<PAGE>
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CONNECTICUT
DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
July 31, 1996
(Unaudited)
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CONNECTICUT
DAILY TAX FREE 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
INCOME FUND, INC. 212/830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Connecticut Daily Tax Free
Income Fund, Inc. for the period February 1, 1996 through July 31, 1996.
The Fund had net assets of $118,726,128 and 593 active shareholders as of July
31, 1996. Dividends earned on a share held throughout the period were $.013
which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 2.57% yield on an annual basis.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
/s/ Steven W. Duff
Steven W. Duff
President
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
JULY 31, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
------------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- ------
Other Tax Exempt Investments (21.11%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 Bethel, CT BAN (c) 07/11/97 3.50% $ 1,000,359
3,000,000 Brookfield, CT BAN (c) 09/19/96 3.20 3,000,186
2,280,000 City of Milford, CT BAN (c) 11/14/96 3.09 2,282,237
5,000,000 City of Stamford, CT BAN (c) 10/15/96 3.09 5,001,077
500,000 Connecticut State GO 09/15/96 3.17 500,330 Aa AA-
655,000 Connecticut State HFA Housing Mortgage Program - Series A
FHA/VA/Private Mortgages 11/15/96 3.22 662,233 Aa AA
3,365,000 Connecticut State Special Tax Obligation Bond - Series D
FGIC Insured 10/01/96 3.02 3,377,895 Aaa AAA
1,460,000 Darien, CT BAN (c) 08/14/96 3.54 1,460,200
2,250,000 Montville, CT BAN (c) 01/28/97 3.23 2,250,311
2,000,000 State of Connecticut GO Bond 1996 - Series A 05/15/97 3.53 2,006,103 Aa AA-
2,500,000 State of Connecticut - Series D 11/15/96 2.96 2,517,715 Aa AA-
1,000,000 Westport, CT BAN (c) 06/27/97 3.50 1,000,172
----------- -----------
25,010,000 Total Other Tax Exempt Investments 25,058,818
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (b) (47.29%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,100,000 Connecticut Development Authority
(Exeter Energy Project) - Series 1989B
LOC Sanwa Bank, Ltd. 12/01/19 3.60% $ 5,100,000 A1
5,600,000 Connecticut Development Authority PCRB
(CT Light and Power Company Project 1996) - Series A (c)
LOC Canadian Imperial Bank of Commerce 05/01/31 3.50 5,600,000
5,600,000 Connecticut HFA Housing Mortgage Finance Program (c)
AMBAC Insured 05/15/18 3.50 5,600,000
2,000,000 Connecticut PCR Refunding Bond
(Connecticut Light & Power Company Project)
LOC Union Bank of Switzerland 09/01/28 3.60 2,000,000 VMIG-1 A1+
9,900,000 Connecticut State Development Authority
(CT Light & Power Co. Project) - Series 1993A
LOC Deutsche Bank A.G. 09/01/28 3.50 9,900,000 VMIG-1 A1+
3,100,000 Connecticut State Development Authority
(Corporation for Independent Living Project)
LOC Chase Manhattan Bank, N.A. 07/01/15 3.45 3,100,000 VMIG-1
</TABLE>
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See Notes to Financial Statements.
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Other Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,500,000 Connecticut State Development Authority
(Western Mass Electric Company) - Series 1993A
LOC Union Bank of Switzerland 09/01/25 3.40% $ 3,500,000 VMIG-1 A1+
1,300,000 Connecticut State Development Authority IDRB
(Columbia Diamond Ring)
LOC Barclays Bank PLC 09/01/08 3.90 1,300,000 P1 A1+
6,000,000 Connecticut State Development Authority IDRB
(Gerber Scientific Incorporated)
LOC Wachovia Bank & Trust Co., N.A. 12/01/14 3.70 6,000,000 A1+
1,500,000 Connecticut State Development Authority IDRB
(Rand Whitney Container Board L.P.)
LOC Chase Manhattan Bank, N.A. 08/01/23 3.35 1,500,000 P1 A1
1,200,000 Connecticut State Development Authority IDRB
(Vitta Corporation Project)
LOC Barclays Bank PLC 09/01/09 3.90 1,200,000 P1 A1+
6,100,000 Connecticut State Special Tax Obligation RB
(Second Lien Transportation Infrastructure)
LOC Commerzbank A.G. 12/01/10 3.55 6,100,000 VMIG-1 A1+
3,845,000 Hartford County, CT RDA (Underwood Tower Project)(c)
Financial Security Assurance, Inc. 06/01/20 3.55 3,845,000
1,400,000 State of Connecticut HEFA - Series A
LOC Credit Locale de France 07/01/24 3.40 1,400,000 VMIG-1
----------- -----------
56,145,000 Total Other Variable Rate Demand Instruments 56,145,000
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<CAPTION>
Put Bonds (d) (14.20%)
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<S> <C> <C> <C> <C> <C> <C>
$ 1,545,000 Connecticut HFA Program Bond - Series A-4 04/10/97 3.65 $ 1,545,000 VMIG-1 A1+
1,600,000 Connecticut State HEFA (Yale University) - Series E
FGIC Insured 06/01/97 3.60 1,600,000 VMIG-1 A1+
3,860,000 Connecticut State RRA Bond
(Wallingford Resource Recovery) - Series 1986
LOC National Westminster Bank PLC 11/14/96 3.85 3,860,000 P1 A1+
5,000,000 Connecticut State Special Assessment Unemployment
Compensation Advance Fund RB - Series 93C
FGIC Insured 07/01/97 3.90 5,000,000 VMIG-1 A1+
4,860,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Reynolds Metals Corporation)
LOC ABN AMRO Bank N.V. 09/01/96 3.75 4,859,803 VMIG-1 A1+
----------- -----------
16,865,000 Total Put Bonds 16,864,803
----------- -----------
</TABLE>
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See Notes to Financial Statements.
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JULY 31, 1996
(UNAUDITED)
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<TABLE>
<CAPTION>
Ratings (a)
------------------
Face Maturity Standard
Amount Date Yield Moody's & Poors
- ------ ---- ----- ------- ------
Revenue Bond (2.83%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 3,300,000 South Central Connecticut Regional Water System RB (c)
Escrowed In U.S. Treasury Securities 08/01/96 3.70% $ 3,366,000
- ------------- -----------
3,300,000 Total Revenue Bond 3,366,000
- ------------- -----------
<CAPTION>
Tax Exempt Commercial Paper (13.38%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,000,000 Connecticut HEFA (Yale University) - Series L 10/08/96 3.50% $ 2,000,000 VMIG-1 A1+
3,000,000 Connecticut HEFA (Yale University) - Series M 10/10/96 3.40 3,000,000 VMIG-1 A1+
500,000 Connecticut HEFA (Yale University) - Series O 09/04/96 3.45 500,000 VMIG-1 A1+
980,000 Connecticut HFA Mortgage Project 1989 - Series D 09/04/96 3.50 980,000 A1+
4,000,000 Connecticut Municipal Electric Company
LOC Fleet National Bank 09/09/96 3.40 4,000,000 P1 A1
1,400,000 Connecticut Municipal Electric Energy Cooperative
Power Supply System RB Series 1995A
LOC Fleet National Bank 09/11/96 3.35 1,400,000 P1 A1
2,000,000 Connecticut Municipal Electric Energy Cooperative
Power Supply System RB Series 1995A
LOC Fleet National Bank 09/11/96 3.15 2,000,000 P1 A1
2,000,000 Puerto Rico Government Development Bank 09/17/96 3.45 2,000,000 A1+
----------- -----------
15,880,000 Total Tax Exempt Commercial Paper 15,880,000
----------- -----------
<CAPTION>
Variable Rate Demand Instruments - Participations (b) (1.12%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 862,105 Connecticut State Development Authority IDRB (Nefco Holding)
LOC Chase Manhattan Bank, N.A. 11/01/00 5.36% $ 862,105 P1 A1
464,384 Connecticut State Development Authority IDRB
(The Finlay Brothers Project)
LOC Chase Manhattan Bank, N.A. 10/01/00 5.36 464,384 P1 A1
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1,326,489 Total Variable Rate Demand Instruments - Participations 1,326,489
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Total Investments (99.93%) (Cost $118,641,110+) 118,641,110
Cash and Other Assets in Excess of Liabilities (0.07%) 85,018
-----------
Net Assets (100%), 118,751,540 Shares Outstanding (Note 3) $118,726,128
===========
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
===========
+ Aggregate cost for federal income tax purposes is
$ 118,639,291.
</TABLE>
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See Notes to Financial Statements.
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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 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.
(c) Securities that are not rated which the Fund's Board of Directors have
determined to be of comparable quality to those rated securities in which
the Fund invests.
(d) The maturity dated indicated is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note PCFA = Pollution Control Finance Authority
GO = General Obligation PCR = Pollution Control Revenue
HEFA = Health and Education Facilities Authority PCRB = Pollution Control Revenue Bond
HFA = Housing Finance Authority RB = Revenue Bond
IDRB = Industrial Development Revenue Bond RDA = Revenue Development Authority
LOC = Letter of Credit RRA = Resource Recovery Authority
</TABLE>
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See Notes to Financial Statements.
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1996
(UNAUDITED)
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<C> <C>
Income:
Interest...................................................................... $ 1,914,041
------------------
Expenses: (Note 2)
Investment management fee.................................................... 167,057
Administration fee........................................................... 116,940
Shareholder servicing fee.................................................... 111,372
Custodian expenses........................................................... 7,484
Shareholder servicing and related shareholder expenses....................... 52,842
Legal, compliance and filing fees............................................ 10,219
Audit and accounting......................................................... 35,664
Directors' fees.............................................................. 6,203
Other........................................................................ 3,629
------------------
Total expenses........................................................... 511,410
Less:
Expenses paid indirectly............................................... ( 13,265)
------------------
Net expenses...................................................... 498,145
------------------
Net investment income........................................................ 1,415,896
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<C> <C>
Net realized gain (loss) on investments......................................... ( 7,763)
------------------
Increase in net assets from operations.......................................... $ 1,408,133
==================
</TABLE>
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See Notes to Financial Statements.
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
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<TABLE>
<CAPTION>
Six Months Year
Ended Ended
July 31, 1996 January 31, 1996
------------- ----------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<C> <C> <C>
Net investment income...................................... $ 1,415,896 $ 2,747,513
Net realized gain (loss) on investments.................... ( 7,763) 2,987
--------------- ----------------
Increase (decrease) in net assets from operations............... 1,408,133 2,750,500
Dividends to shareholders from net investment income............ ( 1,415,896)* ( 2,747,513)*
Capital share transactions (Note 3)............................. 12,907,885 24,022,159
--------------- ----------------
Total increase (decrease).................................. 12,900,122 24,025,146
Net assets:
Beginning of period........................................ 105,826,006 81,800,860
--------------- ----------------
End of period.............................................. $ 118,726,128 $ 105,826,006
=============== ================
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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1. Summary of Accounting Policies.
Connecticut Daily Tax Free Income Fund, Inc. is a no-load, non-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. Its
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 .30%
of the Fund's average daily net assets. The Manager has agreed to reimburse the
Fund for its expenses (exclusive of interest, taxes, brokerage, and
extraordinary expenses) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. No such reimbursement was required for the period ended July
31, 1996.
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2. Investment Management Fees and Other Transactions with Affiliates(Continued)
Pursuant to an Administrative Services Contract the Fund pays to the Manager an
annual fee of .21% of the Fund's average daily net assets.
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 Plan adopted under Securities and Exchange Commission
Rule 12b-1, the Fund and Reich & Tang Distributors L.P. (the Distributor) have
entered into a Distribution Agreement and a Shareholder Servicing Agreement. For
its services under the Shareholder Servicing Agreement, the Distributor receives
from the Fund a fee equal to .20% of the Fund's average daily net assets. There
were no additional expenses borne by the Fund pursuant to the Distribution Plan.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$3,000 per annum plus $500 per meeting attended.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $15,246 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
Included in the Statement of Operations under the captions "Custodian expenses"
and "Shareholder servicing and related shareholder expenses" are expense offsets
of $13,265.
3. Capital Stock.
At July 31, 1996, 20,000,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $118,733,230. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
July 31, 1996 January 31, 1996
---------------- ----------------
<C> <C> <C>
Sold........................................... 126,355,656 230,071,612
Issued on investment of dividends.............. 1,382,532 2,456,633
Redeemed....................................... ( 114,830,303) ( 208,506,086)
----------------- -----------------
Net increase (decrease)........................ 12,907,885 24,022,159
================= =================
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at July 31, 1996 amounted to $7,102.
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CONNECTICUT DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
5. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of Connecticut and, accordingly, is subject to the credit risk associated with
the non-performance of such issuers. Approximately 54% of these investments are
further secured, as to principal and interest, by letters of credit issued by
financial institutions. The Fund maintains a policy of monitoring its exposure
by reviewing the creditworthiness of the issuers, as well as that of the
financial institutions issuing the letters of credit, and by limiting the amount
of holdings with letters of credit from one financial institution.
6. Selected Financial Information.
<TABLE>
<CAPTION>
Six Months Year Ended January 31,
Ended ---------------------------------------------------------------
July 31, 1996 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- -------- -------- -------- --------
Income from investment operations:
Net investment income.............. 0.013 0.030 0.023 0.017 0.021 0.035
Less distributions:
Dividends from net investment income ( 0.013) ( 0.030) ( 0.023) ( 0.017) ( 0.021) ( 0.035)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return.......................... 2.57% 3.02% 2.29% 1.70% 2.12% 3.56%
Ratios/Supplemental Data
Net assets, end of period (000)....... $ 118,726 $ 105,826 $ 81,801 $ 120,551 $ 129,297 $ 185,339
Ratios to average net assets:
Expenses.......................... .92%*(c) .91%(a) 0.88% 0.87% 0.86%(b) 0.79%
Net investment income............. 2.54%* 2.96%(a) 2.25% 1.68% 2.14%(b) 3.51%
(a) Net of administration fees waived equivalent to .03% of average net assets.
(b) Net of shareholder servicing fees waived equivalent to .06% of average net assets.
(c) Includes expenses paid indirectly equivalent to .02% of average net assets.
* Annualized
</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.
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Connecticut 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, New York 10020
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