<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, 1997 through February
28, 1998.
The Fund had net assets of $243,120,015 and 3,110 active shareholders as of
February 28, 1998. Dividends earned on a share held throughout the period were
$0.014 which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 2.86% 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>
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NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (22.48%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Beaufort County, NC Water District V Pantego Township, NC
GO Water BAN (b) 08/26/98 3.71% $ 4,000,265
1,005,000 Charlotte, NC COPS
(FY 1998 Equipment Acquisition Project) - Series A (b) 09/01/98 3.51 1,007,213
6,100,000 City of Greensboro, NC GO Public Improvement BAN (b) 03/04/98 3.70 6,100,013
1,175,000 City of Greensboro, NC GO Public Improvement BAN 04/01/99 3.52 1,187,279 MIG-1 SP-1+
5,000,000 Commonwealth of Puerto Rico TRAN - Series A 07/30/98 3.46 5,020,357 MIG-1 SP-1+
5,000,000 Commonwealth of Puerto Rico TRAN - Series A (b) 07/30/98 3.72 5,015,094
1,000,000 Durham County, NC
Collateralized By U.S. Government Securities 06/01/98 3.68 1,007,543 AAA
1,900,000 East Craven Water and Sewer District Water BAN (b)
FHA Insured 05/13/98 3.66 1,900,215
1,500,000 Forsyth County, NC
Collateralized By U.S. Government Securities 06/01/98 3.67 1,517,004 Aaa AAA
3,500,000 Gaston County, NC GO BAN (b) 04/01/98 3.67 3,500,109
2,250,000 Guilford County, NC GO Bonds (b) 02/01/99 3.58 2,252,994
2,831,000 Lee County, NC Water & Sewer District #1 Water BAN (b)
FHA Insured 05/20/98 3.62 2,831,172
1,000,000 Mecklenberg County, NC Public Improvement - Series A (b) 02/01/99 3.59 1,005,354
4,050,000 Mecklenberg County, NC Public Improvement - Series B (b) 02/01/99 3.59 4,071,706
1,015,000 North Carolina Medical Care Commission Hospital RB
(Duke University Hospital) - Series C 06/01/98 3.67 1,015,601 Aa3 AA
6,250,000 North Carolina State GO 08/01/98 3.70 6,250,000 Aaa AAA
5,770,000 Robeson County, NC BAN (b) 05/06/98 3.71 5,770,993
1,200,000 Southeast Brunswick, NC Sanitary District GO Sanitary Sewer
BAN(b)FHA Insured 06/03/98 3.69 1,200,117
----------- -------------
54,546,000 Total Other Tax Exempt Investments 54,653,029
----------- -------------
<CAPTION>
Other Variable Rate Demand Instruments (c) (54.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,000,000 Alamance County, NC Industrial Facilities & PCFA
(Industrial Science Manufacturing Inc.)
LOC PNC Bank, N.A. 04/01/15 3.70% $ 2,000,000 P1
3,000,000 Beaufort, NC PCRB (Texas Gulf Inc.) - Series 1985 (b)
LOC Societe Generale 12/01/00 3.20 3,000,000
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+
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<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>
$ 9,800,000 Charlotte, NC Airport RB - Series A
MBIA Insured 07/01/17 3.50% $ 9,800,000 VMIG-1 A1
6,000,000 Charlotte-Mecklenburg Hospital Authority Health Care
RB-Series D 01/15/26 3.35 6,000,000 VMIG-1 A1+
1,000,000 City of Charlotte, NC Airport Refunding Bonds - Series 1993A
MBIA Insured 07/01/16 3.35 1,000,000 VMIG-1 A1+
880,000 Durham County, NC Public Improvement GO Bonds
LOC Sumitomo Bank, Ltd. 05/01/07 3.30 880,000 VMIG-1 A2
900,000 Durham, NC Water & Sewer Utility System
LOC Wachovia Bank & Trust Co., N.A. 12/01/15 3.40 900,000 VMIG-1 A1+
100,000 Gaston County, NC PCFA (Keystone Carbon Company) (b)
LOC Mellon Bank, N.A. 09/01/00 3.55 100,000
5,000,000 Granville County, NC Industrial Facilities PCFA
(Mayville Metal Product Project) (b)
LOC Toronto-Dominion Bank 05/23/20 3.55 5,000,000
1,500,000 Guilford County, NC (Bonset America)
LOC Dai-Ichi Kangyo Bank, Ltd. & Industrial Bank of Japan 05/01/09 4.10 1,500,000 P1
2,800,000 Harnett County, NC Industrial Facilities PCFA IDRB
(Edwards Brothers Inc. Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 01/01/07 3.55 2,800,000
800,000 Iredell County, NC (Jet Corr Inc.) (b)
LOC National Bank of Detroit 09/01/99 3.55 800,000
1,100,000 Iredell County, NC Industrial Facilities PCFA RB
(Purina Mills Inc.)
LOC Bank of Nova Scotia 06/01/20 3.45 1,100,000 A1+
1,000,000 Johnson County, NC Industrial Facilities & Pollution Control
IDRB (b) LOC PNC Bank, N.A. 02/01/01 3.60 1,000,000
3,800,000 Lenoir County, NC Industrial Facilities
(West Co. of Nebraska Inc.) - Series 1985 (b)
LOC Dresdner Bank A.G. 10/01/05 3.50 3,800,000
1,100,000 Lincoln County, NC Industrial Facilities PCFA RB (General Marble)
LOC National Bank of Canada 09/01/00 3.55 1,100,000 P1 A1
1,000,000 Mecklenberg County, NC Industrial Facilities & PCFA
(EDG Comb Metals) (b)
LOC BNP US Finance Corp 12/01/09 3.10 1,000,000
1,500,000 Mecklenburg County, NC (Otto Industry) (b)
LOC Bank of Austria 10/01/08 3.55 1,500,000
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1998
(UNAUDITED)
================================================================================
<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>
$ 1,900,000 Mecklenburg County, NC IDRB (Virkler Company) (b)
LOC First Union National Bank 12/01/04 3.60% $ 1,900,000
1,500,000 Mecklenburg County, NC Industrial Facilities & PCFA
(Griffith Micro Science Project)
LOC ABN AMRO Bank N.V. 11/01/07 3.45 1,500,000 A1+
2,000,000 Moore County, NC (Perdue Farm Project)
LOC Rabobank Nederland 06/01/10 3.35 2,000,000 P1 A1+
2,700,000 North Carolina Educational Facilities
(Davidson College Project) (b) 12/01/04 3.55 2,700,000
5,000,000 North Carolina Educational Facilities Agency RB (Elon College)
LOC Nations Bank 01/01/19 3.40 5,000,000 VMIG-1 A1+
1,000,000 North Carolina Educational Facilities Finance Agency RB
(Gardner Webb University)
LOC First Union National Bank 07/17/17 3.35 1,000,000 A1
3,300,000 North Carolina Educational Facilities Finance Authority
(Duke University) - Series 1991B 12/01/21 3.05 3,300,000 VMIG-1 A1+
1,900,000 North Carolina Medical Care Commission - Series 1991B
LOC First Union National Bank 10/01/13 3.65 1,900,000 VMIG-1
200,000 North Carolina Medical Care Commission HRB
(Carol Woods Project)
LOC Bank of Scotland 04/01/21 3.65 200,000 VMIG-1
2,150,000 North Carolina Medical Care Commission HRB
(Duke University Project) - Series A 06/01/23 3.05 2,150,000 VMIG-1 A1+
7,200,000 North Carolina Medical Care Commission HRB
(Park Ridge Hospital Project)
LOC Suntrust 08/15/18 3.50 7,200,000 A1
11,900,000 North Carolina Medical Care Commission HRB
(Pooled Equipment Financing Project)
MBIA Insured 12/01/25 3.65 11,900,000 VMIG-1 A1+
2,000,000 North Carolina Medical Care Commission Health Care
Facilities RB (Pungo District Hospital) (b)
LOC Centura Bank & Norwest Bank 12/01/18 3.50 2,000,000
8,000,000 North Carolina Medical Care Commission
Retirement Community RB - Series B
LOC LaSalle National Bank 11/15/09 3.40 8,000,000 A1+
800,000 Piedmont Triad, NC Airport Authority
(The Cessna Aircraft Company)
LOC Nations Bank 10/01/12 3.55 800,000 P1
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<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>
$ 3,700,000 Raleigh-Durham, NC Airport Authority Special Facilities
Refunding RB (American Airlines Inc.) - 95A
LOC Royal Bank of Canada 11/01/15 3.65% $ 3,700,000 A1+
1,150,000 Raleigh-Durham, NC Airport Authority Special Facilities
Refunding RB
(American Airlines Inc.) - 95A
LOC Royal Bank of Canada 11/01/05 3.65 1,150,000 A1+
1,100,000 Raleigh-Durham, NC Airport Authority Special Facilities
Refunding RB (American Airlines Inc.) - 95B
LOC Royal Bank of Canada 11/01/05 3.65 1,100,000 A1+
600,000 Randolph County, NC Industrial Facilities & PCFA (b)
LOC PNC Bank, N.A. 09/01/05 3.60 600,000
1,000,000 Samson County, NC Industrial Facilities & PCFA
(DuBose Strapping) (b)
LOC First Union National Bank 07/01/07 3.45 1,000,000
500,000 Samson County, NC PCFA (Dubose Strapping) (b)
LOC First Union National Bank 02/01/99 3.60 500,000
6,400,000 University of North Carolina, Chapel Hill School of Medicine
Ambulatory Care Clinic 07/01/12 3.50 6,400,000 A1+
10,600,000 Wake County, NC Industrial Facilities PCFA
(Carolina Power and Light) - Series A
LOC Credit Suisse First Boston 05/01/15 3.40 10,600,000 P1 A1+
6,525,000 Warren County, NC Industrial Facilities
(Glen Raven Mills Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 05/01/08 3.55 6,525,000
2,515,000 Winston-Salem, NC COPS - Series 1988 07/01/09 3.60 2,515,000 VMIG-1 A1+
500,000 Winston-Salem, NC GO Bond 06/01/07 3.45 500,000 VMIG-1 A1+
- ------------ -----------
131,420,000 Total Other Variable Rate Demand Instruments 131,420,000
- ------------ -----------
Put Bonds (d) (2.86%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,060,000 North Carolina Industrial Facilities PCFA (GVK America Inc.)
(b) LOC Union Bank of Switzerland 12/01/98 4.00% $ 2,060,000
700,000 North Carolina Industrial Facilities PCFA RB
(Greer Labs Incorporated Project)
LOC First Union National Bank 12/01/98 4.00 700,000 A1+
2,700,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Merck & Co. Inc. Proj.) - Series 83A 12/01/98 3.80 2,700,000 Aaa AAA
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Put Bonds (d) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,500,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Reynolds Metals Corporation)
LOC ABN AMRO Bank N.V. 09/01/98 3.80% $ 1,500,000 VMIG-1 A1+
- ------------ -------------
6,960,000 Total Put Bonds 6,960,000
- ------------ -------------
<CAPTION>
Revenue Bonds (1.64%)
- ------------------------------------------------------------------------------------------------------------------------------------
<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
1,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbott Laboratories) - Series 83A 03/01/99 3.55 1,000,000 Aa1 AAA
- ------------ ------------
4,000,000 Total Revenue Bonds 4,000,000
- ------------ ------------
<CAPTION>
Tax Exempt Commercial Paper (17.67%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,275,000 City of Winston, NC
(Summit Square Garden Apartment Project) - Series 1989
FHA Insured 03/11/98 3.75% $ 1,275,000 A1+
2,400,000 North Carolina Eastern Municipal Power - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 05/20/98 3.45 2,400,000 A1+
5,000,000 North Carolina Eastern Municipal Power - Series B
LOC Morgan Guaranty & Union Bank of Switzerland 05/13/98 3.40 5,000,000 A1+
1,500,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 08/12/98 3.50 1,500,000 P1 A1+
1,400,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 05/13/98 3.30 1,400,000 P1 A1+
2,075,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Morgan Guaranty & Union Bank of Switzerland 05/19/98 3.50 2,075,000 A1+
1,500,000 North Carolina Eastern Municipal Power Agency - Series 1988B
LOC Canadian Imperial Bank of Commerce 03/10/98 3.75 1,500,000 P1 A1+
2,000,000 North Carolina Municipal Electric (Catawba)
LOC Morgan Guaranty & Union Bank of Switzerland 05/13/98 3.60 2,000,000 P1 A1+
3,300,000 North Carolina Municipal Electric (Catawba)
LOC Morgan Guaranty & Union Bank of Switzerland 05/07/98 3.50 3,300,000 P1 A1+
1,000,000 North Carolina Municipal Electric (Catawba)
LOC Morgan Guaranty & Union Bank of Switzerland 05/07/98 3.35 1,000,000 P1 A1+
3,000,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 05/08/98 3.30 3,000,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Tax Exempt Commercial Paper (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,500,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 05/13/98 3.30% $ 1,500,000 P1 A1+
2,000,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 06/17/98 3.45 2,000,000 P1 A1+
15,000,000 Puerto Rico Government Development Bank 03/05/98 2.80 15,000,000 A1+
- ------------ ------------
42,950,000 Total Tax Exempt Commercial Paper 42,950,000
- ------------ ------------
Variable Rate Demand Instruments - Participations (c) (1.81%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,500,000 North Carolina State University (Housing Facilities) (b) 07/01/99 4.03% $ 3,500,000
900,000 North Carolina State University
(Student Health Facilities) Tax Exempt Lines of Credit (b) 07/01/99 4.03 9 00,000
- ------------ -----------
4,400,000 Total Variable Rate Demand Instruments - Participations 4,400,000
- ------------ -----------
Total Investments (100.52%) (Cost $ 244,383,029+) 244,383,029
Liabilities in Excess of Cash and Other Investments (-0.52%) (1,263,014)
------------
Net Assets (100%), 243,121,323 Shares Outstanding (Note 3) $243,120,015
============
Net Asset Value, offering and redemption price per share $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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, if indicated, unconditionally secured as to
principal and interest by a bank letter of credit. The interest rates are
adjustable and are based on bank prime rates or other interest rate
adjustment indices. The rate shown is the rate in effect at the date of
this statement.
(d) The maturity date indicated is the next put date.
<TABLE>
KEY:
<S> <C><C> <C> <C><C>
BAN = Bond Anticipation Note LOC = Letters of Credit
COPS = Certificate of Participations MBIA = Municipal Bond Insurance Association
FHA = Federal Housing Administration 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, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest.................................................................... $ 4,036,570
-----------------
Expenses: (Note 2)
Investment management fee................................................... 441,013
Shareholder servicing fee .................................................. 275,633
Administration fee.......................................................... 231,532
Custodian expenses.......................................................... 12,907
Shareholder servicing and related shareholder expenses...................... 61,306
Legal, compliance and filing fees........................................... 23,030
Audit and accounting........................................................ 24,167
Directors' fees............................................................. 3,071
Other....................................................................... 6,828
-----------------
Total expenses........................................................... 1,079,487
Less: Fees waived (Note 2)............................................... ( 143,329)
-----------------
Net expenses............................................................. 936,158
-----------------
Net investment income........................................................... 3,100,412
-----------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................................... -0-
-----------------
Increase in net assets from operations.......................................... $ 3,100,412
=================
</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, 1998 Ended
(Unaudited) August 31, 1997
--------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income.......................................... $ 3,100,412 $ 5,382,801
Net realized gain (loss) on investments........................ -0- 16
-------------- --------------
Increase in net assets from operations............................ 3,100,412 5,382,817
Dividends to shareholders from net investment income:
Class A........................................................ ( 3,100,412)* ( 5,382,801)*
Capital share transactions (Note 3):
Class A........................................................ 45,766,972 24,967,548
-------------- --------------
Total increase............................................... 45,766,972 24,967,564
Net assets:
Beginning of period............................................ 197,353,043 172,385,479
-------------- --------------
End of period.................................................. $ 243,120,015 $ 197,353,043
============== ==============
*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. 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 a Distribution Plan adopted under Securities and Exchange Commission
Rule 12b-1, the Fund and Reich & Tang Distributors, Inc. (the Distributor) have
entered into a Distribution Agreement and a Shareholder Servicing Agreement,
only with respect to Class A shares of the Fund. For its services under the
Shareholder Servicing Agreement, the Distributor receives from the Fund with
respect only to 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, 1998, the Manager voluntarily waived
administration fees of $143,329.
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 $55,571 paid to Reich & Tang
Services, L.P., an affiliate of the Manager, as servicing agent to the Fund.
3. Capital Stock.
At February 28, 1998, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $243,121,323. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A Six Months Year
------- Ended Ended
February 28, 1998 August 31, 1997
----------------- ---------------
<S> <C> <C>
Sold........................................... 335,025,240 514,655,437
Issued on reinvestment of dividends............ 1,696,305 2,802,982
Redeemed....................................... ( 290,954,573) ( 492,490,871)
---------------- ----------------
Net increase................................... 45,766,972 24,967,548
================ ================
</TABLE>
There were no Class B shares issued during the six months ended February 28,
1998 and no shares were outstanding as of February 28, 1998.
4. Sales of Securities.
Accumulated undistributed realized losses at February 28, 1998 amounted to
$1,308. Such amount represents tax basis capital losses which may be carried
forward to offset future capital gains. Such losses expire August 31, 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 48% 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>
- --------------------------------------------------------------------------------
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANICAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
6. Financial Highlights.
<TABLE>
<CAPTION>
Six
Months Year Ended August 31,
Ended ------------------------------------------------------------
Class A February 28,
- ------- 1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income............ 0.014 0.028 0.029 0.030 0.018 0.019
Less distributions:
Dividends from net investment
income........................ ( 0.014) ( 0.028) ( 0.029) ( 0.030) ( 0.018) ( 0.019)
-------- -------- -------- -------- -------- --------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return........................ 2.86%* 2.82% 2.87% 3.04% 1.86% 1.94%
Ratios/Supplemental Data
Net assets, end of period (000)..... $243,120 $197,353 $172,385 $164,256 $122,820 $ 93,294
Ratios to average net assets:
Expenses......................... 0.85%* 0.80% 0.80% 0.78% 0.75% 0.71%
Net investment income............ 2.81%* 2.78% 2.82% 3.01% 1.85% 1.91%
Management, shareholder servicing
and Administration fees waived 0.13%* 0.18% 0.20% 0.24% 0.29% 0.35%
* Annualized
</TABLE>
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<PAGE>
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================================================================================
<TABLE>
<CAPTION>
6. Financial Highlights. (Continued)
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%*
* Annualized
</TABLE>
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<PAGE>
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[This Page Intentionally Left Blank.]
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<PAGE>
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- -------------------------------------------------------
This report is submitted for the general information
of the shareholders of the Fund. It is not authorized
for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective
prospectus, which includes information regarding the
Fund's objectives and policies, experience of its
management, marketability of shares, and other
information.
- -------------------------------------------------------
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
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent & Dividend
Disbursing Agent
Reich & Tang Services, L.P.
600 Fifth Avenue
New York, New York 10020
<PAGE>
- --------------------------------------------------------------------------------
NORTH CAROLINA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Semi-Annual Report
February 28, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<PAGE>
