- -------------------------------------------------------------------------------
NORTH
CAROLINA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Annual Report
August 31, 1995
- -------------------------------------------------------------------------------
<PAGE>
1
- -------------------------------------------------------------------------------
NORTH CAROLINA 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
DAILY MUNICIPAL 212/830-5200
INCOME FUND, INC.
===============================================================================
Dear Shareholder:
We are pleased to present the annual report of North Carolina Daily Municipal
Income Fund, Inc. for the year ended August 31, 1995.
The Fund had net assets of $164,255,522 and 3,252 active shareholders as of
August 31, 1995. Dividends earned on a share held throughout the period were
$.030 and $.024 for Class A shares and Class B shares, respectively. When
adjusted for the compounding effect of the reinvestment of dividends, this
represents a yield of 3.04% and 3.48% on an annual basis for Class A and Class B
shares, respectively.
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
- -------------------------------------------------------------------------------
<PAGE>
2
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings(a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Tax Exempt Investments (10.87%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,100,000 Cleveland County, NC Refunding GO Valorem Property Tax
FGIC Insured 06/01/96 3.62% $ 1,111,202 Aaa AAA
1,750,000 Craven County, NC BAN (b) 09/13/95 4.06 1,750,488
850,000 Cumberland County, NC GO
MBIA Insured 02/01/96 3.50 856,721 Aaa AAA
3,608,000 East Central Water and Sewer Harnett County (b)
FHA Insured 10/11/95 4.75 3,608,152
1,585,000 Harnett County, NC COPS
AMBAC Insured 12/01/95 4.90 1,585,000 Aaa AAA
1,000,000 High Point, NC BAN 03/13/96 3.45 1,003,603 MIG-1 SP-1+
425,000 High Point, NC BAN 03/13/96 3.84 425,627 MIG-1 SP-1+
1,500,000 High Point, NC Refunding Bond 04/01/96 4.14 1,499,961 Aa AA
1,000,000 North Carolina State Public Improvement Bonds (b)
Escrowed In Treasuries 08/01/96 3.66 1,023,987
1,000,000 Pitt County, NC Revenue
(Pitt County Memorial Hospital) 12/01/95 3.49 1,005,220 Aa AA-
455,000 Robeson County, NC GO RB
AMBAC Insured 02/01/96 3.47 456,656 Aaa AAA
1,525,000 South Camden Water & Sewer District,
NC GO Water BAN
FHA Insured 09/20/95 3.93 1,525,077 Aaa AAA
2,000,000 Wake County, NC Refunding Bond 04/01/96 4.23 1,997,971 Aaa AAA
---------- ----------
17,798,000 Total Other Tax Exempt Investments 17,849,665
- ----------- ----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (67.37%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,400,000 Alamance County, NC (SCI Manufacturing)
LOC PNC Bank 04/01/15 3.45% $ 4,400,000 MIG-1
3,000,000 Beaufort, NC PCRB (Texas Gulf Incorporated) - Series 1985
LOC Societe Generale 12/01/00 3.95 3,000,000 Aaa
900,000 Bladen County, NC (Harriet and Henderson Yarns)
LOC Nations Bank 12/01/03 3.85 900,000 A1+
2,000,000 Burke County, NC PCFA (Jobs Project)
LOC Wachovia Bank & Trust Company, N.A. 06/01/02 3.80 2,000,000 A1+
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
3
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
$ 3,500,000 Gaston County, NC Industrial Facilities PCRB
(Allibert, Incorporated Project) Series 1987A (b)
LOC Credit Lyonnais 01/01/12 3.75% $ 3,500,000
260,000 Gaston County, NC PCFA (Keystone Carbon Company)
LOC Nations Bank 09/01/00 3.85 260,000 P1
5,000,000 Granville County, NC Industrial Facilities PCFA
(Mayville Metal Products Project)
LOC PNC Bank 05/23/20 3.85 5,000,000 P1 A1
1,400,000 Greensboro, NC COPS (Greensboro Coliseum) - Series A 12/01/15 3.40 1,400,000 A1+
1,500,000 Guilford County, NC (Bonset America)
LOC Dai-Ichi Kangyo Bank, Ltd. 05/01/09 3.85 1,500,000 P1 A1+
3,000,000 Harnett County Industrial Facilities PCFA IDRB
(Edwards Brothers Incorporated Project) (b)
LOC Wachovia Bank & Trust Company, N.A. 01/01/07 3.85 3,000,000
2,700,000 Haywood City Industrial Facilities PCR Finance Authority
(Champion International)
LOC Bank of Austria 03/01/20 3.55 2,700,000 VMIG-1 A1+
2,500,000 Iredell County, NC (Jet Corr Incorporated) (b)
LOC National Bank of Canada 09/01/99 3.85 2,500,000
1,100,000 Iredell County, NC Industrial Facilities PCFA RB
(Purina Mills Incorporated)
LOC Bank of Nova Scotia 07/01/20 3.65 1,100,000 A1+
1,000,000 Lenoir County Industrial Facilities PCFA Resource Recovery RB
(Carolina Energy, LP Project)
LOC Bank of Tokyo, Ltd. 07/01/22 3.85 1,000,000 VMIG-1 A1
3,800,000 Lenoir County, NC Industrial Facilities
(West Company of Nebraska Incorporated) - Series 1985
LOC Dresdner Bank A.G. 10/01/05 3.65 3,800,000
2,000,000 Lincoln County, NC Industrial Facilities PCFA RB (General Marble)
LOC National Bank of Canada 09/01/00 3.85 2,000,000 P1 A1
1,500,000 Mecklenburg County, NC (Otto Industry)
LOC Rabobank Nederland 10/01/08 3.85 1,500,000 P1
2,000,000 Mecklenburg County, NC IDRB (Virkler Company) (b)
LOC First Union National Bank 12/01/04 3.90 2,000,000
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
4
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Moore County, NC (Perdue Farm Project)
LOC Rabobank Nederland 06/01/10 3.60% $ 2,000,000 P1 A1+
2,900,000 North Carolina Education Facilities (Davidson College Project)(b) 12/01/04 3.70 2,900,000
2,700,000 North Carolina Education Facilties (Guilford College Project)
LOC Wachovia Bank & Trust Company, N.A. 09/01/23 3.50 2,700,000 VMIG-1 A1+
2,525,000 North Carolina Education Facilities Finance Agency RB
(Wake Forest University Project) 01/01/09 3.60 2,525,000 VMIG-1
8,600,000 North Carolina Medical Care Commission (Carol Woods)
LOC Bank of Scotland 04/01/21 3.40 8,600,000 VMIG-1
1,000,000 North Carolina Medical Care Commission - Series 1991B
LOC First Union National Bank 10/01/13 3.35 1,000,000 VMIG-1
2,400,000 North Carolina Medical Care Commission HRB
(NC Baptist Hospitals Project) - Series 1992B 06/01/22 3.80 2,400,000 VMIG-1 A1+
2,000,000 North Carolina Medical Care Commission HRB
(Pooled Finance) - Series 1991A
LOC Dai-Ichi Kangyo Bank, Ltd. 10/01/20 3.40 2,000,000 VMIG-1 A1
3,200,000 North Carolina Medical Care Commission Variable Rate Demand
HRB (Park Ridge Hospital Project)
LOC Nations Bank 08/15/18 3.65 3,200,000 A1
1,000,000 Pasquotanic County Industrial Facilities PCFA IDRB
(JW Jones Lumber Company, Incorporated Project) (b)
LOC Wachovia Bank & Trust Company, N.A. 10/01/10 3.88 1,000,000
3,600,000 Person County, NC PCRB
(Carolina Power and Light Solid Waste Disposal) - Series 1986
LOC Fuji Bank, Ltd. 11/01/16 3.70 3,600,000 P1
1,000,000 Piedmont Triad, NC Airport Authority
(The Cessna Aircraft Company)
LOC Nations Bank 09/01/12 3.85 1,000,000 A1
900,000 Randolph County, NC Industrial Facilities & PCFA (b)
LOC Bank One Ohio 09/01/05 3.90 900,000
3,000,000 Richmond County, NC Industrial Facilities & PCFA
(Bibb Company Project)
LOC Citibank 12/01/03 3.70 3,000,000 A1
1,750,000 Samson County, NC PCFA (Dubose Strapping)
LOC First Union National Bank 02/01/99 3.90 1,750,000 P1
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
5
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 7,000,000 University of North Carolina
Chapel Hill School of Medicine Ambulatory Care Clinic 07/01/12 3.60% $ 7,000,000 A1+
1,000,000 Union County, NC Facilities Pollution Control (Square D)
LOC Morgan Guaranty 03/01/03 3.70 1,000,000 VMIG-1
4,800,000 Wake County, NC Industrial Facilities PCFA
(Carolina Power and Light)
LOC Sumitomo Bank, Ltd. 03/01/17 3.65 4,800,000 VMIG-1
10,600,000 Wake County, NC Industrial Facilities PCFA
(Carolina Power and Light) - Series A
LOC Credit Suisse 05/01/15 3.50 10,600,000 P1 A1+
2,300,000 Warren County, NC Industrial Facilities
(Glen Raven Mills Project) (b)
LOC Wachovia Bank & Trust Company, N.A. 05/01/06 3.85 2,300,000
2,800,000 Winston-Salem, NC COPS - Series 1988 07/01/09 3.60 2,800,000 A1+
500,000 Winston-Salem, NC GO Bond 06/01/07 3.70 500,000 VMIG-1 A1+
1,525,000 Yancey County, NC Industrial Facilities
(Avondale Mills Incorporated Project)
LOC Suntrust 01/01/97 3.75 1,525,000 P1
- ----------- ----------
110,660,000 Total Other Variable Rate Demand Instruments 110,660,000
- ----------- -----------
<CAPTION>
Put Bonds (7.43%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Mecklenburg County, NC Industrial Facilities PCFA
(Ecolaire Combustion Products)
LOC Union Bank of Switzerland 02/01/96 3.80% $ 4,000,000 P1 A1+
2,500,000 North Carolina Industrial Facilities PCFA
(GVK America Incorporated)
LOC Union Bank of Switzerland 12/01/95 5.00 2,500,000 AAA
2,700,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Merck & Company Incorporated Project) 12/01/95 4.10 2,700,000 Aaa AAA
3,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbot Laboratories) 03/01/96 5.10 3,000,000 Aaa AAA
- ----------- -----------
12,200,000 Total Put Bonds 12,200,000
---------- -----------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
6
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Revenue Bonds (1.05%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 700,000 Northern Hospital District, Surry County
U.S. Government Guaranteed 10/01/95 3.96% $ 717,122 Aaa
1,000,000 Wilmington, NC Water RB 06/01/96 3.77 1,011,990 A1 A+
---------- ----------
1,700,000 Total Revenue Bonds 1,729,112
---------- ----------
<CAPTION>
Tax Exempt Commercial Paper (16.79%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,000,000 County of Winston Salem, NC (Water & Sewer System) 09/14/95 3.10% $ 3,000,000 VMIG-1 A1+
1,275,000 County of Winston, NC
(Summit Square Garden Apartment Project) - Series 1989
FHA Insured 11/08/95 3.55 1,275,000 AAA
3,000,000 North Carolina Eastern Municipal Power Agency
LOC Industrial Bank of Japan, Ltd. 09/06/95 3.60 3,000,000 A1
1,075,000 North Carolina Eastern Municipal Power Agency
LOC Industrial Bank of Japan, Ltd. 09/06/95 3.85 1,075,000 A1
6,726,000 North Carolina Eastern Municipal Power Agency
LOC Industrial Bank of Japan, Ltd. 09/07/95 3.80 6,726,000 A1
3,000,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 09/07/95 3.05 3,000,000 A1+
2,000,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 10/05/95 2.90 2,000,000 A1+
1,500,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 10/18/95 3.45 1,500,000 A1+
5,000,000 North Carolina Municipal Power Agency
Number 1 Catawba Electric RB 12/15/95 3.50 5,000,000 P1 A1
1,000,000 Wake County, NC Industrial Facilities PCRB
(Carolina Power & Light)
LOC Fuji Bank, Ltd. 09/07/95 3.75 1,000,000 P1 A1
- ----------- -----------
27,576,000 Total Tax Exempt Commercial Paper 27,576,000
- ----------- -----------
Total Investments (103.51%)(Cost $170,014,777+) 170,014,777
Liabilities in Excess of Cash and Other Assets (-3.51%) ( 5,759,255)
-----------
Net Assets (100.00%), 164,260,263 Shares Outstanding - Class A (Note 3) 164,255,522
===========
Net Asset Value, offering and redemption price per share $ 1.00
===========
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
7
- -------------------------------------------------------------------------------
===============================================================================
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 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.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note IDRB = Industrial Development Revenue Bond
CI = Certificate of Indebtedness PCFA = Pollution Control Finance Authority
COPS = Certificate of Participations PCR = Pollution Control Revenue
GO = General Obligation PCRB = Pollution Control Revenue Bond
HRB = Hospital Revenue Bond RB = Revenue Bond
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
8
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest.................................................................... $ 5,472,977
--------------
Expenses: (Note 2)
Investment management fee................................................... 578,697
Shareholder servicing fee (Class A)......................................... 359,894
Administration fee.......................................................... 289,349
Custodian, shareholder servicing and related shareholder expenses........... 123,510
Legal, compliance and filing fees........................................... 33,731
Audit and accounting........................................................ 53,795
Directors' fees............................................................. 6,393
Amortization of organization expenses....................................... 9,001
Other....................................................................... 7,481
--------------
Total expenses.......................................................... 1,461,851
Less: Fees waived (Note 2).................................................. ( 341,866)
--------------
Net expenses.......................................................... 1,119,985
--------------
Net investment income........................................................... 4,352,992
--------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................................... 498
--------------
Increase in net assets from operations.......................................... $ 4,353,490
==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
9
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Year Year
Ended Ended
August 31, 1995 August 31, 1994
--------------- ---------------
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income.......................................... $ 4,352,992 $ 1,991,239
Net realized gain (loss) on investments........................ 498 268
-------------- --------------
Increase in net assets from operations............................. 4,353,490 1,991,507
Dividends to shareholders from net investment income:
Class A........................................................ ( 4,328,632)* ( 1,991,239)*
Class B........................................................ ( 24,360)* --
Capital share transactions (Note 3):
Class A........................................................ 41,434,929 29,525,848
Class B........................................................ -- --
------------- --------------
Total increase (decrease).................................... 41,435,427 29,526,116
Net assets:
Beginning of year.............................................. 122,820,095 93,293,979
------------- --------------
End of year.................................................... $ 164,255,522 $ 122,820,095
============= ==============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
10
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies.
North Carolina Daily Municipal 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. In all other
respects, the Class A and Class B shares represent the same interest in the
income and assets of the Fund. Distribution of Class B shares commenced December
12, 1994. The Fund's 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
.40% 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 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 year 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.
- -------------------------------------------------------------------------------
<PAGE>
11
- -------------------------------------------------------------------------------
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
Pursuant to a Distribution and Service 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 the Class A shares of the Fund. For its
services under the Shareholder Servicing Agreement, the Distributor receives
from the Fund with respect only to the Class A shares, a fee equal to .25% 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 August 31, 1995, the Manager and the Distributor
voluntarily waived investment management fees, administration fees and
shareholder servicing fees of $48,044, $203,253 and $90,569, respectively.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
Included in the Statement of Operations under the caption "Custodian,
shareholder servicing and related shareholder expenses" are fees of $38,487 paid
to Fundtech Services L.P., an affiliate of the Manager, as servicing agent for
the Fund.
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 $164,260,263. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A
Year Year
Ended Ended
August 31, 1995 August 31, 1994
--------------- ---------------
<S> <C> <C>
Sold............................................... 621,223,319 394,716,582
Issued on reinvestment of dividends................ 2,303,648 1,413,037
Redeemed........................................... ( 582,092,038) ( 366,603,771)
---------------- ---------------
Net increase (decrease)............................ 41,434,929 29,525,848
================ ===============
<CAPTION>
Class B
December 12, 1994
(Commencement of Operations)
to August 31, 1995
------------------
<S> <C>
Sold............................................... 5,002,449
Issued on reinvestment of dividends................ 24,108
Redeemed........................................... ( 5,026,557)
----------------
Net increase (decrease)............................ -0-
================
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
12
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
4. Sales of Securities.
Accumulated undistributed realized losses at August 31, 1995 amounted to $4,741.
Such amount represents tax basis capital losses which may be carried forward to
offset future capital gains. Such losses expire August 31, 2000.
5. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of North Carolina and, accordingly, is subject to the credit risk associated
with the non-performance of such issuers. Approximately 68% 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 credit worthiness 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>
December 12, 1994 September 10, 1991
Year (Commencement Year Year (Commencement
Ended of Operations) to Ended Ended of Operations) to
August 31, 1995 August 31, 1995 August 31, 1994 August 31, 1993 August 31, 1992
---------------- --------------- --------------- --------------- ---------------
Class A Class B
----------- --------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------ ------- -------
Income from investment operations:
Net investment income............ 0.030 0.024 0.018 0.019 0.030
Less distributions:
Dividends from net investment income 0.030 0.024 0.018 0.019 0.030
------- ------- ------ ------- --------
Net asset value, end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======
Total Return..................... 3.04% 3.48%* 1.86% 1.94% 3.07%*
Ratios/Supplemental Data
Net assets, end of period (000).. $ 164,256 $ -0- $ 122,820 $ 93,294 $ 75,417
Ratios to average net assets:
Expenses......................... 0.78%+ 0.51%*++ 0.75%+ 0.71%+ 0.50%*+
Net investment income............ 3.01%+ 3.40%*++ 1.85%+ 1.91%+ 2.82%*+
* Annualized
+ Net of management, shareholder servicing and administration fees waived
equivalent to .24%, .29%, .35% and .62% of average net assets for Class A
in 1995 and for the Fund in years 1994, 1993 and 1992, respectively.
++ Net of management and administration fee equivalent to .20%.
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
13
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
North Carolina Daily Municipal Income Fund, Inc.
We have audited the accompanying statement of net assets of North Carolina Daily
Municipal Income Fund, Inc. as of August 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 three years in the period then ended and the period
from September 10, 1991 (Commencement of Operations) to August 31, 1992. 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 August 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 North Carolina Daily Municipal Income Fund, Inc. as of August 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
September 26, 1995
- -------------------------------------------------------------------------------
<PAGE>
14
- -------------------------------------------------------------------------------
[This Page Intentionally Left Blank.]
- -------------------------------------------------------------------------------
<PAGE>
15
- -------------------------------------------------------------------------------
[This Page Intentionally Left Blank.]
- -------------------------------------------------------------------------------
<PAGE>
16
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
North Carolina Daily Municipal 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, MO 64105
Transfer Agent &
Dividend Disbursing Agent
Fundtech Services, L.P.
600 Fifth Avenue
New York, New York 10020
- -------------------------------------------------------------------------------
