- -------------------------------------------------------------------------------
NORTH CAROLINA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Semi-Annual Report
February 29, 1996
(Unaudited)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NORTH CAROLINA
DAILY MUNICIPAL 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
INCOME FUND, INC. 212/830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of North Carolina Daily
Municipal Income Fund, Inc. for the period September 1, 1995 through February
29, 1996.
The Fund had net assets of $195,399,779 and 3,215 active shareholders as of
February 29, 1996. Dividends earned on a share held throughout the period were
$0.015 which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 3.04% 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
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Tax Exempt Investments (9.24%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 250,000 Charlotte, NC COPS
AMBAC Insured 12/01/96 3.34% $ 254,501 Aaa AAA
500,000 Charlotte, NC Water & Sewer 10/01/96 3.45 509,547 Aaa AAA
2,065,000 Cleveland County, NC Refunding GO Valorem Property Tax
FGIC Insured 06/01/96 3.59 2,072,327 Aaa AAA
500,000 Durham, NC
Escrowed in U.S. Treasury Securities 02/01/97 3.20 526,549 Aaa AAA
620,000 Harrelsville, NC Water BAN (b)
FHA Insured 05/15/96 3.54 620,186
2,575,000 High Point, NC BAN 03/13/96 3.63 2,575,400 MIG-1 SP-1+
1,500,000 High Point, NC Refunding Bond 04/01/96 4.16 1,499,994 Aa AA
1,799,000 Hopewell/Pisgah Water District, NC BAN (b)
FHA Insured 03/27/96 3.42 1,799,277
1,000,000 North Carolina State Public Improvement Bond
Escrowed in U.S. Treasury Securities 08/01/96 3.74 1,010,955 Aaa AAA
1,600,000 South Camden Water & Sewer BAN (b)
FHA Insured 06/12/96 3.64 1,600,216
3,090,000 Town of Weaverville, NC Water BAN (b)
FHA Insured 07/24/96 3.61 3,090,947
2,000,000 Wake County, NC Refunding Bond 04/01/96 4.23 1,999,705 Aaa AAA
500,000 Winston Salem, NC COPS - Series A 10/01/96 3.39 504,989 Aa1 AAA
- ---------- -----------
17,999,000 Total Other Tax Exempt Investments 18,064,593
- ---------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (68.69%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$3,000,000 Beaufort, NC PCRB (Texas Gulf Inc.) - Series 1985
LOC Societe Generale 12/01/00 3.35% $ 3,000,000 Aaa
800,000 Buncombe County, NC PCRB (Ashville Incorporated Project) (b)
LOC Nations Bank 06/01/07 3.55 800,000
2,000,000 Burke County, NC PCFA (Jobs Project)
LOC Wachovia Bank & Trust Co., N.A. 06/01/02 3.50 2,000,000 A1+
7,805,000 Charlotte, NC Airport Revenue
MBIA Insured 07/01/16 3.05 7,805,000 VMIG-1 A1
2,000,000 City of Durham, NC COPS - Series A
LOC Wachovia Bank & Trust Co., N.A. 07/01/07 3.15 2,000,000 VMIG-1 A1+
1,905,000 Durham, NC Public Improvement 02/01/12 3.05 1,905,000 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 & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$3,500,000 Gaston County, NC Industrial Facilities PCRB
(Allibert, Inc. Project) - Series 1987 (b)
LOC Bank of Nova Scotia 01/01/12 3.45% $ 3,500,000
260,000 Gaston County, NC PCFA (Keystone Carbon Company)
LOC Nations Bank 09/01/00 3.55 260,000 P1 A1
5,000,000 Granville County, NC Industrial Facilities PCFA
(Mayville Metal Product Project)
LOC PNC Bank 05/23/20 3.55 5,000,000 P1 A1
1,400,000 Greensboro, NC COPS (Greensboro Coliseum) - Series A 12/01/15 3.05 1,400,000 A1+
1,000,000 Greensboro, NC Public Improvement - Series B 04/01/14 3.05 1,000,000 VMIG-1 A1+
1,550,000 Greensboro, NC Public Improvement - Series B 04/01/09 3.05 1,550,000 VMIG-1 A1+
650,000 Greensboro, NC Public Improvement - Series B 04/01/10 3.05 650,000 VMIG-1 A1+
1,750,000 Greensboro, NC Public Improvement - Series B 04/01/11 3.05 1,750,000 VMIG-1 A1+
1,000,000 Greensboro, NC Public Improvement - Series B 04/01/12 3.05 1,000,000 VMIG-1 A1+
1,950,000 Greensboro, NC Public Improvement - Series B 04/01/13 3.05 1,950,000 VMIG-1 A1+
1,500,000 Guilford County, NC (Bonset America)
LOC Dai-Ichi Kangyo Bank, Ltd. & Industrial Bank of Japan 05/01/09 3.55 1,500,000 A1
3,000,000 Harnett County, NC Industrial Facilities PCFA IDRB
(Edwards Brothers Inc. Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 01/01/07 3.40 3,000,000
2,700,000 Haywood County, NC Industrial Facilities PCR Finance Authority
(Champion International)
LOC Bank of Austria 03/01/20 3.25 2,700,000 VMIG-1 A1+
2,000,000 Iredell County, NC (Jet Corr Inc.) (b)
LOC National Bank of Canada 09/01/99 3.55 2,000,000
1,100,000 Iredell County, NC Industrial Facilities PCFA RB
(Purina Mills Inc.)
LOC Bank of Nova Scotia 06/01/20 3.30 1,100,000 A1+
1,000,000 Lenoir County, NC Industrial Facilities PCFA
Resource Recovery RB (Carolina Energy, LP Project)
LOC Bank of Tokyo, Ltd 07/01/22 3.60 1,000,000 VMIG-1 A1
3,800,000 Lenoir County, NC Industrial Facilities
(West Co. of Nebraska Inc.) - Series 1985 (b)
LOC Dresdner Bank A.G. 10/01/05 3.40 3,800,000
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1,600,000 Lincoln County, NC Industrial Facilities PCFA RB
(General Marble)
LOC National Bank of Canada 09/01/00 3.55% $ 1,600,000 P1 A1
1,500,000 Mecklenburg County, NC (Otto Industry)
LOC Rabobank Nederland 10/01/08 3.55 1,500,000 P1
2,000,000 Mecklenburg County, NC IDRB (Virkler Company) (b)
LOC First Union National Bank 12/01/04 3.40 2,000,000
1,500,000 Mecklenburg County, NC Industrial Facilities & PCFA
(Griffith Micro Science Project)
LOC ABN AMRO Bank N.V. 11/01/07 3.30 1,500,000 A1+
2,000,000 Moore County, NC (Perdue Farm Project)
LOC Rabobank Nederland 06/01/10 3.30 2,000,000 P1 A1+
1,500,000 North Carolina Education Facilities
(Bowman Grey School of Medicine)
LOC Wachovia Bank & Trust Co., N.A. 09/01/20 3.25 1,500,000 VMIG-1
2,900,000 North Carolina Education Facilities
(Davidson College Project) (b) 12/01/04 3.25 2,900,000
3,200,000 North Carolina Education Facilities
(Guilford College Project)
LOC Wachovia Bank & Trust Co., N.A. 09/01/23 3.40 3,200,000 VMIG-1 A1+
2,525,000 North Carolina Education Facilities Finance Agency RB
(Wake Forest University Project) 01/01/09 3.25 2,525,000 VMIG-1
8,300,000 North Carolina Medical Care Commission (Carol Woods)
LOC Bank of Scotland 04/01/21 3.40 8,300,000 VMIG-1
900,000 North Carolina Medical Care Commission - Series 1991B
LOC First Union National Bank 10/01/13 3.35 900,000 VMIG-1
2,400,000 North Carolina Medical Care Commission HRB
(North Carolina Baptist Hospital Project) - Series 1992B 06/01/22 3.25 2,400,000 VMIG-1 A1+
1,200,000 North Carolina Medical Care Commission HRB
(Pooled Finance Project) - Series 1991A
LOC Dai-Ichi Kangyo Bank, Ltd. 10/01/20 3.45 1,200,000 VMIG-1
3,200,000 North Carolina Medical Care Commission HRB
(Park Ridge Hospital Project)
LOC Nations Bank 08/15/18 3.25 3,200,000 A1
1,000,000 Pasquotank County, NC Industrial Facilities PCFA IDRB
(J.W. Jones Lumber Co., Inc. Project) - Series 1995 (b)
LOC Wachovia Bank & Trust Co., N.A. 10/01/10 3.40 1,000,000
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 300,000 Person County, NC PCRB
(Carolina Power and Light Solid Waste Disposal) - Series 1986
LOC Fuji Bank, Ltd. 11/01/16 3.60% $ 300,000 P1
900,000 Piedmont Triad, NC Airport Authority
(The Cessna Aircraft Company)
LOC Nations Bank 09/01/12 3.55 900,000 A1
15,100,000 Raleigh Durham, NC Airport Authority Special Facilities
Refunding RB (American Airlines Inc.) - Series1995A
LOC Royal Bank of Canada 11/01/15 3.45 15,100,000 A1+
800,000 Randolph County, NC Industrial Facilities & PCFA (b)
LOC Bank One Ohio 09/01/05 3.55 800,000
3,000,000 Richmond County, NC Industrial Facilities PCFA
(Bibb Company Project)
LOC Citibank 12/01/03 3.40 3,000,000 A1+
1,500,000 Samson County, NC PCFA (Dubose Strapping)
LOC First Union National Bank 02/01/99 3.40 1,500,000 P1
1,000,000 Union County, NC Facilities Pollution Control (Square D)
LOC Morgan Guaranty 03/01/03 3.25 1,000,000 VMIG-1
7,000,000 University of North Carolina,
Chapel Hill School of Medicine Ambulatory Care Clinic 07/01/12 3.30 7,000,000 A1+
1,000,000 University of North Carolina,
University School of Dentistry Clinic RB (b)
LOC Wachovia Bank & Trust Co., N.A. 09/01/10 3.25 1,000,000
10,600,000 Wake County, NC Industrial Facilities PCFA
(Carolina Power and Light) - Series A
LOC Credit Suisse 05/01/15 3.30 10,600,000 P1 A1+
2,300,000 Warren County, NC Industrial Facilities
(Glen Raven Mills Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 05/01/06 3.40 2,300,000
2,800,000 Winston Salem, NC COPS - Series 1988 07/01/09 3.30 2,800,000 A1+
500,000 Winston Salem, NC GO Bond 06/01/07 3.25 500,000 VMIG-1 A1+
1,025,000 Yancey County, NC Industrial Facilities
(Avondale Mills Inc. Project)
LOC Suntrust 01/01/97 3.30 1,025,000 P1
- ----------- -----------
134,220,000 Total Other Variable Rate Demand Instruments 134,220,000
- ----------- -----------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 29, 1996
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Put Bonds (d) (4.64%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$2,465,000 North Carolina Industrial Facilities PCFA (GVK America Inc.)
LOC Union Bank of Switzerland 12/01/96 3.90% $ 2,465,000 AAA
900,000 North Carolina Industrial Facilities PCFA RB
(Greer Laboratories Incorporated Project)
LOC First Union National Bank 12/01/96 4.00 900,000 A+
2,700,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Merck & Company Inc. Project) - Series 1983A 12/01/96 4.00 2,700,000 Aaa AAA
3,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbott Laboratories) - Series 1983A 03/01/96 5.10 3,000,000 Aaa AAA
- ---------- -----------
9,065,000 Total Put Bonds 9,065,000
- ---------- -----------
<CAPTION>
Tax Exempt Commercial Paper (15.86%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$3,000,000 County of Winston Salem, NC (Water & Sewer System) 05/14/96 3.15% $ 3,000,000 VMIG-1 A1+
1,275,000 County of Winston, NC
(Summit Square Garden Apartment Project) - Series 1989
FHA Insured 04/03/96 3.20 1,275,000 AAA
6,315,000 North Carolina Municipal Power Agency RB (Catawba Electric)
LOC Morgan Guaranty & Union Bank of Switzerland 04/03/96 3.20 6,315,000 A1+
4,000,000 North Caolina Municipal Power Agency RB (Catawba Electric)
LOC Morgan Guaranty & Union Bank of Switzerland 06/19/96 3.20 4,000,000 A1+
3,500,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 03/07/96 3.20 3,500,000 A1+
4,900,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 03/13/96 3.20 4,900,000 A1+
3,000,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 03/14/96 3.40 3,000,000 A1+
5,000,000 North Carolina Municipal Power Agency #1 RB
(Catawba Electric) 08/08/96 3.15 5,000,000 P1 A1
- ---------- -----------
30,990,000 Total Tax Exempt Commercial Paper 30,990,000
- ---------- -----------
<CAPTION>
Variable Rate Demand Instruments - Private Placements (c) (1.41%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$2,750,000 Lease Agreement Between First Concord Corporation and Concord,
North Carolina (b) 05/01/96 3.50% $ 2,750,000
- ---------- -----------
2,750,000 Total Variable Rate Demand Instruments - Private Placements 2,750,000
- ---------- -----------
Total Investments (99.84%)(Cost 195,089,593+) 195,089,593
Cash and Other Assets in Excess of Liabilities (.16%) 310,186
-----------
Net Assets (100.00%), 195,401,404 Shares Outstanding - Class A (Note 3) 195,399,779
===========
Net Asset Value, offering and redemption price per share $ 1.00
===========
+ Aggregate cost for federal income tax purposes is $195,086,234.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
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.
(d) The maturity date indicated is the next put date.
<TABLE>
<CAPTION>
KEY:
<C> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note LOC = Letters of Credit
COPS = Certificate of Participations PCFA = Pollution Control Finance Authority
GO = General Obligation PCR = Pollution Control Revenue
HRB = Hospital Revenue Bond PCRB = Pollution Control Revenue Bond
IDRB = Industrial Development Revenue Bond RB = Revenue Bond
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<C> <C>
Income:
Interest....................................................................$ 3,378,296
-----------------
Expenses: (Note 2)
Investment management fee................................................... 357,683
Shareholder servicing fee .................................................. 223,552
Administration fee.......................................................... 183,576
Custodian expenses.......................................................... 14,416
Shareholder servicing and related shareholder expenses...................... 67,998
Legal, compliance and filing fees........................................... 22,498
Audit and accounting........................................................ 34,761
Directors' fees............................................................. 3,341
Amortization of organization expenses....................................... 4,488
Other....................................................................... 4,171
----------------
Total expenses........................................................... 916,484
Less: Fees waived (Note 2)...............................................( 200,813)
----------------
Net expenses............................................................. 715,671
----------------
Net investment income........................................................... 2,662,625
----------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<C> <C>
Net realized gain (loss) on investments......................................... 3,116
----------------
Increase in net assets from operations..........................................$ 2,665,741
=================
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
Six Months
Ended Year
February 29, 1996 Ended
(Unaudited) August 31, 1995
--------- ---------------
<C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.......................................... $ 2,662,625 $ 4,352,992
Net realized gain (loss) on investments........................ 3,116 498
--------------- --------------
Increase in net assets from operations............................. 2,665,741 4,353,490
Dividends to shareholders from net investment income:
Class A........................................................ ( 2,662,625)* ( 4,328,632)*
Class B........................................................ -- ( 24,360)*
Capital share transactions (Note 3):
Class A........................................................ 31,141,141 41,434,929
Class B........................................................ -- --
--------------- --------------
Total increase............................................... 31,144,257 41,435,427
Net assets:
Beginning of period............................................ 164,255,522 122,820,095
--------------- --------------
End of period.................................................. $ 195,399,779 $ 164,255,522
=============== ==============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
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 is a short-term, tax exempt money market fund. 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) 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 .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
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
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 period ended February 29, 1996.
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
Pursuant to an Administrative Services Contract the Fund pays to the Manager an
annual fee of .21% of the Fund's average daily net assets. Prior to December 1,
1995, the Administrative fee was .20%.
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 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 period ended February 29, 1996, the Manager voluntarily waived
investment management fees and administration fees of $21,971 and $178,842,
respectively.
Fees are paid to Trustees 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 "Shareholder servicing
and related shareholder expenses" are fees of $22,608 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
3. Capital Stock.
At February 29, 1996, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $195,401,404. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A
Six Months Year
Ended Ended
February 29, 1996 August 31, 1995
----------------- ---------------
<C> <C> <C>
Sold............................................... 271,530,588 621,223,319
Issued on reinvestment of dividends................ 1,330,215 2,303,648
Redeemed........................................... ( 241,719,662) ( 582,092,038)
------------- -------------
Net increase....................................... 31,141,141 41,434,929
============= =============
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
3. Capital Stock. (Continued)
Class B
December 12, 1994
(Commencement of Operations)
to August 31, 1995
------------------
<C> <C>
Sold............................................... 5,002,449
Issued on reinvestment of dividends................ 24,108
Redeemed........................................... ( 5,026,557)
------------
Net increase (decrease)............................ -0-
============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses at February 29, 1995 amounted to
$1,625. At February 29, 1996 tax basis capital losses which may be carried
forward to offset future capital gains amounted to $5,242. Such losses expire
August 31, 2000 and 2001.
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 63% 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.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
6. Selected Financial Information.
<TABLE>
<CAPTION>
(December 12, 1994 September 10, 1991
Six Months Year (Commencement Year Year (Commencement
Ended Ended of Operations) to Ended Ended of Operations) to
February 29, August 31, August 31, August 31, August 31, August 31,
1996 1995 1995 1994 1993 1992
------ ------ ------ ------ ------ ------
Class A Class A Class B
------- ------- -------
<C> <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............ .015 .030 .024 0.018 0.019 0.030
Less distributions:
Dividends from net investment income .015 .030 .024 0.018 0.019 0.030
-------- --------- --------- ---------- ----------- -----------
Net asset value, end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ========== ========== =========== ===========
Total Return..................... 3.04%* 3.04% 3.48%* 1.86% 1.94% 3.07%*
Ratios/Supplemental Data
Net assets, end of period (000).. $195,400 $ 164,256 $ -0- $ 122,820 $ 93,294 $ 75,417
Ratios to average net assets:
Expenses......................... .80%*+++ .78%+ .51%*++ .75%+ 0.71%+ 0.50%*+
Net investment income............ 2.98%*+++ 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 fees waived equivalent to .20% of
average net assets.
+++ Net of management and administration fees waived equivalent to .22% of
average net assets.
</TABLE>
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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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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, Missouri 64105
Transfer Agent & Dividend
Disbursing Agent
Fundtech Services, L.P.
600 Fifth Avenue
New York, New York 10020
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