<PAGE>
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CALIFORNIA
DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
June 30, 1996
(Unaudited)
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<PAGE>
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CALIFORNIA
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 California Daily Tax Free
Income Fund, Inc. for the period January 1, 1996 through June 30, 1996.
The Fund had net assets of $179,704,995 as of June 30, 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 2.74% 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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<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Tax Exempt Investments (26.22%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Alameda County, CA City of Alameda TRAN - Series 1996 07/01/97 3.70% $ 5,012,000 MIG-1
5,000,000 California Community College
Financing Authority 1996 TRAN - Series A 07/02/97 3.86 5,043,200 SP-1+
5,000,000 California School Cash Reserve Program
Authority Pool Bonds - Series 1996A 07/02/97 3.80 5,043,200 MIG-1 SP-1+
5,000,000 County of Fresno, CA Sanger USDF TRAN 11/07/96 3.74 5,011,878 SP-1+
2,000,000 County of Riverside, CA 1996-97 TRAN - Series A 06/30/97 3.85 2,011,500 MIG-1 SP-1+
18,000,000 Los Angeles County, CA TRAN
LOC Credit Suisse/Morgan Guaranty/Swiss Bank Corporation/
Union Bank of Switzerland/West Land Girozentrale/Bank of America 07/01/96 3.58 18,000,000 MIG-1 SP-1+
1,000,000 San Diego County, CA TRAN
LOC Nations West/Banque Nationale de Paris 09/30/96 3.69 1,001,667 MIG-1 SP-1
1,000,000 San Diego, CA USDF TRAN - Series A
LOC Westdeutsche Landesbank Girozentrale 10/10/96 3.74 1,002,392 VMIG-1
5,000,000 Ventura County, CA TRAN 07/02/96 3.74 5,000,092 MIG-1 SP-1+
- ----------- -----------
47,000,000 Total Other Tax Exempt Investments 47,125,929
- ----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (52.33%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 3,000,000 Alameda County, CA IDRB Refunding
(Hoover Universal Inc. Project) - Series 1994
LOC Johnson Control 06/01/04 3.45% $ 3,000,000 VMIG-1 A1
1,200,000 California HFFA (St. Francis Memorial Hospital)
LOC Bank of America 11/01/19 3.10 1,200,000 VMIG-1
400,000 California Health Facilities (Sutter Health) - Series B
LOC Morgan Guaranty Trust Company 03/01/20 2.90 400,000 VMIG-1 A1+
3,800,000 California PCFA Refunding RB
(Atlantic Richfield Company Project) - Series 1994A 12/01/24 3.75 3,800,000 VMIG-1 A1
2,000,000 California PCRB Financial Authority
(Southern California Edison) - Series C 02/28/08 3.45 2,000,000 P1 A1+
2,500,000 California Statewide Commission Development Authority
(Karcher Properties) - Series 1994C
LOC Bayerische Vereinsbank, A.G. 12/01/19 3.25 2,500,000 VMIG-1
7,500,000 City of Anaheim, CA (1993 Refunding Projects)
AMBAC Insured 08/01/19 3.10 7,500,000 VMIG-1 A1
3,000,000 City of Los Angeles IDRB (Cereal Food Processors, Inc. Project)
LOC Commerzbank A.G. 12/01/05 3.30 3,000,000 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Clipper, CA Tax Exempt Trust
COPS - Series 1996-1 Class A
MBIA Insured 07/04/20 3.34% $ 2,000,000 Aaa AAA
2,535,000 County of Contra Costa
(GNMA Collateralized Del Norte Place Apartments)
LOC Sumitomo Bank, Ltd. 10/20/28 3.50 2,535,000 A1
1,000,000 County of Kings, CA Housing Authority MHRB
(Edgewater Isle Apartments) - Series 1996A
LOC First Interstate Bank of California 06/01/07 3.20 1,000,000 VMIG-1
1,175,000 Fullerton, CA IDA RB (PCL Packaging)
LOC Bank of Nova Scotia 12/01/04 2.85 1,175,000 A1+
1,000,000 Irwindale, CA IDRB
(Toys R' Us, Incorporated Project) - Series 1984
LOC Bankers Trust Company 12/01/19 3.43 1,000,000 Aa2
3,000,000 Los Angeles County, CA HFA MHRB
(Sand Canyon Ranch Project) - Series F
LOC Citibank 11/01/06 3.00 3,000,000 A1+
5,700,000 Los Angeles County, CA TRAN
Common Sales Tax Revenue - Series A
FGIC Insured 07/01/12 3.10 5,700,000 VMIG-1 A1
1,000,000 Los Angeles, CA (Harbor Cove Project)
LOC Citibank 10/01/06 3.20 1,000,000 A1
1,000,000 Orange County, CA (Radnor Aragon Corporation)
LOC Bank of Nova Scotia 08/01/19 3.43 1,000,000 Aa2
1,000,000 Orange County, CA (Sanitation District) - Series C
FGIC Insured 08/01/17 3.40 1,000,000 VMIG-1 A1+
3,000,000 Orange County, CA (Sanitation District) - Series C
FGIC Insured 08/01/17 3.50 3,000,000 VMIG-1 A1+
2,500,000 Otay Water District (1996 Capital Project)
LOC Landesbank Hessen 09/01/26 3.15 2,500,000 VMIG-1 A1+
305,000 Oxnard, CA (Channel Island Business Center Project)
LOC Wells Fargo Bank, N.A. 07/01/05 3.83 305,000 VMIG-1
2,000,000 Petaluma Community Development Commission MHRB
(Oakmont at Petaluma Project)
LOC Banque Paribas 04/01/26 3.55 2,000,000 A1
4,500,000 Rohnert Park, CA MHRB
(Crossbrook Apartments Project) - Series A 06/15/25 3.10 4,500,000 A1+
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 6,000,000 Sacramento County, CA MHRB (Shadowood Apartments Project)
LOC General Electric Capital Corporation 12/01/22 3.35% $ 6,000,000 A1+
2,200,000 Santa Clara County, CA Transit District CA
Refunding Equipment Trust
LOC Sumitomo Bank, Ltd. 06/01/15 3.60 2,200,000 VMIG-1
6,000,000 Southeast Resource Recovery Facilities
California Lease Revenue - Series A
LOC Industrial Bank of Japan, Ltd. 12/01/18 3.45 6,000,000 VMIG-1 A1
2,000,000 Southern California Public Power Authority Power Project
Refunding RB, 1996 Subordinate (Palo Verde Project) - Series B
AMBAC Insured 07/01/09 3.10 2,000,000 VMIG-1 A1+
9,000,000 Southern California Public Power Authority Transmission Project RB
1991 Subordinate (Southern Transmission Project)
LOC Swiss Bank Corp. 07/01/19 3.10 9,000,000 VMIG-1 A1+
2,100,000 The City of Los Angeles MHRB
(Coral Wood County Project) - Series 1995D
LOC Union Bank of California 11/01/25 3.40 2,100,000 VMIG-1
3,700,000 The City of Los Angeles MHRB
(Orangewood County Project) - Series 1995C
LOC Union Bank of California 11/01/25 3.40 3,700,000 VMIG-1
3,315,000 Town of Windsor Variable Rate Demand MHRB
(Oakmount at Windsor Project)
LOC Banque Paribas 08/01/25 3.80 3,315,000 A1
1,000,000 Tustin, CA Improvement Bond Act 1915
(Reassessment District No. 95-2-A)
LOC Kredietbank 09/02/13 3.10 1,000,000 VMIG-1 A1+
2,500,000 Visalia, CA IDRB (Savannah Foods)
LOC Trust Co. Bank of Atlanta 06/01/05 3.40 2,500,000 Aa3
1,100,000 Western Riverside County,
Regional Wastewater Treatment Authority RB - 1996
LOC National Westminster Bank PLC 04/01/28 3.10 1,100,000 VMIG-1 A1+
- ----------- -----------
94,030,000 Total Other Variable Rate Demand Instruments 94,030,000
- ----------- -----------
<CAPTION>
Put Bonds (d) (1.53%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 2,745,000 California PCFA PCR (Chevron USA Incorporated Project) 11/15/96 3.62% $ 2,747,979 Aa2 AA
- ----------- -----------
2,745,000 Total Put Bonds 2,747,979
- ----------- -----------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Tax Exempt Commercial Paper (19.60%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 3,010,000 California PCFA PCRB (Pacific Gas & Electric) - Series 1988C (d)
LOC Credit Suisse 07/25/96 3.25% $ 3,010,000 A1+
8,000,000 California PCFA PCRB (Pacific Gas & Electric) - Series 1988F (d)
LOC Banque Nationale de Paris 08/15/96 3.60 8,000,000 A1+
3,000,000 California PCFA PCRB
(Southern California Edison) - Series 1985A (d) 08/07/96 3.20 3,000,000 P1 A1
5,000,000 California PCFA PCRB
(Southern California Edison) - Series 1985B (d) 08/01/96 3.20 5,000,000 P1 A1+
3,911,000 Los Angeles County, CA Metro Trans Authority
Second Subordinated Sales Tax RB
LOC Nations West/ABN AMRO/Banque Nationale de Paris/
Canadian Imperial Bank of Commerce/Bank of California 09/04/96 3.50 3,911,000 P1 A1
3,300,000 Puerto Rico Government Development Bank 07/10/96 3.50 3,300,000 A1+
2,000,000 State of California GO 08/22/96 3.55 2,000,000 P1 A1
3,000,000 The City of Long Beach Harbor Department, CA - Series A 09/10/96 3.60 3,000,000 P1 A1+
4,000,000 West & Central Water Basin Municipal Water District 07/24/96 2.75 4,000,000 P1 A1+
- ------------- ------------
35,221,000 Total Tax Exempt Commercial Paper 35,221,000
- ------------- ------------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (c) (3.37%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 3,955,000 Gene E. Lynn Nursing Home
LOC Bank of America (b) 12/01/15 5.32% $ 3,955,000
2,107,000 IDA County Riverside, CA IDRB
(National RV Incorporated Project)
LOC Union Bank of California 12/01/03 4.95 2,107,000 P1 A1+
- ----------- ------------
6,062,000 Total Variable Rate Demand Instruments - Private Placements 6,062,000
- ----------- ------------
Total Investment (103.05%) (Cost $185,186,908+) 185,186,908
Liabilities In Excess of Cash and Other Assets (-3.05%) ( 5,481,913)
------------
Net Assets (100.00%), 179,720,607 Shares Outstanding (Note 3) $179,704,995
============
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1996
(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 those rated securities in which
the Fund invests.
(c) Securities payable on demand at par including accrued interest (usually
with seven days notice) and, if indicated, 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 is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C><C> <C> <C><C>
COPS = Certificates of Participations MHRB = Multi-Family Housing Revenue Bond
GNMA = Government National Mortgage Association PCFA = Pollution Control Finance Authority
GO = Government Obligation PCRB = Pollution Control Revenue Bond
HFFA = Health Facility Finance Authority RB = Revenue Bond
HFA = Housing Finance Agency TRAN = Tax and Revenue Anticipation Note
IDRB = Industrial Development Revenue Bond USDF = Unified School District Fund
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income:
Interest...................................................................... $ 3,084,479
------------------
Expenses: (Note 2)
Investment management fee.................................................... 269,242
Administration fee........................................................... 188,469
Shareholder servicing fee.................................................... 179,494
Custodian expenses........................................................... 8,622
Shareholder servicing and related shareholder expenses....................... 64,902
Legal, compliance and filing fees............................................ 11,070
Audit and accounting......................................................... 30,424
Directors' fees.............................................................. 3,995
Other........................................................................ 7,997
------------------
Total expenses........................................................... 764,215
Less: Fees waived (Note 2)............................................... ( 96,373)
Expenses paid indirectly.......................................... ( 14,704)
------------------
Net expenses............................................................. 653,138
------------------
Net investment income........................................................... 2,431,341
------------------
<CAPTION>
<S> <C>
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................................... -0-
------------------
Increase in net assets from operations.......................................... $ 2,431,341
==================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1996 Ended
(Unaudited) December 31, 1995
--------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income...................................... $ 2,431,341 $ 3,471,410
Net realized gain (loss) on investments.................... -0- -0-
--------------- ----------------
Increase in net assets from operations.......................... 2,431,341 3,471,410
Dividends to shareholders from net investment income............ ( 2,431,341)* ( 3,471,410)*
Capital share transactions (Note 3)............................. 7,896,740 66,687,982
--------------- ----------------
Total increase (decrease).................................. 7,896,740 66,687,982
Net assets:
Beginning of period........................................ 171,808,255 105,120,273
--------------- ----------------
End of period............................................. $ 179,704,995 $ 171,808,255
=============== ================
* 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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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
1. Summary of Accounting Policies.
California 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 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 2.5% of the first $30 million of the Fund's average net
assets, 2% of the next $70 million of its average net assets, and 1.5% of its
average net assets in excess of $100 million. No such reimbursement was required
for the period ended June 30, 1996.
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<PAGE>
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CALIFORNIA 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 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.
During the period ended June 30, 1996, the Manager and the Distributor
voluntarily waived administration fees and shareholder servicing fees of $2,837
and $93,536, respectively.
Fees are paid to Directors who are unaffiliated with the Manager
on the basis of $2,000 per annum plus $250 per meeting attended.
Included in the Statement of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $21,934 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 caption "Custodian expenses"
are expense offsets of $14,704.
3. Capital Stock.
At June 30, 1996, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $179,720,607. Transactions
in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Sold........................................... 168,323,044 378,553,200
Issued on reinvestment of dividends............ 1,398,699 2,706,820
Redeemed....................................... ( 161,825,003) ( 314,572,038)
---------------- ----------------
Net increase (decrease)........................ 7,896,740 66,687,982
================ ================
</TABLE>
<PAGE>
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================================================================================
4. Sales of Securities.
Accumulated undistributed realized losses at June 30, 1996 amounted to $15,612.
This amount represents tax basis capital losses which may be carried forward to
offset future capital gains. Such losses expire December 31, 1999 through
December 31, 2002.
5. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of California and, accordingly, is subject to the credit risk associated with
the non-performance of such issuers. Approximately 56% 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 December 31,
Ended -------------------------------------------------------------------
June 30, 1996 1995 1994 1993 1992 1991
------------- -------- -------- -------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment income................. 0.013 0.032 0.024 0.021 0.023 0.038
Dividends from net investment income.. ( 0.013) ( 0.032) ( 0.024) ( 0.021) ( 0.023) ( 0.038)
------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return.......................... 2.74%* 3.28% 2.45% 2.16% 2.35% 3.83%
Ratios/Supplemental Data
Net assets, end of period(000)........ $179,705 $171,808 $105,120 $117,260 $ 90,795 $ 83,525
Ratios to average net assets:
Expenses........................... 0.74%*+# 0.67%+# 0.56%+ 0.35%+ 0.68%+ 0.74%+
Net investment income.............. 2.71%*+ 3.24%+ 2.40%+ 2.14%+ 2.34%+ 3.77%+
* Annualized
+ Net of management, administration and shareholder servicing fees waived
equivalent to .11%, .22%, .28%, .54%, .29% and .23%
of average net assets.
# Includes expense offsets.
</TABLE>
<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.
- --------------------------------------------------------------------------------
California 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
- -------------------------------------------------------------------------------
<PAGE>