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PENNSYLVANIA
DAILY
MUNICIPAL
INCOME
FUND
Annual Report
November 30, 1995
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<PAGE>
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PENNSYLVANIA
DAILY MUNICIPAL 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND 212-830-5200
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Dear Shareholder:
We are pleased to present the annual report of Pennsylvania Daily Municipal
Income Fund for the year ended November 30, 1995.
The Fund had net assets of $40,980,201 and 1,425 active shareholders as of
November 30, 1995. Dividends earned on a share held throughout the period were
$.034 which, when adjusted for the compounding effect of the reinvestment of
dividends, represents a 3.50% 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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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1995
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Tax Exempt Investments (18.94%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,500,000 Central Blair County, PA Sanitary Authority RN (b) 05/15/96 4.33% $ 1,505,534
1,300,000 Philadelphia, PA School District TRAN - Series 1995-96 06/28/96 3.95 1,303,955 Aaa SP-1
1,000,000 Philadelphia, PA Water & Sewer (11th Series) - Subseries A 12/01/95 3.86 1,020,000 Aaa AAA
1,575,000 State of Pennsylvania IDA GH3
AMBAC Insured 01/01/96 4.55 1,575,316 Aaa AAA
1,500,000 Temple University (University Funding Obligation) - Series 1995 05/22/96 4.07 1,505,846 SP-1+
800,000 York County, PA IDA First Mortgage
(Fairview Village Associates Project) 06/01/96 3.93 849,424 Aaa AA
- -------------- ----------
7,675,000 Total Other Tax Exempt Investments 7,760,075
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<CAPTION>
Other Variable Rate Demand Instruments (c) (50.39%)
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<S> <C> <C> <C> <C> <C> <C>
$ 200,000 Alleghany County, PA ACES (Alleghany Hospital) - Series 1988C
LOC PNC Bank 03/01/13 3.60% $ 200,000 VMIG-1 A1+
1,200,000 Alleghany County, PA HDA RB
Alleghany General Hospital - Series B
LOC Morgan Guaranty 09/01/10 3.55 1,200,000 VMIG-1 A1+
500,000 Alleghany, PA IDA
(Commercial Development Parkway Center Project) - Series A
LOC Mellon Bank, N.A. 05/01/09 4.00 500,000 A1
1,000,000 Allegheny County, PA
(Childrens Hospital of Pittsburgh) - Series 1985B
MBIA Insured 12/01/15 3.60 1,000,000 VMIG-1 A1
2,000,000 Beaver County, PA IDA
LOC Barclays Bank 08/01/20 3.65 2,000,000 P1 A1+
1,500,000 Cambria County, PA IDA
(Cambria Generation Project) - Series VI
LOC Fuji Bank, Ltd. 09/01/19 3.90 1,500,000 VMIG-1 A1
200,000 Cambria County, PA IDA
(Cogenation Project) - Series 1991
LOC Fuji Bank, Ltd. 09/01/19 3.90 200,000 VMIG-1 A1+
400,000 Chartiers Valley IDA
(Commercial Steel Corporation) - Series 1990A (b)
LOC PNC Bank 09/01/05 4.00 400,000
1,900,000 Clarion County, PA EDA (Piney Creek) - Series A
LOC Swiss Bank Corp. 12/01/11 3.80 1,900,000 VMIG-1 A1+
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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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)
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<S> <C> <C> <C> <C> <C> <C>
$ 375,000 Clinton County, PA Municipal Authority HRB
(Lock Haven Hospital Project) - Series 1991A (b)
LOC Mellon Bank, N.A. 09/01/07 3.80% $ 375,000 A1
1,000,000 College Township IDA
LOC Wachovia Bank & Trust Co., N.A. 11/01/11 3.75 1,000,000 A1+
800,000 Delaware County, PA IDA (British Petroleum Oil Incorporated) 12/01/09 3.80 800,000 P1 A1+
1,600,000 Delaware County, PA IDA (Scott Paper Company) - Series A
LOC Fuji Bank, Ltd. 12/01/18 4.10 1,600,000 P1 A1
400,000 Emmaus General Authority, PA
Local Government RB - Series 1989 F4
GIC Goldman Sachs 03/01/24 3.75 400,000 A1
2,000,000 Geisinger Authority, PA Health System
(Geisinger Health System) - Series 1992B 07/01/22 3.70 2,000,000 A1+
400,000 Jeannette, PA Health Services Authority (Jeannette Corporation)
LOC PNC Bank 07/01/99 4.00 400,000 VMIG-1
500,000 Lehigh County, PA IDA - Series 1985A
LOC Rabobank Nederland 12/01/15 3.80 500,000 P1
675,000 PA Economic Development Financing Authority RB - Series D11
LOC PNC Bank 11/01/05 4.00 675,000 A1
1,000,000 Pennsylvania HEFA RB (Carnegie Mellon University) - Series B 11/01/27 3.70 1,000,000 A1+
100,000 Pennsylvania State EDA (B&W Ebensburg Project)
LOC Swiss Bank Corp. 12/01/11 3.75 100,000 VMIG-1
1,100,000 Pennsylvania State Higher Education Assistance Agency
Student Loan 07/01/18 3.80 1,100,000 VMIG-1 A1+
1,000,000 Quakertown, PA Hospital Group Pooled RB
LOC First National Bank of Chicago 07/01/05 3.70 1,000,000 VMIG-1
800,000 Sewickley Valley Hospital Authority, PA RN
(D.T. Watson Rehabilitation Hospital)
LOC PNC Bank 10/01/97 4.38 800,000 P1 A1
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20,650,000 Total Other Variable Rate Demand Instruments 20,650,000
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<CAPTION>
Put Bonds (d) (6.59%)
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<S> <C> <C> <C> <C> <C> <C>
$ 2,700,000 Alleghany County, PA
LOC Canadian Imperial Bank of Commerce 11/07/96 3.75% $ 2,700,000 P1 A1
----------- ----------
2,700,000 Total Put Bonds 2,700,000
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</TABLE>
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See Notes to Financial Statements.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
NOVEMBER 30, 1995
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<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Tax Exempt Commercial Paper (14.64%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,400,000 Alleghany County, PA IDA PCRB
LOC Norinchukin Bank, Ltd. 12/07/95 4.15% $ 2,400,000 P1 A1
1,000,000 Beaver County, PA IDA PCRB (Duquesne Light Company)
LOC Union Bank of Switzerland 02/09/96 3.80 1,000,000 VMIG-1 A1+
1,000,000 City of Philadelphia, PA Gas Works - Series B
LOC Canadian Imperial Bank of Commerce 02/22/96 3.75 1,000,000 P1 A1+
800,000 Venango County, PA IDA RB (Scrubgrass Project) - Series A
LOC National Westminster Bank PLC 12/13/95 3.85 800,000 P1 A1+
800,000 Venango County, PA IDA RB (Scrubgrass Project) - Series B
LOC National Westminster Bank PLC 02/12/96 3.80 800,000 P1 A1+
----------- ------------
6,000,000 Total Tax Exempt Commercial Paper 6,000,000
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<CAPTION>
Variable Rate Demand Instruments -
Private Placements (c) (7.32%)
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<S> <C> <C> <C> <C>
$ 3,000,000 Pennsylvania Economic Development
Financing Authority - Series 1992E (b)
LOC First National Bank of Maryland 12/01/17 4.32% $ 3,000,000
----------- ------------
3,000,000 Total Variable Rate Demand Instruments - Private Placements 3,000,000
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Total Investments (97.88%) (Cost $40,110,075+) 40,110,075
Cash and Other Assets, Net of Liabilities (2.12%) 870,126
------------
Net Assets (100.00%), 40,981,143 Shares Outstanding (Note 3) $ 40,980,201
============
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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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) Securities 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.
(d) The maturity date indicated for the put bonds is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
EDA = Economic Development Authority PCRB = Pollution Control Revenue Bond
HEFA = Health & Education Finance Authority RB = Revenue Bond
HDA = Hospital Development Authority RN = Revenue Note
HRB = Hospital Revenue Bond TRAN = Tax and Revenue Anticipation Note
IDA = Industrial Development Authority
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest................................................................................ $ 1,569,689
------------
Expenses: (Note 2)
Investment management fee............................................................... 155,535
Administration fee...................................................................... 77,767
Distribution fee........................................................................ 97,209
Custodian, shareholder servicing and related shareholder expenses....................... 55,166
Legal, compliance and filing fees....................................................... 11,933
Audit and accounting.................................................................... 51,809
Trustees' fees.......................................................................... 6,861
Amortization of organization expenses................................................... 9,848
Other................................................................................... 3,052
------------
Total expenses........................................................................ 469,180
Fees waived........................................................................... ( 238,372)
------------
Net expenses.......................................................................... 230,808
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Net investment income....................................................................... 1,338,881
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments..................................................... 707
------------
Increase in net assets from operations...................................................... $ 1,339,588
============
</TABLE>
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See Notes to Financial Statements.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1995 AND 1994
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<TABLE>
<CAPTION>
1995 1994
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INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income......................................... $ 1,338,881 $ 963,160
Net realized gain (loss) on investments...................... 707 3,570
--------------- --------------
Increase in net assets from operations............................ 1,339,588 966,730
Dividends to shareholders from net investment income.............. ( 1,338,881)* ( 963,160)*
Capital share transactions (Note 3)............................... ( 2,579,953) 4,738,804
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Total increase (decrease)................................. ( 2,579,246) 4,742,374
Net assets:
Beginning of year............................................. 43,559,447 38,817,073
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End of year................................................... $ 40,980,201 $ 43,559,447
=============== ==============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
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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
year ended November 30, 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.
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
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<PAGE>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
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2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
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.
For the year ended November 30, 1995 the Manager voluntarily waived investment
management fees and administration fees and the Distributor voluntarily waived
shareholder servicing fees of $63,396, $77,767 and $97,209, 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 $19,354 paid
to Fundtech Services L.P., an affiliate of the Manager, as servicing agent for
the Fund.
3. Capital Stock.
At November 30, 1995, an unlimited number of shares of beneficial interest ($.01
par value) were authorized and capital paid in amounted to $40,981,143.
Transactions in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
November 30, 1995 November 30, 1994
----------------- -----------------
<S> <C> <C>
Sold........................................ 125,004,714 111,398,451
Issued on reinvestment of dividends......... 1,130,639 686,315
Redeemed.................................... ( 128,715,306) ( 107,345,962)
---------------- ---------------
Net increase (decrease)..................... ( 2,579,953) 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 65% 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.
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<PAGE>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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5. Sales of Securities.
Accumulated undistributed realized losses at November 30, 1995 amounted to $942
which represents tax basis capital losses which may be carried forward to offset
future gains through November 30, 2001.
6. Selected Financial Information.
<TABLE>
<CAPTION>
December 16, 1992
Year Ended November 30, (Commencement of
-------------------------------------- Operations) to
1995 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................. .034 0.024 0.022
Less distributions:
Dividends from net investment income.. ( .034) ( 0.024) ( 0.022)
------------ ------------ ------------
Net asset value, end of period........... $ 1.000 $ 1.000 $ 1.000
============= ============= =============
Total Return............................. 3.50% 2.44% 2.28%*
Ratios/Supplemental Data
Net assets, end of period (000).......... $ 40,980 $ 43,559 $ 38,817
Ratios to average net assets:
Expenses.............................. .59%+ 0.49%+ 0.22%*+
Net investment income................. 3.44%+ 2.44%+ 2.26%*+
* Annualized
+ Net of management, administration fees and shareholder servicing fees
waived equivalent to .61%, .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>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Trustees and Shareholders
Pennsylvania Daily Municipal Income Fund
We have audited the accompanying statement of net assets of Pennsylvania Daily
Municipal Income Fund as of November 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended and the selected financial
information for each of the two years in the period then ended and for the
period from December 16, 1992 (Commencement of Operations) to November 30, 1993.
These financial statements and selected financial information are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and selected financial information based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards.Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of Pennsylvania Daily Municipal Income Fund as of November 30, 1995,
the results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with generally
accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
December 26, 1995
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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.
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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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