
Management, Rutgers University with
which he has been associated since 1966.
Dr. Mellon is also a Director of California
Daily Tax Free Income Fund, Inc.;
Connecticut Daily Tax Free Income Fund,
Inc.; Daily Tax Free Income Fund, Inc.;
Delafield Fund, Inc.; Michigan Daily Tax
Free Income Fund, Inc.; New Jersey Daily
Municipal Income Fund, Inc.; North
Carolina Daily Municipal Income Fund,
Inc.; Reich & Tang Equity Fund, Inc.; and
Short Term Income Fund, Inc.; and a
Trustee of Florida Daily Municipal Income
Fund, Institutional Daily Income Fund,
Pennsylvania Daily Municipal Income Fund
and Reich & Tang Government Securities
Trust.
Robert Trustee of the Fund since its formation in [-0-] [-0-]
Straniere 1994; Member of New York State
Assembly; Partner, The Straniere Law
53 Firm since 1981; Director of California
Daily Tax Free Income Fund, Inc.;
Connecticut Daily Tax Free Income Fund,
Inc.; Daily Tax Free Income Fund, Inc.;
Delafield Fund, Inc.; Michigan Daily Tax
Free Income Fund, Inc.; New Jersey Daily
Municipal Income Fund, Inc.; North
Carolina Daily Municipal Income Fund,
Inc.; Reich & Tang Equity Fund, Inc.; and
Short Term Income Fund, Inc.; Trustee of
Florida Daily Municipal Income Fund,
Institutional Daily Income Fund,
Pennsylvania Daily Municipal Income Fund
and Reich & Tang Government Securities
Trust; and Director of Life Cycle Mutual
Funds, Inc.
</TABLE>
10
322065.4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature
of Beneficial
Principal Occupation Ownership at % of
Name and Age During Preceding Five Years 11/30/95 Shares
<S> <C> <C> <C>
Dr. Yung Trustee of the Fund since its formation in [-0-] [-0-]
Wong 1994; Director of Shaw Investment
Management Ltd. (U.K.) 1994 to October,
56 1995; formerly General Partner of Abacus
Partners Limited Partnership (a general
partner of a venture capital investment
firm) from 1984 to 1994; Director of
California Daily Tax Free Income Fund,
Inc.; Connecticut Daily Tax Free Income
Fund, Inc.; Daily Tax Free Income Fund,
Inc.; Delafield Fund, Inc.; Michigan Daily
Tax Free Income Fund, Inc.; New Jersey
Daily Municipal Income Fund, Inc.; North
Carolina Daily Municipal Income Fund,
Inc.; Reich & Tang Equity Fund, Inc.; and
Short Term Income Fund, Inc.; Trustee of
Florida Daily Municipal Income Fund,
Institutional Daily Income Fund,
Pennsylvania Daily Municipal Income Fund
and Reich & Tang Government Securities
Trust; and Trustee of Eclipse Financial
Asset Trust.
</TABLE>
The address of each trustee and officer of the Fund is 600 Fifth Avenue, New
York, New York 10020.
In addition to Mr. Duff, who has served as President of the Fund since
September, 1994, the officers of the Fund are:
Dana E. Messina, 38, Vice President of the Fund. Ms. Messina is an Executive
Vice President of the Manager since January, 1995. Ms. Messina has been
associated with the Manager and its predecessors in various capacities since
December, 1980, and is an officer of other investment companies advised by the
Manager.
Lesley M. Jones, 47, Vice President of the Fund. Ms. Jones is a Senior Vice
President of the Manager since September, 1993 and has been associated with the
Manager and its predecessors in various capacities since April, 1973. She is
also an officer of other investment companies advised by the Manager.
Bernadette N. Finn, 47, Vice President and Secretary of the Fund. Ms. Finn is a
Vice President of the Manager since September, 1993 and has been associated with
the Manager and its predecessors
11
322065.4
<PAGE>
in various capacities since September, 1970. She is also an officer of other
investment companies advised by the Manager.
Molly Flewharty, 44, Vice President of the Fund. Ms. Flewharty is Vice President
of the Manager since September, 1993 and has been associated with the Manager
and its predecessors in various capacities since December, 1977. She is also an
officer of other investment companies advised by the Manager.
Richard De Sanctis, 39, Treasurer of the Fund since October, 1992. Mr. De
Sanctis is Treasurer of the Manager and its predecessors since December, 1990
and is an officer of other investment companies advised by the Manager.
The Fund paid an aggregate remuneration of $ to its officers and trustees and to
certain employees of the Manager with respect to its fiscal year ended August
31, 1995, consisting of $ in aggregate directors' fees to the three
disinterested trustees, and salaries and benefits aggregating $ paid to certain
employees of the Manager pursuant to the terms of the Investment Management
Contract.
<TABLE>
<CAPTION>
=================================================================================================================================
(1) (2) (3) (4) (5)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Pension or Total
Retirement Compensation
Name of Aggregate Benefits Accrued Estimated From Fund and
Person, Compensation As Part of Fund Annual Benefits Fund Complex
Position From Fund Expenses Upon Retirement Paid to Trustees*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Steven W. Duff, $0 0 0 $0
President and
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
W. Giles 0 0 $51,500
Mellon, Trustee (14 Funds)
- ---------------------------------------------------------------------------------------------------------------------------------
Robert 0 0 $51,500
Straniere, (14 Funds)
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Yung Wong, 0 0 $51,500
Trustee (14 Funds)
=================================================================================================================================
</TABLE>
* The total compensation paid to such persons by the Fund and Fund
Complex for the fiscal year ending August 31, 1995 (and, with respect
to certain of the funds in the Fund Complex, estimated to be paid
during the fiscal year ending August 31, 1995). The parenthetical
number represents the number of investment companies (including the
Fund ) from which such person receives compensation that are considered
part of the same Fund Complex as the Fund, because, among other things,
they have a common investment advisor.
12
322065.4
<PAGE>
PROPOSAL 3 RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees recommends that the shareholders ratify the selection of
Messrs. McGladrey & Pullen LLP, independent public accountants, to audit the
accounts of the Fund for the fiscal year ending August 31, 1996. Messrs.
McGladrey & Pullen LLP have audited the accounts of the Fund since its inception
and do not have any direct financial interest or any material indirect financial
interest in the Fund.
A representative of Messrs. McGladrey & Pullen is not expected to be present at
the shareholders' meeting. If the shareholders do not ratify the Board's
recommendation, the Board will submit another proposal to the shareholders with
a recommendation for independent public accountants. The ratification of
selection of Independent Accountants requires the approval of a majority present
at the meeting in person or by proxy.
INFORMATION REGARDING THE MANAGER
The Manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020. The Manager was at August 31, 1995 manager, adviser or
supervisor with respect to assets aggregating approximately $7.9 billion. The
Manager acts as manager of fifteen other investment companies and also advises
pension trusts, profit sharing trusts and endowments. Appendix B hereto sets
forth the advisory fees payable by such investment companies to the Manager. In
addition to the Fund, the Manager's advisory clients include, among others,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Florida Daily Municipal Income Fund, Institutional Daily Income
Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal
Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina
Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income Fund,
Reich & Tang Equity Fund, Inc., Reich & Tang Government Securities Trust, Tax
Exempt Proceeds Fund, Inc. and Short Term Income Fund, Inc. Attached as Exhibit
B is a Table of Fees for all funds advised by the Manager. The Manager also
advises pension trusts, profit-sharing trusts and endowments.
Peter S. Voss (49), G. Neal Ryland (54), Steven W. Duff (42) and
Richard E. Smith, III (45) are directors of Reich & Tang Asset Management, Inc.
the general partner of the Manager. Mr. Voss is President of Reich & Tang Asset
Management, Inc. The address of Messrs. Voss and Ryland is 399 Boylston Street,
Boston Massachusetts 02116. Mr. Duff is President of the Mutual Fund Group of
the Manager. Mr. Smith is President of the Capital Management Group of the
Manager. Their address is 600 Fifth Avenue, New York, New York 10020.
NEIC Inc. is a holding company offering a broad array of investment
styles across a wide range of asset categories through ten investment
advisory/management affiliates and two distribution subsidiaries which include,
in addition to the Manager, Loomis, Sayles & Company, L.P., Copley Real Estate
Advisors, Inc., Back Bay Advisors, L.P., Harris Associates, Marlborough Capital
Advisors, L.P., Westpeak Investment Advisors, L.P., Draycott Partners, Ltd., TNE
Investment Services, L.P., New England Investment Associates, Inc., and an
affiliate, Capital Growth
13
322065.4
<PAGE>
Management Limited Partnership. These affiliates in the aggregate are investment
advisors or managers to over 42 other registered investment companies.
Pursuant to the Investment Management Contract for each Portfolio, the
Manager manages each Portfolio's portfolio of securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Trustees of the Fund.
The Manager 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 directors or officers of Reich
& Tang Asset Management, Inc., the sole general partner of the Manager, or
employees of the Manager or its affiliates.
The Investment Management Contract with the Manager's predecessor was
approved by the Board of Trustees, including a majority of the Trustees who are
not interested persons (as defined in the Act) of the Fund or the Manager and by
the sole shareholder of each Portfolio at a special meeting of shareholders,
effective [_________________, 1994]. The re-execution of the Investment
Management Contract with the Manager was approved by the Board of Trustees,
including a majority of the directors who are not interested persons of the Fund
or Manager, effective October 1, 1994. The Investment Management Contract for
each Portfolio has a term which extends to March 31, 1996 and may be continued
in force thereafter for successive twelve-month periods beginning each April 1,
provided that such continuance is specifically approved annually by majority
vote of the Fund's outstanding voting securities or by 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 Investment Management Contract is terminable without penalty by
each Portfolio on sixty days' written notice when authorized either (1) by
majority vote of its outstanding voting shares or (2) by a vote of a majority of
its Board of Trustees or (3) by the Manager on sixty days' written notice, and
will automatically terminate in the event of its assignment. 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 current Investment Management Contract, each Portfolio will
pay an annual management fee of 0.08% of such Portfolio's average daily net
assets. The Manager, at its discretion, may voluntarily waive all or a portion
of the management fee. The fees are accrued daily and paid monthly. Any portion
of the total fees received by the Manager may be used by the Manager to provide
shareholder services and for distribution of the Fund's shares.
Pursuant to an Administrative Services Contract 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 bookkeeping related services by Investors Fiduciary
Trust Company, the Fund's bookkeeping agent, (ii) prepare reports to and filings
with regulatory authorities, and (iii) perform such other services as the 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. [Under the Administrative Services Contract, the Fund may pay the
Manager for such personnel and for rendering such services at rates which are to
be agreed upon by the Fund and the Manager, provided that the Fund will not pay
for services performed by any such
14
322065.4
<PAGE>
persons who are also officers of the general partner of the Manager. It is
intended that such rates will be the actual costs of the Manager. Under such
contract, the Fund may reimburse the Manager for all of the Fund's operating
costs (in addition to the personnel reimbursement), including rent, depreciation
of equipment and facilities, interest and amortization of loans financing
equipment used by the Fund and all the expenses incurred to conduct the Fund's
affairs. As of the date of this proxy statement no such payments or
reimbursements have been made.] The Manager, at its discretion, may voluntarily
waive all or a portion of the administrative services fee. For its services
under the Administrative Services Contract, the Manager receives from the Fund
an annual fee equal to [0.05%] of each Portfolio's average daily net assets.
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.
With respect to each Portfolio, the Manager has voluntarily agreed to
waive its management and administrative services fees in whole or in part and
reimburse each Portfolio its operating expenses to the extent that (i) such
Portfolio's Class A shares total operating expenses exceed .40%, .425% and .45%
of the Class A shares average daily net assets during the first, second and
third fiscal years of the Fund, respectively; and (ii) such Portfolio's Class B
shares total operating expenses exceed .15%, 175% and .20% of the Class B shares
average daily net assets during the first, second and third fiscal years of the
Fund, respectively. The Manager therefore receives only that portion of its
management and administrative services fees which, when added to all operating
expenses does not result in total operating expenses for each Class of shares of
each Portfolio exceeding the amounts set forth in the preceding sentence during
the first three fiscal years of the Fund. The Fund commenced operations on April
14, 1994. The Manager will not subsequently recoup any portion of the fees so
waived or expenses reimbursed.
Investment management fees and operating expenses which are
attributable to all Classes of a Portfolio will be allocated daily to each Class
share based on the percentage of outstanding shares at the end of the day.
Additional shareholder services provided by Participating Organizations to Class
A shareholders pursuant to the Plan shall be compensated by the Distributor from
its shareholder servicing fee, and the Manager from its management fee. Expenses
incurred in the distribution of Class B shares shall be paid by the Manager.
Expense Limitation. The Manager has agreed, pursuant to the Investment
Management Contract, to reimburse the Fund for its expenses (exclusive of
interest, taxes, brokerage and extraordinary expenses) which in any year exceed
the limits on investment company expenses prescribed by any state in which the
Fund's shares are qualified for sale. For the purpose of this obligation to
reimburse expenses, the Fund's annual expenses are estimated and accrued daily,
and any appropriate estimated payments are made to it on a monthly basis.
Subject to the obligations of the Manager to reimburse the Fund for its excess
expenses as described above, the Fund has, under the Investment Management
Contract, confirmed its obligation for payment of all its other expenses,
including all operating expenses, taxes, brokerage fees and commissions,
commitment fees, certain insurance premiums, interest charges and expenses of
the custodian, transfer agent and dividend disbursing agent's fees,
telecommunications expenses, auditing and legal expenses, bookkeeping agent
fees, costs of forming the corporation and maintaining corporate existence,
compensation of Trustees, officers and employees of the Fund and costs of other
personnel performing services for the Fund who
15
322065.4
<PAGE>
are not officers of the Manager or its affiliates, costs of investor services,
shareholders' reports and corporate meetings, Securities and Exchange Commission
registration fees and expenses, state securities laws registration fees and
expenses, expenses of preparing and printing the Fund's prospectus for delivery
to existing shareholders and of printing application forms for shareholder
accounts, and the fees and reimbursements payable to the Manager under the
Investment Management Contract and the Administrative Services Contract and the
Distributor under the Shareholder Servicing Agreement.
The Fund may from time to time hire its own employees or contract to
have management services performed by third parties (including Participating
Organizations) as discussed herein, and the management of the Fund intends to do
so whenever it appears advantageous to the Fund. The Fund's expenses for
employees and for such services are among the expenses subject to the expense
limitation described above.
For the Fund's fiscal year ended August 31, 1995, the Manager or its
predecessor received investment management fees totaling $_________, $__________
and $__________ from the Money Market Portfolio, the U.S. Government Portfolio
and the Municipal Portfolio, respectively. For the fiscal year ended August 31,
1995, the Manager or its predecessor received administration fees in the
aggregate of $_________, $_________ and $__________ from the Money Market
Portfolio, the U.
S. Government Portfolio and the Municipal Portfolio, respectively.
The Manager now acts as investment manager or adviser for other persons
and entities and may under the Investment Management Contract act as investment
manager or adviser to other registered investment companies. At present, the
Manager is investment manager to fifteen other registered investment companies.
Distribution and Service Plan. Pursuant to Rule 12b-1 under the Act,
the Securities and Exchange Commission has required that an investment company
which bears any direct or indirect expense of distributing its shares must do so
only in accordance with a plan permitted by the Rule. The Fund's Board of
Trustees has adopted a distribution and service plan (the "Plan") and, pursuant
to the Plan, the Fund and the Manager have entered into a Distribution Agreement
and a Shareholder Servicing Agreement with Reich & Tang Distributors L.P. (the
"Distributor") as distributor of the Fund's shares. Because the Merger will be
considered to result in the assignment of the Fund's Distribution Agreement with
the Distributor, causing those agreements to terminate upon the Merger, the
Board of Directors of the Fund approved a new Distribution Agreement with Reich
& Tang Distributors L.P. for the Fund to take effect if a new Investment
Management Agreement is approved by shareholders of the Fund and upon
consummation of the Merger. The new Distribution Agreement would replace the
current Distribution Agreement with the Distributor and would be identical to
those agreements, except for the dates of execution and effectiveness.
Reich & Tang Asset Management, Inc. serves as the sole general partner
for both Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P.
Reich & Tang Asset Management L.P. serves as the sole limited partner of the
Distributor. The Distributor's address is 600 Fifth Avenue, New York, New York
10020. Under the Distribution Agreement, the Distributor, for nominal
consideration and as agent for 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.
16
322065.4
<PAGE>
Under each Plan, the Portfolios and the Distributor will enter a
Shareholder Servicing Agreement with respect to the Class A shares only. Under
the Shareholder Servicing Agreement, the Distributor receives from each
Portfolio a service fee equal to .25% per annum of each Portfolio's Class A
shares average daily net assets (the "Service Fee") for providing, with respect
only to the Class A shares, personal shareholder services and for the
maintenance of shareholder accounts. The Service Fee is accrued daily and paid
monthly and any portion of the Service Fee may be deemed to be used by the
Distributor for payments to Participating Organizations with respect to
servicing their clients or customers who are shareholders of the Fund.
The Plan provides, with respect to Class A shares, that the Manager may
make payments from time to time from its own resources, which may include the
management fee and past profits for the following purposes: (i) to defray the
costs of, and to compensate others, including Participating Organizations with
whom the Distributor has entered into written agreements for performing
shareholder servicing and related administrative functions on behalf of the
Fund; (ii) to compensate certain Participating Organizations for providing
assistance in distributing the Fund's shares; and (iii) to pay the costs of
printing and distributing the Fund's prospectus to prospective investors, and to
defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective stockholders, advertising, and
other promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Service Fee with respect to Class A shares and past
profits for the purpose enumerated in (i) above. The Distributor will determine
the amount of such payments made pursuant to the Plan, provided that such
payments will not increase the amount which each Portfolio is required to pay to
the Manager and the Distributor for any fiscal year under either the Investment
Management Contract in effect for that year, the Administrative Services
Contract in effect for that year or under the Shareholder Servicing Agreement in
effect for that year.
The following information applies only to the Class A shares of the
Portfolios. For the fiscal year ended August 31, 1995, the Fund paid a Service
Fee for expenditures pursuant to the Plan in amounts aggregating $ with respect
to the Money Market Portfolio, $ with respect to the U.S. Government Portfolio
and $ with respect to the Municipal Portfolio. During such period, the Manager
and Distributor made payments pursuant to the Plan to or on behalf of
Participating Organizations of $ with respect to the Money Market Portfolio, $
with respect to the U.S. Government Portfolio and $ with respect to the
Municipal Portfolio. The excess of such payments over the total payments the
predecessor managers and Distributor received from the Fund represents
distribution and servicing expenses funded by the Manager's predecessors and
Distributor from their own resources including the management fee.
ALLOCATION OF PORTFOLIO BROKERAGE [Check SAI]
The Fund's purchases and sales of securities usually are principal
transactions. Portfolio securities are generally purchased directly from the
issuer or from an underwriter or market maker for the securities. There usually
are no brokerage commissions paid for such purchases and the Fund at present
does not anticipate paying brokerage commissions. Should the Fund pay a
brokerage commission on a particular transaction, the Fund would seek to effect
the transaction at the most favorable available combination of best execution
and lowest commission. Purchases from underwriters of portfolio securities
include a commission or concession paid by the issuer to the
17
322065.4
<PAGE>
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price.
No portfolio transactions are executed with the Manager, or with an
affiliate of the Manager, acting either as principal or as paid broker.
The frequency of transactions and their allocation to various dealers
is determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund. The primary consideration is prompt
execution of orders in an effective manner at the most favorable price.
Investment decisions for the Fund will be made independently from those
for any other accounts or investment companies that may be or become advised or
managed by the Manager or its affiliates. If, however, the Fund and other
investment companies or accounts advised or managed by the Manager are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund. In
addition, when purchases or sales of the same security for 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.
OTHER MATTERS
As a Massachusetts business trust, the Fund is not required, and does not
intend, to hold regular annual meetings. Shareholders who wish to present
proposals at any future shareholder meeting must present such proposals to the
Board at a reasonable time prior to the solicitation of any shareholder proxy.
The management does not know of any matters to be present at this Special
Meeting of Shareholders other than those mentioned in this Proxy Statement. If
any of the persons listed above is unavailable for election as a director, an
event not now anticipated, or if any other matters properly come before the
meeting, the shares represented by proxies will be voted with respect thereto in
accordance with the best judgment of the person or persons voting the proxies.
By Order of the Board of Trustees
BERNADETTE N. FINN, Secretary
December ____, 1995
322065.4
<PAGE>
EXHIBIT A (INVESTMENT MANAGEMENT CONTRACT BETWEEN THE FUND AND REICH & TANG
ASSET MANAGEMENT, L.P.)
322065.4
<PAGE>
EXHIBIT A
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
___________, 1996
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
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 you are authorized to exercise full discretion and act for us in the
same manner and
C/M: 11399.0000 326681.1
<PAGE>
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
-2-
C/M: 11399.0000 326681.1
<PAGE>
charges on borrowings, (e) charges and expenses of our custodian, (f) charges,
expenses and payments relating to the issuance, redemption, transfer and
dividend disbursing functions for us, (g) recurring and nonrecurring legal and
accounting expenses, including those of the bookkeeping agent, (h)
telecommunications expenses, (i) the costs of organizing and maintaining our
existence as a corporation, (j) compensation, including directors' fees, of any
of our directors, 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, and (o) payment of the fees and expenses
provided for herein, under the Administrative Services Agreement and pursuant to
the Distribution Agreement. 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 .08% 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
-3-
C/M: 11399.0000 326681.1
<PAGE>
servicing payments to organizations whose customers or clients are our
shareholders. You may waive your right to any fee to which you are entitled
hereunder, provided such waiver is delivered to us in writing. Any reimbursement
of our expenses, to which we may become entitled pursuant to paragraph 3 hereof,
will be paid to us at the same time as we pay you.
6. This Agreement will become effective on the date hereof and
shall continue in effect until ____________, 199_ and thereafter for successive
twelve-month periods (computed from each ____________), provided that such
continuation is specifically approved at least annually by our Board of Trustees
or by a majority vote of the holders of 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 New England
Investment Companies, 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
-4-
C/M: 11399.0000 326681.1
<PAGE>
render services of any kind to any other corporation, firm,
individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
INSTITUTIONAL DAILY INCOME FUND
U.S. Government Portfolio
Money Market Portfolio
Tax Exempt Portfolio
By:
ACCEPTED: ___________, 1996
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT,
INC., General Partner
By: ___________________________
-5-
C/M: 11399.0000 326681.1
<PAGE>
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER)
322065.4
<PAGE>
<TABLE>
EXHIBIT B
<CAPTION>
===================================================================================================================================
NET ASSETS (IN
MILLIONS) AT
FUND NAME FEES 11-30-95
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fee
.30% of average daily net assets up to $750 million
Money Market Portfolio .29% of average daily net assets in excess of $750 million up to
$ 1 billion
.28% of average daily net assets in excess of $1 billion up to
$1.5 billion
.27% of average daily net assets in excess of $1.5 billion
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fee
U.S. Government Portfolio .275% of average daily net assets up to $250 million
.25% of average daily net assets in excess of $250 million
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Services Fee
.21% of average daily net assets up to $1.25 billion
Each Portfolio .20% of average daily net assets in excess of $1.25 billion up to
$1.5 billion
.19% of average daily net assets in excess of $1.5 billion
-----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee (Class A only)
.25% of average daily net assets
====================================================================================================================================
Management Fee
.325% of average daily net assets up to $750 million
.30% of average daily net assets in excess of $750 million
-----------------------------------------------------------------------------------------------
DAILY TAX FEE INCOME FUND, INC. Administrative Services Fee
.21% of average daily net assets up to $1.25 million
.20% of average daily net assets in excess of $1.25 million up to
$1.5 billion
.19% in excess of $1.5 billion
-----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee (Class A Only)
.25% of average daily net assets
===================================================================================================================================
</TABLE>
-1-
322069.1
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NET ASSETS (IN
MILLIONS) AT
FUND NAME FEES 11-30-95
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Management Fee
REICH & TANG EQUITY FUND, INC. .80% of average daily net assets
------------------------------------------------------------------------------------------------
Administrative Services Fee
.21% of average daily net assets
====================================================================================================================================
Management Fee
.80% of average daily net assets
------------------------------------------------------------------------------------------------
DELAFIELD FUND, INC. Administrative Services Fee
.21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
====================================================================================================================================
Management Fee
CONNECTICUT DAILY TAX FREE .30% of average daily net assets
INCOME FUND, INC. ------------------------------------------------------------------------------------------------
Administrative Services Fee
.21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
====================================================================================================================================
Management Fee
.30% of average daily net assets
NEW YORK DAILY TAX FEE INCOME ------------------------------------------------------------------------------------------------
FUND, INC. Administrative Services Fee
.21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
====================================================================================================================================
</TABLE>
-2-
322069.1
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NET ASSETS (IN
MILLIONS) AT
FUND NAME FEES 11-30-95
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Management Fee
.35% of average daily net assets
-----------------------------------------------------------------------------------------------
REICH & TANG GOVERNMENT Administrative Services Fee
SECURITIES TRUST .21% of average daily net assets
-----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
====================================================================================================================================
Management Fee
.30% of average daily net assets
-----------------------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FEE INCOME Administrative Services Fee
FUND, INC. .21% of average daily net assets
-----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
====================================================================================================================================
Management Fee
.30% of average daily net assets
-----------------------------------------------------------------------------------------------
MICHIGAN DAILY TAX FREE INCOME Administrative Services Fee
FUND, INC. .21% of average daily net assets
-----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
====================================================================================================================================
All Inclusive Management Fee*
.40% of average daily net assets up to $250 million
TAX EXEMPT PROCEEDS FUND, INC. .35% of average daily net assets in excess of $250 million up to
$500 million
.30% of average daily net assets in excess of $500 million
</TABLE>
- -----------------
* Management Contract requires the Manager, not the Fund to bear all other fund
expenses; therefore, the fee payable under the Management Contract is the only
expense of the Fund.
-3-
322069.1
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NET ASSETS (IN
MILLIONS) AT
FUND NAME FEES 11-30-95
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Management Fee
.30% of average daily net assets
-----------------------------------------------------------------------------------------------
NEW JERSEY DAILY MUNICIPAL INCOME Administrative Services Fee
FUND, INC. .21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
===================================================================================================================================
All Inclusive Management Fee
.80% of the first $500 million
CORTLAND TRUST, INC. .775% of the next $500 million
.75% of the next $500 million
All Portfolios .735% in excess of $1.5 billion
------------------------------------------------------------------------------------------------
Distribution Fee
.25% of average daily net assets
===================================================================================================================================
Management Fee
.40% of average daily net assets
------------------------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL Administrative Services Fee
INCOME FUND, INC. .21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
====================================================================================================================================
</TABLE>
-4-
322069.1
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
NET ASSETS (IN
MILLIONS) AT
FUND NAME FEES 11-30-95
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Management Fee
.40% of average daily net assets
------------------------------------------------------------------------------------------------
Administrative Services Fee
PENNSYLVANIA DAILY MUNICIPAL .21% of average daily net assets up to $1.25 billion
INCOME FUND .20% of average daily net assets in excess of $1.25 billion up to
$1.5 billion
.19% of average daily net assets in excess of $1.5 billion
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
===================================================================================================================================
Management Fee
.40% of average daily net assets
------------------------------------------------------------------------------------------------
FLORIDA DAILY MUNICIPAL FUND Administrative Services Fee
.21% of average daily net assets
------------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution Plan Fee (Class A Only)
.25% of average daily net assets
===================================================================================================================================
Investment Management Fee
.08% of average daily net assets
INSTITUTIONAL DAILY INCOME FUND -----------------------------------------------------------------------------------------------
Administrative Services Fee
.05% of average daily net assets
All Portfolios -----------------------------------------------------------------------------------------------
Shareholder Servicing and Distribution
Plan Fee (Class A Only) .25% of average
daily net assets
===================================================================================================================================
</TABLE>
-5-
322069.1
<PAGE>
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 - FEBRUARY 15, 1996
THE UNDERSIGNED SHAREHOLDER OF INSTITUTIONAL DAILY INCOME FUND
(THE "FUND") HEREBY APPOINTS BERNADETTE N. FINN AND DANA E. MESSINA, 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 NOVEMBER 28, 1995 AT THE
SPECIAL MEETING OF SHAREHOLDERS OF THE CORPORATION TO BE HELD AT THE OFFICES OF
THE CORPORATION AT 600 FIFTH AVENUE, NEW YORK, NY 10020 AT 9:00 A.M. ON FEBRUARY
15, 1996 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 PROPOSAL. 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.
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
KEEP THIS PO TION FOR YOUR RECORDS
- ------------------------------------------------------------------------------
(DETACH HERE AND RETURN THIS PORTION ONLY)
INSTITUTIONAL DAILY INCOME FUND
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
I. TO APPROVE OR DISAPPROVE A NEW
INVESTMENT CONTRACT THAT
INCLUDES AN INCREASE TO THE FEES
PAYABLE THEREUNDER
II. ELECT THE FOLLOWING NOMINEES FOR
TRUSTEES
1. STEVEN W. DUFF
2. W. GILES MELLON
3. ROBERT STRANIERE
4. YUNG WONG
III. TO RATIFY OR REJECT THE
SELECTION OF MCGLADREY & PULLEN
LLP AS INDEPENDENT ACCOUNTANTS
OF THE CORPORATION FOR ITS
FISCAL YEAR ENDING 3/31/96
__________________________________ _________________________________________
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.
