- -------------------------------------------------------------------------------
CALIFORNIA
DAILY
TAX FREE
INCOME
FUND, INC.
Annual Report
December 31, 1995
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<PAGE>
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CALIFORNIA
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 annual report of California Daily Tax Free Income
Fund, Inc. for the year ended December 31, 1995.
The Fund had net assets of $171,808,255 as of December 31, 1995. Dividends
earned on a share held throughout the year were $0.32 which, when adjusted for
the compounding effect of the reinvestment of dividends, represents a 3.28%
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
DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-------------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------- ------- -------
Other Tax Exempt Investments (23.57%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$5,000,000 California State RAW - Series C
LOC (14)* 04/25/96 3.65 % $ 5,030,524 MIG-1 SP-1
4,310,000 California State RAW - Series C
LOC (14)* 04/25/96 3.65 4,336,301 MIG-1 SP-1
5,000,000 County of Fresno, CA Sanger USDF TRAN 11/07/96 3.74 5,028,544 SP-1+
3,000,000 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 3.64 3,010,792 MIG-1 SP-1+
5,000,000 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 3.24 5,027,626 MIG-1 SP-1+
10,000,000 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 3.74 10,033,316 MIG-1 SP-1+
1,000,000 San Diego County, CA TRAN
LOC Nations West/Banque Nationale de Paris 09/30/96 3.69 1,004,984 MIG-1 SP-1
1,000,000 San Diego, CA USDF TRAN - Series A
LOC Westdeutsche Landesbank Girozentrale 10/10/96 3.74 1,006,678 VMIG-1
1,000,000 San Jose, CA Airport Revenue
FGIC Insured 03/01/96 3.64 1,001,073 Aaa AAA
5,000,000 Ventura County, CA TRAN 07/02/96 3.74 5,016,754 MIG-1 SP-1+
- ---------- ----------
40,310,000 Total Other Tax Exempt Investments 40,496,592
- ---------- ----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (47.90%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$2,800,000 Alameda County, CA IDRB Refunding Bonds
(Hoover Universal) - Series 1994 06/01/04 5.90 % $ 2,800,000 VMIG-1 A1
400,000 California HFA (Sutter Health) - Series 1990A
LOC Morgan Guaranty 03/01/20 5.85 400,000 VMIG-1 A1+
3,800,000 California PCFA Refunding RB
(Atlantic Richfield Company Project) - Series 1994A 12/01/24 6.05 3,800,000 VMIG-1 A1
1,100,000 California PCFA Refunding RB
(Southern California Edison) - Series D 02/28/08 5.40 1,100,000 VMIG-1 A1+
700,000 California PCFA Refunding RB
(Southern California Edison) - Series A 02/28/08 5.40 700,000 VMIG-1 A1
2,500,000 California PCFA Solid Waste Disposal
(Western Waste Industrial Project)
LOC Citibank 12/01/00 5.38 2,500,000 VMIG-1
</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>
$ 2,400,000 California PCRB Financial Authority
(Southern California Edison) - Series B 02/28/08 5.40 % $ 2,400,000 VMIG-1 A1+
7,500,000 City of Anaheim, CA COP (1993 Refunding Projects)
AMBAC Insured 08/01/19 5.30 7,500,000 VMIG-1 A1
1,500,000 City of Los Angeles IDRB (Cereal Food Processors, Inc. Project)
LOC Commerzbank A.G. 12/01/05 5.05 1,500,000 A1
2,560,000 County of Contra Costa
(GNMA Collateralized Del Norte Place Apartments)
LOC Sumitomo Bank, Ltd. 10/20/28 5.85 2,560,000 A1
1,175,000 Fullerton, CA IDA RB (PCL Packaging)
LOC Bank of Nova Scotia 12/01/04 5.00 1,175,000 A1+
1,000,000 Irwindale, CA IDRB
(Toys R' Us, Incorporated Project) - Series 1984
LOC Bankers Trust Company 12/01/19 5.13 1,000,000 Aa2
3,000,000 Los Angeles County, CA HFA MHRB
(Sand Canyon Ranch Project) - Series F
LOC Citibank 11/01/06 5.30 3,000,000 A1+
5,700,000 Los Angeles County, CA TRAN
Common Sales Tax Revenue - Series A
FGIC Insured 07/01/12 5.10 5,700,000 VMIG-1 A1
1,000,000 Los Angeles, CA (Harbor Cove Project)
LOC Citibank 10/01/06 5.15 1,000,000 A1+
7,700,000 Ontario, CA IDA (LD Brinkman & Company)
LOC Barclays Bank 04/01/15 5.90 7,700,000 P1
1,000,000 Orange County, CA (Radnor Aragon Corporation)
LOC Bank of Nova Scotia 08/01/19 5.13 1,000,000 Aa2
305,000 Oxnard, CA (Channel Island Business Center Project)
LOC Wells Fargo Bank, N.A. 07/01/05 5.23 305,000 VMIG-1
4,500,000 Rohnert Park, CA MHRB
(Crossbrook Apartments Project) - Series A 06/15/25 5.00 4,500,000 A1+
5,000,000 Sacramento County, CA MHRB (Shadowood Apartments Project)
LOC General Electric Capital Corporation 12/01/22 5.20 5,000,000 A1+
3,000,000 San JoaQuin County Transportation Authority Sales Tax RB
- Series 1993
LOC Sumitomo Bank, Ltd. 04/01/11 5.15 3,000,000 VMIG-1 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)
DECEMBER 31, 1995
===============================================================================
<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>
$ 2,200,000 Santa Clara County, CA Transit District
Refunding Equipment Trust
LOC Sumitomo Bank, Ltd. 06/01/15 5.85 % $ 2,200,000 VMIG-1
7,000,000 Southeast Resource Recovery Facilities
California Lease Revenue - Series A
LOC Industrial Bank of Japan, Ltd. 12/01/18 5.15 7,000,000 VMIG-1 A1
4,000,000 Southern California (Public Power Authority Transmission Project) RB
(1991 Subordinate)
LOC Swiss Bank Corporation 07/01/19 4.75 4,000,000 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 5.15 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 5.15 3,700,000 VMIG-1
2,155,000 Town of Windsor Variable Rate Demand MHRB
(Oakmount at Windsor Project)
LOC Banque Paribas 08/01/25 5.25 2,155,000 A1
2,500,000 Visalia, CA IDRB (Savannah Foods)
LOC Trust Co. Bank of Atlanta 06/01/05 5.25 2,500,000 Aa3
- ----------- ----------
82,295,000 Total Other Variable Rate Demand Instruments 82,295,000
---------- ----------
<CAPTION>
Put Bonds (d) (1.60%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 2,745,000 California PCFA PCRB (Chevron USA Incorporated Project) 11/15/96 3.66 % $ 2,751,914 Aa2 AA
---------- ----------
2,745,000 Total Put Bonds 2,751,914
---------- ----------
<CAPTION>
Revenue Bonds (0.87%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,500,000 California HFA Housing Mortgage RB - Series 1995E
FGIC Insured 02/01/96 4.60 % $ 1,500,000 VMIG-1 A1+
--------- ---------
1,500,000 Total Revenue Bonds 1,500,000
--------- ---------
<CAPTION>
Tax Exempt Commercial Paper (22.88%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
$ 3,010,000 California PCFA PCRB (Pacific Gas & Electric) - Series 1988C (d)
LOC Credit Suisse 02/14/96 3.50 % $ 3,010,000 A1+
4,000,000 California PCFA PCRB (Pacific Gas & Electric) - Series F (d)
LOC Banque Nationale de Paris 01/10/96 3.75 4,000,000 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
------ ---- ----- -------- ------- -----
Tax Exempt Commercial Paper (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 4,000,000 California PCFA PCRB (Pacific Gas & Electric) - Series F (d)
LOC Banque Nationale de Paris 02/07/96 3.40 % $ 4,000,000 A1+
3,000,000 California PCFA PCRB
(Southern California Edison) - Series 1985A (d) 02/20/96 3.65 3,000,000 P1 A1
3,100,000 California PCFA PCRB
(Southern California Edison) - Series 1985A (d) 03/06/96 3.20 3,100,000 P1 A1
10,800,000 Puerto Rico Government Development Bank 01/11/96 3.40 10,800,000 A1+
1,500,000 Riverside County, CA Transportation Commission Sales Tax RB (b)
LOC Industrial Bank of Japan, Ltd. 01/10/96 3.50 1,500,000
2,900,000 San Diego County, CA Water Authority 01/23/96 3.55 2,900,000 P1 A1
3,000,000 The City of Long Beach Harbor Department, CA - Series A 01/16/96 3.80 3,000,000 P1 A1+
4,000,000 West & Central Water Basin Municipal Water District 04/03/96 3.45 4,000,000 P1 A1+
---------- ----------
39,310,000 Total Tax Exempt Commercial Paper 39,310,000
---------- ----------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (c) (3.64%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 4,065,000 Gene E. Lynn Nursing Home
LOC Bank of America (b) 12/01/15 5.48 % $ 4,065,000
2,180,000 IDA County Riverside, CA IDRB (National RV Incorporated Project)
LOC Union Bank 12/01/03 5.10 2,180,000 P1 A1+
--------- ------------
6,245,000 Total Variable Rate Demand Instruments - Private Placements 6,245,000
--------- ------------
Total Investments (100.46%)(Cost $172,598,506+) 172,598,506
Liabilities In Excess of Cash and Other Assets (-0.46%) ( 790,251)
------------
Net Assets (100.00%), 171,823,867 Shares Outstanding (Note 3) $171,808,255
============
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
* Bank of America/Morgan Guaranty/Sumitomo Bank/Banque Nationale de
Paris/ Bank of Nova Scotia/Canadian Imperial Bank of
Commerce/Society Generale/ Citibank/Credit Suisse/Nations
West/Toronto Dominion/Chemical/ Swiss Bank/ West Deutche Landesbank
</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)
DECEMBER 31, 1995
===============================================================================
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>
COP = Certificate of Participation PCFA = Pollution Control Finance Authority
HFA = Housing Finance Agency PCRB = Pollution Control Revenue Bond
IDA = Industrial Development Authority RAW = Revenue Anticipation Warrant
IDRB = Industrial Development Revenue Bond RB = Revenue Bond
MHRB = Multi-Family Housing Revenue Bond TRAN = Tax and Revenue Anticipation Note
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
YEAR ENDED DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income:
Interest...................................................................... $ 4,174,084
------------------
Expenses: (Note 2)
Investment management fee.................................................... 321,501
Administration fee........................................................... 215,873
Shareholder servicing fee.................................................... 214,334
Custodian expenses........................................................... 20,872
Shareholder servicing and related shareholder expenses....................... 89,891
Legal, compliance and filing fees............................................ 27,337
Audit and accounting......................................................... 49,705
Directors' fees.............................................................. 10,061
Other........................................................................ 5,975
------------------
Total expenses........................................................... 955,549
Less: Fees waived (Note 2) .............................................. ( 236,467)
Expenses paid indirectly.......................................... ( 16,408)
------------------
Net expenses............................................................. 702,674
------------------
Net investment income........................................................... 3,471,410
------------------
<CAPTION>
<S> <C>
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................................... -0-
------------------
Increase in net assets from operations.......................................... $ 3,471,410
==================
</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
YEARS ENDED DECEMBER 31, 1995 AND 1994
===============================================================================
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income...................................... $ 3,471,410 $ 2,986,671
Net realized gain (loss) on investments.................... -0- ( 12,387)
--------------- ----------------
Increase in net assets from operations.......................... 3,471,410 2,974,284
Dividends to shareholders from net investment income............ ( 3,471,410)* ( 2,986,671)*
Capital share transactions (Note 3)............................. 66,687,982 ( 12,126,851)
--------------- ----------------
Total increase (decrease).................................. 66,687,982 ( 12,139,238)
Net assets:
Beginning of year.......................................... 105,120,273 117,259,511
--------------- ----------------
End of year................................................ $ 171,808,255 $ 105,120,273
=============== ================
* 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
===============================================================================
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 year ended December 31, 1995.
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<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
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. Prior to December 1,
1995, the administration fee was .20%.
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 year ended December 31, 1995, the Manager and the Distributor
voluntarily waived administration fees and shareholder servicing fees of
$22,133, and $214,334, 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 $32,917 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 $16,408.
3. Capital Stock.
At December 31, 1995, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $171,823,867. Transactions
in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Sold........................................... 378,553,200 461,860,925
Issued on reinvestment of dividends............ 2,706,820 2,013,039
Redeemed....................................... ( 314,572,038) ( 476,000,815)
------------------ -------------------
Net increase (decrease)........................ 66,687,982 ( 12,126,851)
================== ===================
</TABLE>
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<PAGE>
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===============================================================================
4. Sales of Securities.
Accumulated undistributed realized losses at December 31, 1995 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 59% 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>
Year Ended December 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ -----
Per Share Operating Performance:
(for a share outstanding throughout the year)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ -----
Net investment income 0.032 0.024 0.021 0.023 0.038
Dividends from net investment income.. ( 0.032) ( 0.024) ( 0.021) ( 0.023) ( 0.038)
------ ------ ------ ------ -----
Net asset value, end of year.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====
Total Return 3.28% 2.45% 2.16% 2.35% 3.83%
Ratios/Supplemental Data
Net assets, end of year (000)......... $171,808 $105,120 $117,260 $90,795 $83,525
Ratios to average net assets:
Expenses........................... 0.67%+ 0.56%+ 0.35%+ 0.68%+ 0.74%+
Net investment income.............. 3.24%+ 2.40%+ 2.14%+ 2.34%+ 3.77%+
+ Net of management, administration and shareholder servicing fees waived
equivalent to .22%, .28%, .54%, .29%, and .23% of average net assets.
</TABLE>
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<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
California Daily Tax Free Income Fund, Inc.
We have audited the accompanying statement of net assets of California Daily Tax
Free Income Fund, Inc. as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended and the selected financial
information for each of the five years in the period then ended. These financial
statements and selected financial information are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of California Daily Tax Free Income Fund, Inc. as of December 31, 1995,
the results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with generally
accepted accounting principles.
\s\McGladrey & Pullen, LLP
New York, New York
January 26, 1996
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
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, Transfer Agent &
Dividend Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
- -------------------------------------------------------------------------------
