<PAGE>
- -------------------------------------------------------------------------------
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, 1997 through June 30, 1997.
The Fund had net assets of $238,257,142 and 722 active shareholders as of June
30, 1997.
We thank you for your support and we look forward to continuing to serve your
cash management needs.
Sincerely,
\S\Steven W. Duff
Steven W. Duff
President
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
------------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Tax Exempt Investments (19.80%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Alameda County, CA City of Alameda TRAN - Series 1996 07/01/97 4.00% $ 5,000,000 MIG-1
5,000,000 Butte County Office of Education State of California 1996-1997 RAN
08/20/97 3.87 5,003,822 SP-1+
5,000,000 California Community College Financing Authority 1996 TRAN - Series A
07/02/97 3.80 5,000,119 SP-1+
5,000,000 California School Cash Reserve Program Authority 07/02/98 3.80 5,043,300 MIG-1 SP-1+
5,000,000 California School Cash Reserve Program Authority Pool Bonds - Series 1996A
07/02/97 3.80 5,000,118 MIG-1 SP-1+
5,000,000 City of Ontario 1997 TRAN (San Bernadino County, CA) 06/30/98 3.77 5,032,400 SP-1+
10,000,000 County of Los Angeles 1997-8 - Series A 06/30/98 3.80 10,062,400 MIG-1 SP-1+
2,000,000 Los Angeles Community College District
Los Angeles County, CA 1997-98 TRAN 07/02/98 3.85 2,011,500 SP-1+
5,000,000 The City of Los Angeles, CA 1997 TRAN 06/30/98 3.83 5,029,750 MIG-1 SP-1+
------------ ------------
47,000,000 Total Other Tax Exempt Investments 47,183,409
------------ ------------
<CAPTION>
Other Variable Rate Demand Instruments (b) (67.99%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,000,000 Alameda County, CA IDR Refunding Bonds
(Hoover Universal Inc. Project) - Series 1994
LOC Johnson Control 06/01/04 4.00% $ 9,000,000 VMIG-1
2,170,000 Alameda-Contra Costa, CA School Finance Authority COPS - SeriesC
(Capital Improvement Financing)
LOC National Westminster Bank PLC 07/01/25 4.00 2,170,000 A1+
1,500,000 California EDFA (Kuhnash Properties/Arkay Plastics, CA) (c)
LOC PNC Bank 04/01/17 3.55 1,500,000
2,000,000 California HFFA (St. Francis Memorial Hospital)
LOC Bank of America 11/01/19 4.05 2,000,000 VMIG-1
400,000 California Health Facilities (Sutter Health) - Series 90 A
LOC Morgan Guaranty Trust Company 03/01/20 3.75 400,000 VMIG-1 A1+
3,800,000 California PCFA Refunding RB
(Atlantic Richfield Company Project) - Series 1994A 12/01/24 4.05 3,800,000 VMIG-1 A1
1,900,000 California PCFA Refunding RB (Southern California Edison) - Series A
02/28/08 5.20 1,900,000 VMIG-1 A1
1,100,000 California PCFA Refunding RB (Southern California Edison) - Series D
02/28/08 5.20 1,100,000 P1 A1+
1,000,000 California PCFA Solid Waste Disposal RB
(Shell Oil Company Martinez Project) 10/01/24 3.85 1,000,000 VMIG-1 A1+
2,400,000 California PCRB Financial Authority (Southern California Edison) - Series B
02/28/08 5.20 2,400,000 VMIG-1 A1+
2,300,000 California PCRB Financial Authority (Southern California Edison) - Series C
02/28/08 5.20 2,300,000 P1 A1+
2,500,000 California Statewide Commission Development Authority
(Karcher Properties) - Series 1994C
LOC Bayerische Vereinsbank, A.G. 12/01/19 4.05 2,500,000 VMIG-1
</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 (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,955,000 California Statewide Communities Development Authority
(Irvine Apartment) - Series 1995 A-4
Fannie Mae Collateralized 05/15/25 4.00% $ 5,955,000 A1+
3,630,000 California Statewide Communities Development
LOC National Westminster Bank PLC 08/01/10 4.05 3,630,000 A1+
7,200,000 City of Anaheim, CA (1993 Refunding Projects)
AMBAC Insured 08/01/19 3.90 7,200,000 VMIG-1 A1
2,760,000 City of Los Angeles IDRB (Cereal Food Processors, Inc. Project)
LOC Commerzbank A.G. 12/01/05 4.15 2,760,000 A1
1,500,000 City of San Jose, MHRB
(Siena Renaissance Square Apartments) - Series 1996A
LOC Bank One Arizona 12/01/29 4.10 1,500,000 VMIG-1
2,000,000 Clipper, CA Tax Exempt Trust COPS - Series 1996-1 Class A
MBIA Insured 07/04/20 4.15 2,000,000 Aaa AAA
1,800,000 Community Redevelopment Agency of the City of Grand Terrace
LOC Industrial Bank of Japan, Ltd. 12/01/11 4.20 1,800,000 A1
2,485,000 County of Contra Costa (GNMA Collateralized Del Norte Place Apartments)
LOC Sumitomo Bank, Ltd. 10/20/28 4.25 2,485,000 A1
6,500,000 County of Contra Costa
Variable Rate Demand Multifamily Mortgage Refinancing Bonds
Fannie Mae Collateralized 11/15/22 3.95 6,500,000 A1+
1,000,000 County of Kings, CA Housing Authority MHRB
(Edgewater Isle Apartments) - Series 1996A
LOC Wells Fargo Bank, N.A. 06/01/07 3.95 1,000,000 VMIG-1
2,000,000 County of Sacramento Court House
LOC Union Bank of Switzerland 06/01/20 3.90 2,000,000 VMIG-1 A1+
1,675,000 County of Santa Clara, CA MHRB (Grove Garden Apartments) - Series 1997A
Fannie Mae Collateralized 02/15/27 4.00 1,675,000 AAA
1,400,000 Fullerton, CA IDA RB (PCL Packaging)
LOC Bank of Nova Scotia 12/01/04 4.10 1,400,000 A1+
2,000,000 Housing Authority of the County of Riverside MHRB
(Amanda Park Apartment Proj.) 1989 - Series B
LOC Corestates Bank, N.A. 05/01/19 4.10 2,000,000 VMIG-1
1,000,000 Irwindale, CA IDRB (TOYS R' US, Incorporated Project) - Series 1984
LOC Bankers Trust Company 12/01/19 4.25 1,000,000 Aa2
3,000,000 Los Angeles County, CA HFA MHRB (Sand Canyon Ranch Project) - Series F
LOC Citibank 11/01/06 4.00 3,000,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,700,000 Los Angeles County, CA TRAN Common Sales Tax Revenue - Series A
FGIC Insured 07/01/12 3.90% $ 5,700,000 VMIG-1 A1
1,000,000 Los Angeles, CA (Harbor Cove Project)
LOC Citibank 10/01/06 4.00 1,000,000 A1
9,000,000 Ontario, CA IDA (LD Brinkman & Co.)
LOC Union Bank of California 04/01/15 3.95 9,000,000 P1
1,000,000 Orange County, CA (Radnor Aragon Corporation)
LOC Bank of Nova Scotia 08/01/19 4.25 1,000,000 Aa2
1,000,000 Orange County, CA (Sanitation District) - Series C
FGIC Insured 08/01/17 3.90 1,000,000 VMIG-1 A1+
7,800,000 Orange County, CA LT DBL Improvement Bond
(Irvine Coast Assessment Dist. No. 88-1) 09/02/18 3.90 7,800,000 VMIG-1 A1+
2,500,000 Otay Water District (1996 Capital Project)
LOC Landesbank Hessen 09/01/26 3.90 2,500,000 VMIG-1 A1+
305,000 Oxnard, CA (Channel Island Business Center Project)
LOC Wells Fargo Bank, N.A. 07/01/05 4.50 305,000 VMIG-1
2,000,000 Petaluma Community Development Commission MHRB
(Oakmont at Petaluma Project)
LOC Banque Paribas 04/01/26 4.35 2,000,000 A1
4,500,000 Rohnert Park, CA MHRB (Crossbrook Apartments Project) - Series A
Fannie Mae Collateralized 06/15/25 3.95 4,500,000 A1+
9,000,000 Sacramento County, CA MHRB (Shadowood Apartments Project)
LOC General Electric Capital Corporation 12/01/22 4.25 9,000,000 A1+
2,000,000 San Bernadino County, CA (1996 County Center Refinancing Project)
LOC Canadian Imperial Bank of Commerce 07/01/15 4.00 2,000,000 VMIG-1 A1+
2,200,000 San Francisco-South Beach 19 Redevelopment Agency
LOC Bank of Tokyo - Mitsubishi Bank, Ltd. 12/01/16 4.00 2,200,000 VMIG-1
2,300,000 Santa Clara County, CA El Camino Hospital District (Medical Control Project)
LOC National Westminster Bank PLC 08/01/15 3.90 2,300,000 VMIG-1
6,000,000 Southeast Resource Recovery Facilities California Lease Revenue - Series A
LOC Industrial Bank of Japan, Ltd. 12/01/18 4.10 6,000,000 VMIG-1 A1
2,000,000 Southern California Public Power Authority 1996 Subordinate Refunding RB
(Southern Trans Project)
FSA Insured 07/01/23 3.90 2,000,000 VMIG-1 A1+
2,000,000 Southern California Public Power Authority
Power Project Refunding RB (Palo Verde Project)
AMBAC Insured 07/01/09 3.90 2,000,000 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 (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9,000,000 Southern California Public Power Authority Transmission Project RB
(1991 Subordinate)
LOC Swiss Bank Corp. 07/01/19 3.90% $ 9,000,000 VMIG-1 A1+
3,000,000 State of California - Various Purpose GO RB
MBIA Insured 09/01/21 4.20 3,000,000 A1+
2,100,000 The City of Los Angeles MHRB (Coral Wood County Project) - Series 1995D
LOC Union Bank of California 11/01/25 4.15 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 4.15 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 4.35 3,315,000 A1
1,000,000 Tustin, CA Improvement Bond Act 1915 (Reassessment District No. 95-2-A)
LOC Kredietbank 09/02/13 3.75 1,000,000 VMIG-1 A1+
2,500,000 Visalia, CA IDRB (Savannah Foods)
LOC Trust Co. Bank of Atlanta 06/01/05 4.20 2,500,000 Aa3
1,100,000 Western Riverside County, Regional Wastewater Authority RB - 1996
LOC National Westminster Bank PLC 04/01/28 3.75 1,100,000 VMIG-1 A1+
------------ ------------
161,995,000 Total Other Variable Rate Demand Instruments 161,995,000
------------ ------------
<CAPTION>
Put Bonds (d) (1.57%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 California PCFA PCR (Chevron USA Incorporated Project) 11/15/97 3.62% $ 1,000,728 Aa2 AA
2,745,000 California PCFA PCR (Chevron USA Incorporated Project) 11/15/97 3.90 2,745,000 Aa2 AA
------------ ------------
3,745,000 Total Put Bonds 3,745,728
------------ ------------
<CAPTION>
Tax Exempt Commercial Paper (13.73%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 California PCR Southern California Edison - Series B 07/16/97 3.45% $ 5,000,000 P1 A1
2,000,000 California PCRB (Southern California Edison) - Series B
LOC Morgan Guaranty Trust Company 09/10/97 3.75 2,000,000 A1+
3,000,000 Long Beach, CA Beach Harbor Department - Series A 09/10/97 3.75 3,000,000 P1 A1+
3,000,000 Los Angeles, CA Wastewater System Revenue Notes 07/10/97 3.75 3,000,000 VMIG-1 A1+
5,200,000 Puerto Rico Government Development Bank 08/14/97 3.55 5,200,000 A1+
3,000,000 Puerto Rico Government Development Bank 07/15/97 3.70 3,000,000 A1+
2,500,000 Puerto Rico Government Development Bank 08/13/97 3.70 2,500,000 A1+
5,000,000 Regents of University of California Notes - Series A 07/08/97 3.35 5,000,000 P1 A1+
4,000,000 West & Central Basin Finance Authority
(Water Basin Municipality Water District) 07/24/97 3.75 4,000,000 P1 A1+
------------ ------------
32,700,000 Total Tax Exempt Commercial Paper 32,700,000
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Variable Rate Demand Instruments - Private Placements (b) (4.16%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,850,000 Gene E. Lynn Nursing Home
LOC Bank of America 12/01/15 5.48% $ 3,850,000
1,961,000 IDA County Riverside, CA IDRB (National RV Incorporated Project)
LOC Union Bank of California 12/01/03 5.10 1,961,000 P1 A1+
2,465,000 Kent Trust Project - Series 84 B
LOC Comerica Bank 12/01/14 4.68 2,465,000
1,620,000 Nob Hill Venture - Series 84
LOC Wells Fargo Bank, N.A. 12/01/09 4.68 1,620,000
------------ ------------
9,896,000 Total Variable Rate Demand Instruments - Private Placements 9,896,000
------------ ------------
Total Investments (107.25%) (Cost $255,520,137+) 255,520,137
Liabilities in Excess of Cash and Other Assets (-7.25%) ( 17,262,995)
------------
Net Assets (100.00%) $238,257,142
============
Net Asset Value, offering and redemption price per share:
Class A Shares, 231,481,572 Shares Outstanding (Note 3) $ 1.00
============
Class B Shares, 6,791,182 Shares Outstanding (Note 3) $ 1.00
============
</TABLE>
+ Aggregate cost for federal income tax purposes is identical.
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, 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.
(c) 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.
(d) The maturity date indicated is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
COPS = Certificates of Participations IDRB = Industrial Development Revenue Bond
EDFA = Economic Development Finance Authority MHRB = Multi-Family Housing Revenue Bond
GNMA = Government National Mortgage Association PCFA = Pollution Control Finance Authority
GO = Government Obligation PCR = Pollution Control Revenue
HFFA = Health Facility Finance Authority PCRB = Pollution Control Revenue Bond
HFA = Housing Finance Agency RAN = Revenue Anticipation Note
IDA = Industrial Development Revenue Bond RB = Revenue Bond
IDR = Industrial Development Revenue TRAN = Tax and Revenue Anticipation Note
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest...................................................................... $ 4,187,339
------------------
Expenses: (Note 2)
Investment management fee.................................................... 347,786
Administration fee........................................................... 243,450
Shareholder servicing fee.................................................... 226,494
Custodian expenses........................................................... 11,836
Shareholder servicing and related shareholder expenses....................... 99,628
Legal, compliance and filing fees............................................ 12,454
Audit and accounting......................................................... 29,337
Directors' fees.............................................................. 4,500
Other........................................................................ 4,502
------------------
Total expenses........................................................... 979,987
Less: Fees waived (Note 2)...............................................( 69,557)
Expenses paid indirectly...........................................( 178)
------------------
Net expenses............................................................. 910,252
------------------
Net investment income........................................................... 3,277,087
------------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments......................................... -0-
------------------
Increase in net assets from operations.......................................... $ 3,277,087
==================
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1997 Ended
(Unaudited) December 31, 1996
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income...................................... $ 3,277,087 $ 5,368,563
Net realized gain (loss) on investments.................... -0- -0-
--------------- --------------
Increase in net assets from operations.......................... 3,277,087 5,368,563
Dividends to shareholders from net investment income:
Class A.................................................... ( 3,194,486)* ( 5,355,010)*
Class B.................................................... ( 82,601)* ( 13,553)*
Capital share transactions (Note 3):
Class A.................................................... 25,518,981 34,138,724
Class B.................................................... 3,355,338 3,435,844
-------------- --------------
Total increase (decrease).................................. 28,874,319 37,574,568
Net assets:
Beginning of period........................................ 209,382,823 171,808,255
-------------- --------------
End of period.............................................. $ 238,257,142 $ 209,382,823
============== ===============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
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 has two classes of stock authorized, Class A and Class B.
The Class A shares are subject to a service fee pursuant to the Distribution and
Service Plan. The Class B shares are not subject to a service fee. Additionally,
the Fund may allocate among its classes certain expenses, to the extent
allowable to specific classes, including transfer agent fees, government
registration fees, certain printing and postage costs, and administrative and
legal expenses. Class Specific expenses of the Fund were limited to distribution
fees and minor transfer agent expenses. In all other respects the Class A and
Class B shares represent the same interest in the income and assets of the Fund.
Distribution for Class B shares commenced on October 9, 1996 and all Fund shares
outstanding before October 9, 1996 were designated as Class A shares. 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.
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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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 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,
only with respect to Class A shares of the Fund. For its services under the
Shareholder Servicing Agreement, the Distributor receives from the Fund with
respect only to Class A shares, 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, 1997, the Manager voluntarily waived management
fees of $69,557.
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 $58,707 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
Included in this Statement of Operations in the same category are expense of
offsets $178.
3. Capital Stock. At June 30, 1997, 20,000,000,000 shares of $.001 par value
stock were authorized and capital paid in amounted to $238,272,754. Transactions
in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Class A Ended Ended
- ------- June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Sold................................... 197,041,612 387,317,948
Issued on reinvestment of dividends.... 2,306,149 3,615,939
Redeemed............................... ( 173,828,780) ( 356,795,163)
------------- ------------
Net increase (decrease)................ 25,518,981 34,138,724
============= ============
<CAPTION>
Six Months October 9, 1996
Class B Ended (Commencement of Offering)
- ------- June 30, 1997 to December 31, 1996
------------- ---------------------
<S> <C> <C>
Sold................................... 24,301,746 6,012,221
Issued on reinvestment of dividends.... 69,268 12,875
Redeemed............................... ( 21,015,676) ( 2,589,252)
------------- ------------
Net increase (decrease)................ 3,355,338 3,435,844
============= ============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at June 30, 1997 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 44% 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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights.
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Class A Ended ---------------------------------------------------------
- ------- June 30, 1997 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- ------
Income from investment operations:
Net investment income............... 0.014 0.027 0.032 0.024 0.021 0.023
Less distributions:
Dividends from net investment income ( 0.014) ( 0.027) ( 0.032) ( 0.024) ( 0.021) ( 0.023)
------- ------- ------- ------- ------- ------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =======
Total Return............................ 2.86%* 2.76% 3.28% 2.45% 2.16% 2.35%
Ratios/Supplemental Data
Net assets, end of period (000)......... $231,466 $205,947 $171,808 $105,120 $117,260 $90,795
Ratios to average net assets:
Expenses............................ 0.79%* 0.75% 0.67% 0.56% 0.35% 0.68%
Net investment income............... 2.82%* 2.73% 3.24% 2.40% 2.14% 2.34%
Management, administration and shareholder
servicing fees waived.......... 0.06%* 0.08% 0.22% 0.28% 0.54% 0.29%
Expense offsets..................... 0.00% 0.01% 0.01% -- -- --
<CAPTION>
Six Months October 9, 1996
Class B Ended (Commencement of Sales) to
- ------- June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00
--------- --------
Income from investment operations:
Net investment income............... 0.015 0.004
Less distributions:
Dividends from net investment income ( 0.015) ( 0.004)
-------- -------
Net asset value, end of period.......... $ 1.00 $ 1.00
========= ========
Total Return............................ 3.06%* 3.08%*
Ratios/Supplemental Data
Net assets, end of period (000)......... $ 6,791 $ 3,436
Ratios to average net assets:
Expenses............................ 0.59%* 0.56%*
Net investment income............... 3.08%* 3.09%*
Management fees waived.............. 0.06%* 0.06%*
Expense offsets..................... 0.00% 0.01%
* Annualized
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA
DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<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
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>
