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MICHIGAN
DAILY
TAX FREE
INCOME
FUND, INC.
Semi-Annual Report
August 31, 1995
(Unaudited)
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<PAGE>
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MICHIGAN
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 Michigan Daily Tax Free
Income Fund, Inc. for the period March 1, 1995 through August 31, 1995.
The Fund had net assets of $62,546,502 and 365 active shareholders as of August
31, 1995. Dividends earned on a share held throughout the period were $.017
which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 3.32% 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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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Tax Exempt Investments (8.42%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,250,000 Detroit, MI CSD State School Aid Notes 05/01/96 3.79% $ 1,255,243 SP-1+
1,000,000 Kalamazoo School District Kalamazoo County,
Michigan State Aid Anticipation Notes 04/01/96 3.54 1,005,107 SP-1+
1,000,000 Michigan Municipal Bond Authority RN Series 1995B 07/03/96 3.74 1,005,635 SP-1+
2,000,000 State of Michigan GO Notes 09/29/95 4.02 2,001,342 MIG-1 SP-1+
--------- ---------
5,250,000 Total Other Tax Exempt Investments 5,267,327
--------- ---------
<CAPTION>
Other Variable Rate Demand Instruments (b) (72.64%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,000,000 Birmingham, MI EDC Limited Obligation RB
(Brown St. Assoc. Project) - Series 1983
LOC Bankers Trust Company 12/01/18 4.08% $ 1,000,000 Aa2
2,000,000 City of Saline, MI EDC
LOC Fuji Bank, Ltd. 02/01/08 4.10 2,000,000 P1 A1
1,000,000 Dearborn, MI EDC
LOC Mellon Bank, N.A. 03/01/25 3.65 1,000,000 A1
3,500,000 Delta County, MI (Mead Paper) - Series 1985F
LOC Bank of Nova Scotia 12/01/13 3.40 3,500,000 P1
2,900,000 Delta County, MI EDC Environment Improvement RB
(Mead Escanaba Paper)
LOC Credit Suisse 12/01/23 3.40 2,900,000 P1
800,000 Detroit, MI Water Bond 1993
FGIC Insured 07/01/14 3.60 800,000 VMIG-1 A1+
1,000,000 Detroit, MI (Central Industrial Park)
LOC Citibank 10/01/10 3.55 1,000,000 A1
400,000 Detroit, MI (Tax Finance Authority)
LOC Citibank 10/01/10 3.55 400,000 A1
2,000,000 EDC Farmington Hills - Carefour
LOC Bankers Trust Company 09/01/15 3.83 2,000,000 Aa3
1,100,000 Grand Rapids, MI (Water Supply)
LOC Societe Generale 01/01/20 3.35 1,100,000 VMIG-1
1,500,000 Holland, MI Economic Development
LOC Industrial Bank of Japan, Ltd. 03/01/13 3.75 1,500,000 A1
3,000,000 Jackson County, MI EDC (Thrifty Leoni)
LOC First National Bank of Chicago 12/01/14 3.90 3,000,000 P1 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 & Poor's
------ ---- ----- -------- ------- ------
Other Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 800,000 Melvindale, MI EDC (Des Jardin)
LOC National Bank of Detroit 09/01/00 3.70% $ 800,000 P1 A1+
1,000,000 Michigan JDA (Gordon Food Services) - Series 1985
LOC Rabobank Nederland 08/01/15 3.68 1,000,000 Aaa
2,500,000 Michigan JDA (Kentwood Residence Association) 11/01/14 3.85 2,500,000 A1
1,000,000 Michigan JDA (Mazda Motors)
LOC Sumitomo Bank, Ltd. 10/01/08 3.80 1,000,000 VMIG-1
2,435,000 Michigan State (Allied Signal) 04/01/99 3.65 2,435,000 A1
800,000 Michigan State Housing Authority
LOC Sumitomo Bank, Ltd. 10/01/23 3.70 800,000 A1
1,000,000 Michigan State Housing Development Authority
(Harbortown LTD Dividend)
LOC Bankers Trust Company 06/01/04 3.83 1,000,000 VMIG-1
1,000,000 Michigan State Housing Development
Authority Rental Housing RB - Series 1994C
LOC Credit Suisse 10/01/23 3.55 1,000,000 A1+
2,000,000 Michigan State Strategic Fund Ltd. Obligation
(Louisiana Pacific Corporation)
LOC Wachovia Bank & Trust Co., N.A. 12/01/09 3.75 2,000,000 Aa2
1,000,000 Michigan Strategic Fund
(Consumer Power Company) - Series 1988A
LOC Union Bank of Switzerland 04/15/18 3.35 1,000,000 P1
1,000,000 Michigan Strategic Fund (Grayling Generating Project)
LOC Barclays Bank PLC 01/01/14 3.70 1,000,000 VMIG-1
700,000 Michigan Strategic Fund (Natech Group)
LOC National Bank of Detroit 08/01/02 3.70 700,000 P1 A1+
800,000 Michigan Strategic Fund (Pilot Industry Incorporated Project)
LOC National Bank of Detroit 06/01/99 4.20 800,000
2,000,000 Michigan Strategic Fund (Sugar Company)
LOC Trust Company Bank of Atlanta 11/01/03 3.75 2,000,000 Aa3
700,000 Michigan Strategic Fund (Uniflow Capital Project)(c)
LOC National Bank of Detroit 06/01/02 4.20 700,000
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Variable Rate Demand Instruments (b) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 800,000 Michigan Strategic Fund (Wayne Disposal Project) 04/01/99 3.85% $ 800,000 A1
LOC Comerica Bank
1,000,000 Michigan Strategic Fund Lmt. Obligation RB (c)
(Mechanics Uniform Rental Co. Proj.) - Series 1995 08/01/15 3.70 1,000,000
LOC Comerica Bank
500,000 Michigan Strategic Fund PCRB
(Consumers Power Company Project) - Series 1993A 06/15/10 3.45 500,000 A1+
LOC Canadian Imperial Bank of Commerce
2,200,000 Monroe County, MI EDC (Detroit Edison) - Series CC 10/01/24 3.45 2,200,000 VMIG-1
LOC Barclays Bank PLC
2,000,000 Van Buren, MI (Daiken Clutch) 03/01/97 4.20 2,000,000 Aa3
LOC Sanwa Bank, Ltd. ----------
- ----------- 45,435,000
45,435,000 Total Other Variable Rate Demand Instruments ----------
- -----------
<CAPTION>
Put Bonds (4.00%)
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<C> <C> <C> <C> <C>
$ 2,500,000 Michigan Strategic Fund (Donnelly Corp.) (c)
LOC ABN AMRO Bank N.V. 10/02/95 5.00% $ 2,500,000
- ----------- ---------
2,500,000 Total Put Bonds 2,500,000
---------- ---------
<CAPTION>
Revenue Bond (5.69%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 1,000,000 Michigan Municipal Bond Authority RN Series 1994C 09/08/95 3.95% $ 1,000,184 SP-1+
1,550,000 Michigan Municipal Bond Authority Series 1995A 05/03/96 4.18 1,557,460 SP-1+
1,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbot Laboratories) 03/01/96 5.10 1,000,000 Aaa AAA
- ----------- ---------
3,550,000 Total Revenue Bond 3,557,644
- ----------- ---------
<CAPTION>
Tax Exempt Commercial Paper (4.00%)
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<S> <C> <C> <C> <C>
$ 500,000 Delta County, MI EDC (Mead Paper) - Series A
LOC Swiss Bank Corp. 10/04/95 3.35% $ 500,000 P1
1,000,000 Delta County, MI EDC (Mead Paper) - Series A
LOC Swiss Bank Corp. 10/26/95 3.70 1,000,000 P1
1,000,000 Delta County, MI EDC (Mead Paper) - Series B
LOC Union Bank of Switzerland 11/14/95 3.55 1,000,000 P1
- ----------- ---------
2,500,000 Total Tax Exempt Commercial Paper 2,500,000
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</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 & Poor's
------ ---- ----- -------- ------- ------
Variable Rate Demand Instruments - Private Placements (b) (4.39%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 248,000 Charlevoix, MI (Hoskins)
LOC Chemical Bank 11/01/99 5.69% $ 248,000 P1 A
2,500,000 EDC Kalamazoo (WBC Properties Limited Partnership Project)
Series 1985
LOC Old Kent Bank & Trust Co. 09/01/15 4.20 2,500,000 P1 A1+
--------- -----------
2,748,000 Total Variable Rate Demand Instruments - Private Placements 2,748,000
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Total Investments (99.14%) Cost ($62,007,971+) 62,007,971
Cash and Other Assets, In Excess of Liabilities (0.86%) 538,531
-----------
Net Assets, (100%) 62,567,722 Shares Outstanding (Note 3) $62,546,502
===========
Net Asset Value, Offering and Redemption Price Per Share $ 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 noted are those of the bank whose letter of credit
collateralized such instruments. P1 and A1+ are the highest ratings for tax
exempt commercial paper.
(b) Securities payable on demand at par including accrued interest (usually
with seven days notice) and where 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 have
determined to be of comparable quality to those rated securities in which
the Fund invests.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
CSD = Central School District PCRB = Pollution Control Revenue Bond
EDC = Export Development Corporation RB = Revenue Bond
GO = Government Obligations RN = Revenue Note
JDA = Job Development Authority
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest...................................................................... $ 1,173,578
---------------------
Expenses: (Note 2)
Investment management fee..................................................... 87,037
Administration fee............................................................ 58,025
Shareholder servicing fee..................................................... 58,025
Custodian, shareholder servicing and related shareholder expenses............. 28,444
Legal, compliance and filing fees............................................. 6,190
Audit and accounting.......................................................... 27,202
Directors' fees............................................................... 3,160
Other......................................................................... 6,610
---------------------
Total expenses.............................................................. 274,693
Less fees waived.......................................................... ( 49,601)
---------------------
Net expenses.............................................................. 225,092
---------------------
Net investment income........................................................... 948,486
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments......................................... -0-
---------------------
Increase in net assets from operations.......................................... $ 948,486
=====================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
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<TABLE>
<CAPTION>
Six Months Ended
August 31, 1995 Year Ended
(Unaudited) February 28, 1995
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
<S> <C> <C>
Operations:
Net investment income..................................... $ 948,486 $ 1,448,873
Net realized gain (loss) on investments................... -0- 7,920
------------------ ----------------
Increase in net assets from operations.................... 948,486 1,456,793
Dividends to shareholders from net investment income........ ( 948,486)* ( 1,448,873)*
Capital share transactions (Note 3)......................... 7,222,307 ( 13,084,637)
------------------ ----------------
Total increase (decrease)............................. 7,222,307 ( 13,076,717)
Net assets:
Beginning of period...................................... 55,324,195 68,400,912
------------------ ----------------
End of period ............................................ $ 62,546,502 $ 55,324,195
================== ================
* Designated as exempt-interest dividends for Federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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1. Summary of Accounting Policies
Michigan 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. 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) 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. (the 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) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. No such reimbursement was required for the period ended
August 31, 1995. Pursuant to an Administrative Services Contract the Fund pays
to the Manager an annual fee of .20% of the Fund's average daily net assets.
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<PAGE>
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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. For
its services under the Shareholder Servicing Agreement, the Distributor receives
from the Fund a fee equal to .20% of the Fund's average daily net assets. There
were no additional expenses borne by the Fund pursuant to the Distribution Plan.
During the period ended August 31, 1995, the Distributor voluntarily waived
shareholder servicing fees of $49,601.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
3. Capital Stock.
At August 31, 1995, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $62,567,722. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
August 31, 1995 February 28, 1995
--------------- -----------------
<S> <C> <C>
Sold........................................ 71,425,149 134,147,344
Issued on investment of dividends........... 905,228 1,369,892
Redeemed.................................... ( 65,108,070) ( 148,601,873)
--------------- --------------
Net increase (decrease)..................... 7,222,307 ( 13,084,637)
================ ==============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at August 31, 1995 amounted to
$21,220. At August 31, 1995 the Fund had tax basis capital losses of $29,030
which may be carried forward to offset future capital gains. Such losses expire
between February 29, 1996 and February 28, 2001.
5. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of Michigan and, accordingly, is subject to the credit risk associated with the
non-performance of such issuers. Approximately 78% 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.
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<PAGE>
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MICHIGAN DAILY TAX FREE INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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6. Selected Financial Information.
<TABLE>
<CAPTION>
Six Months Year Ended Year Ended Year Ended
Ended February 28 February 29, February 28,
-------------------------- ------------ ------------
August 31, 1995 1995 1994 1993 1992 1991
--------------- ------ ------ ------ ------ ------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............... 0.017 0.025 0.019 0.023 0.038 0.055
Dividends from net investment income ( 0.017 ) ( 0.025 ) ( 0.019 ) ( 0.023 ) ( 0.038 ) ( 0.055 )
------- ------- ------ ------ ------- -------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= ======== ========
Total Return........................ 3.32%* 2.56% 1.88% 2.33% 3.82% 5.64%
Ratios/Supplemental Data
Net assets, end of period (000)..... $ 62,547 $ 55,324 $ 68,401 $ 83,101 $119,535 $ 119,770
Ratios to average net assets:
Expenses............................ 0.78%+* 0.75%+ 0.74%+ 0.68%+ 0.64%+ 0.39%+
Net investment income............... 3.27%+* 2.53%+ 1.86%+ 2.32%+ 3.73%+ 5.45%+
* Annualized
+ Net of investment management, administration and shareholder servicing
fees waived equivalent to .17%, .28%, .30%, .25%, .25% and .49%
of average net assets.
</TABLE>
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<PAGE>
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
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Michigan 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, Missouri 64105
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