<PAGE>
- -------------------------------------------------------------------------------
DAILY TAX FREE 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. 212-830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Daily Tax Free Income Fund,
Inc. for the period November 1, 1996 through April 30, 1997. As of the end of
the period, the Fund had net assets of $570,189,952 and 5,473 active
shareholders.
We thank you for your support of Daily Tax Free Income Fund, Inc. and look
forward to continuing to serve your cash management needs.
Sincerely,
\s\Steven W. Duff
Steven W. Duff
President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------
Face Value Standard
Amount Yield (Note 1) Moody's & Poor's
------ ----- ------ ------- ------
Variable Rate Demand Instruments -
Participations (c) (4.23%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,779,189 The Bank of New York LOC covering eight issues
due 10-01-98 through 05-01-01 4.95% to 5.10% $ 2,779,189 P1 A1+
16,101,219 Chase Manhattan Bank LOC covering thirteen issues
due 11-10-98 through 05-01-13 4.67% to 5.52% 16,101,219 P1 A1+
1,484,322 The First National Bank of Maryland LOC covering six issues
due 09-15-00 through 09-15-02 5.10% 1,484,322 P1 A1
187,416 LaSalle National Bank LOC covering one issue due 07-01-00 5.10% 187,416 P1 A1+
3,582,250 PNC Bank, N.A. LOC covering two issues due 07-29-97
through 07-01-03 5.44% to 6.90% 3,582,250 P1
- ----------- ------------
24,134,396 Total Variable Rate Demand Instruments - Participations 24,134,396
- ----------- ------------
<CAPTION>
Variable Rate Demand Instruments -
Private Placements (c) (15.34%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,780,000 Banc One Arizona LOC covering three issues
due 01-01-99 through 04-01-05 5.52% $ 1,780,000 P1 A1
12,946,000 Bank of Tokyo, Ltd. LOC covering four issues
due 12-01-09 through 12-01-15 5.10% to 5.52% 12,946,000 P1 A1+
269,166 Central Trust Company LOC Backed by Bank of New York
LOC covering two issues due 01-01-99 5.52% 269,166 P1 A1
1,686,848 Comerica Bank - Detroit LOC covering four issues
due 02-01-00 through 05-01-05 5.10% 1,686,848 P1 A1
1,500,000 Credit Suisse LOC covering one issue due 12/01/00 5.10% 1,500,000 P1 A1+
6,000,000 Creditanstalt-Bankverein LOC covering two issues
due 11-01-05 through 06-01-10 5.10% 6,000,000 P1 A1+
2,000,000 Dresdner Bank AG LOC covering two issues
due 12-28-14 through 08-01-15 5.10% 2,000,000 P1 A1+
5,985,000 The First National Bank of Maryland LOC covering two issues
due 07-01-04 through 12-01-20 4.65% to 5.36% 5,985,000 P1 A1
3,166,795 The Huntington National Bank LOC covering two issues
due 12-01-98 through 10-01-05 4.70% to 5.78% 3,166,795 P1 A1
1,181,667 Key Bank, N.A. LOC covering one issue due 07-01-15 5.10% 1,181,667 P1 A1
379,064 Nations Bank, N.A. LOC covering one issue due 12-01-99 5.52% 379,064 P1 A1
3,524,000 PNC, N.A. LOC covering two issues
due 12-01-00 through 06-30-02 5.52% 3,524,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<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>
$ 3,633,000 Norwest Bank, N.A. LOC covering three issues
due 07-01-00 through 12-01-15 5.27% to 5.52% $ 3,633,000 P1 A1+
26,561,200 Seattle-First National Bank
LOC Backed by Bank of America NT & SA LOC
covering twelve issues due 12-15-00 through 11-15-15 5.52% 26,561,200 P1 A1
1,455,000 State Street Bank & Trust Company
LOC covering one issue due 01-01-02 5.10% 1,455,000 P1 A1+
1,700,000 Wells Fargo Bank, N.A. LOC covering two issues
due 12-15-04 through 08-01-05 5.18% 1,700,000 P1 A1+
4,000,000 York Bank and Trust covering one issue due 12-01-14 4.75% 4,000,000
9,689,614 Zion's National Bank Liquidity Facility covering one issue
due 12-10-15 5.52% 9,689,614 P2 A2
- ----------- ------------
87,457,354 Total Variable Rate Demand Instruments - Private Placements 87,457,354
- ----------- ------------
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Other Tax Exempt Investments (17.44%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,350,000 Brentwood, NY UFSD TAN (b) 06/30/97 4.04% $ 2,351,460
5,290,000 Campbell County School District #1
State of Wyoming TAW - Series 1996 06/30/97 3.94 5,294,182 SP-1+
5,000,000 Colorado State General Fund TRAN - Series A 06/27/97 3.80 5,004,887 MIG-1 SP-1+
3,000,000 Iowa School Corporations Warrant Certificates 1996-97 - Series A
FSA Insured 06/27/97 3.90 3,003,603 MIG-1 SP-1+
2,500,000 Mansfield City School District, OH (Richland County) TAN 06/27/97 3.94 2,501,877 A
10,000,000 Michigan Municipal Bond Authority
Revenue Notes - Series 1996 A 07/03/97 3.85 10,009,959 SP-1+
10,000,000 New Jersey State Transportation Trust Fund
(Transportation System) - Series B 06/15/97 3.18 10,021,909 A+
5,000,000 Ocean County, NJ BAN 06/20/97 3.82 5,002,472 MIG-1
4,000,000 Pennsylvania State University - Series 1996A 11/25/97 3.58 4,019,246 MIG-1
2,300,000 Pennsylvania - Harris Madison
Ind. School Corporation - Temp Time Warrants (b) 12/31/97 3.65 2,305,928
2,000,000 School District of Greenville County, North Carolina 03/01/98 3.64 2,013,724 A1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Other Tax Exempt Investments (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 State of Idaho TAN - Series 1996 06/30/97 3.85% $ 5,004,744 MIG-1 SP-1+
4,000,000 State of Maine GO TAN 06/27/97 3.82 4,003,756 MIG-1 SP-1+
24,150,000 State of Texas TRAN - Series 1996 08/29/97 3.89 24,211,291 MIG-1 SP-1+
4,400,000 Sharonville City Ohio BAN
(Hamilton County) - First 1996 Renewal (b) 09/24/97 3.62 4,412,560
2,500,000 Tennesee Local Development Authority
State Loan Program RAN - Series 1996A 05/29/97 3.57 2,500,702 MIG-1 SP-1+
5,000,000 The City of Jersey City (Hudson County, NJ) 03/06/98 3.67 5,016,299 SP-1+
2,750,000 Thomas County, Georgia TAN (b) 12/31/97 3.81 2,757,108
----------- -----------
99,240,000 Total Other Tax Exempt Investments 99,435,707
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (42.76%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,000,000 Alameda County, California IDA
(Hoover Universal, Inc. Project) - Series 1994 06/01/04 3.85% $ 9,000,000 VMIG-1
1,660,000 Baldwin County, GA (William Barnet and Son Project)
LOC Fleet National Bank & Trust 12/01/99 4.87 1,660,000 A1
5,710,000 Bexar County, TX HFDC (Air Force Village II) - Series 1985B
LOC Rabobank Nederland 03/01/12 4.50 5,710,000 A1+
2,000,000 Butler County IDA (Lutheran Welfare) - Series 1996A
LOC PNC Bank, N.A. 11/01/16 4.60 2,000,000 A1
1,600,000 California PCFA - Series F (Pacific Gas & Electric)
LOC Banque Nationale de Paris 11/01/26 3.70 1,600,000 A1+
12,500,000 Carlton, WI (Wisconsin Power & Light) - Series B 09/01/05 4.10 12,500,000 P1 A1+
3,800,000 Chelan County, Washington Public Utilities District #001
(Chelan Hydro) - Series A
MBIA Insured 06/01/15 3.90 3,800,000 VMIG-1 A1+
4,470,000 Clarksville, TN Public Building Authority Pooled Financing RB
LOC Nationsbank 06/01/24 4.70 4,470,000 A1
5,000,000 Colorado HFA (Grant Plaza Project)
LOC Bankers Trust Company 11/01/09 4.62 5,000,000 VMIG-1
3,000,000 Connecticut Special Tax Second Lien
Transformation Infrastructure Bonds
LOC Commerzbank 12/01/10 4.45 3,000,000 VMG-1 A1+
6,600,000 County of Contra Costa, MHRB Mortgage Refunding
(Rivershore Apartments) - Series 1992B
Fannie Mae (Unconditional Guaranty) 11/15/22 4.50 6,600,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 7,050,000 Coweta County, GA Development Authority RB
(Jack Eckerd Project) (b)
LOC Union Bank of Switzerland 03/01/09 4.10% $ 7,050,000
14,600,000 DeKalb County, GA Housing Authority
LOC Bank of Montreal 12/01/07 4.60 14,600,000 A1+
10,000,000 Hammond, LA IDB (Eckerds Warehouse Project) (b)
LOC Union Bank of Switzerland 05/01/13 4.10 10,000,000
6,200,000 Hillsborough County, FL IDA PCRB
(Tampa Electric Company Cannon) 05/15/18 3.85 6,200,000 VMIG-1 A1+
4,700,000 Illinois Charitabulls Development Finance Authority
(James Jordan Boys & Girls Club &
Family Life Center Project) - Series 1995
LOC American National Bank &
Trust Company of Chicago/LaSalle National Bank 08/01/30 4.55 4,700,000 A1+
6,000,000 Illinois IDFA Chicago Educational Television
LOC Harris Trust & Savings Bank 11/01/14 4.50 6,000,000 VMIG-1
6,200,000 Illinois Health Facility (Resurrection Hospital) 05/01/11 4.10 6,200,000 VMIG-1
19,400,000 Illinois Museum of Contemporary Art 1994
LOC Northern Trust\Harris Trust\LaSalle National\
National Bank of Detroit 02/01/29 4.50 19,400,000 A1+
3,100,000 Irvine Ranch Water District, California
LOC Landesbank 10/01/09 3.75 3,100,000 A1+
4,000,000 Irvine Ranch Water District, California
LOC National Westminster Bank 06/01/15 3.75 4,000,000 VMIG-1 A1+
5,000,000 Jackson County, MI EDC (Thrifty Leoni)
LOC First National Bank of Chicago 12/01/14 4.62 5,000,000 P1 A1
5,000,000 Kansas Department of Transportation - Series 1994B 09/01/14 4.40 5,000,000 VMIG-1 A1+
3,720,000 Maryland IDFA EDRB (The Barre School Facility)
LOC Nationsbank 07/01/14 4.70 3,720,000 A1
1,170,000 Mecklenberg County, NC (Aplix, Inc.)
LOC Wachovia Bank & Trust Co., N.A. 12/01/99 4.60 1,170,000 P1 A1+
5,510,000 Missouri State HEFA (Barnes Hospital)
LOC Morgan Guaranty Trust Company 12/01/15 4.50 5,510,000 P1 A1+
1,000,000 Monroe County, MI EDC Limited Obligation RB
(Detroit Edison Project)
LOC Barclays Bank, PLC 10/01/24 4.50 1,000,000 P1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,000,000 Montgomery County, MD Housing Opportunity Commission
LOC General Electric Capital Corporation 11/01/07 4.70% $ 8,000,000 A1+
2,200,000 Montgomery County, TX
(Houston Area Residential Center Project) - Series 1985
LOC Banque Nationale 12/01/15 4.50 2,200,000 A1
4,710,000 Montgomery County, MD EDC RB
(Brooke Grove Foundations, Incorporated Facilities) - Series 1995
LOC First National Bank of Maryland 01/01/16 4.80 4,710,000 P1
1,000,000 New Mexico State Highway Commission
Adjustable Tender Suboirdinate Lien
Tax Revenue Highway Bonds - Series 1996
FSA Insured 06/15/11 4.55 1,000,000 VMG1 A1+
8,000,000 Ontario, CA IDA (LD Brinkman & Company)
LOC Barclays Bank PLC 04/01/15 3.80 8,000,000 P1
2,400,000 Orange County, Florida Health Facilities (Mayflower Project)'88
LOC Rabobank Nederland 03/01/18 4.60 2,400,000 A1+
2,600,000 Oyster Point, VA Development Corporation - Series 1991
LOC Perpetual Savings 11/01/11 5.05 2,600,000 A1+
7,350,000 Phoenix, AZ IDA MHRB Refunding
(Bell Square Apartments Project) - Series 1995
LOC General Electric Capital Corporation 06/01/25 4.75 7,350,000 A1+
3,500,000 Phoenix, AZ IDA MHRB Refunding
(Paradise Lake Apartment Projects) - Series 1995
LOC General Electric Captal Corporation 07/01/25 4.75 3,500,000 A1+
11,890,000 Pitkin County, CO IDA (Aspen Skiing Co. Project) - Series A
LOC First National Bank of Chicago 04/01/16 4.10 11,890,000 A1+
2,675,000 Polk County, FL IDA PCRB (IMC Fertilizer Incorporation Project)
LOC Rabobank Nederland 02/01/00 4.65 2,675,000 P1
2,700,000 Prince Georges County, MD EDC RB
LOC Fleet National Bank & Trust 09/30/15 5.36 2,700,000 P1 A1
2,875,000 St. Cloud, MN Commercial Development RFDG
(Kelly Inn Project) (b)
LOC First Bank of South Dakota 04/01/13 4.60 2,875,000
4,900,000 San Antonio, TX IDA (Rivercenter Project)
LOC PNC Bank, N.A. 12/01/12 4.60 4,900,000 Aa3
2,900,000 Salina, KS (Dillards Project) (b)
LOC Boatmens National Bank of St. Louis 12/01/14 4.75 2,900,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,130,000 County of Sarpy, NE PCR Refunding Bond
(Allied Signal Inc. Project) - Series 1995 07/01/13 4.65% $ 2,130,000 A1
2,000,000 Southgate, MI EDC EDRB (Trust Realty Corp. Project)
LOC Bankers Trust Company 10/01/18 4.62 2,000,000 A1
5,100,000 State of Ohio Environmental Improvement
(U.S. Steel Corp. USX)
LOC PNC Bank, N.A. 12/01/01 3.65 5,100,000 P1
1,910,000 Terre Haute, IN EDRB
(Westminster Village Terre Haute Inc.)
LOC Huntington National Bank 07/01/01 5.00 1,910,000 P1 A1
7,000,000 City of Valdez Alaska Marine Terminal TRAN - Series 1994B 05/01/31 4.60 7,000,000 P1 A1
----------- ------------
243,830,000 Total Other Variable Rate Demand Instruments 243,830,000
----------- ------------
<CAPTION>
Put Bonds (d) (4.58%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,160,000 Butler County IDA (Lutheran Welfare) - Series 1996A
LOC PNC Bank, N.A. 11/03/97 3.62 % $ 2,166,412 A1
9,945,000 DeKalb County, GA MHRB - Series 1985L
LOC Amsouth Bank N.A. 12/01/97 3.90 9,945,000 A1+
4,000,000 Joliet Illinois Gas Supply Revenue - Peoples Gas & Light 10/01/97 3.95 4,000,000 VMIG-1
10,000,000 State of Connecticut Special Assessment - Series 1993C
FGIC Insured 07/01/97 3.90 10,000,000 VMIG-1 A1+
----------- ------------
26,105,000 Total Put Bonds 26,111,412
----------- ------------
<CAPTION>
Tax Exempt Commercial Paper (14.94%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Baltimore, MD Metropolitan District BAN - Series 1995 06/03/97 3.45% $ 4,000,000 P1 A1+
9,950,000 Burke County, GA (Oglethorpe Power Co.)
LOC Credit Suisse 05/07/97 3.40 9,950,000 P1 A1+
2,000,000 City of Burlington, KS Customized Purchase PCRB
(Kansas City Power and Light Company Project) - Series 1987B
LOC Toronto Dominion Bank 06/12/97 3.45 2,000,000 P1 A1+
6,600,000 City of Burlington, KS Customized Purchase PCRB
(Kansas City Power and Light Company Project) - Series 1987B
LOC Deutsche Bank 06/11/97 3.45 6,600,000 P1 A1+
9,600,000 City of Burlington, KS Customized Purchase PCRB
(Kansas City Power and Light Company Project) - Series 1987B
LOC Deutsche Bank 08/15/97 3.65 9,600,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poor's
------ ---- ----- ----- ------- ------
Tax Exempt Commercial Paper (Continued)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10,000,000 City of Houston, Texas - Series A 05/14/97 3.50% $ 10,000,000 P1 A1+
7,000,000 Illinois HFA Adjusted Demand RB
(Victory Health Services Project) - Series 1989C
LOC First National Bank of Chicago 05/22/97 3.50 7,000,000 VMIG-1
3,000,000 Intermountain Power Agency RFDG
LOC Swiss Bank Corporation 08/13/97 3.65 3,000,000 VMIG-1 A1+
8,000,000 Lincoln County, WY PCRB
(Pacific Corporation Project) - Series 1991
LOC Union Bank of Switzerland 05/21/97 3.10 8,000,000 VMIG-1 A1+
4,500,000 Mashan Tucket (Western) Pequot Tribe Teep - Series 1996
LOC Bank of America 05/29/97 3.60 4,500,000 P1 A1+
3,500,000 Municipal Gas Authority of Georgia RB - Series D
(Southern Portfolio Project)
LOC Wachovia Bank 08/06/97 3.65 3,500,000 A1+
4,000,000 New York City Municipal Water Finance Authority - Series 3
LOC Bank of Nova Scotia / Toronto Dominion Bank 05/01/97 3.40 4,000,000 P1 A1+
6,000,000 North Carolina Eastern Municipal Power Agency RB - Series 1988B
LOC Morgan Guaranty / Union Bank of Switzerland 05/08/97 3.40 6,000,000 P1 A1+
2,000,000 Orlando, FL Waste Water System RB - Series 1990A 06/30/97 3.45 2,000,000 VMIG-1 A1+
5,000,000 State of Connecticut Healther and Educational
Facilities Authority RB - Series S
(Yale University Issue) 05/02/97 3.35 5,000,000 VMIG-1 A1+
----------- ------------
85,150,000 Total Tax Exempt Commercial Paper 85,150,000
----------- ------------
Total Investments (99.29%)(Cost $566,118,869+) 566,118,869
Cash and Other Assets in Excess of Liabilities (0.71%) 4,071,083
------------
Net Assets (100.00%) $570,189,952
============
Class A Shares, 409,336,076 Shares Outstanding (Note 3) $ 1.00
============
Class B Shares, 161,022,525 Shares Outstanding (Note 3) $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
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>
BAN = Bond Anticipation Note IDRB = Industrial Development Revenue Bond
EDA = Economic Development Authority MHRB = Multifamily Housing Revenue Bond
EDC = Economic Development Corporation PCFA = Pollution Control Finance Authority
EDRB = Economic Development Revenue Bond PCR = Pollution Control Revenue
GO = General Obligation PCRB = Pollution Control Revenue Bond
HEFA = Hospital & Education Finance Authority RAN = Revenue Anticipation Note
HFA = Housing Finance Authority RB = Revenue Bond
HFDC = Housing Development Finance Corporation RFDG = Revenue Refunding
IDA = Industrial Development Authority TAN = Tax Anticipation Note
IDB = Industrial Development Bond TAW = Tax Anticipation Warrant
IDFA = Industrial Development Finance Authority TRAN = Tax and Revenue Anticipation Note
UFSD = Unified School District
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest............................................................. $ 11,764,054
------------
Expenses: (Note 2)
Investment management fee.............................................. 990,514
Administration Fee..................................................... 640,024
Distribution fee (Class A)............................................. 556,589
Custodian expenses..................................................... 57,632
Shareholder servicing and related shareholder expenses................. 189,674
Legal, compliance and filing fees...................................... 27,978
Audit and accounting................................................... 83,705
Directors' fees........................................................ 13,500
Other.................................................................. 13,104
------------
Total expenses....................................................... 2,572,720
Expenses paid indirectly.............................................( 4,643)
------------
Net expenses......................................................... 2,568,077
------------
Net investment income........................................................ 9,195,977
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments...................................... -0-
------------
Increase in net assets from operations.......................................$ 9,195,977
============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
April 30, 1997 Ended
(Unaudited) October 31, 1996
--------- ----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income......................................... $ 9,195,977 $ 20,241,886
Net realized gain (loss) on investments....................... -0- ( 95,536)
--------------- --------------
Increase in net assets from operations........................ 9,195,977 20,146,350
Dividends to shareholders from net investment income
Class A....................................................... ( 6,566,649)* ( 14,058,285)*
Class B....................................................... ( 2,629,328)* ( 6,183,601)*
Capital share transactions (Note 3)
Class A....................................................... ( 39,465,677) ( 10,229,577)
Class B....................................................... 22,529 ( 5,683,693)
--------------- --------------
Total increase (decrease)................................. ( 39,443,148) ( 16,008,806)
Net assets:
Beginning of period........................................... 609,633,100 625,641,906
--------------- ---------------
End of period................................................. $ 570,189,952 $ 609,633,100
=============== ===============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
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
is a short term, tax exempt money market fund. 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. Additionally, the Fund may allocate among its classes
certain expenses to the extent allowable to specific classes, including transfer
agent fees, government registration fees, certain printing and postage costs,
and administrative and legal expenses. Class specific expenses of the Fund were
limited to distribution fees and minor transfer agent expenses. 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) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
e) 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)
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<PAGE>
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===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
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 period ended April 30, 1997.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .21% of the Fund's average daily net assets of $1.25 billion,
plus .20% of such assets in excess of $1.25 billion but not in excess of $1.5
billion, plus .19% of such assets in excess of $1.5 billion.
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 "Shareholder servicing
and related shareholder expenses" are fees of $153,798 paid to Reich & Tang
Services L.P., an affiliate of the Manager as servicing agent for the Fund.
Also, included under this caption are expense offsets of $4,643.
3. Capital Stock.
At April 30, 1997, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $570,191,488. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Class A Ended Ended
April 30, 1997 October 31, 1996
-------------- ----------------
<S> <C> <C>
Sold 630,381,340 1,485,899,847
Issued on reinvestment of dividends....... 5,693,266 11,960,037
Redeemed.................................. ( 675,540,283) (1,508,089,461)
------------- -------------
Net increase (decrease)................... ( 39,465,677) ( 10,229,577)
============= =============
<CAPTION>
Class B
<S> <C> <C>
Sold...................................... 486,100,709 1,028,483,308
Issued on reinvestment of dividends....... 2,408,890 5,806,308
Redeemed.................................. ( 488,487,070) (1,039,973,309)
------------- -------------
Net increase (decrease)................... 22,529 ( 5,683,693)
============= =============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at April 30, 1997 amounted to $1,536.
Such losses may be carried forward to offset capital gains through October 31,
2004.
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
5. Selected Financial Information.
<TABLE>
<CAPTION>
Six Year Ended
Months October 31,
Ended ----------------------------------------------------------------
Class A April 30,
- ------- 1997 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income........... 0.015 0.031 0.034 0.023 0.022 0.029
Less distributions:
Dividends from net investment
income.................. ( 0.015) ( 0.031) ( 0.034) ( 0.023) ( 0.022) ( 0.029)
------ ------ ------ ------ ------ ------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total Return....................... 3.00%* 3.09% 3.46% 2.35% 2.24% 2.98%
Ratios/Supplemental Data
Net assets, end of period (000).... $409,182 $448,647 $458,942 $541,106 $606,497 $666,484
Ratios to average net assets:
Expenses........................ 0.91%*+ 0.90%+ 0.89%+ 0.88% 0.90% 0.82%
Net investment income........... 2.95%* 3.05% 3.41% 2.31% 2.22% 2.94%
Expenses paid indirectly........ 0.00% 0.01% 0.01% - - -
* Annualized
+ Includes expenses paid indirectly.
</TABLE>
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<PAGE>
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===============================================================================
5. Selected Financial Information. (Continued)
<TABLE>
<CAPTION>
Six Year Ended
Months October 31,
Ended ----------------------------------------------------------------
Class B (a) April 30,
- ------- 1997 1996 1995 1994 1993
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- --------
Income from investment operations:
Net investment income............... 0.016 0.033 0.037 0.026 0.023
Less distributions:
Dividends from net investment
income...................... ( 0.016) ( 0.033) ( 0.037) ( 0.026) ( 0.023)
------- ------- ------- ------- -------
Net asset value, end of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return........................... 3.25%* 3.35% 3.71% 2.60% 2.49%*
Ratios/Supplemental Data
Net assets, end of period (000)........ $161,008 $160,986 $166,700 $142,006 $137,248
Ratios to average net assets:
Expenses............................ 0.66%*+ 0.66%+ 0.64%+ 0.63% 0.65%*
Net investment income............... 3.20%* 3.30% 3.66% 2.56% 2.45%*
Expenses paid indirectly............ 0.00% 0.01% 0.01% - -
* Annualized
+ Includes expenses paid indirectly
(a) Commencement of sales November 23, 1992.
</TABLE>
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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.
- -----------------------------------------------------
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,
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent
& Dividend Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, NY 10020
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<PAGE>
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DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
April 30, 1997
(Unaudited)
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