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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 annual report of Pennsylvania Daily Municipal
Income Fund for the year ended November 30, 1997.
The Fund had net assets of $43,455,857 and 1,358 active shareholders as of
November 30, 1997.
Thank you for your support and we 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, 1997
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- -------- ------- ------
Other Tax Exempt Investments (13.74%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000 Pennsylvania Higher Education Facility Authority RB - Series F
AMBAC Insured 12/15/97 3.82% $ 250,093 Aaa AAA
2,000,000 Philadelphia, PA School District TRAN
LOC Commerzbank A.G. 06/30/98 3.90 2,006,115 MIG-1 SP-1+
2,000,000 Philadelphia, PA TRAN - Series A
LOC Union Bank of Switzerland 06/30/98 3.95 2,005,557 MIG-1 SP-1+
680,000 State Public School Building Authority PA School RB - Series 1997D
AMBAC Insured 06/15/98 3.85 680,000 Aaa AAA
1,025,000 University of PA - Series B
MBIA Insured 06/01/98 3.73 1,028,457 Aaa AAA
----------- -----------
5,955,000 Total Other Tax Exempt Investments 5,970,222
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (38.48%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 700,000 Butler County, PA IDA (Armco Incorporated Project) - Series 1996A (b)
LOC Chase Manhattan Bank, N.A. 06/01/20 4.10% $ 700,000
3,800,000 Chester County, PA 1997 Archdiocese of Philadelphia
LOC Corestates Bank, N.A. 07/01/27 3.85 3,800,000 VMIG-1
900,000 City of York General Authority (Adjusted Rate Pooled Financing)
LOC First Union National Bank 09/01/26 3.95 900,000 A1
370,000 Clinton County, PA Municipal Authority HRB
(Lock Haven Hospital Project) - Series 1991A
LOC Mellon Bank, N.A. 09/01/07 4.15 370,000 A1
2,000,000 Delaware County, PA IDA Airport Facility RB
(United Parcel Service Project) - Series 1985 12/01/15 3.80 2,000,000 P1 A1+
2,400,000 Delaware County, PA IDA PCRB (Philadelphia Electric Co.) - Series A
LOC Toronto-Dominion Bank 08/01/16 3.75 2,400,000 P1 A1+
1,100,000 Delaware County, PA IDA PCRB British Petroleum Exploration & Oil 10/01/19 3.85 1,100,000 P1 A1+
500,000 Lehigh County, PA IDA - Series 1985A
LOC Rabobank Nederland 12/01/15 4.10 500,000 P1
1,000,000 Mercersbury Borough, PA General Purpose
(Mercersbury College Project)
LOC Mellon Bank, N.A. 11/01/27 4.05 1,000,000 A1
1,000,000 Northeastern Pennsylvania Hospital and Education Auth. RB
(All Health Pooled Fin. Prog.)
LOC Chase Manhattan Bank, N.A. 07/01/26 3.95 1,000,000 VMIG-1
100,000 Pennsylvania Higher Education Facility Authority - Series 1995 A
LOC Morgan Guaranty Trust Company 11/01/25 3.80 100,000 A1+
</TABLE>
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See Notes to Financial Statements.
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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>
$ 1,250,000 York County, PA IDA Limited Obligation RB (b)
(Metal Exchange Corporation Project)
LOC Comerica Bank 06/01/06 4.05% $ 1,250,000
1,600,000 York County, PA IDA PCRB (Philadelphia Electric Company)
LOC Toronto-Dominion Bank 08/01/16 3.75 1,600,000 P1 A1+
----------- -----------
16,720,000 Total Other Variable Rate Demand Instruments 16,720,000
----------- -----------
<CAPTION>
Tax Exempt Commercial Paper (9.66%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 900,000 Beaver City, PA IDA
LOC Union Bank of Switzerland 02/19/98 3.75% $ 900,000 VMIG-1 A1+
1,500,000 Montgomery County, PA IDA
LOC Deutsche Bank A.G. 01/21/98 3.75 1,500,000 P1 A1+
1,800,000 Venango, PA IDA Resource Recovery RB
(Scrubgrass Project)
LOC Natwest Bank 12/17/97 3.85 1,800,000 A1+
----------- -----------
4,200,000 Total Tax Exempt Commercial Paper 4,200,000
----------- -----------
Total Investments (61.88%) (Cost $26,890,222+) 26,890,222
Cash and Other Assets, Net of Liabilities (38.12%) 16,565,635
-----------
Net Assets (100.00%) $43,455,857
===========
+ 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 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.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
HRB = Hospital Revenue Bond PCRB = Pollution Control Revenue Bond
IDA = Industrial Development Authority RB = Revenue Bond
TRAN = Tax and Revenue Anticipation Note
</TABLE>
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See Notes to Financial Statements.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
================================================================================
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities at value (Cost $26,890,222) .......................... $ 26,890,222
Receivables:
Securities sold............................................................. 16,876,152
Interest ................................................................... 200,338
---------------
Total assets.............................................................. 43,966,712
---------------
LIABILITIES
Due to custodian................................................................ 381,768
Accrued expenses................................................................ 45,690
Dividends payable............................................................... 83,397
---------------
Total liabilities......................................................... 510,855
---------------
Net assets...................................................................... $ 43,455,857
===============
Net Asset Value, offering and redemption price per share:
Class A Shares 43,064,785 Shares Outstanding (Note 3).......................... $ 1.00
===============
Class B Shares 392,014 Shares Outstanding (Note 3).......................... $ 1.00
===============
</TABLE>
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See Notes to Financial Statements.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest..................................................................... $ 1,580,366
--------------
Expenses: (Note 2)
Investment management fee.................................................... 170,844
Administration fee........................................................... 89,693
Distribution fee............................................................. 106,492
Custodian fee................................................................ 4,978
Shareholder servicing and related shareholder expenses....................... 46,670
Legal, compliance and filing fees............................................ 9,913
Audit and accounting......................................................... 61,151
Trustees' fees............................................................... 6,159
Amortization of organization expenses........................................ 9,632
Other........................................................................ 2,977
--------------
Total expenses............................................................. 508,509
Less: Fees waived (Note 2)................................................. ( 209,818)
--------------
Net expenses............................................................... 298,691
--------------
Net investment income............................................................ 1,281,675
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments.......................................... -0-
--------------
Increase in net assets from operations........................................... $ 1,281,675
==============
</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, 1997 AND 1996
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<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income......................................... $ 1,281,675 $ 1,189,585
Net realized gain (loss) on investments....................... -0- -0-
--------------- ---------------
Increase in net assets from operations........................... 1,281,675 1,189,585
Dividends to shareholders from net investment income:
Class A....................................................... ( 1,277,930)* ( 1,189,561)*
Class B....................................................... ( 3,745)* ( 24)*
Capital share transactions (Note 3)
Class A...................................................... 6,728,888 ( 4,645,246)
Class B...................................................... 386,997 5,017
--------------- ---------------
Total increase (decrease)................................. 7,115,885 ( 4,640,229)
Net assets:
Beginning of year............................................. 36,339,972 40,980,201
--------------- ---------------
End of year................................................... $ 43,455,857 $ 36,339,972
=============== ===============
* 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. This Fund is a short term, tax exempt
money market fund. The Fund has two classes of stock authorized, Class A and
Class B. The Class A shares are subject to a service fee pursuant to the
Distribution and Service Plan. The Class B shares are not subject to a service
fee. Additionally, the Fund may allocate among its classes certain expenses to
the extent allowable to specific classes, including transfer agent fees,
government registration fees, certain printing and postage costs, and
administrative and legal expenses. Class specific expenses of the Fund were
limited to distribution fees and wtransfer agent expenses. In all other respects
the Class A and Class B shares represent the same interest in the income and
assets of the Fund. Distribution for Class B shares commenced on October 10,
1996 and all Fund shares outstanding before October 10, 1996 were designated as
Class A shares. 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 Trustees.
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), equal to .40% of the Fund's
average daily net assets.
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
Pursuant to an Administrative Services Contract the Fund pays to the Manager an
annual fee of .21% of the Fund's average daily net assets not in excess of $1.25
billion, plus .20% of such assets in excess of $1.25 billion but not in excess
of $1.5 billion, plus .19% 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.
For the year ended November 30, 1997 the Manager voluntarily waived investment
management fees and administration fees of $124,396 and $85,422, respectively.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $24,752 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
3. Capital Stock.
At November 30, 1997, an unlimited number of shares of beneficial interest ($.01
par value) were authorized and capital paid in amounted to $43,456,799.
Transactions in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
November 30, 1997 November 30, 1996
----------------- -----------------
Class A
<S> <C> <C>
Sold...................................... 122,761,722 150,377,896
Issued on reinvestment of dividends....... 1,120,365 932,450
Redeemed.................................. ( 117,153,199) ( 155,955,592)
-------------- --------------
Net increase (decrease)................... 6,728,888 ( 4,645,246)
============== ==============
Year October 10, 1996
Ended (Commencement of Sales) to
November 30, 1997 November 30, 1996
----------------- -----------------
Class B
<S> <C> <C>
Sold...................................... 388,922 5,100
Issued on reinvestment of dividends....... 3,228 17
Redeemed.................................. ( 5,153) ( 100)
-------------- --------------
Net increase (decrease)................... 386,997 5,017
============== ==============
</TABLE>
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<PAGE>
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4. Sales of Securities.
Accumulated undistributed realized losses at November 30, 1997 amounted to $942.
This amount represents tax basis capital losses which may be carried forward to
offset future gains. Such losses expire on November 30, 2001.
5. 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 81% 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.
6. Financial Highlights.
<TABLE>
<CAPTION>
Year Ended December 16, 1992
November 30, (Commencement of
Class A --------------------------------------------------- Sales) to
- ------- 1997 1996 1995 1994 November 30, 1993
--------- --------- --------- --------- -----------------
<S> <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
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income..................... 0.030 0.030 0.034 0.024 0.022
Less distributions:
Dividends from net investment income ( 0.030) ( 0.030) ( 0.034) ( 0.024) ( 0.022)
--------- --------- --------- --------- ---------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return................................ 3.05% 3.01% 3.50% 2.44% 2.28%*
Ratios/Supplemental Data
Net assets, end of period (000)............. $ 43,064 $ 36,335 $ 40,980 $ 43,559 $ 38,817
Ratios to average net assets:
Expenses.................................. 0.70% 0.68% 0.59% 0.49% 0.22%*
Net investment income..................... 3.00% 2.97% 3.44% 2.44% 2.26%*
Management, administration fees
and shareholder servicing fees waived... 0.49% 0.49% 0.61% 0.68% 0.85%*
Expenses reimbursed....................... -- -- -- -- 0.33%*
Expense offsets........................... -- 0.01% -- -- --
* Annualized
</TABLE>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. Financial Highlights. (Continued)
<TABLE>
<CAPTION>
October 10, 1996
Year (Commencement of
Class B Ended Sales) to
- ------- November 30, 1997 November 30, 1996
----------------- -----------------
<S> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period................. $ 1.00 $ 1.00
--------- ---------
Income from investment operations:
Net investment income.............................. 0.033 0.005
Less distributions:
Dividends from net investment income............... ( 0.033) ( 0.005)
-------- --------
Net asset value, end of period....................... $ 1.00 $ 1.00
========= =========
Total Return......................................... 3.31% 3.25%*
Ratios/Supplemental Data
Net assets, end of period (000)...................... $ 392 $ 5
Ratios to average net assets:
Expenses............................................. 0.45% 0.42%*
Net investment income................................ 3.28% 3.21%*
Management and administration fees waived............ 0.49% 0.27%*
Expense offsets...................................... -- 0.01%*
*Annualized
</TABLE>
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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 assets and liabilities, including
the statement of investments, of Pennsylvania Daily Municipal Income Fund as of
November 30, 1997, 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 financial highlights for each of the four 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 financial
highlights on 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 financial
highlights 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, 1997, 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 financial highlights referred to
above present fairly, in all material respects, the financial position of
Pennsylvania Daily Municipal Income Fund as of November 30, 1997, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles.
\s\McGladrey & Pullen, LLP
New York, New York
December 24, 1997
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<PAGE>
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PENNSYLVANIA
DAILY
MUNICIPAL
INCOME
FUND
Annual Report
November 30, 1997
- ------------------------------------------------------
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.
- ------------------------------------------------------
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
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>
