<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, 1997 through April 30, 1998. As of the end of
the period, the Fund had net assets of $555,814,799 and 4,698 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, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Value Standard
Amount Yield (Note 1) Moody's & Poor's
------ ----- ------ ------- -------
Variable Rate Demand Instruments - Participations (c) (3.98%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,251,513 The Bank of New York LOC covering eight issues
due 10-01-98 through 05-01-01 4.95% to 5.10% $ 2,251,513 P1 A1+
13,248,896 Chase Manhattan Bank LOC covering eleven issues
due 11-10-98 through 05-01-13 4.67% to 5.52% 13,248,896 P1 A1+
1,147,493 The First National Bank of Maryland LOC covering six issues
due 09-15-00 through 09-15-02 5.10% 1,147,493 P1 A1
129,750 LaSalle National Bank LOC covering one issue due 07-01-00 5.10% 129,750 P1 A1+
4,000,000 North Carolina State University due 10-01-99 4.01% 4,000,000
1,350,000 PNC Bank, N.A. LOC covering one issue due 07-01-03 6.90% 1,350,000 P1
------------- ------------
22,127,652 Total Variable Rate Demand Instruments - Participations 22,127,652
------------- ------------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (c) (12.93%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,340,000 Banc One Arizona LOC covering two issues
due 01-01-99 through 04-01-05 5.52% $ 1,340,000 P1 A1
1,500,000 Banque Nationale de Paris LOC covering one issue due 12-01-00 5.10% 1,500,000 P1 A1+
49,999 Central Trust Company LOC Backed by Bank of New York LOC
covering one issue due 01-01-99 5.10% 49,999 P1 A1
1,301,429 Comerica Bank - Detroit LOC covering four issues
due 02-01-00 through 05-01-05 5.10% 1,301,429 P1 A1
2,000,000 Creditanstalt-Bankverein LOC covering one issue
due 06-01-10 5.10% 2,000,000 P1 A1+
1,500,000 Dresdner Bank AG LOC covering one issue due 12-28-14 5.10% 1,500,000 P1 A1+
5,760,000 The First National Bank of Maryland LOC
covering two issues due 07-01-04 through 12-01-20 4.55% to 5.52% 5,760,000 P1 A1
2,823,815 The Huntington National Bank LOC covering two issues
due 12-01-98 through 10-01-05 4.23% to 5.78% 2,823,815 P1 A1
1,115,000 Key Bank, N.A. LOC covering one issue due 07-01-15 5.10% 1,115,000 P1 A1
219,068 Nations Bank, N.A. LOC covering one issue due 12-01-99 5.52% 219,068 P1 A1
3,292,000 Norwest Bank, N.A. LOC covering three issues
due 07-01-00 through 12-01-15 5.27% to 5.52% 3,292,000 P1 A1+
2,896,000 PNC Bank, N.A. LOC covering two issues due 12-01-00
through 06-30-02 5.52% 2,896,000 P1 A1+
16,827,900 Seattle-First National Bank LOC
Backed by Bank of America NT & SA LOC
covering eight issues due 12-15-00 through 11-15-15 5.52% 16,827,900 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>
$ 4,000,000 Societe Generale LOC covering one issue
due 11-01-05 5.10% $ 4,000,000 P1 A1+
1,205,000 State Street Bank & Trust Company LOC
covering one issue due 01-01-02 5.10 % 1,205,000 P1 A1+
12,686,000 Union Bank, CA LOC covering four issues
due 12-01-09 through 12-01-15 5.10% to 5.52% 12,686,000 P1 A1+
1,500,000 Wells Fargo Bank, N.A. LOC covering two issues
due 12-15-04 through 08-01-05 5.18% 1,500,000 P1 A1+
3,875,000 York Bank and Trust covering one issue due 12-01-14 (b) 4.65% 3,875,000
7,975,580 Zion's National Bank Liquidity Facility
covering one issue due 12-10-15 5.52% 7,975,580 P2 A2
------------ ------------
71,866,791 Total Variable Rate Demand Instruments - Private Placements 71,866,791
------------ ------------
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (20.80%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,075,000 Campbell County, WY School District Number 1
Wyoming TAW - Series 1997 06/29/98 3.84% $ 9,078,527 SP-1+
1,445,000 County of Adams Gettysbury, PA TRAN (b) 12/31/98 3.81 1,447,028
10,000,000 County of Los Angeles 1997-98 TRAN - Series A 06/30/98 3.80 10,010,286 MIG-1 SP-1+
8,500,000 District of Columbia TRAN
LOC Union Bank of Switzerland/Morgan Guaranty Trust Company 09/30/98 3.82 8,521,439 MIG-1 SP-1+
5,000,000 Essex County, NJ BAN - Series A 08/07/98 3.85 5,004,511 MIG-1
8,600,000 Floyd County, GA 1998 TAN (b) 12/31/98 3.70 8,600,000
4,490,000 City of Ankeny, IA GO Bond & GAN (b) 06/01/98 3.84 4,491,286
1,435,000 HEFA of the State of Missouri RAN - Series 1998 D
LOC Allied Irish Bank 04/07/99 4.25 1,441,851 SP-1
5,000,000 Jersey City, NJ BAN 01/15/99 3.71 5,008,583 MIG-1 SP-1+
5,000,000 Michigan Municipal Bond Authority Revenue Notes - Series B 07/02/98 3.75 5,005,724 SP-1+
1,000,000 Middleton - Cross Plains Area School District, WI TRAN (b) 08/26/98 3.96 1,000,762
2,500,000 New Albany -Floyd County, IN School Buildings Corporation BAN (b)09/01/98 3.95 2,500,000
3,000,000 Ohio School District 1998 Cash Flow Borrowing Program
COP - Series A 12/31/98 3.52 3,011,134 MIG-1 SP-1+
3,300,000 School District of Greenfield TRAN (b) 09/30/98 3.90 3,307,247
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 School District of the City of Detroit, Wayne County, MI
State School Aid Notes 1997 05/01/98 4.50% $ 5,000,000 SP-1+
8,500,000 State of California RAN 06/30/98 3.80 8,509,989 MIG-1 SP-1+
5,000,000 State of New Mexico 1997-98 TRAN - Series 1997 06/30/98 3.82 5,004,983 MIG-1 SP-1+
14,800,000 State of Texas TRAN 08/31/98 3.53 14,853,747 MIG-1 SP-1+
3,800,000 Sweetwater County School District #1
State of Wyoming TAW - Series 1997 06/30/98 3.85 3,801,497 SP-1
10,000,000 Town of Hilton Head, South Carolina (b) 09/29/98 3.66 10,012,103
------------ ------------
115,445,000 Total Other Tax Exempt Investments 115,610,697
------------ ------------
<CAPTION>
Other Variable Rate Demand Instruments (c) (48.65%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,090,000 Baldwin County, GA (William Barnet and Son Project)
LOC Fleet National Bank & Trust 12/01/99 4.47% $ 1,090,000 A1
4,700,000 Brazos River, TX Harbor Nav. Dist. (Badishce Corp. Facs)
LOC Credit Suisse First Boston 12/01/19 3.65 4,700,000 A1+
4,000,000 Broward County, FL (Sanctuary Apartment Project)
LOC PNC Bank, N.A. 02/01/09 4.10 4,000,000 VMIG-1
3,000,000 Carlton, WI PCRB - Series B (Wisconsin Power & Light) 09/01/05 4.25 3,000,000 VMIG-1 A1+
1,000,000 Carlton, WI Environmental Improvement ( Wisconsin Power & Light) 10/01/00 3.95 1,000,000 VMIG-1 A1+
3,700,000 Chelan County, Washington Public Utilities District #001
(Chelan Hydro Project) - Series A
MBIA Insured 06/01/15 4.00 3,700,000 VMIG-1 A1+
500,000 Chester County, PA 1997 Archdiocese of Philadelphia
LOC Corestates Bank 07/01/27 4.20 500,000 VMIG-1
3,100,000 City of Jacksonville, FL IDRB -Series 1989 University of Florida,
Health Science Center Jacksonville Faculty Practice Association
LOC Barnett Bank 07/01/19 4.35 3,100,000 VMIG-1
2,500,000 City of Jacksonville, FL PCR Refunding Bonds - Series 1995
(Florida Power & Light Company) 05/01/29 4.00 2,500,000 VMIG-1 A1
4,130,000 Clarksville, TN Public Building Authority Pooled Financing RB
LOC Nations Bank 06/01/24 4.10 4,130,000 A1+
5,000,000 Colorado HFA (Grant Plaza Project)
LOC Nations Bank 11/01/09 4.22 5,000,000 VMIG-1
3,000,000 Connecticut EDA (Connecticut Light & Power) 1993A
LOC Deutsche Bank, A.G. 09/01/28 4.05 3,000,000 VMIG-1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<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>
$ 5,000,000 County of Cuyahoga, OH HRB (The Cleveland Clinic Foundation)
AMBAC Insured 01/01/16 4.15% $ 5,000,000 VMIG-1 A1+
2,250,000 County of Franklin, OH RB - Series 1997F
(The Villas at Saint Therese Project) (b)
LOC Fifth Third Bank 10/01/22 4.20 2,250,000
7,050,000 Coweta County, GA Development Authority RB
(Jack Eckerd Project) (b)
LOC Union Bank of Switzerland 03/01/09 4.25 7,050,000
3,800,000 Dade County, FL IDA Exempt Facilities RB - Series 1993 06/01/21 4.20 3,800,000 VMIG-1 A1+
14,600,000 DeKalb County, GA Housing Authority
LOC Bank of Montreal 12/01/07 3.90 14,600,000 A1+
2,200,000 Delaware County, PA IDA - Series 1995 (British Petroleum) 10/01/19 4.25 2,200,000 P1 A1+
1,000,000 Delaware County, PA IDA PCRB - Series A
(Philadelphia Electric Company)
LOC Toronto Dominion 08/01/16 4.20 1,000,000 P1 A1+
5,000,000 Florida State Municipal Power Agency Rev. (Stanton Project)
MBIA Insured 10/01/19 4.00 5,000,000 A1
10,000,000 Hammond, LA IDRB
(Eckerds Warehouse Project) (b)
LOC Union Bank of Switzerland 05/01/13 4.25 10,000,000
1,000,000 Harris County, TX Health Facility Development Corporation
Series 1994 (Methodist Hospital) 12/01/25 4.25 1,000,000 A1+
8,250,000 Hillsborough County, FL IDA PCRB
(Tampa Electric Co. Gannon) 05/15/18 4.00 8,250,000 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 4.15 4,700,000 A1+
6,000,000 Illinois IDFA Chicago Educational Television
LOC Harris Trust & Savings Bank 11/01/14 4.15 6,000,000 VMIG-1
2,300,000 Illinois Health Facility (Resurrection Hospital) 05/01/11 4.25 2,300,000 VMIG-1 A1+
19,400,000 Illinois Museum of Contemporary Art 1994
LOC Northern Trust\Harris Trust\LaSalle\National Bank of Detroit 02/01/29 4.15 19,400,000 VMIG-1 A1+
3,000,000 Jackson County, MI EDC (Thrifty Leoni) (b)
LOC First National Bank of Chicago 12/01/14 4.22 3,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1998
(UNAUDITED)
================================================================================
<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>
$ 2,500,000 Jacksonville, FL Health Facilities Authority (River Garden Project)
LOC First Union National Bank 02/01/18 4.05% $ 2,500,000 A1
5,000,000 Kansas Department TRAN Series - 1994B 09/01/14 4.05 5,000,000 VMIG-1 A1+
3,585,000 Maryland IDFA EDRB (The Barre School Facility)
LOC Nations Bank 07/01/14 4.10 3,585,000 A1+
7,400,000 Massachusetts State HEFA RB (Harvard University) 08/01/17 3.90 7,400,000 VMIG-1 A1+
870,000 Mecklenberg County, NC (Aplix, Inc.) (b)
LOC Wachovia Bank & Trust Co., N.A. 12/01/99 4.10 870,000
5,410,000 Missouri State HEFA (Barnes Hospital)
LOC Morgan Guaranty Trust Company 12/01/15 4.10 5,410,000 VMIG-1 A1+
8,000,000 Montgomery County, MD Housing Opportunity Commission
LOC General Electric Capital Corporation 11/01/07 4.30 8,000,000 A1+
1,900,000 Montgomery County, TX
(Houston Area Residential Center Project) - Series 1985
LOC Banque Nationale de Paris 12/01/15 4.25 1,900,000 A1
4,570,000 Montgomery County, MD EDC RB
(Brooke Grove Foundations, Incorporated Facilities) - Series 1995
LOC First National Bank of Maryland 01/01/16 4.70 4,570,000 A1
1,000,000 New Mexico State Highway Commission Adjustable Tender
Subordinate Lien Tax Revenue Highway Bonds - Series 1996
FSA Insured 06/15/11 4.50 1,000,000 VMIG-1 A1+
2,100,000 Orange County, FL Health Facilities - Adventist
(Orange County Health Facilities)
LOC SunTrust Bank 11/15/14 4.05 2,100,000 VMIG-1 A1+
3,715,000 Orange County, FL HFA MHRB (Post Fountains Project)
FNMA Collateralized 06/01/25 4.15 3,715,000 A1+
4,500,000 Orange County, FL HFA (Smokewood/SunKey Apartments)
LOC Citibank 12/01/22 4.15 4,500,000 A1+
4,000,000 Orange County HFA MHRB Refunding - Series 1997F
(Post Lake Project)
FNMA Collaterlized 06/01/25 4.15 4,000,000 A1+
2,600,000 Oyster Point, VA Development Corporation - Series 1991
LOC Perpetual Savings 11/01/11 4.45 2,600,000 A1+
1,000,000 Palm Beach County, FL RB - Series 1997
(Jewish Community Campus Group)
AMBAC Insured 03/01/27 4.10 1,000,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<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>
$ 8,000,000 Paso County, FL School Board COP
AMBAC Insured 08/01/26 4.10% $ 8,000,000 VMIG-1 A1+
1,900,000 Peninsula Port Authority Virginia Coal Terminal RB - 1987 C
(Dominion Terminal Project)
LOC National Westminster Bank PLC 07/01/16 4.15 1,900,000 P1
900,000 Philadelphia, PA Hospital & Higher Education Facility HRB
(Friends Hospital - Series A) (b)
LOC PNC Bank, N.A. 03/01/06 4.20 900,000
7,350,000 Phoenix, AZ IDA MHRB Refunding
(Bell Square Apartments Project) - Series 1995
LOC General Electric Capital Corporation 06/01/25 4.30 7,350,000 A1+
3,500,000 Phoenix, AZ IDA MHRB Refunding
(Paradise Lake Apartment Projects) - Series 1995
LOC General Electric Capital Corporation 07/01/25 4.30 3,500,000 A1+
4,500,000 Pinellas County, FL Health Facilities
(Pooled Hospital Loan Project)
LOC Chase Manhattan Bank 12/01/15 4.15 4,500,000 VMIG-1 A1
6,890,000 Pitkin County, CO IDA (Aspen Skiing Co. Project) - Series A
LOC First National Bank of Chicago 04/01/16 4.25 6,890,000 A1+
950,000 Polk County, FL IDA Pollution Control Refunding
(Florida Convention Center Project)
LOC Toronto Dominion 01/01/11 3.75 950,000 P1
2,675,000 Polk County, FL IDA Pollution Control Refunding
(IMC Fertilizer Inc. Proj.)
LOC Rabobank Nederland 02/01/00 4.25 2,675,000 P1
2,650,000 Prince Georges County, MD EDC RB (b)
LOC Fleet National Bank & Trust 09/30/15 5.52 2,650,000
2,625,000 St. Cloud, MN Commercial Development (Kelly Inn Project) (b)
LOC First Bank of South Dakota 04/01/13 4.50 2,625,000
4,500,000 St. Lucie County, FL PCRB (Florida Power & Light Project) 03/01/27 4.00 4,500,000 VMIG-1 A1+
4,700,000 San Antonio, TX IDA (Rivercenter Project) (b)
LOC PNC Bank, N.A. 12/01/12 4.20 4,700,000
2,900,000 Salina, KS (Dillards Project) (b)
LOC Nations Bank 12/01/14 4.35 2,900,000
2,130,000 Sarpy County, NE PCRB
(Allied Signal Inc. Project) - Series 1995 07/01/13 4.30 2,130,000 A1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1998
(UNAUDITED)
================================================================================
<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 4.22% $ 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 3.70 5,100,000 P1
4,000,000 Susquehanna Structure Products Santa Clara County
Finance Authority Lease RB - Series 1997A (VMC Refunding)
AMBAC Insured 07/01/22 4.05 4,000,000 VMIG-1
3,000,000 Tampa, FL Health Care Facilities (Lifelink Foundation Inc. Project)(b)
LOC SunTrust Bank 08/01/22 4.15 3,000,000
1,910,000 Terre Haute, IN EDRB (Westminster Village Terre Haute Inc.) (b)
LOC Huntington National Bank 07/01/01 4.60 1,910,000
1,800,000 Wisconsin HEFA RB - Series 1997 (Alverno College Project)
LOC Allied Irish Banks 11/01/17 4.30 1,800,000 VMIG-1
7,000,000 Valdez Alaska Marine Terminal TRAN - Series 1994B 05/01/31 4.15 7,000,000 VMIG-1 A1
------------ ------------
270,400,000 Total Other Variable Rate Demand Instruments 270,400,000
------------ ------------
<CAPTION>
Put Bonds (d) (5.49%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,700,000 Alleghany, PA IDA - Series 1992A (Duquesne Light Company)
LOC Canadian Imperial Bank of Commerce 10/21/98 3.85% $ 2,700,000 A1+
3,900,000 California Higher Education Loan Authority
Student Loan Revenue 1991 - Series A
LOC National Westminster Bank 07/01/98 4.00 3,900,000 VMIG-1
10,000,000 Connecticut State Special Assessment Unemployment
Compensation Advance RB - Series 1993C
FGIC Insured 07/01/98 3.90 10,000,000 VMIG-1 A1+
9,945,000 DeKalb County, GA MHRB - Series 1985L
LOC Amsouth Bank N.A. 12/01/98 3.90 9,945,000 A1+
4,000,000 Joliet Illinois Gas Supply Revenue - Peoples Gas & Light 10/01/98 3.87 4,000,000 VMIG-1
------------ ------------
30,545,000 Total Put Bonds 30,545,000
------------ ------------
<CAPTION>
Tax Exempt Commercial Paper (6.77%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Baltimore, MD Metropolitan District BAN - Series 1995 05/12/98 3.35% $ 4,000,000 P1 A1+
2,000,000 City of Burlington, KS Customized Purchase PCRB
(Kansas City Power and Light Company Project) - Series 1987A
LOC Toronto Dominion 07/22/98 3.50 2,000,000 A1+
8,000,000 City of Burlington, KS PCRB
LOC Toronto Dominion 05/13/98 3.75 8,000,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1998
(UNAUDITED)
================================================================================
<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>
$ 3,000,000 Intermountain Power Agency Power Supply Revenue and
Revenue Refunding Bonds - Series 1985F
LOC Swiss Bank Corporation 05/14/98 3.30% $ 3,000,000 VMIG-1 A1+
2,600,000 Hoosier, City of Sullivan, IN - Series 1985L-5
(Hoosier Energy Rural Electric Coop)
LOC National Rural Utilities Cooperative Finance Corporation 05/13/98 3.35 2,600,000 P1 A1
2,600,000 Maricopa, AZ PCRB (Southern California Edison Company) 08/19/98 3.60 2,600,000 P1 A1
4,000,000 New York City Municipal Water Finance Authority - Series 3
LOC Westdeutsche Landesbank/Bayerische Landesbank/
Landesbank Hessen 05/07/98 3.75 4,000,000 P1 A1+
5,000,000 Orange County, FL - Series A 05/21/98 3.50 5,000,000 P1 A1+
2,160,000 City of Rochester, MN (Mayo Foundation) - Series 1998E 08/19/98 3.50 2,160,000 A1+
4,250,000 State of Louisiana - Series 1991 A
LOC Credit Local de France 08/17/98 3.50 4,250,000 VMIG-1 A1+
------------ ------------
37,610,000 Total Tax Exempt Commercial Paper 37,610,000
------------ ------------
<CAPTION>
Revenue Bond (0.53%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,950,000 Lake Charles Harbor & Terminal District RB - Series 1983
(Reynolds Metal Company Project)
LOC ABN AMRO 12/01/98 3.85% $ 2,950,000 A1+
------------ ------------
2,950,000 Total Revenue Bond 2,950,000
------------ ------------
Total Investments (99.15%)(Cost $551,110,140+) 551,110,140
Cash and Other Assets in Excess of Liabilities (0.85%) 4,704,659
------------
Net Assets (100.00%) $555,814,799
============
Net asset value, offering and redemption price per share:
Class A Shares, 342,715,334 Shares Outstanding (Note 3) $ 1.00
============
Class B Shares, 213,268,044 Shares Outstanding (Note 3) $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
APRIL 30, 1998
(UNAUDITED)
================================================================================
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>
BAN = Bond Anticipation Note IDFA = Industrial Development Finance Authority
COP = Certificate of Participation IDRB = Industrial Development Revenue Bond
EDA = Economic Development Authority MHRB = Multifamily Housing Revenue Bond
EDC = Economic Development Corporation PCR = Pollution Control Revenue
EDRB = Economic Development Revenue Bond PCRB = Pollution Control Revenue Bond
GAN = Grant Anticipation Note RAN = Revenue Anticipation Note
GO = General Obligation RB = Revenue Bond
HEFA = Hospital & Education Finance Authority TAN = Tax Anticipation Note
HFA = Housing Finance Authority TAW = Tax Anticipation Warrant
HRB = Hospital Revenue Bond TRAN = Tax and Revenue Anticipation Note
IDA = Industrial Development Authority
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest................................................................................ $ 11,234,670
-------------
Expenses: (Note 2)
Investment management fee............................................................... 941,539
Administration Fee...................................................................... 608,379
Distribution fee (Class A).............................................................. 486,723
Custodian expenses...................................................................... 26,587
Shareholder servicing and related shareholder expenses.................................. 192,755
Legal, compliance and filing fees....................................................... 66,696
Audit and accounting.................................................................... 59,969
Directors' fees......................................................................... 13,570
Other................................................................................... 14,036
-------------
Total expenses........................................................................ 2,410,254
-------------
Net investment income...................................................................... 8,824,416
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments.................................................... 70
-------------
Increase in net assets from operations..................................................... $ 8,824,486
=============
</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
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<TABLE>
<CAPTION>
Six Months
Ended Year
April 30, 1998 Ended
(Unaudited) October 31, 1997
----------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income......................................... $ 8,824,416 $ 18,300,654
Net realized gain (loss) on investments....................... 70 -0-
--------------- ---------------
Increase in net assets from operations........................ 8,824,486 18,300,654
Dividends to shareholders from net investment income
Class A....................................................... ( 5,765,277)* ( 12,820,890)*
Class B....................................................... ( 3,059,139)* ( 5,479,764)*
Capital share transactions (Note 3)
Class A....................................................... ( 47,298,024) ( 58,788,395)
Class B....................................................... 39,877,206 12,390,842
--------------- ---------------
Total increase (decrease)................................. ( 7,420,748) ( 46,397,553)
Net assets:
Beginning of period........................................... 563,235,547 609,633,100
--------------- ---------------
End of period................................................. $ 555,814,799 $ 563,235,547
=============== ===============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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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 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.
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
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, Inc.
(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 $147,687 paid to Reich & Tang
Services L.P., an affiliate of the Manager as servicing agent for the Fund.
3. Capital Stock.
At April 30, 1998, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $555,816,265. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, 1998 October 31, 1997
-------------- ----------------
Class A
<S> <C> <C>
Sold 368,937,146 1,047,420,480
Issued on reinvestment of dividends....... 5,169,714 11,105,086
Redeemed.................................. ( 421,404,884) ( 1,117,313,961)
------------- --------------
Net increase (decrease)................... ( 47,298,024) ( 58,788,395)
============= ==============
<CAPTION>
Class B
<S> <C> <C>
Sold...................................... 206,556,387 702,069,192
Issued on reinvestment of dividends....... 2,843,386 4,978,557
Redeemed.................................. ( 169,522,567) ( 694,656,907)
------------- --------------
Net increase (decrease)................... 39,877,206 12,390,842
============= ==============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at April 30, 1998 amounted to $1,466.
Such losses may be carried forward to offset capital gains through October 31,
2004.
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<PAGE>
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================================================================================
<TABLE>
<CAPTION>
5. Financial Highlights.
Six
Months Year Ended October 31,
Ended ---------------------------------------------------------------
Class A April 30,
- ------- 1998 1997 1996 1995 1994 1993
--------- -------- -------- -------- -------- --------
<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 0.031 0.034 0.023 0.022
Less distributions:
Dividends from net investment
income......................... ( 0.015) ( 0.031) ( 0.031) ( 0.034) ( 0.023) ( 0.022)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return............................. 3.01%* 3.08% 3.09% 3.46% 2.35% 2.24%
Ratios/Supplemental Data
Net assets, end of period (000).......... $342,612 $389,897 $448,647 $458,942 $541,106 $606,497
Ratios to average net assets:
Expenses (Includes expenses paid
indirectly)....................... 0.92%* 0.91% 0.90% 0.89% 0.88% 0.90%
Net investment income.................. 2.96%* 3.03% 3.05% 3.41% 2.31% 2.22%
Expenses paid indirectly............... 0.00%* 0.00% 0.01% 0.01% 0.00% 0.00%
* Annualized
</TABLE>
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<PAGE>
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DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
5. Financial Highlights. (Continued)
Six
Months Year Ended October 31,
Ended ---------------------------------------------------------------
Class B (a) April 30,
- ------- 1998 1997 1996 1995 1994 1993
--------- -------- -------- -------- -------- --------
<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................ 0.016 0.033 0.033 0.037 0.026 0.023
Less distributions:
Dividends from net investment
income....................... ( 0.016) ( 0.033) ( 0.033) ( 0.037) ( 0.026) ( 0.023)
-------- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return........................... 3.27%* 3.34% 3.35% 3.71% 2.60% 2.49%*
Ratios/Supplemental Data
Net assets, end of period (000)........ $213,203 $173,339 $160,986 $166,700 $142,006 $137,248
Ratios to average net assets:
Expenses (Includes expenses paid
indirectly).................... 0.66%* 0.66% 0.66% 0.64% 0.63% 0.65%*
Net investment income................ 3.22%* 3.29% 3.30% 3.66% 2.56% 2.45%*
Expenses paid indirectly............. 0.00%* 0.00% 0.01% 0.01% 0.00% 0.00%
* Annualized
(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 Funds
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
801 Pennsylvania
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, 1998
(Unaudited)
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<PAGE>
