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PENNSYLVANIA
DAILY
MUNICIPAL
INCOME
FUND
Semi-Annual Report
May 31, 1995
(Unaudited)
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<PAGE>
1
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PENNSYLVANIA
DAILY MUNICIPAL 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND 212-830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Pennsylvania Daily Municipal
Income Fund for the period December 1, 1994 through May 31, 1995.
The Fund had net assets of $34,980,762 and 1,347 active shareholders as of May
31, 1995. Dividends earned on a share held throughout the period were $.018
which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 3.63% yield on an annual basis.
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
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<PAGE>
2
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS
MAY 31, 1995
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Tax Exempt Investments (24.12%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,500,000 Central Blair County
Sanitary Authority PA RN (b) 05/15/96 4.33% $ 1,511,635
1,000,000 City of Philadelphia, PA TRAN
LOC Canadian Imperial Bank of Commerce 06/15/95 3.85 1,000,314 MIG-1 SP-1+
1,000,000 City of Philadelphia, PA TRAN Series B
LOC Corestates Bank, N.A. 06/15/95 3.85 1,000,314 MIG-1 SP-1+
2,250,000 Lycoming City, PA Hospital
(Williamsport Hospital Project) 11/01/95 3.84 2,341,840 Aaa AAA
1,575,000 State of Pennsylvania IDA GH3
AMBAC Insured 01/01/96 4.63 1,577,179 Aaa AAA
1,000,000 Temple University, University Funding Obligation Series 1995 05/22/96 4.23 1,006,525 SP-1+
----------- -----------
8,325,000 Total Other Tax Exempt Investments 8,437,807
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments(c) (47.60%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 Alleghany City, PA ACES (Alleghany Hospital) Series 88C
LOC PNC Bank 03/01/13 3.45% $ 200,000 VMIG-1 A1+
500,000 Alleghany, PA IDA
(Commercial Development Parkway Center Project) Series A
LOC Mellon Bank, N.A. 05/01/09 4.45 500,000 A1
1,000,000 Allegheny, PA (Childrens Hospital of Pittsburgh) - Series 85
MBIA Insured 12/01/15 3.90 1,000,000 VMIG-1
1,000,000 Beaver IDA PA
LOC Barclays Bank 08/01/20 3.90 1,000,000 P1 A1+
1,000,000 Beaver IDA PA
LOC Barclays Bank 08/01/20 3.90 1,000,000 P1 A1+
1,500,000 Cambria County, PA IDA
(Cambria Generation Project Series VI)
LOC Fuji Bank, Ltd. 09/01/19 3.75 1,500,000 VMIG-1 A1
200,000 Cambria County, PA IDA (Cogenation Project) - Series 91
LOC Fuji Bank, Ltd. 09/01/19 3.75 200,000 VMIG-1 A1+
400,000 Chartiers Valley Industrial & Commerical Development Authority
(Commercial Steel Corp.) Series 1990A (b)
LOC PNC Bank 09/01/05 4.45 400,000
1,900,000 Clarion County, PA EDA (Piney Creek) - Series A
LOC Swiss Bank Corp. 12/01/11 4.00 1,900,000 VMIG-1 A1+
</TABLE>
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See Notes to Financial Statements.
<PAGE>
3
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<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>
$ 375,000 Clinton County, PA Municipal Authority HRB
(Lock Haven Hospital Project) - Series 91A (b)
LOC Mellon Bank, N.A. 09/01/07 3.85% $ 375,000
1,000,000 College Township IDA
LOC Wachovia Bank & Trust Co., N.A. 11/01/11 3.80 1,000,000 A1+
1,600,000 Delaware County, PA IDA (Scott Paper Co.) Series A
LOC Fuji Bank, Ltd. 12/01/18 3.95 1,600,000 P1 A1
700,000 Emmaus General Authority Local Government RB 1989
Series F4 03/01/24 3.95 700,000 A1+
400,000 Emmaus General Authority PA Local Government RB
Series 1989 H-2
GIC-Goldman Sachs 03/01/24 3.95 400,000 A1+
1,000,000 Geisinger Authority PA Health System Series 1992B,
Geisinger Health System 07/01/22 4.40 1,000,000 A1+
400,000 Jeannette, PA Health Services Authority (Jeannette Corp.)
LOC PNC Bank 07/01/99 4.45 400,000 VMIG-1
500,000 Lehigh County, PA IDA Series 1985 A
LOC Rabobank Nederland 12/01/15 4.10 500,000 P1
575,000 PA Economic Development Financing Authority RB - Series D11
LOC PNC Bank 11/01/05 4.45 575,000 Aa
100,000 Pennsylvania State EDA (B&W Ebensburg Proj.)
LOC Swiss Bank Corp. 12/01/11 3.70 100,000 VMIG-1
700,000 Pennsylvania State Higher Education
Assistance Agency Student Loan
LOC Union Bank of Switzerland 07/01/18 3.70 700,000 VMIG-1 A1+
800,000 Schuykill County, PA IDA Resource Recovery RB Series 1985
(Northeastern Power Company)
LOC Sumitomo Bank, Ltd. 12/01/11 4.10 800,000 A1
800,000 Sewickley Valley Hospital Authority PA Revenue Variable
D.T. Watson Rehab. Hospital Note (b)
LOC PNC Bank 10/01/97 4.50 800,000
------------ ----------
16,650,000 Total Other Variable Rate Demand Instruments 16,650,000
------------ ----------
<CAPTION>
Put Bonds (6.29%)
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<S> <C> <C> <C> <C> <C> <C>
$ 700,000 Alleghany City, PA
LOC Canadian Imperial Bank of Commerce 11/30/95 4.75% $ 700,000 P1 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
4
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
MAY 31, 1995
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Put Bonds (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 500,000 Pennsylvania Higher Education Facilities Authority
Carnegie-Mellon University RB 05/01/96 4.50% $ 500,000 A1+
1,000,000 Pennsylvania Higher Education Facilities Authority Series B
(Carnegie Mellon Institute) 11/01/95 4.20 1,000,000 A1+
----------- -----------
2,200,000 Total Put Bonds 2,200,000
----------- -----------
<CAPTION>
Tax Exempt Commercial Paper (12.01%)
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<S> <C> <C> <C> <C> <C> <C>
$ 600,000 Alleghany County, PA IDA PCR
LOC Norinchukin Bank, Ltd. 06/08/95 4.40% $ 600,000 P1 A1
1,000,000 Allegheny County, PA IDA PCR
LOC Norinchukin Bank, Ltd. 07/13/95 4.20 1,000,000 P1 A1
1,000,000 Beaver County, PA IDA PCRB (Duquesne Light Co.)
LOC Union Bank of Switzerland 07/12/95 4.25 1,000,000 VMIG-1 A1+
800,000 Venango County, PA IDA Resource Recovery RB
(Scrubgrass Project) - Series B
LOC National Westminster Bank PLC 06/06/95 4.35 800,000 P1 A1+
800,000 Venango County, PA IDA Resource Recovery RB
(Scrubgrass Project) 1990B
LOC National Westminster Bank PLC 08/08/95 4.20 800,000 P1 A1+
----------- -----------
4,200,000 Total Tax Exempt Commercial Paper 4,200,000
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<CAPTION>
Variable Rate Demand Instruments - Private Placements(c)(8.57%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,000,000 Pennsylvania Economic Developement
Financing Authority Series 92E (b)
LOC First National Bank of Maryland 12/01/17 4.83% $ 3,000,000
------------ ------------
3,000,000 Total Variable Rate Demand Instruments - Private Placements 3,000,000
------------ ------------
Total Investments(98.59%)(Cost $34,487,807+) 34,487,807
Cash and Other Assets, Net of Liabilities(1.41%) 492,955
------------
Net Assets(100.00%), 34,982,329 Shares Outstanding(Note 3) $ 34,980,762
============
Net Asset Value, offering and redemption price per share $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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See Notes to Financial Statements.
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5
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FOOTNOTES:
(a) The ratings noted for variable rate demand instruments are those of the
bank whose letter of credit secures such instruments or guarantor of the
bond. P1 and A1+ are the highest ratings assigned for tax exempt commercial
paper.
(b) Securites that are not rated have been determined by the Fund's Board of
Trustees to be of comparable quality to the rated securities in which the
Fund may invest.
(c) Securities payable on demand at par including accrued interest (usually
with seven days notice) and where indicated are unconditionally secured as
to principal and interest by a bank letter of credit. The interest rates
are adjustable and are based on bank prime rates or other interest rate
adjustment indices. The rate shown is the rate in effect at the date of
this statement.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note PCR = Pollution Control Revenue
CI = Certificate of Indebtedness PCRB = Pollution Control Revenue Bond
CLN = Construction Loan Note RAN = Revenue Anticipation Note
EDA = Economic Development Authority RAW = Revenue Anticipation Warrant
FAN = Fund Anticipation Note RB = Revenue Bond
GAN = Grant Anticipation Note RN = Revenue Note
HRB = Hospital Revenue Bond TAN = Tax Anticipation Note
IDA = Industrial Development Authority TLN = Tax Loan Note
IDRB = Industrial Development Revenue Bond TRAN = Tax and Revenue Anticipation Note
</TABLE>
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See Notes to Financial Statements.
<PAGE>
6
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest................................................................................ $ 819,549
---------
Expenses: (Note 2)
Investment management fee............................................................... 42,278
Custodian, shareholder servicing and related shareholder expenses....................... 28,163
Legal, compliance and filing fees....................................................... 9,716
Audit and accounting.................................................................... 23,907
Trustees' fees.......................................................................... 3,061
Amortization of organization expenses................................................... 4,910
Other................................................................................... 1,708
---------
Total expenses........................................................................ 113,743
---------
Net investment income....................................................................... 705,806
---------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments..................................................... 82
---------
Increase in net assets from operations...................................................... $ 705,888
=========
</TABLE>
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See Notes to Financial Statements.
<PAGE>
7
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Six Months
Ended Year
May 31, 1995 Ended
(Unaudited) November 30, 1994
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income......................................... $ 705,806 $ 963,160
Net realized gain (loss) on investments...................... 82 3,570
--------------- -------------
Increase in net assets from operations............................ 705,888 966,730
Dividends to shareholders from net investment income.............. ( 705,806)* ( 963,160)*
Capital share transactions (Note 3)............................... ( 8,578,767) 4,738,804
--------------- -------------
Total increase (decrease)................................. ( 8,578,685) 4,742,374
Net assets:
Beginning of period.......................................... 43,559,447 38,817,073
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End of period................................................. $ 34,980,762 $ 43,559,447
=============== =============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
8
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
1. Summary of Accounting Policies.
Pennsylvania Daily Municipal Income Fund, a Massachusetts business trust, is a
no-load, non-diversified, open-end management investment company registered
under the Investment Company Act of 1940. Its 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 Trustees.
d) General -
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned. Realized gains and losses from securities transactions
are recorded on the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management L.P. (Manager), equal to .40% of the Fund's
average daily net assets. The Manager is required to reimburse the Fund for its
expenses (exclusive of interest, taxes, brokerage, and extraordinary expenses)
to the extent that such expenses, including the investment management and the
shareholder servicing and administration fees, for any fiscal year exceed the
limits on investment company expenses prescribed by any state in which the
Fund's shares are qualified for sale. No such reimbursement was required for the
period ended May 31, 1995.
Pursuant to an Administrative Services Contract the Fund pays to the Manager an
annual fee of .20% of the Fund's average daily net assets not in excess of $1.25
billion, plus .19% of such assets in excess of $1.25 billion but not in excess
of $1.5 billion, plus .18% of such assets in excess of $1.5 billion.
Pursuant to a distribution and service plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors L.P.,
(the Distributor), an affiliate of the Manager, have entered into a Distribution
Agreement and a Shareholder Servicing Agreement. For its services under the
Shareholder Servicing Agreement, the Distributor receives from the Fund 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.
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<PAGE>
9
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2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
For the period ended May 31, 1995 the Manager voluntarily waived investment
management fees and administation fees and the Distributor voluntarily waived
shareholder servicing fees of $37,120, $39,699 and $49,624, respectively.
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
Included in the Statement of Operations under the caption "Custodian,
shareholder servicing and related shareholder expenses" are fees of $9,301 paid
to Fundtech Services L.P., an affiliate of the Manager, as servicing agent for
the Fund.
3. Capital Stock.
At May 31, 1995, an unlimited number of shares of beneficial interest ($.01 par
value) were authorized and capital paid in amounted to $34,982,329. Transactions
in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
May 31, 1995 November 30, 1994
------------ -----------------
<S> <C> <C>
Sold........................................ 67,751,992 111,398,451
Issued on reinvestment of dividends......... 577,084 686,315
Redeemed.................................... ( 76,907,843) ( 107,345,962)
------------- -------------
Net increase (decrease)..................... ( 8,578,767) 4,738,804
============= =============
</TABLE>
4. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of Pennsylvania and, accordingly, is subject to the credit risk associated with
the non-performance of such issuers. Approximately 68% of these invesments 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.
5. Sales of Securities.
Accumulated undistributed realized losses at May 31, 1995 amounted to $1,567. At
May 31, 1995 the Fund had tax basis capital losses of $1,948 which may be
carried forward to offset future gains through November 30, 2001.
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<PAGE>
10
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
6. Selected Financial Information.
<TABLE>
<CAPTION>
December 16, 1992
(Commencement of
Six Months Ended Year Ended Operations) to
May 31, 1995 November 30, 1994 November 30, 1993
------------ ----------------- -----------------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C>
Net asset value, beginning of period..... $ 1.000 $ 1.000 $ 1.000
------------- ------------- -------------
Income from investment operations:
Net investment income................. .018 0.024 0.022
Less distributions:
Dividends from net investment income.. ( .018) ( 0.024) ( 0.022)
------------ ------------ ------------
Net asset value, end of period........... $ 1.000 $ 1.000 $ 1.000
============= ============= ============
Total Return............................. 3.63%* 2.44% 2.28%*
Ratios/Supplemental Data
Net assets, end of period (000).......... $ 34,981 $ 43,559 $ 38,817
Ratios to averagte net assets:
Expenses*............................. .57%*+ 0.49%+ 0.22%*+
Net investment income................. 3.56%*+ 2.44%+ 2.26%*+
* Annualized
+ Net of management, administration fees and shareholder servicing fees waived
equivalent to .64%, .68%, and .85% of average net assets, plus expenses
reimbursed equivalent to .33% of average net assets for the period December 16,
1992 (Commencement of Operations) to November 30, 1993.
</TABLE>
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<PAGE>
11
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
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Pennsylvania Daily Municipal Income Fund
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Fundtech Services L.P.
600 Fifth Avenue
New York, NY 10020
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