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DAILY
TAX FREE
INCOME
FUND, INC.
Annual Report
October 31, 1995
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<PAGE>
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DAILY TAX FREE 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. 212-830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the annual report of Daily Tax Free Income Fund, Inc.
for the year ended October 31, 1995. As of the end of the period, the Fund had
net assets of $625,641,906 and 5,765 active shareholders.
We thank you for your support of Daily Tax Free Income Fund, Inc. and look
forward to continuing to serve our cash management needs.
Sincerely,
/s/ Steven W. Duff
President
Steven W. Duff
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
OCTOBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Value Standard
Amount Yield (Note 1) Moody's & Poor's
------ ----- -------- ------- ------
Variable Rate Demand Instruments -
Private Placements (c) (18.50%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 240,000 The Bank of California, N.A. LOC covering two issues
due 12-15-95 through 06-30-96 5.68% to 7.00% $ 240,000 P1 A1+
11,477,427 Banc One Arizona LOC covering seven issues
due 12-01-95 through 01-01-11 5.68% 11,477,427 P1 A1
13,386,000 Bank of Tokyo, Ltd. LOC covering four issues
due 12-01-09 through 12-01-15 5.25% to 5.68% 13,386,000 P1 A1+
429,166 Central Trust Company LOC
Backed by Bank of New York LOC
covering two issues due 01-01-99 5.25% 429,166 P1 A1
2,263,974 Comerica Bank - Detroit LOC covering four issues
due 02-01-00 through 05-01-05 5.25% 2,263,974 P1 A1
1,500,000 Credit Suisse LOC covering one issue due 12-01-00 5.25% 1,500,000 P1 A1+
6,000,000 Creditanstalt-Bankverein LOC covering two issues
due 11-01-05 through 06-01-10 5.25% 6,000,000 P1 A1+
2,000,000 Dresdner Bank AG LOC covering two issues
due 12-28-14 through 08-01-15 5.25% 2,000,000 P1 A1+
4,300,760 First New Hampshire Bank LOC
Backed by State Street Bank & Trust Company LOC
covering one issue due 12-01-10 5.25% 4,300,760 P1 A1+
4,490,000 The First National Bank of Maryland
LOC covering two issues
due 07-01-04 through 09-01-17 4.42% to 5.68% 4,490,000 P1 A1
5,319,055 The Huntington National Bank LOC covering four issues
due 11-01-95 through 10-01-05 4.15% to 5.95% 5,319,055 P1 A1
1,281,666 Key Bank, N.A. LOC covering one issue due 07-01-15 5.25% 1,281,666 P1 A1
619,058 Nations Bank, N.A. LOC covering one issue due 12-01-99 5.68% 619,058 P1 A1
580,000 National Westminster Bank PLC
LOC covering one issue due 12-15-95 5.25% 580,000 P1 A1+
4,432,000 PNC, N.A. LOC covering two issues
due 12-01-00 through 06-30-02 5.68% 4,432,000 P1 A1+
5,267,000 Norwest Bank, N.A. LOC covering five issues
due 12-01-95 through 12-01-15 5.42% to 5.68% 5,267,000 P1 A1+
28,919,600 Seattle-First National Bank LOC
Backed by Bank of America NT & SA LOC,
covering thirteen issues due 12-15-00 through 11-15-15 5.68% 28,919,600 P1 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Value Standard
Amount Yield (Note 1) Moody's & Poor's
------ ----- -------- ------- ------
Variable Rate Demand Instruments -
Private Placements (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,000,000 Societe Generale LOC covering one issue due 12-01-95 5.25% $ 2,000,000 P1 A1+
1,910,000 State Street Bank & Trust Company
LOC covering one issue due 01-01-02 5.25% 1,910,000 P1 A1+
2,000,000 Wells Fargo Bank, N.A. LOC covering two issues
due 12-15-04 through 08-01-05 5.33% 2,000,000 P1 A1+
4,000,000 York Bank and Trust covering one issue due 12-01-14 4.00% 4,000,000
13,314,289 Zion's National Bank Liquidity Facility covering one issue
due 12-10-15 5.68% 13,314,289 P2 P2
------------ ------------
115,729,995 Total Variable Rate Demand Instruments - Private Placements 115,729,995
------------ ------------
<CAPTION>
Variable Rate Demand Instruments -
Participations (c) (6.25%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 804,992 The Bank of California, N.A. LOC covering one issue
due 12-31-09 5.07% $ 804,992 P1 A1+
3,543,924 The Bank of New York LOC covering eight issues
due 10-01-98 through 05-01-01 5.16% to 5.25% 3,543,924 P1 A1+
21,716,147 Chemical Bank LOC covering eighteen issues
due 04-01-96 through 05-01-13 4.81% to 5.68% 21,716,147 P1 A1+
2,237,124 The First National Bank of Maryland
LOC covering nine issues
due 09-16-96 through 09-15-02 5.10% to 5.25% 2,237,124 P1 A1
273,916 LaSalle National Bank
LOC covering one issue due 07-01-00 5.25% 273,916 P1 A1+
8,421,250 PNC Bank, N.A. LOC covering three issues
due 07-29-97 through 10-15-13 5.60% to 6.90% 8,421,250 P1
2,125,000 The Sumitomo Bank of California LOC
Backed by Sumitomo Bank, Ltd. LOC
covering one issue due 05-01-96 5.92% 2,125,000 P1 A1+
---------- ----------
39,122,353 Total Variable Rate Demand Instruments - Participations 39,122,353
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Tax Exempt Commercial Paper (7.89%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 6,300,000 Burke County, GA (Oglethorpe Power Co.)
LOC Credit Suisse 11/09/95 3.15% $ 6,300,000 P1 A1+
</TABLE>
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See Notes to Financial Statements,
<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
OCTOBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Tax Exempt Commercial Paper (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,675,000 Burke County, GA (Oglethorpe Power Co.)
LOC Credit Suisse 11/16/95 3.75% $ 10,675,000 P1 A1+
12,000,000 Burke County, GA (Oglethorpe Power Co.)
LOC Credit Suisse 12/07/95 3.55 12,000,000 P1 A1+
4,900,000 City of Burlington, KS Customized Purchase PCRB
(Kansas City Power and Light Company Project) - Series 1987B
LOC Deutsche Bank A.G. 11/09/95 3.15 4,900,000 P1 A1+
15,490,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty Trust Company\
Union Bank of Switzerland 01/23/96 3.80 15,490,000 A1+
---------- ----------
49,365,000 Total Tax Exempt Commercial Paper 49,365,000
---------- ----------
<CAPTION>
Other Tax Exempt Investments (13.69%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 10,000,000 Colorado State General Fund Revenue TRAN - Series A 06/27/96 3.66% $ 10,049,072 SP-1+
10,000,000 DeKalb County, GA TAN 12/29/95 4.18 10,011,480 MIG-1 SP-1+
10,000,000 Essex County, New Jersey TRAN - Series C
LOC National Westminster Bank PLC 11/22/95 3.50 10,003,954 MIG-1
5,000,000 State of Illinois RAN 04/12/96 3.64 5,017,360 MIG-1 SP-1+
10,000,000 State of Illinois RAN 05/10/96 3.72 10,035,823 MIG-1 SP-1+
8,685,000 State of Maine GO TAN 06/28/96 3.73 8,723,407 MIG-1 SP-1+
31,650,000 State of Texas TRAN - Series 1995A 08/30/96 3.96 31,830,800 MIG-1 SP-1+
---------- ----------
85,335,000 Total Other Tax Exempt Investments 85,671,896
---------- ----------
<CAPTION>
Put Bonds (d) (8.41%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 14,460,000 California PCRB Finance Authority
(Chevron Chemical Company Project) 11/15/95 4.71% $ 14,456,251 Aa2 AA
9,860,000 DeKalb County, GA MHRB - Series 1985L
LOC Amsouth Bank N.A. 12/01/95 4.50 9,860,000 A1+
14,310,000 Fulton County, GA - Series 1985B
LOC Amsouth Bank N.A. 08/01/96 3.94 14,310,000 A1+
4,000,000 Joliet Illinois Gas Supply Revenue
Peoples Gas, Light & Core 10/01/96 4.00 4,000,000 VMIG-1
10,000,000 State of Connecticut Special Assessment - Series 1993C
FGIC Insured 07/01/96 3.90 10,000,000 VMIG-1 AAA
---------- ----------
52,630,000 Total Put Bonds 52,626,251
---------- ----------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (44.73%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,900,000 Arlington, TX (Dallas/Ft. Worth Suburban Newspaper)
LOC Sanwa Bank, Ltd 10/01/20 4.45% $ 2,900,000 A1+
2,800,000 Baldwin County, GA (William Barnet and Son Project)
LOC Fleet Trust 12/01/99 4.45 2,800,000 A1
3,100,000 Broward County, FL HFA
Multifamily Housing Revenue (Sanctuary Apartments Project)
LOC PNC Bank, N.A. 02/01/09 3.90 3,100,000 VMIG-1
2,500,000 Burke County, GA
Georgia Power Co. Second - Series 1995 04/01/25 4.00 2,500,000 VMIG-1 A1
5,600,000 Burke County, GA
PCRB (Georgia Power Co. PLT Vogtle - Second ) 07/01/24 4.00 5,600,000 VMIG-1 A1
1,400,000 California PCFA (Southern California Edison) - Series B 02/28/08 3.75 1,400,000 VMIG-1 A1+
3,200,000 California PCFA (Southern California Edison) - Series C 02/28/08 3.75 3,200,000 VMIG-1 A1+
1,100,000 California PCFA (Southern California Edison) - Series 1986D 02/28/08 3.75 1,100,000 VMIG-1 A1+
4,000,000 Carlton, WI (Wisconsin Power & Light) - Series B 09/01/05 4.05 4,000,000 P1 A1+
1,000,000 City of Atlantic Beach, FL (Fleet Landing)
LOC Barnett Bank 10/01/24 4.00 1,000,000 VMIG-1
4,870,000 Clarksville, TN Public Building Authority Pooled Financing RB
LOC Nationsbank 06/01/24 4.00 4,870,000 A1
6,400,000 Clayton, MO IDRB (Bailey Court Project)
LOC Bankers Trust Company 01/01/09 4.07 6,400,000 VMIG-1
5,000,000 Colorado HFA (Grant Plaza Project)
LOC Bankers Trust Company 11/01/09 4.07 5,000,000 VMIG-1
6,700,000 County of Contra Costa, MHRB Mortgage Refunding
(Rivershore Apartments) - Series 1992B
Fannie Mae (Unconditional Guaranty) 11/15/22 3.75 6,700,000 A1+
4,850,000 Coweta County, GA IDRB
(Jack Eckerd Project) (b)
LOC Union Bank of Switzerland 03/01/09 4.05 4,850,000
3,600,000 Dade County, FL Mortgage RB - Series 1985 - 6
(Gables Point Apartment Project)
Fannie Mae (Unconditional Guaranty) 05/15/05 3.80 3,600,000 A1+
14,600,000 DeKalb County, GA Housing Authority
LOC Bank of Montreal 12/01/07 4.00 14,600,000 A1+
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
OCTOBER 31, 1995
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,235,000 Gulf Breeze, FL - Series 1985B
FGIC Insured 12/01/15 4.00% $ 1,235,000 VMIG-1 A1+
10,000,000 Hammond, LA IDB
(Eckerds Warehouse Project) (b)
LOC Union Bank of Switzerland 05/01/13 4.05 10,000,000
8,000,000 Housing Opportunity Commission of Montgomery County
LOC General Electric Capital Corporation 11/01/07 4.05 8,000,000 A1+
6,000,000 Illinois IDFA
Chicago Educational Television
LOC Harris Trust & Savings Bank 11/01/14 3.95 6,000,000 VMIG-1
17,000,000 Illinois Health Facilities Resurrection Hospital
LOC First Chicago\Comerica Bank\
LaSalle National\National Bank of Detroit 05/01/11 4.05 17,000,000 VMIG-1
12,400,000 Illinois HFA (Northwestern Memorial Hospital) - Series 1995
LOC Northern Trust 08/15/25 4.00 12,400,000 VMIG-1 A1+
19,400,000 Illinois Museum of Contemporary Art 1994
LOC Northern Trust\Harris Trust\
LaSalle National\National Bank of Detroit 02/01/29 3.90 19,400,000 A1+
5,000,000 Jackson County, MI EDC (Thrifty Leoni)
LOC First National Bank of Chicago 12/01/14 4.15 5,000,000 P1 A1
3,500,000 Jacksonville, FL PCRB
(Florida Power and Light Company Project) - Series 1995 05/01/29 3.85 3,500,000 VMIG-1 A1
1,600,000 Jacksonville, FL HFA RB
(Baptist Health Property Project)
LOC Barnett Bank 06/01/20 3.95 1,600,000 A1
5,000,000 Kansas Department TRAN 1994B 09/01/14 3.85 5,000,000 VMIG-1 A1+
3,850,000 Maryland IDFA EDRB (The Barre School Facility)
LOC Nations Bank 07/01/14 4.00 3,850,000 A1
1,770,000 Mecklenberg County, NC (Aplix, Inc.)
LOC Wachovia Bank & Trust Co., N.A. 12/01/99 3.90 1,770,000 P1 A1+
5,910,000 Missouri State HEFA (Barnes Hospital)
LOC Morgan Guaranty Trust Company 12/01/15 3.90 5,910,000 P1 A1+
5,700,000 Missouri State HEFA - Washington University 09/01/10 3.90 5,700,000 VMIG-1 A1+
8,900,000 Monroe County, GA IDFA
(Georgia Power Company) 07/01/25 4.00 8,900,000 P1 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,200,000 Monroe County, MI (Detroit Edison)
LOC Barclays Bank 10/01/24 3.95% $ 8,200,000 VMIG-1
2,000,000 Montgomery County, TX
(Houston Area Residential Center Project) - Series 1985
LOC J.P. Morgan 12/01/15 3.90 2,000,000 A1+
1,700,000 Orange County, FL (Health Facility)
LOC Banque Paribas 11/15/14 4.00 1,700,000 VMIG-1 A1
7,140,000 Orange County, FL (Mayflower Project)
LOC Banque Paribas 03/01/18 4.00 7,140,000 A1
2,600,000 Oyster Point, VA Development Corporation - Series 1991
LOC Perpetual Savings 11/01/11 4.35 2,600,000 A1+
7,350,000 IDA of the City of Phoenix, AZ MHRB Refunding
(Bell Square Apartments Project) - Series 1995
LOC General Electric Capital Corporation 06/01/25 4.10 7,350,000 A1+
3,500,000 Phoenix, AZ IDA MHRB
(Paradise Lakes Apartments Project) - Series 1995
LOC General Electric Capital Corporation 07/01/25 4.10 3,500,000 A1+
2,250,000 Pierce County, Atlas Foundry
LOC Bank of America 05/01/05 5.68 2,250,000 P1 A1
5,300,000 Pinellas County, FL HFA - Series 1987
(St. Mark Village Project)
LOC Nations Bank 03/01/17 3.90 5,300,000 A1
5,000,000 Pitkin County, CO IDA
(Aspen Skiing Co. Project) - Series A
LOC First National Bank of Chicago 04/01/16 4.05 5,000,000 A1
2,750,000 Prince Georges County, MD EDC RB
LOC Fleet National Bank 09/30/15 5.68 2,750,000 P1 A1
3,170,000 St. Cloud, MN Commercial Development RFDG
(Kelly Inn Project) (b)
LOC First Bank of South Dakota 04/01/13 4.00 3,170,000
5,300,000 San Antonio, TX IDA (Rivercenter Project)
LOC PNC Bank, N.A. 12/01/12 4.00 5,300,000 Aa3
2,900,000 Salina, KS (Dillards Project) (b)
LOC Boatmens National Bank of St. Louis 12/01/14 4.32 2,900,000
2,130,000 County of Sarpy, NE PCR Refunding Bond - Series 1995
(Allied Signal Inc. Project) 07/01/13 4.00 2,130,000 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
OCTOBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Southgate, MI EDC EDRB (Trust Realty Corp. Project)
LOC Bankers Trust Company 10/01/18 4.07% $ 2,000,000 Aa2
5,000,000 State of Connecticut GO Economic Recovery Note - Series B 06/01/96 3.90 5,000,000 VMG1 A1+
5,100,000 State of Ohio Environmental Improvement
(U.S. Steel Corp. USX)
LOC PNC Bank, N.A. 12/01/01 3.95 5,100,000 P1
2,155,000 Terre Haute, IN EDRB (Westminster Village Terre Haute Inc.)
LOC Huntington National Bank 07/01/01 4.45 2,155,000 P1 A1
8,400,000 Union County, NJ PCFA (Exxon Corporation) - Series 1994 07/01/23 3.85 8,400,000 P1 A1+
7,000,000 City of Valdez Alaska Marine Terminal TRAN 1994B
LOC Arco Transportation 05/01/31 4.00 7,000,000 P1 A1
----------- -----------
279,830,000 Total Other Variable Rate Demand Instruments 279,830,000
----------- -----------
Total Investments (99.47%) (Cost $622,345,495+) 622,345,495
Cash and Other Assets in Excess of Liabilities (0.53%) 3,296,411
-----------
Net Assets (100.00%) $625,641,906
===========
Class A Shares, 459,031,330 Shares Outstanding (Note 3) $ 1.00
===========
Class B Shares, 166,683,689 Shares Outstanding (Note 3) $ 1.00
===========
+ Aggregate cost for federal income tax purpose is $622,251,495.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
FOOTNOTES:
(a) The ratings noted for variable rate demand instruments are those of the
bank whose letter of credit secures such instruments or the guarantor of
the bond. P1 and A1+ are the highest ratings assigned for tax exempt
commercial paper.
(b) Securities that are not rated which the Fund's Board of Directors has
determined to be of comparable quality to the rated securities in which the
Fund invests.
(c) Securities payable on demand at par including accrued interest (usually
with seven days notice) and unconditionally secured as to principal and
interest by a bank letter of credit. The interest rates are adjustable and
are based on bank prime rates or other interest rate adjustment indices.
The rate shown is the rate in effect at the date of this statement.
(d) The maturity date indicated for the put bonds is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
EDC = Economic Development Corporation MHRB = Multifamily Housing Revenue Bond
EDRB = Economic Development Revenue Bond PCFA = Pollution Control Finance Authority
HEFA = Hospital & Education Finance Authority PCR = Pollution Control Revenue
HFA = Housing Finance Authority PCRB = Pollution Control Revenue Bond
IDA = Industrial Development Authority RAN = Revenue Anticipation Note
IDB = Industrial Development Bond RB = Revenue Bond
IDFA = Industrial Development Finance Authority TAN = Tax Anticipation Note
IDRB = Industrial Development Revenue Bond TRAN = Tax and Revenue Anticipation Note
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest................................................................................ $ 27,967,870
------------
Expenses: (Note 2)
Investment management fee............................................................... 2,124,937
Administration Fee...................................................................... 1,307,653
Distribution fee (Class A).............................................................. 1,254,570
Custodian, shareholder servicing and related shareholder expenses....................... 455,588
Legal, compliance and filing fees....................................................... 106,161
Audit and accounting.................................................................... 150,348
Directors' fees......................................................................... 28,815
Other................................................................................... 28,203
------------
Total expenses........................................................................ 5,456,275
Expenses paid indirectly.............................................................. ( 82,894)
------------
Net expenses.......................................................................... 5,373,381
------------
Net investment income....................................................................... 22,594,489
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments..................................................... 165,639
------------
Increase in net assets from operations...................................................... $ 22,760,128
============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED OCTOBER 31, 1995 AND 1994
===============================================================================
<TABLE>
<CAPTION>
1995 1994
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income......................................... $ 22,594,489 $ 17,996,573
Net realized gain (loss) on investments...................... 165,639 ( 21,649)
-------------- --------------
Increase in net assets from operations........................ 22,760,128 17,974,924
Dividends to shareholders from net investment income
Class A....................................................... ( 17,048,352)* ( 14,184,451)*
Class B....................................................... ( 5,546,137)* ( 3,812,122)*
Capital share transactions (Note 3)
Class A....................................................... ( 82,290,952) ( 65,374,023)
Class B....................................................... 24,655,030 4,763,164
-------------- --------------
Total increase (decrease)................................. ( 57,470,283) ( 60,632,508)
Net assets:
Beginning of year............................................. 683,112,189 743,744,697
-------------- --------------
End of year................................................... $625,641,906 $683,112,189
============== ==============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies.
Daily Tax Free Income Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The Fund
has two classes of stock authorized, Class A and Class B. The Class A shares are
subject to a service fee pursuant to the Distribution and Service Plan. The
Class B shares are not subject to a service fee. In all other respects, the
Class A and Class B shares represent the same interest in the income and assets
of the Fund. Distribution of Class B shares commenced November 23, 1992. The
Fund's financial statements are prepared in accordance with generally accepted
accounting principles for investment companies as follows:
a) Valuation of Securities -
Investments are valued at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any discount or premium is
amortized on a constant basis to the maturity of the instrument. The
maturity of variable rate demand instruments is deemed to be the longer of
the period required before the Fund is entitled to receive payment of the
principal amount or the period remaining until the next interest rate
adjustment.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its tax exempt and taxable income to its shareholders. Therefore, no
provision for federal income tax is required.
c) Dividends and Distributions -
Dividends from investment income (excluding capital gains and losses, if
any, and amortization of market discount) are declared daily and paid
monthly. Distributions of net capital gains, if any, realized on sales of
investments are made after the close of the Fund's fiscal year, as declared
by the Fund's Board of Directors.
d) General -
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management L.P. (Manager) at the annual rate of .325%
of the Fund's average daily net assets not in excess of $750 million plus .30%
of such assets in excess of $750 million. The Manager is required to reimburse
the Fund for its expenses (exclusive of interest, taxes, brokerage, and
extraordinary expenses) to the extent that such expenses, including the
investment management and the shareholder servicing and administration fees, for
any fiscal year exceed the lesser of (i) 1 1/2% of the Fund's average net assets
or (ii) the limits on investment company expenses prescribed by any state in
which the Fund's shares are qualified for sale. No such reimbursement was
required for the year ended October 31, 1995.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets of $1.25 billion,
plus .19% of such assets in excess of $1.25 billion but not in excess of $1.5
billion, plus .18% of such assets in excess of $1.5 billion.
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<PAGE>
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===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
Pursuant to a Distribution and Service Plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors L.P. (the
Distributor) entered into a Distribution Agreement and a Shareholder Servicing
Agreement, only with respect to the Class A shares of the Fund. For its services
under the Shareholder Servicing Agreement, the Distributor receives from the
Fund with respect only to the Class A shares, a fee equal to .25% of the Fund's
average daily net assets.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$6,000 per annum plus $750 per meeting attended.
Included in the Statement of Operations under the caption "Custodian,
shareholder servicing and related shareholder expenses" are fees of $61,829 paid
to Fundtech Services L.P., an affiliate of the Manager as servicing agent for
the Fund. Also, included under this caption are custodian expense offsets of
$82,894.
3. Capital Stock.
At October 31, 1995, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $625,715,019. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
October 31, 1995 October 31, 1994
---------------- ----------------
Class A
<S> <C> <C>
Sold...................................... 2,061,020,405 3,355,486,993
Issued on reinvestment of dividends....... 14,036,481 11,739,693
Redeemed.................................. ( 2,157,347,838) (3,432,600,709)
-------------- -------------
Net increase (decrease)................... ( 82,290,952) ( 65,374,023)
============== =============
Class B
<S> <C> <C>
Sold...................................... 1,126,403,552 1,260,699,566
Issued on reinvestment of dividends....... 5,123,928 3,514,388
Redeemed.................................. ( 1,106,872,450) (1,259,450,790)
-------------- -------------
Net increase (decrease)................... 24,655,030 4,763,164
============== =============
</TABLE>
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
4. Sales of Securities.
Accumulated undistributed realized losses at October 31, 1995 amounted to
$73,113.
5. Selected Financial Information.
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------------- ---------------- ---------------- ------- -------
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
Per Share Operating Performance:
(for a share outstanding throughout the year)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income................. 0.034 0.037 0.023 0.026 0.022 0.023 0.029 0.045
Less distributions:
Dividends from net investment income.. ( 0.034) ( 0.037) ( 0.023) ( 0.026) ( 0.022) ( 0.023) ( 0.029) ( 0.045)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======
Total Return.......................... 3.46% 3.71% 2.35% 2.60% 2.24% 2.49%* 2.98% 4.64%
Ratios/Supplemental Data
Net assets, end of year (000)......... $458,942 $166,700 $541,106 $142,006 $606,497 $137,248 $666,484 $678,486
Ratios to average net assets:
Expenses......................... 0.89%+ 0.64%+ 0.88% 0.63% 0.90% 0.65%* 0.82% 0.79%
Net investment income............ 3.41%+ 3.66%+ 2.31% 2.56% 2.22% 2.45%* 2.94% 4.53%
* Annualized
+ Includes custodian fees paid indirectly.
</TABLE>
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
Daily Tax Free Income Fund, Inc.
We have audited the accompanying statement of net assets of Daily Tax Free
Income Fund, Inc. as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the selected financial
information for each of the five years in the period then ended. These financial
statements and selected financial information are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of Daily Tax Free Income Fund, Inc. as of October 31, 1995, the results
of its operations, the changes in its net assets and the selected financial
information for the periods indicated, in conformity with generally accepted
accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
November 29, 1995
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<PAGE>
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
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Daily Tax Free Income Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Custodian, Transfer Agent
& Dividend Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
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