<PAGE>
- --------------------------------------------------------------------------------
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, 1996 through February
28, 1997.
The Fund had net assets of $209,818,920 and 3,100 active shareholders as of
February 28, 1997. Dividends earned on a share held throughout the period were
$0.013 which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 2.74% 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 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
------------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
Other Tax Exempt Investments (12.31%)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 425,000 Buncomb County, NC Metropolitan Sewer Authority
Escrowed In U.S. Government Securities 07/01/97 4.00% $ 425,000 Aaa AAA
1,700,000 Cabarrus County, NC GO Bond (b)
MBIA Insured 02/01/98 3.57 1,724,432
1,000,000 Charlotte, NC GO RB Series A 07/01/97 3.33 1,002,918 Aaa AAA
545,000 Charlotte, NC Water and Sewer
Collateralized By U.S. Government Securities 10/01/97 3.72 554,950 Aaa AAA
1,920,000 City of Thomasville, NC
Combined Enterprise System Revenue BAN 12/01/97 3.70 1,920,000 MIG-1
2,000,000 County of Johnson, NC COPS
(Johnson County Schools Judicial Annex & Healthcare Proj) - Ser 96
MBIA Insured 09/01/97 3.84 2,000,000 Aaa AAA
1,000,000 Greensboro, NC GO (b) 03/01/97 4.60 1,000,000
3,474,000 Hertford County, NC Southern Rural Water District BAN (b) 06/25/97 3.37 3,475,177
2,500,000 Hillsborough, NC BAN (b) 07/16/97 3.51 2,504,063
430,000 North Carolina Medical Care Commission Hospital RB
(Wilson Memorial Hospital Project)
AMBAC Insured 11/01/97 2.84 431,381 Aaa AAA
435,000 North Carolina Medical Care Hospital RB
(Presbyterian Hospital Project)
Escrowed In U.S. Government Securities 10/01/97 3.63 441,748 Aaa AAA
445,000 Northampton County, NC GO Bond
MBIA Insured 06/01/97 3.71 445,795 Aaa AAA
2,000,000 Puerto Rico Commonwealth TRAN 07/30/97 3.42 2,004,564 MIG-1 SP-1+
5,000,000 Puerto Rico Commonwealth TRAN 07/30/97 3.40 5,011,424 MIG-1 SP-1+
2,136,500 Scotland County, NC Water District 1 BAN (b) 11/05/97 3.31 2,142,144
750,000 State of North Carolina GO
Pre-Refunded In Government Securities 06/01/97 3.75 750,000 Aaa AAA
----------- ----------
25,760,500 Total Other Tax Exempt Investments 25,833,596
----------- ----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (65.98%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <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
700,000 Buncombe County, NC PCRB (Ashville Incorporated Project) (b)
LOC Nations Bank 06/01/07 3.45 700,000
</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)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Burke County, NC PCFA (Jobs Project)
LOC Wachovia Bank & Trust Co., N.A. 06/01/02 3.40% $ 2,000,000 A1+
3,500,000 Charlotte Mecklenburg Hospital Authority Health Care RB - Series B 01/15/26 3.25 3,500,000 VMIG-1 A1
2,000,000 Charlotte Mecklenburg Hospital Authority Health Care RB - Series D 01/15/26 3.25 2,000,000 VMIG-1 A1
4,705,000 Charlotte, NC Airport RB
MBIA Insured 07/01/16 3.25 4,705,000 VMIG-1 A1+
1,400,000 City of Ashville, NC
LOC Wachovia Bank & Trust Co., N.A. 07/01/03 3.15 1,400,000 VMIG-1 A1+
5,000,000 County of Mecklenburg, NC 03/01/15 3.20 5,000,000 VMIG-1 A1+
880,000 Durham County, NC Public Improvement GO Bonds 05/01/07 3.20 880,000 VMIG-1 A1
2,200,000 Durham, NC Public Improvement 02/01/10 3.35 2,200,000 VMIG-1 A1+
3,500,000 Gaston County, NC Industrial Facilities PCRB
(Allibert, Inc. Project) - Series 1987 (b)
LOC Bank Of Nova Scotia 01/01/12 3.40 3,500,000
160,000 Gaston County, NC PCFA (Keystone Carbon Company)
LOC Mellon Bank, N.A. 09/01/00 3.45 160,000 P1 A1
5,000,000 Granville County, NC Industrial Facilities PCFA
(Mayville Metal Product Project) (b)
LOC Toronto-Dominion Bank 05/23/20 3.70 5,000,000
650,000 Greensboro, NC Public Improvement - Series B 04/01/10 3.35 650,000 VMIG-1 A1+
1,500,000 Guilford County, NC (Bonset America)
LOC Dai-Ichi Kangyo Bank, Ltd. & Industrial Bank of Japan 05/01/09 3.45 1,500,000 A1
3,200,000 Halifax County, NC Industrial Facilities PCFA
(Westmoreland) (b)
LOC Credit Suisse 12/01/19 3.55 3,200,000
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
1,200,000 Iredell County, NC (Jet Corr Inc.) (b)
LOC National Bank Of Canada 09/01/99 3.45 1,200,000
1,100,000 Iredell County, NC Industrial Facilities PCFA RB
(Purina Mills Inc.)
LOC Bank Of Nova Scotia 06/01/20 3.40 1,100,000 A1+
1,000,000 Johnson County, NC Industrial Facilities & Pollution Control IDRB (b)
LOC PNC Bank 02/01/01 3.50 1,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 Lenoir County, NC Ind. Facilities PCFA Resource Recovery RB
(Carolina Energy, LP Project)
LOC Bank Of Tokyo - Mitsubishi Bank, Ltd. 07/01/22 3.55% $ 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
1,300,000 Lincoln County, NC Industrial Facilities PCFA RB
(General Marble)
LOC National Bank Of Canada 09/01/00 3.45 1,300,000 P1 A1
1,000,000 Mecklenberg County, NC Industrial Facilities & PCFA
(EDG Comb Metals) (b)
LOC BNP US Finance Corp 12/01/09 3.25 1,000,000
1,500,000 Mecklenburg County, NC (Otto Industry)
LOC Rabobank Nederland 10/01/08 3.45 1,500,000 P1
2,000,000 Mecklenburg County, NC IDRB (Virkler Company) (b)
LOC First Union National Bank 12/01/04 3.45 2,000,000
1,500,000 Mecklenburg County, NC Idustrial Facilities & PCFA
(Griffith Micro Science Project)
LOC ABN AMRO Bank N.V. 11/01/07 3.40 1,500,000 A1+
2,000,000 Moore County, NC (Perdue Farm Project)
LOC Rabobank Nederland 06/01/10 3.20 2,000,000 P1 A1+
7,000,000 NC Medical Care Commission Retirement Community RB Series B
LOC Lasalle National Bank 11/15/09 3.35 7,000,000 A1+
3,000,000 NC Medical Care Community Hospital
(Pooled Equipment Financing Project) - Series 1985
MBIA Insured 12/01/25 3.50 3,000,000 VMIG-1 A1+
2,800,000 North Carolina Education Facilities (Davidson College Project) (b) 12/01/04 3.35 2,800,000
500,000 North Carolina Education Facilities
(Guilford College Project)
LOC Wachovia Bank & Trust Co., N.A. 09/01/23 3.45 500,000 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
7,300,000 North Carolina Medical Care Commission (Carol Woods)
LOC Bank Of Scotland 04/01/21 3.50 7,300,000 VMIG-1 A1
1,700,000 North Carolina Medical Care Commission - Series 1991B
LOC First Union National Bank 10/01/13 3.50 1,700,000 VMIG-1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,150,000 North Carolina Medical Care Commission HRB
(Duke University Project) - Series A 06/01/23 3.20% $ 2,150,000 VMIG-1 A1+
3,000,000 North Carolina Medical Care Commission HRB
(NC Baptist Hospital Project) - Series 1992B 06/01/22 3.30 3,000,000 VMIG-1 A1+
3,100,000 North Carolina Medical Care Commission VRD HRB
(Park Ridge Hospital Project)
LOC Nations Bank 08/15/18 3.30 3,100,000 A1
900,000 Pasquotank County, NC Ind. Fac. PCFA IDRB
(J.W. Jones Lumber Co., Inc. Proj) - Series 95 (b)
LOC Wachovia Bank & Trust Co., N.A. 10/01/10 3.40 900,000
5,600,000 Person County, NC PCRB
(Carolina Power and Light Solid Waste Disposal)
LOC Fuji Bank, Ltd. 11/01/16 3.60 5,600,000 P1
800,000 Piedmont Triad, NC Airport Authority
(The Cessna Aircraft Company)
LOC Nations Bank 09/01/12 3.45 800,000 A1
11,000,000 Raleigh-Durham, NC Airport Auth. Special Fac. Refunding RB
(American Airlines Inc.) - 95A
LOC Royal Bank of Canada 11/01/15 3.45 11,000,000 A1+
800,000 Raleigh-Durham, NC Airport Auth. Special Fac. Refunding RB
(American Airlines) - Ser. 95A
LOC Royal Bank of Canada 11/01/05 3.45 800,000 A1+
700,000 Randolph County, NC Industrial Facilities & PCFA (b)
LOC Bank One Ohio 09/01/05 3.50 700,000
1,000,000 Samson County, NC PCFA (Dubose Strapping)
LOC First Union National Bank 02/01/99 3.45 1,000,000 P1
1,000,000 Union County, NC Facilities Pollution Control (Square D)
LOC Morgan Guaranty Trust Company 03/01/03 3.25 1,000,000 VMIG-1
6,700,000 University of North Carolina,
Chapel Hill School of Medicine Ambulatory Care Clinic 07/01/12 3.25 6,700,000 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 3.30 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+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,300,000 Warren County, NC Industrial Facilities (b)
LOC Wachovia Bank & Trust Co., N.A. 05/01/06 3.40% $ 2,300,000
2,675,000 Winston-Salem, NC COPS - Series 1988 07/01/09 3.35 2,675,000 A1+
500,000 Winston-Salem, NC GO Bond 06/01/07 3.30 500,000 VMIG-1 A1+
----------- -----------
138,445,000 Total Other Variable Rate Demand Instruments 138,445,000
----------- -----------
<CAPTION>
Put Bonds (d) (3.47%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,265,000 North Carolina Industrial Facilities PCFA
(GVK America Inc.)
LOC Union Bank Of Switzerland 12/01/97 3.80% $ 2,265,000 AAA
800,000 North Carolina Industrial Facilities PCFA RB
LOC First Union National Bank
(Greer Labs Incorporated Project) 12/01/97 4.00 800,000 A+
2,700,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Merck & Co. Inc. Proj.) - Ser 83A 12/01/97 4.00 2,700,000 Aaa AAA
1,500,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Reynolds Metals Corporation)
LOC ABN AMRO Bank N.V. 09/01/97 3.67 1,500,361 VMIG-1 A1+
----------- ---------
7,265,000 Total Put Bonds 7,265,361
----------- ---------
<CAPTION>
Revenue Bond (1.43%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbott Laboratories) - Series 83A 03/01/98 3.75% $ 3,000,000 Aa1 AAA
----------- -----------
3,000,000 Total Revenue Bond 3,000,000
----------- -----------
<CAPTION>
Tax Exempt Commercial Paper (16.25%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,275,000 City of Winston, NC
(Summit Square Garden Apartment Project) - Series 1989
FHA Insured 03/06/97 3.50% $ 1,275,000 A1+
3,000,000 City of Winston-Salem, NC (Water and Sewer System) 04/17/97 3.35 3,000,000 VMIG-1 A1+
3,500,000 North Carolina Municipal Electric RB (Catawba)
LOC Morgan Guaranty & Union Bank Of Switzerland 04/10/97 3.40 3,500,000 P1 A1+
5,000,000 North Carolina Municipal Electric RB (Catawba)
LOC Morgan Guaranty & Union Bank Of Switzerland 05/21/97 3.40 5,000,000 P1 A1+
2,000,000 North Carolina Municipal Electric RB (Catawba)
LOC Morgan Guaranty & Union Bank Of Switzerland 06/18/97 3.55 2,000,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- ------ ------- -----
Tax Exempt Commercial Paper (Continued)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 North Carolina Municipal Electric RB (Catawba)
LOC Morgan Guaranty & Union Bank Of Switzerland 07/02/97 3.55% $ 2,000,000 P1 A1+
5,315,000 North Carolina Municipal Electric RB (Catawba)
LOC Morgan Guaranty & Union Bank Of Switzerland 07/10/97 3.45 5,315,000 P1 A1+
5,000,000 North Carolina Municipal Power Agency RB (Catawba Electric)
LOC Morgan Guaranty & Union Bank Of Switzerland 06/12/97 3.45 5,000,000 A1+
2,000,000 North Carolina State Clean Water 06/01/97 3.45 2,003,817 Aaa AAA
3,000,000 Puerto Rico Government Development Bank 04/03/97 3.35 3,000,000 A1+
2,000,000 Pureto Rico Government Development Bank 05/07/97 3.35 2,000,000
----------- -----------
34,090,000 Total Tax Exempt Commercial Paper 34,093,817
----------- -----------
Total Investments (99.44%) (Cost $208,637,774+) 208,637,774
Cash and Other Assets in Excess of Liabilities (0.56%) 1,181,146
-----------
Net Assets (100%), 209,820,244 Shares Outstanding (Note 3) $209,818,920
===========
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
===========
</TABLE>
+ Aggregate cost for federal income tax purposes is identical.
FOOTNOTES:
(a) The ratings noted for variable rate demand instruments are those of the
bank whose letter of credit secures such instruments or the guarantor of
the bond. P1 and A1+ are the highest ratings assigned for tax exempt
commercial paper.
(b) Securities 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>
KEY:
<S> <C> <C> <C>
BAN = Bond Anticipation Note LOC = Letters of Credit
COPS = Certificate of Participations PCFA = Pollution Control Finance Authority
GO = General Obligation PCRB = Pollution Control Revenue Bond
HRB = Hospital Revenue Bond RB = Revenue Bond
IDRB = Industrial Development Revenue Bond TRAN = Tax and Revenue Anticipation Note
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest.................................................................... $ 3,214,943
-------------
Expenses: (Note 2)
Investment management fee................................................... 367,383
Shareholder servicing fee .................................................. 229,614
Administration fee.......................................................... 192,876
Custodian expenses.......................................................... 8,594
Shareholder servicing and related shareholder expenses...................... 58,687
Legal, compliance and filing fees........................................... 20,927
Audit and accounting........................................................ 28,251
Directors' fees............................................................. 3,007
Other....................................................................... 5,084
--------------
Total expenses........................................................... 914,423
Less:
Fees waived (Note 2)..................................................... ( 174,507)
Expenses paid indirectly................................................. ( 5,153)
--------------
Net expenses............................................................. 734,763
--------------
Net investment income........................................................... 2,480,180
--------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments......................................... -0-
--------------
Increase in net assets from operations.......................................... $ 2,480,180
==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
February 28, 1997 Ended
(Unaudited) August 31, 1996
--------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income.......................................... $ 2,480,180 $ 5,202,678
Net realized gain (loss) on investments........................ -0- 3,417
------------- ------------
Increase in net assets from operations............................. 2,480,180 5,206,095
Dividends to shareholders from net investment income:
Class A........................................................ ( 2,480,180)* ( 5,202,678)*
Capital share transactions (Note 3):
Class A........................................................ 37,433,441 8,126,540
------------- ------------
Total increase............................................... 37,433,441 8,129,957
Net assets:
Beginning of period............................................ 172,385,479 164,255,522
------------ ------------
End of period.................................................. $ 209,818,920 $ 172,385,479
============ ============
* 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. Additionally, the Fund may allocate among its classes certain expenses,
to the extent allowable to specific classes, including transfer agent fees,
government registration fees, certain printing and postage costs, and
administrative and legal expenses. Class Specific expenses of the Fund were
limited to distribution fees and minor transfer agent expenses. In all other
respects, the Class A and Class B shares represent the same interest in the
income and assets of the Fund. Distribution 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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
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.
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 28, 1997, the Manager voluntarily waived
administration fees of $174,507.
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 "Custodian expenses"
and "Shareholder servicing and related shareholder expenses" are expense offsets
of $5,153.
3. Capital Stock.
At February 28, 1997, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $209,820,244. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A Six Months Year
- ------- Ended Ended
February 28, 1997 August 31, 1996
----------------- ---------------
<S> <C> <C>
Sold............................................. 261,165,482 500,625,735
Issued on reinvestment of dividends.............. 1,287,242 2,474,924
Redeemed......................................... ( 225,019,283 ) ( 494,974,119)
---------------- --------------
Net increase..................................... 37,433,441 8,126,540
================ ==============
</TABLE>
There were no Class B shares issued during the six months ended February 28,
1997 and none were outstanding as of February 28, 1997.
4. Sales of Securities.
Accumulated undistributed realized losses at February 28, 1997 amounted to
$1,324. 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 59% of these investments
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANICAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
5. Concentration of Credit Risk. (Continued)
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>
Six September 10, 1991
Months (Commencement
Ended Year Ended August 31, of Operations) to
Class A February 28, ----------------------------------------------- August 31,
- ------- 1997 1996 1995 1994 1993 1992
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income......... 0.013 0.029 0.030 0.018 0.019 0.030
Less distributions:
Dividends from net investment
income................ 0.013 0.029 0.030 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..................... 2.74%* 2.87% 3.04% 1.86% 1.94% 3.07%*
Ratios/Supplemental Data
Net assets, end of period (000).. $209,819 $172,385 $164,256 $122,820 $ 93,294 $ 75,417
Ratios to average net assets:
Expenses...................... 0.81%* 0.80% 0.78% 0.75% 0.71% 0.50%*
Net investment income......... 2.70%* 2.82% 3.01% 1.85% 1.91% 2.82%*
Management, shareholder servicing
and Administration fees waived 0.19%* 0.20% 0.24% 0.29% 0.35% 0.62%*
</TABLE>
* Annualized
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<PAGE>
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================================================================================
6. Selected Financial Information. (Continued)
<TABLE>
<CAPTION>
December 12, 1994
Class B (Commencement of Operations) to
- ------- August 31, 1995
---------------
<S> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period...................... $ 1.00
----------
Income from investment operations:
Net investment income.................................. 0.024
Less distributions:
Dividends from net investment income................... 0.024
----------
Net asset value, end of period............................ $ 1.00
==========
Total Return.............................................. 3.48%*
Ratios/Supplemental Data
Net assets, end of period (000)........................... -0-
Ratios to average net assets:
Expenses............................................... 0.51%*
Net investment income.................................. 3.40%*
Management, shareholder servicing
and Administration fees waived ...................... 0.20%*
</TABLE>
* Annualized
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[This Page Intentionally Left Blank.]
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<PAGE>
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NORTH CAROLINA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Semi-Annual Report
February 28, 1997
(Unaudited)
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<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.
- -------------------------------------------------------
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
Reich & Tang Services, L.P.
600 Fifth Avenue
New York, New York 10020
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<PAGE>
