<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, 1998 through February
28, 1999.
The Fund had net assets of $266,437,178 and 3,006 active shareholders as of
February 28, 1999.
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, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Other Tax Exempt Investments (5.28%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,042,000 Beaufort County, NC
Water District Bath Township, NC GO Water BAN (b)
LOC Federal Housing Administration 06/09/99 3.00% $ 3,043,673
1,410,000 Charlotte, NC COPS (Equipment Acquisition Project) (b) 09/01/99 3.35 1,413,485
2,000,000 Cumberland County, NC GO Bonds (b)
FGIC Insured 03/01/99 4.80 2,000,000
1,175,000 Greensboro, NC GO Public Improvement BAN 04/01/99 3.56 1,175,966 VMIG-1
2,000,000 Halifax County, NC BAN (b) 06/23/99 3.46 2,000,299
2,980,000 Montgomery County, NC Water District I BAN (b) 06/23/99 3.46 2,980,318
1,455,000 Walnut Cove, NC BAN (b)
LOC Federal Housing Administration 09/22/99 2.97 1,456,604
------------ ------------
14,062,000 Total Other Tax Exempt Investments 14,070,345
------------ ------------
<CAPTION>
Other Variable Rate Demand Instruments (c) (79.90%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Allamance County, NC Industrial Facilities
LOC PNC Bank, N.A. 04/01/15 3.20% $ 2,000,000 VMIG-1
3,000,000 Beaufort, NC PCRB (Texas Gulf Inc.) - Series 1985 (b)
LOC Societe Generale 12/01/00 2.85 3,000,000
2,000,000 Burke County, NC Industrial Facilities & PCFA IDRB (Jobs Project)
LOC Wachovia Bank & Trust Co., N.A. 06/01/02 3.00 2,000,000 A1+
2,600,000 Chapel Hill School of Medicine (Ambulatory Health Clinic) 07/01/12 3.00 2,600,000 A1+
12,100,000 City of Charlotte, NC Airport Refunding Bonds - Series A
MBIA Insured 07/01/17 3.05 12,100,000 VMIG-1 A1
1,000,000 City of Charlotte, NC Airport Refunding Bonds - Series 1993A
MBIA Insured 07/01/16 2.95 1,000,000 VMIG-1 A1+
7,150,000 City of Charlotte, NC Local Government Commission
LOC Merrill Lynch 02/01/23 2.97 7,150,000 A1+
700,000 Cleveland County, NC Industrial Facilities
(Curtis Wright Flight System) (b)
LOC Bank of Nova Scotia 11/01/23 3.00 700,000
1,000,000 Columbus County, NC (Conflandey Project) (b)
LOC Bank Nationale de Paris 01/01/15 3.10 1,000,000
1,500,000 Department of State Treasurer, State of North Carolina
LOC Merrill Lynch 03/01/11 2.97 1,500,000 A1+
880,000 Durham County, NC Public Improvement GO Bonds 05/01/07 2.90 880,000 VMIG-1 A2
1,900,000 Durham County, NC Public Improvement GO Bonds 02/01/10 2.90 1,900,000 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 & Poor's
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 900,000 Durham, NC Water & Sewer Utility System
LOC Wachovia Bank & Trust Co., N.A. 12/01/15 2.95% $ 900,000 VMIG-1 A1+
900,000 East Carolina University, NC University RB
(Dowdy-Ficklen Stadium Project)
LOC Wachovia Bank & Trust Co., N.A. 05/01/17 2.85 900,000 VMIG-1
5,000,000 Granville County, NC Industrial Facilities & PCFA
(Mayville Metal Product Project) (b)
LOC Toronto-Dominion Bank 05/23/20 3.20 5,000,000
1,000,000 Greensboro, NC Public Improvement Bond 04/01/14 3.00 1,000,000 VMIG-1 A1+
2,740,000 Greensboro, NC GO Bond 04/01/19 3.00 2,740,000 VMIG-1 A1+
2,700,000 Harnett County, NC Industrial Facilities & PCFA IDRB
(Edwards Brothers Inc. Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 01/01/07 3.00 2,700,000
6,000,000 Herford County, NC Industrial Facilities
(Easco Corporation Project) (b)
LOC Bank of America 11/01/13 3.15 6,000,000
1,000,000 Iredell County, NC PCFA IDRB (Jet Corr Inc.) (b)
LOC National Bank of Detroit 09/01/99 3.05 1,000,000
1,000,000 Johnson County, NC
Industrial Facilities & Pollution Control IDRB (b)
LOC PNC Bank, N.A. 03/01/11 3.15 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 3.05 3,800,000
900,000 Lincoln County, NC Industrial Facilities & PCFA RB
(Leucadia Inc. Project)
LOC National Bank of Canada 09/01/00 3.05 900,000 P1
1,000,000 Mecklenberg County, NC Industrial Facilities & PCFA
(EDG Comb Metals) (b)
LOC Bank Nationale de Paris 12/01/09 2.75 1,000,000
1,500,000 Mecklenburg County, NC Industrial Facilities & PCFA
(Griffith Micro Science Project)
LOC ABN AMRO Bank N.V. 11/01/07 2.90 1,500,000 A1+
2,850,000 Mecklenburg County, NC Industrial Facilities & PCFA IDRB
(Otto Industry) (b)
LOC Bank of Austria 10/01/08 3.05 2,850,000
1,800,000 Mecklenburg County, NC PCFA IDRB (Virkler Company) (b)
LOC First Union National Bank 12/01/04 3.05 1,800,000
</TABLE>
See Notes to Financial Statements.
<PAGE>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1999
(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>
$ 5,000,000 Mecklenberg County, NC - Series C 02/01/17 2.85% $ 5,000,000 VMIG-1 A1
1,000,000 Mecklenberg County, NC - Series C 02/01/18 2.85 1,000,000 VMIG-1 A1+
900,000 Mecklenberg County, NC - Series C (b)
LOC Union Bank of Switzerland 12/01/08 2.95 900,000
5,000,000 Moore County, NC Industrial Facilities & PCFA RB
(Perdue Farm Project) - Series 1990
LOC Rabobank Nederland 06/01/10 2.85 5,000,000 P1 A1+
7,645,000 North Carolina Eastern Municipal Power Agency ROCS - Series 46
MBIA Insured 01/01/15 3.01 7,645,000 A1+
5,000,000 North Carolina Eastern Municipal Power Agency ROCS
(Power System ROCS - Series 46) 12/04/18 3.07 5,000,000 A1+
1,500,000 North Carolina Educational Facilities Finance Authority
(Bowman Grey School Medical Project)
LOC Wachovia Bank & Trust Co., N.A. 09/01/20 2.90 1,500,000 VMIG-1
2,700,000 North Carolina Educational Facilities
(Davidson College Project) (b) 12/01/04 3.00 2,700,000
9,700,000 North Carolina Educational Facilities Finance Authority
(Duke University) - Series 1987A 12/01/17 2.70 9,700,000 VMIG-1 A1+
3,300,000 North Carolina Educational Facilities Finance Authority
(Duke University) - Series 1991B 12/01/21 2.70 3,300,000 VMIG-1 A1+
1,000,000 North Carolina Educational Facilities Finance Agency RB
(Gardner Webb University)
LOC First Union National Bank 07/01/17 2.85 1,000,000 A1
1,000,000 North Carolina Educational Facilities Finance Agency RB
(Elton College)
LOC NationsBank 01/01/19 2.95 1,000,000 VMIG-1 A1+
1,100,000 North Carolina Medical Commission
(Angel Medical Center, Inc.)
LOC First Union National Bank 10/01/16 2.90 1,100,000 A1
2,700,000 North Carolina Medical Commission
(Carol Woods Project)
LOC NationsBank 04/01/21 3.20 2,700,000 VMIG-1
3,300,000 North Carolina Medical Care Commission
(Duke University Hospital) 06/01/15 2.70 3,300,000 VMIG-1 A1+
5,000,000 North Carolina Medical Care Commission
(J. Authur Dosher Memorial Hospital)
LOC Branch Bank & Trust 05/01/18 3.00 5,000,000 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
------ ---- ----- ------ ------- ------
Other Variable Rate Demand Instruments (c) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,500,000 North Carolina Medical Care Commission
(Lutheran Services for the Aging)
LOC Branch Bank & Trust 03/01/28 2.90% $ 2,500,000 A1
500,000 North Carolina Medical Care Commission
(The Givens Estates Inc., Project)
LOC First Union National Bank 12/01/26 3.30 500,000 VMIG-1
7,100,000 North Carolina Medical Care Commission HRB
(Park Ridge Hospital Project)
LOC Suntrust Bank 08/15/18 2.95 7,100,000 A1
6,500,000 North Carolina Medical Care Commission HRB
(Pooled Equipment Financing Program Project)
MBIA Insured 12/01/25 2.90 6,500,000 VMIG-1 A1+
3,700,000 North Carolina Medical Care Commission Health Care Facilities RB
(Pungo District Hospital) (b)
LOC Centura Bank & Norwest Bank 12/01/18 2.95 3,700,000
6,300,000 North Carolina Medical Care Commission Health System RB
(Updates Catholic Health Project)
AMBAC Indemnity 11/15/28 2.95 6,300,000 VMIG-1 A1+
8,000,000 North Carolina Medical
Care Commission Retirement Community RB - Series B
LOC LaSalle National Bank 11/15/09 2.95 8,000,000 A1+
18,995,000 North Carolina State Certificates - Series 38 04/01/13 3.04 18,995,000 VMIG-1
2,250,000 North Carolina Public School Building
LOC Merrill Lynch 04/01/14 2.97 2,250,000 A1+
2,100,000 North Carolina Puttable Receipts (Public School Building) 03/01/06 3.02 2,100,000 VMIG-1
700,000 Piedmont Triad, NC Airport Authority (The Cessna Aircraft Company)
LOC NationsBank 10/01/12 3.05 700,000 A1+
1,230,000 Puerto Rico Commonwealth GO Bond
(Puerto Rico Electric Power Authority)
MBIA Insured 07/01/23 2.84 1,230,000 VMIG-1
500,000 Randolph County, NC Industrial Facilities & PCFA (b)
LOC Bank One 09/01/05 3.15 500,000
1,200,000 Raleigh Durham, NC Airport Authority
(American Airlines - Series 1995A)
LOC NationsBank 11/01/15 3.30 1,200,000 A1+
1,000,000 Raleigh Durham, NC Airport Authority
(American Airlines - Series 1995B)
LOC NationsBank 11/01/15 3.30 1,000,000 A1+
</TABLE>
See Notes to Financial Statements.
<PAGE>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1999
(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>
$ 900,000 Raleigh Durham, NC Airport Authority
(American Airlines - Series 1995B)
LOC NationsBank 11/01/05 3.30% $ 900,000 A1+
1,000,000 Samson County, NC Industrial Facilities & PCFA IDRB
(DuBose Strapping) (b)
LOC First Union National Bank 07/01/07 3.05 1,000,000
550,000 State of North Carolina
LOC Merrill Lynch 03/01/16 3.01 550,000 A1+
1,000,000 University of North Carolina RB (Chapel Hill Project) - Series C 05/15/27 3.00 1,000,000 VMIG-1 A1+
7,700,000 Wake County, NC Industrial Facilities & PCFA
(Carolina Power and Light) - Series A
LOC Wachovia Bank & Trust Co., N.A. 05/01/15 2.90 7,700,000 P1 A1+
4,000,000 Wake County, NC Housing Authority Multifamily RB
(Chandler Ridge Project) (b)
LOC PNC Bank, N.A. 12/01/38 3.05 4,000,000
1,000,000 Wake County, NC Industrial Facilities & PCFA
(Carolina Power and Light)
LOC First Union National Bank 03/01/17 3.40 1,000,000 VMIG-1
6,525,000 Warren County, NC Industrial Facilities & PCFA IDRB
(Glen Raven Mills Project) (b)
LOC Wachovia Bank & Trust Co., N.A. 05/01/08 3.00 6,525,000
2,370,000 Winston-Salem, NC COPS - Series 1988 07/01/09 3.00 2,370,000 VMIG-1 A1+
500,000 Winston-Salem, NC GO Bond 06/01/07 2.90 500,000 VMIG-1 A1+
------------ ------------
212,885,000 Total Other Variable Rate Demand Instruments 212,885,000
------------ ------------
<CAPTION>
Put Bonds (d) (3.69%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,025,000 North Carolina Industrial Facilities & PCFA
(GVK America Inc.) (b)
LOC Union Bank of Switzerland 12/01/99 3.50% $ 4,025,000
600,000 North Carolina Industrial Facilities & PCFA RB
(Greer Labs Incorporated Project)
LOC First Union National Bank 12/01/99 3.75 600,000 A1+
2,700,000 Puerto Rico Industrial Medical & Environmental PCFA RB (b)
(Merck & Co. Inc. Proj.) - Series 1983A 12/01/99 2.90 2,700,000
2,500,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Reynolds Metals Corporation)
LOC ABN AMRO Bank N.V. 09/01/99 3.60 2,500,000 VMIG-1 A1+
------------ ------------
9,825,000 Total Put Bonds 9,825,000
------------ ------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- ------
Revenue Bonds (1.78%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 730,000 North Carolina Medical Care Commission (b)
AMBAC Indemnity 11/01/99 3.03% $ 734,543
4,000,000 Puerto Rico Industrial Medical & Environmental PCFA RB
(Abbott Laboratories) - Series 83A 03/01/00 2.90 4,000,000 Aa1 AAA
------------ ------------
4,730,000 Total Revenue Bonds 4,734,543
------------ ------------
<CAPTION>
Tax Exempt Commercial Paper (9.04%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,120,000 City of Winston-Salem, NC
(Water and Sewer System) - Series 1989
LOC Federal Housing Administration 04/06/99 2.85% $ 1,120,000 A1+
1,500,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 03/09/99 2.95 1,500,000 P1 A1+
3,500,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 04/01/99 2.90 3,500,000 P1 A1+
2,000,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 05/05/99 2.65 2,000,000 P1 A1+
1,600,000 North Carolina Eastern Municipal Power Agency
LOC Canadian Imperial Bank of Commerce 05/12/99 2.95 1,600,000 P1 A1+
7,075,000 North Carolina Eastern Municipal Power Agency - Series B
LOC Morgan Guaranty & Union Bank of Switzerland 04/06/99 2.85 7,075,000 A1+
4,300,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 04/06/99 2.85 4,300,000 P1 A1+
1,000,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 04/08/99 2.80 1,000,000 P1 A1+
2,000,000 North Carolina Municipal Power Agency #1 (Catawba Project)
LOC Morgan Guaranty & Union Bank of Switzerland 05/13/99 2.75 2,000,000 P1 A1+
------------ ------------
24,095,000 Total Tax Exempt Commercial Paper 24,095,000
------------ ------------
Total Investments (99.69%) (Cost $265,609,888+) $265,609,888
Cash and Other Assets in Excess of Liabilities (.31%) 827,290
------------
Net Assets (100.00%), 266,438,446 Shares Outstanding (Note 3) $266,437,178
============
Net Asset Value, offering and redemption price per share $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
See Notes to Financial Statements.
<PAGE>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1999
(UNAUDITED)
================================================================================
FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings are those of the holding company of the bank whose letter of
credit guarantees the issue or the insurance company who insures the issue.
All letters of credit and insurance are irrevocable and direct pay covering
both principal and interest. Certain issuers have either a line of credit,
a liquidity facility, a standby purchase agreement or some other financing
mechanism to ensure the remarketing of the securities. This is not a
guarantee and does not serve to insure or collateralize the issue.
(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>
<CAPTION>
KEY:
<S> <C><C> <C> <C> <C>
AMBAC = American Municipal Bond Assurance Corporation LOC = Letter of Credit
BAN = Bond Anticipation Note MBIA = Municipal Bond Insurance Association
COPS = Certificate of Participations PCFA = Pollution Control Finance Authority
FGIC = Financial Guaranteed Insurance Company PCRB = Pollution Control Revenue Bond
GO = General Obligation RB = Revenue Bond
HRB = Hospital Revenue Bond ROCS = Reset Option Certificates
IDRB = Industrial Development Revenue Bond
</TABLE>
See Notes to Financial Statements.
<PAGE>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest....................................................................$ 4,089,473
-----------------
Expenses: (Note 2)
Investment management fee................................................... 503,041
Shareholder servicing fee .................................................. 314,401
Administration fee.......................................................... 264,097
Custodian expenses.......................................................... 28,268
Shareholder servicing and related shareholder expenses...................... 70,035
Legal, compliance and filing fees........................................... 33,016
Audit and accounting........................................................ 26,866
Directors' fees............................................................. 3,053
Other....................................................................... 8,863
-----------------
Total expenses........................................................... 1,251,640
Less: Fees waived (Note 2)...............................................( 152,952)
Less: Expenses paid indirectly (Note 2)..................................( 163)
-----------------
Net expenses............................................................. 1,098,525
-----------------
Net investment income.......................................................... 2,990,948
-----------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments........................................ 35
-----------------
Increase in net assets from operations.........................................$ 2,990,983
=================
</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, 1999 Ended
(Unaudited) August 31, 1998
--------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income.......................................... $ 2,990,948 $ 6,360,678
Net realized gain (loss) on investments........................ 35 5
-------------- --------------
Increase in net assets from operations............................ 2,990,983 6,360,683
Dividends to shareholders from net investment income:
Class A........................................................ ( 2,990,948)* ( 6,360,678)*
Capital share transactions (Note 3):
Class A........................................................ 35,764,565 33,319,530
-------------- --------------
Total increase............................................... 35,764,600 33,319,535
Net assets:
Beginning of period............................................ 230,672,578 197,353,043
-------------- --------------
End of period.................................................. $ 266,437,178 $ 230,672,578
============== ==============
* 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>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
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, 1999, the Manager voluntarily waived
administration fees of $152,952.
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 $63,438 paid to Reich & Tang
Services, Inc., an affiliate of the Manager, as servicing agent to the Fund.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are expense offsets of $163.
3. Capital Stock.
At February 28, 1999, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $266,438,446. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Class A Ended Ended
February 28, 1999 August 31, 1998
----------------- ---------------
<S> <C> <C>
Sold............................................. 401,133,572 646,778,294
Issued on reinvestment of dividends.............. 1,506,252 3,510,899
Redeemed......................................... ( 366,875,259) ( 616,969,663)
---------------- -----------------
Net increase..................................... 35,764,565 33,319,530
================ =================
</TABLE>
There were no Class B shares transactions during the six months ended February
28, 1999 and no shares were outstanding as of February 28, 1999.
4. Sales of Securities.
Accumulated undistributed realized losses at February 28, 1999 amounted to
$1,268. 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 56% 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>
================================================================================
<TABLE>
<CAPTION>
6. Financial Highlights
Six
Months
Ended Year Ended August 31,
Class A February 28, ------------------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
<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................... 0.012 0.028 0.028 0.029 0.030 0.018
Less distributions:
Dividends from net investment
income............................... ( 0.012) ( 0.028) ( 0.028) ( 0.029) ( 0.030) ( 0.018)
-------- -------- -------- -------- -------- --------
Net asset value, end of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return............................... 2.42%* 2.82% 2.82% 2.87% 3.04% 1.86%
Ratios/Supplemental Data
Net assets, end of period (000)............ $ 266,437 $ 230,673 $ 197,353 $ 172,385 $ 164,256 $ 122,820
Ratios to average net assets:
Expenses (Net of fees waived)........... 0.87%* 0.85% 0.80% 0.80% 0.78% 0.75%
Net investment income................... 2.38%* 2.77% 2.78% 2.82% 3.01% 1.85%
Management, shareholder servicing
and Administration fees waived 0.12%* 0.13% 0.18% 0.20% 0.24% 0.29%
* Annualized
</TABLE>
<PAGE>
NORTH CAROLINA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANICAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<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 (Net of fees waived).......................... 0.51%*
Net investment income.................................. 3.40%*
Management and Administration fees waived ............. 0.20%*
* Annualized
</TABLE>
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
NORTH CAROLINA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Semi-Annual Report
February 28, 1999
(Unaudited)
<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
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent & Dividend
Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
NC299S
<PAGE>
