INSTITUTIONAL DAILY INCOME FUND
IMPORTANT NOTICE TO SHAREHOLDERS
Dear Shareholder:
As you are aware, each Fund is managed and advised by Reich & Tang Asset
Management L.P. (the "Manager"). The parent company of the Manager, New England
Investment Companies, L.P. is majority-owned by New England Mutual Life
Insurance Company, which proposes to merge with Metropolitan Life Insurance
Company sometime after the 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 and investment advisory services to be performed under the new
agreement are the same as those under the current agreement. As described in the
proxy statement, the Board of Trustees has approved, and is recommending that
shareholders approve an increase in the management fee to 0.12% from 0.08% of
each Portfolio's average daily net assets. The other terms of the new agreement
other than the commencement date and the termination date, are the same in all
material respects to the existing agreement. There are no changes contemplated
in the objectives or policies of the Fund, the management or operation of the
Manager relating to the Fund, the personnel managing the Fund or the shareholder
or other business activities of the Fund. The Board of Trustees has determined
that the new agreement would be in the best interest of the Fund and its
shareholders. Accordingly, the Board of Trustees of the Fund 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,
INSTITUTIONAL DAILY INCOME FUND
INSTITUTIONAL DAILY INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
JANUARY 26, 1996
600 Fifth Avenue
New York, New York 10020
(800) 676-6779
A Special Meeting of Shareholders of Institutional Daily Income Fund (the
"Fund") will be held at 9:00 a.m. on January 26, 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 January 10,
1996.
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); To elect four trustees of the
Fund, each to hold office until his successor is duly elected and qualified; 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 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. WE ASK FOR YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
PROXY STATEMENT PAGE
Introduction 4
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 6
Election of Trustees 11
Ratification or Rejection of Selection of Independent Accountants 14
Information Regarding the Manager 14
Allocation of Portfolio Brokerage 18
Other Matters 19
Exhibit A (Investment Management Contract Between the Fund and
Reich & Tang Asset Management, L.P.) 20
Exhibit B (Table of Fees for all Funds Advised by the Manager) 24
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 January 26, 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 January 10, 1996. 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 76,286,080 shares of
the Money Market Portfolio; 5,164 shares of the U.S. Treasury Portfolio; and no
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 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 28, 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 -
Class A
Reich & Tang Asset Management L.P.
600 Fifth Avenue, 8th Foor
New York, NY 10020 100% Record & Beneficial
Money Market Portfolio -
Class B
New England Investment Co., L.P.
399 Boylston Street
Boston, MA 02116 31.64% Record & Beneficial
New England Securities
399 Boylston Street, 8th Floor
Boston, MA 02116 16.05% Record & Beneficial
New England Funds, L.P.
399 Boylston Street
Boston, MA 02116 12.28% Record & Beneficial
KOA Holdings, Inc.
600 Fifth Avenue
New York, NY 10020 10.72% Record & Beneficial
First Trust Co.
P.O. Box 868
Evansville, IN 47705-0868 9.53% Record
The Tang Fund
600 Fifth Avenue, 8th Floor
New York, NY 10020 6.93% Record & Beneficial
August Associates, L.P.
600 Fifth Avenue
New York, NY 10020 5.69% Record & Beneficial United National Bank 1130 Route 22
East P.O. Box Bridgewater, NJ 08807-0010 5.40% Record U.S. Treasury Portfolio
Class A Reich & Tang Asset Management L.P. 600 Fifth Avenue, 8th Floor New York,
NY 10020 100% Record & Beneficial As of November 28, 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 Class B shares of each of the Money Market Portfolio, the U.S.
Treasury Portfolio or the Municipal Portfolio and as indicated above, owned 100%
of the Class A shares. 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 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 April 14, 1994
and NEIC owns approximately 31.64% 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 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 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 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 28,
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 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. COMPARATIVE FEE
TABLE
(i)
(ii)
(iii)
(iv)
(v)
Aggregate amount of Manager's fee (net of fee waiver) for year ended 3/31/95
Aggregate amount of Manager's fee (absent fee waiver) for year ended 3/31/95
Aggregate amount of Manager's fee had increased fee been in effect for year
ended 3/31/95 Difference between (i) and (iii), as a percentage of (i)
Difference between (ii) and (iii), as a percentage age of (ii)
Money Market Portfolio-Class A&B Shares
$0
$30,505
$45,757
100%
50%
U.S. Treasury1 Portfolio-Class A&B Shares
N/A
N/A
N/A
N/A
N/A
1 Commenced investment operations after 3/31/95; no advisory fees have been
accrued or paid to date.
2 Has not yet commenced investment operations. Municipal2 Portfolio-Class A&B
Shares
N/A
N/A
N/A
N/A
N/A
TABLE OF FEES AND EXPENSES
(HISTORICAL)
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
Estimated Annual Fund Operating Expenses
Money Market Portfolio U.S. Treasury Portfolio Municipal Portfolio
<S> <C> <C> <C>
Class A Class B Class A Class B Class A Class B
Management Fees - After Fee Waiver* 0.00% 0.00% 0.000% 0.000% 0.080% 0.080%
12B-1 Fees 0.25% None 0.250% None 0.250% None
Other Expenses - After Reimbursement* 0.12% 0.12% 0.175% 0.175% 0.070% 0.070%
Administration Fees After Fee Waiver* 0.00% 0.00% 0.000% 0.000% 0.000% 0.000%
Total Fund Operating Expenses - After Fee
Waivers and Reimbursements* 0.37% 0.12% 0.425% 0.175% 0.400% 0.150%
Money Market Portfolio U.S. Treasury Portfolio Municipal Portfolio
Class A Class B Class A Class B Class A Class B
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming %% annual
return and redemption at the end of each
time period: 1 year $4 $1 $4 $2 $4 $2
3 years $12 $4 $14 $6 $13 $5
5 years $21 $7 $24 $10 $22 $8
10 years $47 $15 $54 $22 $51 $19
PROFORMA TABLE OF FEES AND EXPENSES (REFLECTING FEE INCREASE) Annual Fund
Operating Expenses (as a percentage of average net assets)
<TABLE>
Estimated Annual Fund Operating Expenses
<S> <C> <C>
Money Market Portfolio U.S. Treasury Portfolio Municipal Portfolio
Class A Class B Class A Class B Class A Class B
Management Fees - After Fee Waiver* 0.00% 0.00% 0.000% 0.000% 0.105% 0.105%
12B-1 Fees 0.25% None 0.250% None 0.250% None
Other Expenses - After Reimbursement* 0.12% 0.12% 0.175% 0.175% 0.070% 0.070%
Administration Fees After Fee Waiver* 0.00% 0.00% 0.000% 0.000% 0.000% 0.000%
Total Fund Operating Expenses - After Fee
Waivers and Reimbursements* 0.37% 0.12% 0.425% 0.175% 0.425% 0.175%
Money Market Portfolio U.S. Treasury Portfolio Municipal Portfolio
Class A Class B Class A Class B Class A Class B
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming %% annual
return and redemption at the end of each
time period: 1 year $4 $1 $4 $2 $4 $2
3 years $12 $4 $14 $6 $14 $6
5 years $21 $7 $24 $10 $24 $8
10 years $47 $15 $54 $22 $54 $22
The purpose of the above fee tables is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. For a further discussion of these fees see "Management of the
Fund" and "Distribution and Service Plan" herein. The outstanding shares of the
Fund were reclassified into Class B shares on April 1, 1995. The expenses shown
for the Money Market Portfolio and the U.S. Treasury Portfolio are at levels
anticipated for the current fiscal year. With respect to both Class A shares and
the Class B shares, the Manager has agreed to waive all of its Management and
Administration Fees and reimburse each Portfolio its operating expenses to the
extent necessary to maintain the total expense ratio of each Portfolio during
the first three fiscal years of the Fund at a maximum of 0.40%, 0.425% amd 0.45%
of the Class A shares' average daily net assets and at a maximum of 0.15%,
0.175%, and 0.20% of the Class B shares' average daily net assets, respectively.
In addition, the Manager has voluntarily reimbursed the expenses of the Money
Market Portfolio to a level below the agree maximum. Absent such waivers, for
the Historical Table of Fees and Expenses, Management and Administration Fees
for the Money Market Portfolio and the U.S. Treasury Portfolio would have been
0.08% and 0.05%, respectively, for both Class A and Class B shares, Absent such
reimbursement and fee waivers, Total Fund Operating Expenses for the Money
Market Portfolio for the Class A and Class B shares would have been 0.54% and
0.29%, respectively. Total Fund Operating Expenses for the U.S. Treasury
Portfolio for the Class A and Class B shares would have been 0.555% and 0.305%,
respectively. Absent such waivers, for the Proforma Table of Fees and Expenses,
Management and Administration Fees would have been 0.12% amd 0.05%,
respectively, for both Class A and Class B of both the Money Market Portfolio
and the U.S. Treasury Portfolio. Absent such reimbursement and fee waivers,
Total Fund Operating Expenses for the Money Market Portfolio Class A and Class B
shares would have been 0.58% and 0.33%, respectively. Total Fund Operating
Expenses for the U.S Treasury Portfolio Class A and Class B shares would have
been 0.595% and 0.345%, respectively. 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 4 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 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
inception. 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 three times during the Fund's fiscal year ended
March 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 March 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.
Amount and Nature
of Beneficial
Principal Occupation Ownership at
Name and Age During Preceding Five Years 11/30/95 % of Shares
Steven W. Duff*
42
President and Trustee of the Fund and President of the mutual funds division of
the Manager since September 1994. Mr. Duff was formerly Director of Mutual Fund
Administration of NationsBanc with which he was associated from 1981 to August
1994. Mr. Duff is also President and a Director of California Daily Tax Free
Income Fund, Inc.; Connecticut Daily Tax Free 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. -0- -0-
W. Giles Mellon
64
Trustee of the Fund since its formation in 1994; Professor of Business
Administration 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. -0- -0-
Robert Straniere
53
Trustee of the Fund since its formation in 1994; Member of New York State
Assembly; Partner, The Straniere Law 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. -0- -0-
Dr. Yung Wong
57
Trustee of the Fund since its formation in 1994; Director of Shaw Investment
Management Ltd. (H.K.) from 1994 to September, 1995; formerly General Partner of
Abacus Partners Limited Partnership (a general partner of a venture capital
investment firm) from 1984 to 1994; Director of California Daily Tax Free Income
Fund, Inc.; Connecticut Daily Tax Free 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.
- -0-
- -0-
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, 48,
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 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
$5,750 to its three disinterested trustees with respect to its fiscal year ended
March 31, 1995.
(1)
(2)
(3)
(4)
(5)
Name of
Person,
Position
Aggregate Compensation
From
Fund
Pension or Retirement Benefits Accrued As Part of Fund Expenses
Estimated Annual Benefits Upon Retirement
Total Compensation From Fund and Fund Complex Paid to Trustees*
Steven W. Duff, President and Trustee
0
0
0
0
W. Giles Mellon, Trustee
1,917
0
0
$51,500
(13 Funds)
Robert Straniere, Trustee
1,917
0
0
$51,500
(13 Funds)
Yung Wong, Trustee
1,917
0
0
$51,500
(13 Funds)
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending March 31, 1995 (and, with respect to certain of the funds
in the Fund Complex, estimated to be paid during the fiscal year ending March
31, 1995). The parenthetical number represents the number of investment
companies (including the Fund ) from which such person receives compensation
that are considered part of the same Fund Complex as the Fund, because, among
other things, they have a common investment advisor.
PROPOSAL 3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees recommends that the shareholders ratify the selection of
Messrs. McGladrey & Pullen LLP, independent public accountants, to audit the
accounts of the Fund for the fiscal year ending March 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 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 March 15, 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 reimburse the Manager for all of
the Fund's operating costs 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 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 March 31, 1995, the Manager or its predecessor received no investment
management fees from the Money Market Portfolio, the U.S. Government Portfolio
and the Municipal Portfolio, respectively. For the fiscal year ended March 31,
1995, the Manager or its predecessor received no administration fees 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. 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. $57,826 have been paid under the Plan to date.
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. ALLOCATION OF PORTFOLIO BROKERAGE 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 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
January 10, 1996
EXHIBIT A (INVESTMENT MANAGEMENT CONTRACT BETWEEN THE FUND AND REICH & TANG
ASSET MANAGEMENT, L.P.)
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:
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. (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.
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 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. 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. 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. 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.
We agree, subject to the limitations described below, to be responsible for, and
hereby assume the obligation for payment of, all our expenses, including: (a)
brokerage and commission expenses, (b) Federal, state or local taxes, including
issue and transfer taxes incurred by or levied on us, (c) commitment fees and
certain insurance premiums, (d) interest charges on borrowings, (e) charges and
expenses of our custodian, (f) charges, expenses and payments relating to the
issuance, redemption, transfer and dividend disbursing functions for us, (g)
recurring and nonrecurring legal and accounting expenses, including those of the
bookkeeping agent, (h) telecommunications expenses, (i) the costs of organizing
and maintaining our existence as a 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. 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. 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 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. 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. 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. 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 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:___________________________
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER)
FUND NAME
FEES
NET ASSETS (IN MILLIONS) AT
11-30-95
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
Management Fee
.30% of average daily net assets up to $750 million
.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
895.3
U.S. Government Portfolio
Management Fee
.275% of average daily net assets up to $250 million
.25% of average daily net assets in excess of $250 million
610.4
Each Portfolio
Administrative Services Fee
.21% of average daily net assets up to $1.25 billion
.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
STIF 895.3
STIG 610.4
Shareholder Servicing and Distribution Plan Fee (Class A only) .25% of average
daily net assets
STIF (A) 671.3
STIG (A) 504.4
Management Fee
.325% of average daily net assets up to $750 million
.30% of average daily net assets in excess of $750 million
626.7
DAILY TAX 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
626.7
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 453.4
REICH & TANG EQUITY FUND, INC.
Management Fee
.80% of average daily net assets
109.5
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
44.0
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
103.2
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
263.1
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
Management Fee
.35% of average daily net assets
REICH & TANG GOVERNMENT SECURITIES TRUST
Administrative Services Fee
.21% of average daily net assets
.7
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 FUND, INC.
Administrative Services Fee
.21% of average daily net assets
159.3
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 FUND, INC.
Administrative Services Fee
.21% of average daily net assets
59.7
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
TAX EXEMPT PROCEEDS
FUND, INC.
All Inclusive Management Fee*
.40% of average daily net assets up to $250 million
.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
265.4
EXHIBIT B (TABLE OF FEES FOR ALL FUNDS ADVISED BY THE MANAGER) (CONTINUED)
Management Fee
.30% of average daily net assets
NEW JERSEY DAILY MUNICIPAL INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
135.1
Shareholder Servicing and Distribution Plan Fee
.20% of average daily net assets
CORTLAND TRUST, INC.
All Portfolios
All Inclusive Management Fee
.80% of the first $500 million .775% of the next $500 million .75% of
the next $500 million .735% in excess of $1.5 billion
1,884.4
Distribution Fee
.25% of average daily net assets
1,503.3
Distribution Fee (Live Oak Shares)
.20% of average daily net assets
381.1
Management Fee
.40% of average daily net assets
NORTH CAROLINA DAILY
MUNICIPAL INCOME FUND, INC.
Administrative Services Fee
.21% of average daily net assets
171.8
Shareholder Servicing and Distribution Plan Fee
.25% of average daily net assets
Management Fee
.40% of average daily net assets
PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
Administrative Services Fee
.21% of average daily net assets
.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
41.0
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
40.6
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 19.9
INSTITUTIONAL DAILY INCOME FUND
Investment Management Fee
.08% of average daily net assets
All Portfolios
Administrative Services Fee
.05% of average daily net assets
350.8
Shareholder Servicing and Distribution Plan Fee (Class A Only) .25% of average
daily net assets
Class A 271.7
PH2-2
* Such person is an "interested person" of the Corporation within the meaning of
Section 2(a) (19) of the 1940 Act.
* 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.
