<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, 1999 through June 30, 1999.
The Fund had net assets of $274,173,287 and 790 active shareholders as of June
30, 1999.
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>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (20.60%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 15,000,000 California Community College Trust Receipts - Series 1998F 09/30/99 3.35% $ 15,000,000 A1+
4,500,000 California State Veterans - Series BJ 06/01/00 3.20 4,500,000 VMIG-1 A1+
4,700,000 City of Placentia, Orange County, CA TRAN - Series 1998 (c) 07/20/99 3.57 4,700,896
4,570,000 City of Placentia, Orange County, CA TRAN (c) 06/30/00 3.62 4,573,062
4,000,000 Davis Joint Unified School District TRAN - Series 1999 - 2000 06/30/00 3.37 4,002,680 SP-1+
1,352,000 Eureka, CA Hosing Authority (Eureka Senior Housing Bayville) (c)
Guaranteed by Federal Home Loan Bank 07/01/99 3.85 1,352,000
2,500,000 Merced County, CA TRAN - Series 1999 - 2000 06/30/00 3.37 2,513,725 SP-1+
10,000,000 Oakland, CA TRAN 09/30/99 3.11 10,026,322 MIG-1 SP-1+
3,260,000 Riverside County, CA Val Verde Unified School District 10/26/99 2.99 3,260,702 SP-1+
2,500,000 Stanislaus County, CA Office of Education TRAN - Series 1998 07/30/99 3.60 2,501,625 SP-1+
4,000,000 Ventura County, CA TRAN - Series 1999 07/06/00 3.21 4,031,400 MIG-1 SP-1+
------------ ------------
56,382,000 Total Other Tax Exempt Investments 56,462,412
------------ ------------
<CAPTION>
Other Variable Rate Demand Instruments (b) (66.62%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 6,600,000 Anaheim, CA COPS (1993 Refunding Projects)
Insured by AMBAC Indemnity Corp. 08/01/19 3.25% $ 6,600,000 VMIG-1 A1+
3,100,000 California Association for Bay Area Government
LOC Banque Nationale de Paris 10/01/27 3.10 3,100,000 A1
3,500,000 California EDFA (Fricke-Parks Press, Inc. Project)
LOC US Bank, N.A. 05/01/23 3.40 3,500,000 A1
1,500,000 California EDFA IDRB (Kuhnash Properties/Arkay Plastics Project) (c)
LOC PNC Bank, N.A. 04/01/17 3.45 1,500,000
5,000,000 California HFA (Adventist Insured Hospital Project)
Insured by MBIA Insurance Co. 09/01/28 3.10 5,000,000 VMIG-1 A1+
1,900,000 California HFA (Adventist Insured Hospital Project)
Insured by MBIA Insurance Co. 09/01/15 3.10 1,900,000 VMIG-1 A1+
400,000 California HEFA (Sutter Health) - Series 1990B
LOC Morgan Guaranty Trust Company 03/01/20 2.90 400,000 VMIG-1 A1+
2,000,000 California PCFA (Pacific Gas & Electric)
LOC Morgan Guaranty Trust Company 11/01/26 3.30 2,000,000 A1+
500,000 California PCFA (Pacific Gas & Electric) - Series A
LOC Toronto Dominion Bank 12/01/18 3.10 500,000 A1+
1,000,000 California PCFA (Pacific Gas & Electric) - Series F
LOC Banque Nationale de Paris 11/01/26 3.10 1,000,000 A1+
1,500,000 California PCRB (Pacific Gas & Electric)
LOC Rabobank Nederland 12/01/16 3.20 1,500,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,900,000 California PCRB (Pacific Gas & Electric) (c)
LOC Union Bank of Switzerland 11/01/26 3.30% $ 8,900,000
6,500,000 California PCRB (Pacific Gas & Electric) - Series 1996C
LOC Bank of America 11/01/26 3.00 6,500,000 A1+
5,300,000 California M-S-R Public Power Agency (San Juan Lien Project)
Insured by MBIA Insurance Co. 07/01/22 3.05 5,300,000 VMIG-1 A1+
5,300,000 California State EDFA IDRB (Independent Systems)
LOC Bank of America 04/01/08 3.05 5,300,000 VMIG-1 A1+
2,000,000 California State EDFA IDRB (Standard Abrasives Manufacturing Project)
LOC Bank of America 03/01/23 3.40 2,000,000 A1+
6,000,000 California Statewide Communities Development (House Ear Institute)
LOC Morgan Guaranty Trust Company 12/01/18 3.10 6,000,000 A1+
2,855,000 California Statewide Communities Development (John Muir/Mount Diablo Health)
Insured by AMBAC Indemnity Corp. 08/15/27 3.75 2,855,000 VMIG-1 A1+
2,000,000 California Statewide Communities Development (Karcher Properties)
LOC Bayerische HypoVereins Bank, A.G. 12/01/19 3.25 2,000,000 VMIG-1
1,200,000 Carlsbad, CA MHRB (La Costa Apartments Project) - Series A
LOC Bank of America 06/01/11 3.05 1,200,000 VMIG-1
2,000,000 Clipper, CA Tax Exempt Trust COPS - Series 1996-1 Class A
Insured by MBIA Insurance Co. 07/04/00 3.62 2,000,000 Aaa AAA
6,300,000 Contra Costa County, CA MHRB (Riverside Apartments Project) - Series 1992
Guaranteed by Fannie Mae 11/15/22 3.20 6,300,000 A1+
1,000,000 Freemont, CA COPS (Family Resource Center Finance Project)
LOC Kredietbank 08/01/28 3.45 1,000,000 A1+
2,945,000 Freemont, CA MHRB (Mission Wells Project) - Series 1985E
LOC Bayerische Landesbank Girozentrale 09/01/14 3.45 2,945,000 A1+
1,400,000 Fullerton, CA IDA RB (PCL Packaging Inc. Project) - Series 1984
LOC Bank of Nova Scotia 12/01/04 3.25 1,400,000 A1+
6,000,000 Hayward, CA MHRB (Barrington Hills) - Series A
Guaranteed by Fannie Mae 06/15/25 3.20 6,000,000 A1+
2,500,000 Hemet, CA MHRB (Sunwest Resort Village Project) - Series 1986B
Guaranteed by Federal Home Loan Bank 07/01/06 3.25 2,500,000 A1+
1,000,000 Irwindale, CA IDRB (TOYS R'US, Inc. Project) - Series 1984 (c)
LOC Bankers Trust Company 12/01/19 3.82 1,000,000
1,900,000 Irvine California Public Facility (Infrastructure Authority Lease Capital)
LOC Bayerische HypoVereins Bank, A.G. 11/01/10 3.40 1,900,000 VMIG-1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1999
(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>
$ 1,500,000 Irvine Ranch Water District, CA # 182
LOC Landesbank Hessen 11/15/13 3.15% $ 1,500,000 A1+
3,000,000 Irvine Ranch Water District - Series A
LOC Bank of America 05/01/09 3.15 3,000,000 VMIG-1 A1+
1,325,000 Irvine Ranch Water District, CA - Series A
LOC Toronto Dominion Bank 06/01/15 3.15 1,325,000 VMIG-1 A1+
1,900,000 Irvine Ranch Water District, CA - Series B
LOC Landesbank Hessen 10/01/04 3.15 1,900,000 A1+
1,000,000 Kings County, CA MHRB (Edgewater Isle Apartments) - Series 1996A
LOC Wells Fargo Bank, N.A. 06/01/07 3.10 1,000,000 VMIG-1
2,240,000 Los Angeles, CA IDRB (Cereal Food Processors, Inc. Project) - Series 1995
LOC Commerce Bank 12/01/05 3.65 2,240,000 A1
1,000,000 Los Angeles, CA Regional Improvement Authority
(Los Angeles International Airport)
LOC Wachovia Bank, N.A. 12/01/24 3.85 1,000,000 P1
1,500,000 Los Angeles, CA MHRB (Coral Wood County Project) - Series 1995D
LOC Union Bank of California 11/01/25 4.00 1,500,000 VMIG-1
2,990,000 Los Angeles, CA MHRB (Orangewood County Project) - Series 1995C
LOC Union Bank of California 11/01/25 4.00 2,990,000 VMIG-1
1,500,000 Los Angeles County, Housing Authority MHRB
(Malibu Meadows Project) - Series 1998B
Guaranteed by Fannie Mae 04/15/28 3.60 1,500,000 A1+
3,000,000 Los Angeles County, CA HFA MHRB
(Sand Canyon Ranch Project) - Series 1985F
LOC Citibank, N.A. 11/01/06 3.35 3,000,000 A1+
2,500,000 Los Angeles County, CA IDA (P&C Poultry Distributors) (c)
LOC Comerica Bank 06/01/23 3.85 2,500,000
6,700,000 Oakland, CA Joint Powers Financing Authority (Lease Revenues) - Series A-1
Insured by FSA 08/01/21 3.40 6,700,000 VMIG-1 A1+
9,950,000 Orange County, CA Sanitation District COPS
Insured by FGIC 08/01/17 3.05 9,950,000 VMIG-1 A1+
2,200,000 Orange County, CA Irvine Coast Association District - Series 1988-1
LOC Societe General & Kredit Bank 09/02/18 3.10 2,200,000 VMIG-1 A1+
1,000,000 Orange County, CA (Radnor/Aragon Corporation)
LOC Toronto-Dominion Bank 08/01/19 3.82 1,000,000 P1
</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>
$ 2,500,000 Otay, CA Water District COPS - Series 1996
LOC Landesbank Hessen 09/01/26 3.15% $ 2,500,000 VMIG-1 A1+
305,000 Oxnard, CA (Channel Island Business Center Project) - Series 1985
LOC Wells Fargo Bank, N.A. 07/01/05 3.72 305,000 VMIG-1
2,000,000 Riverside County, CA Housing Authority (Amanda Park Apartment Project)
Guaranteed by Freddie Mac 01/15/29 3.35 2,000,000 VMIG-1
2,250,000 Riverside County, CA IDA
LOC Union Bank of California 05/01/24 3.65 2,250,000 P1
4,500,000 Rohnert Park, CA MHRB (Crossbrook Apartments Project) - Series 1995A
Guaranteed by Fannie Mae 06/15/25 3.20 4,500,000 A1+
5,000,000 Sacramento County, CA MHRB (Shadowood Apartments Project) - Series 1992A
LOC General Electric Capital Corporation 12/01/22 3.45 5,000,000 A1+
1,900,000 San Bernadino County, CA COPS
(County Center Refinancing Project) - Series 1996
LOC Canadian Imperial Bank of Commerce 07/01/15 3.30 1,900,000 VMIG-1 A1+
1,200,000 San Diego, CA IDRB (Kaiser Aerospace & Electric)
LOC ABN AMRO Bank 10/01/07 3.55 1,200,000 P1
2,000,000 San Diego, CA MHRB (University Town Center Apartment)
LOC Bank of America 10/01/15 3.70 2,000,000 VMIG-1
1,500,000 San Jose, CA MHRB (Siena at Renaissance Square Apartments) - Series 1996A
LOC Key Bank 12/01/29 3.35 1,500,000 VMIG-1
3,000,000 Santa Clara County, CA Transit District - Series 1985A
Insured by AMBAC Indemnity Corp. 06/01/15 3.20 3,000,000 AAA
1,675,000 Santa Clara County, CA MHRB (Grove Garden Apartments) - Series 1997A
Guaranteed by Fannie Mae 02/15/27 3.60 1,675,000 A1+
1,000,000 Southern California Metropolitan Water District Waterworks RB - Series B 07/01/28 3.05 1,000,000 VMIG-1 A1+
2,000,000 Southern California Public Power Authority RB
(Southern Transmission Project) - Series 1996B
Insured by FSA 07/01/23 3.10 2,000,000 VMIG-1 A1+
4,800,000 Southern California Public Power Authority RB
(Public Power Transmission Project) - Series 1991
Insured by AMBAC Indemnity Corp. 07/01/19 3.25 4,800,000 VMIG-1 A1+
3,000,000 State of California GO RB
Insured by MBIA Insurance Co. 09/01/21 3.54 3,000,000 A1+
3,115,000 Town of Windsor MHRB (Oakmount at Windsor Project) - Series A
LOC Banque Paribas 08/01/25 3.90 3,115,000 A1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
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CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1999
(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>
$ 2,500,000 Visalia, CA IDRB (Savannah Foods) (c)
LOC Suntrust Bank 06/01/05 3.70% $ 2,500,000
1,000,000 West Basin Municipal Water District COPS
(Recycled Water Project-Phase II) - Series 1997C
LOC Bayerische HypoVereins Bank, A.G. 08/01/27 3.05 1,000,000 VMIG-1
2,000,000 West Basin Municipal Water District COPS (Recycled Water Project - Phase III)
LOC Bayerische HypoVereins Bank, A.G. 08/01/29 3.20 2,000,000 VMIG-1 A1+
------------ ------------
182,650,000 Total Other Variable Rate Demand Instruments 182,650,000
------------ ------------
<CAPTION>
Put Bonds (d) (4.12%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 California HFA Single Family Variable Rate Bonds II - Series 1998B
Insured by FGIC 02/01/00 3.00% $ 1,000,000 VMIG-1 SP-1+
3,745,000 California PCFA PCRB (Chevron USA Incorporated Project) (c) 11/15/99 3.10 3,745,000
4,000,000 San Luis Obispo, CA San Luis Coastal Unified School District - Series 1999 06/30/00 3.33 4,033,560 SP-1+
2,500,000 South Coast Local Education Pooled TRAN
Insured by MBIA Insurance Co. 06/30/00 3.29 2,515,900 MIG-1
------------ ------------
11,245,000 Total Put Bonds 11,294,460
------------ ------------
<CAPTION>
Tax Exempt Commercial Paper (7.48%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 California PCRB (Southern California Edison) - Series B 07/27/99 3.05% $ 4,000,000 P1 A1
1,500,000 Chula Vista, CA (San Diego Gas & Electric) 08/11/99 3.00 1,500,000 P1 A1
3,000,000 Long Beach, CA Harbor Department - Series A 08/11/99 2.85 3,000,000 P1 A1+
2,000,000 Sacramento Municipal Utilities
LOC Morgan Guaranty/Bayerische Landesbank/Westdeutsche LB 08/16/99 3.00 2,000,000 A1+
7,000,000 San Francisco Bay Area Transit
LOC Bayerische Landesbank 08/09/99 2.75 7,000,000 P1 A1+
2,000,000 San Francisco Bay Area Transit
LOC Bayerische Landesbank 08/10/99 2.80 2,000,000 P1 A1+
1,000,000 The Regents of the University of California - Series A 07/27/99 3.05 1,000,000 P1 A1+
------------ ------------
20,500,000 Total Tax Exempt Commercial Paper 20,500,000
------------ ------------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (b) (2.71%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,625,000 Gene E. Lynn Nursing Home (c)
LOC Bank of America 12/01/15 4.99% $ 3,625,000
2,350,000 Kent Trust Project - Series 84B (c)
LOC Comerica Bank 12/01/14 3.87 2,350,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Variable Rate Demand Instruments - Private Placements (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,465,000 Nob Hill Venture(City of Morgan Hill) - Series 84 (c)
LOC Wells Fargo Bank, N.A. 12/01/09 3.87% $ 1,465,000
------------ ------------
7,440,000 Total Variable Rate Demand Instruments - Private Placements 7,440,000
------------ ------------
Total Investments (101.53%) (Cost $278,346,872+) 278,346,872
Liabilities in Excess of Cash and Other Assets (-1.53%) ( 4,173,585)
-----------
Net Assets (100.00%) $274,173,287
============
Net Asset Value, offering and redemption price per share:
Class A Shares, 226,966,935 Shares Outstanding (Note 3) $ 1.00
============
Class B Shares, 47,218,505 Shares Outstanding (Note 3) $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings are those of the holding company of the bank whose letter of
credit guarantees the issue or the insurance company who issues the issue.
All letters of credit and insurance are irrevocable and direct pay covering
both principal and interest. Certain issuers have either a line of credit,
a liquidity facility, a standby purchase agreement or some other financing
mechanism to ensure the remarketing of the securities. This is not a
guarantee and does not serve to insure or collateralize the issue.
(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 LOC = Letter of Credit
FGIC = Financial Guaranteed Insurance Company MHRB = Multi-Family Housing Revenue Bond
FSA = Financial Securities Assurance PCFA = Pollution Control Finance Authority
GO = General Obligation PCRB = Pollution Control Revenue Bond
HEFA = Health & Educational Facility Authority RB = Revenue Bond
HFA = Housing Finance Agency TRAN = Tax and Revenue Anticipation Note
IDA = Industrial Development Authority
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
Income:
<S> <C>
Interest...................................................................... $ 3,705,047
------------------
Expenses: (Note 2)
Investment management fee.................................................... 367,186
Administration fee........................................................... 257,030
Shareholder servicing fee.................................................... 209,485
Custodian expenses........................................................... 8,476
Shareholder servicing and related shareholder expenses....................... 82,552
Legal, compliance and filing fees............................................ 42,992
Audit and accounting......................................................... 36,810
Directors' fees.............................................................. 4,525
Other........................................................................ 7,339
------------------
Total expenses........................................................... 1,016,395
Less: Expenses paid indirectly (Note 2).................................. ( 4,970)
------------------
Net expenses............................................................. 1,011,425
------------------
Net investment income.......................................................... 2,693,622
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments........................................ 3,459
------------------
Increase in net assets from operations......................................... $ 2,697,081
==================
</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, 1999 Ended
(Unaudited) December 31, 1998
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income...................................... $ 2,693,622 $ 6,003,731
Net realized gain (loss) on investments.................... 3,459 -0-
--------------- ----------------
Increase in net assets from operations......................... 2,697,081 6,003,731
Dividends to shareholders from net investment income:
Class A.................................................... ( 2,263,341)* ( 5,213,015)*
Class B.................................................... ( 430,281)* ( 790,716)*
Capital share transactions (Note 3):
Class A.................................................... 17,037,170 27,262,242
Class B.................................................... 17,027,114 15,026,919
--------------- ----------------
Total increase (decrease).................................. 34,067,743 42,289,161
Net assets:
Beginning of period........................................ 240,105,544 197,816,383
--------------- ----------------
End of period.............................................. $ 274,173,287 $ 240,105,544
=============== ================
* 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 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>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, Inc. (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.
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 $59,078 paid to Reich & Tang
Services, Inc., 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 $4,970.
3. Capital Stock.
At June 30, 1999, 20,000,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $274,185,440. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Class A Ended Ended
- ------- June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
Sold................................... 225,177,321 453,337,599
Issued on reinvestment of dividends.... 1,729,085 3,740,509
Redeemed............................... ( 209,869,236) ( 429,815,866)
------------- -------------
Net increase (decrease)................ 17,037,170 27,262,242
============= =============
<CAPTION>
Six Months Year
Class B Ended Ended
- ------- June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
Sold................................... 83,013,287 143,875,423
Issued on reinvestment of dividends.... 347,066 699,564
Redeemed............................... ( 66,333,239) ( 129,548,068)
------------- -------------
Net increase (decrease)................ 17,027,114 15,026,919
============= =============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at June 30, 1999 amounted to $12,153.
At June 30, 1999 the Fund had tax basis capital losses of $15,612 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>
- --------------------------------------------------------------------------------
CALIFORNIA DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
6. Financial Highlights.
Six Months Year Ended December 31,
Class A Ended ----------------------------------------------------------
------- June 30, 1999 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<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.......................... 0.011 0.025 0.028 0.027 0.032 0.024
Less distributions:
Dividends from net investment income........... ( 0.011) ( 0.025) ( 0.028) ( 0.027) ( 0.032) ( 0.024)
--------- -------- -------- -------- -------- --------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ======== ========
Total Return..................................... 2.19%* 2.48% 2.84% 2.76% 3.28% 2.45%
Ratios/Supplemental Data
Net assets, end of period (000).................. $226,957 $209,916 $182,653 $205,947 $171,808 $105,120
Ratios to average net assets:
Expenses, net of fees waived................... 0.86%* 0.88% 0.82% 0.75% 0.67% 0.56%
Net investment income.......................... 2.16%* 2.43% 2.80% 2.73% 3.24% 2.40%
Management, administration and shareholder
servicing fees waived....................... 0.00%* 0.01% 0.05% 0.08% 0.22% 0.28%
Expense offsets................................ 0.00%* 0.00% 0.00% 0.01% 0.01% 0.00%
<CAPTION>
Six Months Year Ended October 9, 1996
Class B Ended December 31, (Commencement of Sales) to
- ------- June 30, 1999 1998 1997 December 31, 1996
------------- --------- --------- -----------------
<S> <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
--------- --------- --------- ---------
Income from investment operations:
Net investment income.......................... 0.012 0.027 0.030 0.004
Less distributions:
Dividends from net investment income........... ( 0.012) ( 0.027) ( 0.030) ( 0.004)
--------- --------- --------- ---------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= =========
Total Return..................................... 2.43%* 2.76% 3.08% 3.08%*
Ratios/Supplemental Data
Net assets, end of period (000).................. $ 47,216 $ 30,190 $ 15,163 $ 3,436
Ratios to average net assets:
Expenses, net of fees waived................... 0.63%* 0.60% 0.58% 0.56%*
Net investment income.......................... 2.44%* 2.72% 3.10% 3.09%*
Management administration fees waived.......... 0.00%* 0.01% 0.05% 0.06%*
Expense offsets................................ 0.00%* 0.00% 0.00% 0.01%*
* Annualized
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA
DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
June 30, 1999
(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
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
CA699
- --------------------------------------------------------------------------------
<PAGE>
