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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 semi-annual report of Pennsylvania Daily Municipal
Income Fund for the period December 1, 1997 through May 31,1998.
The Fund had net assets of $15,558,450 and 289 active shareholders as of May 31,
1998.
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
MAY 31, 1998
(UNAUDITED)
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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 (33.92%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 City of Philadelphia, PA TRAN - Series A 06/30/98 3.95% $ 2,000,764 MIG-1 SP-1+
395,000 Perkioman Valley School District, PA (b)
FSA Insured 02/01/99 3.90 395,000
2,000,000 Philadelphia, PA School District TRAN
LOC Commerzbank A.G. 06/30/98 3.90 2,000,841 MIG-1 SP-1+
680,000 State Public School Building Authority, PA School RB - Series 1997D (b)
AMBAC Insured 06/15/98 3.85 680,000
200,000 University of Pennsylvania - Series B (b)
MBIA Insured 06/01/98 4.50 200,000
----------- -----------
5,275,000 Total Other Tax Exempt Investments 5,276,605
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (40.30%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 Allegheny County, PA GO - Series C
LOC National Westminster Bank PLC 06/01/03 3.80% $ 100,000 VMIG-1 A1+
300,000 Chester County, PA 1997 Archdiocese of Pennsylvania
LOC Corestates Bank, N.A. 07/01/27 4.00 300,000 VMIG-1
500,000 City of York General Authority
(Adjusted Rate Pooled Financing)
LOC First Union National Bank 09/01/26 3.85 500,000 A1
370,000 Clinton County, PA Municipal Authority HRB
(Lock Haven Hospital Project) - Series 1991A
LOC Mellon Bank, N.A. 09/01/07 4.05 370,000 A1
700,000 Delaware Valley Regional Finance Authority,
Pennsylvania Local Government RB - Series 1985A
LOC Credit Suisse First Boston 12/01/18 3.90 700,000 VMIG-1 A1+
600,000 Emmaus, PA General Authority Local Government RB
(Bond Pool Project) - Series 1989F4
GIC-Goldman Sachs 03/01/24 3.95 600,000 A1+
700,000 Lancaster, PA Higher Education Authority
LOC Chase Manhattan Bank, N.A. 04/15/27 3.97 700,000 VMIG-1 A1
500,000 Lehigh County, PA IDA - Series 1985A
LOC Rabobank Nederland 12/01/15 3.80 500,000 P1
200,000 North Lebanon Township, PA (b)
LOC First Union National Bank 04/01/18 3.95 200,000
600,000 Pennsylvania EDFA - Series 1997
LOC Nations Bank 11/01/27 3.90 600,000 VMIG-1 A1+
600,000 Pennsylvania EDFA - Series 1997F (b)
LOC PNC Bank, N.A. 12/01/04 4.05 600,000
</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>
$ 400,000 Pennsylvania HEFA Cabrini College - Series 1997 A-2
LOC Allied Irish Bank 04/01/22 3.80% $ 400,000 VMIG-1
700,000 Pennsylvania HEFA Moravian College
LOC Summit Bank 04/01/12 3.80 700,000 MIG-1
----------- -----------
6,270,000 Total Other Variable Rate Demand Instruments 6,270,000
----------- -----------
<CAPTION>
Tax Exempt Commercial Paper (26.35%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 900,000 Beaver County, PA IDA PCRB
(Duquesne Light Company Project) - Series 1993A
LOC Union Bank of Switzerland 08/11/98 3.70% $ 900,000 VMIG-1 A1+
1,900,000 Commonwealth of Pennsylvania GO BAN 08/18/98 3.60 1,900,000 P1 A1+
700,000 Montgomery County, PA IDA PCRB Refunding Bonds
(PECO Energy Co. Project) - Series 1994B
LOC Deutsche Bank A.G. 09/10/98 3.70 700,000 P1 A1+
600,000 Venango, PA IDA Resource Recovery RB
(Scrubgrass Project) - Series 1990A
LOC National Westminster Bank PLC 09/10/98 3.80 600,000 P1 A1+
----------- -----------
4,100,000 Total Tax Exempt Commercial Paper 4,100,000
----------- -----------
Total Investments (100.57%) (Cost $15,646,605+) 15,646,605
Liabilities in Excess of Cash and Other Assets (-0.57%) ( 88,155)
-----------
Net Assets (100.00%) $15,558,450
Net Asset value, offering and redemption price per share: ===========
Class A shares, 14,872,826 shares outstanding (Note 3) $ 1.00
===========
Class B shares, 687,117 shares outstanding (Note 3) $ 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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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
MAY 31, 1998
(UNAUDITED)
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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.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
AMBAC = American Municipal Bond Assurance Corporation HRB = Hospital Revenue Bond
BAN = Bond Anticipation Note IDA = Industrial Development Authority
EDFA = Educational Development Finance Authority LOC = Letter of Credit
FSA = Financial Securities Assurance MBIA = Municipal Bond Insurance Association
GIC = Guaranteed Investment Contract PCRB = Pollution Control Revenue Bond
GO = General Obligation RB = Revenue Bond
HEFA = Health and Education Facilities Authority 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 OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest..................................................................... $ 275,632
-----------
Expenses: (Note 2)
Investment management fee.................................................... 30,017
Administration fee........................................................... 15,759
Distribution fee............................................................. 18,559
Custodian fee................................................................ 1,562
Shareholder servicing and related shareholder expenses....................... 12,623
Legal, compliance and filing fees............................................ 27,293
Audit and accounting......................................................... 34,490
Trustees' fees............................................................... 3,048
Other........................................................................ 2,032
-----------
Total expenses............................................................. 145,383
Less: Fees waived (Note 2)............................................... ( 43,346)
Expense paid indirectly (Note 2).................................. ( 10)
Expenses reimbursed (Note 2)....................................... ( 49,699)
-----------
Net expenses............................................................... 52,328
-----------
Net investment income............................................................ 223,304
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments.......................................... ( 551)
-----------
Increase in net assets from operations........................................... $ 222,753
===========
</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
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<TABLE>
<CAPTION>
Six Months
Ended Year
May 31, 1998 Ended
(Unaudited) November 30,1997
----------- ----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income............................................ $ 223,304 $ 1,281,675
Net realized gain (loss) on investments.......................... ( 551) -0-
------------- -------------
Increase in net assets from operations 222,753 1,281,675
Dividends to shareholders from net investment income:
Class A.......................................................... ( 220,573)* ( 1,277,930)*
Class B.......................................................... ( 2,731)* ( 3,745)*
Capital share transactions (Note 3)
Class A ......................................................... ( 28,191,959) 6,728,888
Class B.......................................................... 295,103 386,997
------------- -------------
Total increase (decrease)................................... ( 27,897,407) 7,115,885
Net assets:
Beginning of period.............................................. 43,455,857 36,339,972
------------- -------------
End of period.................................................... $ 15,558,450 $ 43,455,857
============= =============
* 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
(UNAUDITED)
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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 transfer 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)
(UNAUDITED)
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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 period ended May 31, 1998 the Manager voluntarily waived investment
management fees and administration fees of $27,830 and $15,516, respectively. In
addition, although not required to do so, the Manager has agreed to reimburse
expenses amounting to $49,699.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $3,784 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
Included under the same caption are expense offsets of $10.
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
3. Capital Stock.
At May 31, 1998, an unlimited number of shares of beneficial interest ($.01 par
value) were authorized and capital paid in amounted to $15,559,943. Transactions
in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
May 31, 1998 November 30, 1997
-------------- -----------------
Class A
<S> <C> <C>
Sold......................................... 29,294,462 122,761,722
Issued on reinvestment of dividends.......... 222,617 1,120,365
Redeemed..................................... ( 57,709,038) ( 117,153,199)
-------------- -------------
Net increase (decrease)...................... ( 28,191,959) 6,728,888
============== =============
<CAPTION>
Six Months Year
Ended Ended
May 31, 1998 November 30, 1997
-------------- -----------------
Class B
<S> <C> <C>
Sold......................................... 986,920 388,922
Issued on reinvestment of dividends.......... 2,351 3,228
Redeemed..................................... ( 694,168) ( 5,153)
-------------- -------------
Net increase (decrease)...................... 295,103 386,997
============== =============
</TABLE>
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4. Sales of Securities.
Accumulated undistributed realized losses at May 31, 1998 amounted to $1,493.
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 63% 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.
<TABLE>
<CAPTION>
6. Financial Highlights.
Six December 16, 1992
Months Year Ended November 30, (Commencement
Class A Ended --------------------------------------------------- of Sales) to
- ------- November 30,
May 31, 1998 1997 1996 1995 1994 1993
------------ --------- --------- --------- --------- ---------
<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........................ 0.015 0.030 0.030 0.034 0.024 0.022
Less distributions:
Dividends from net investment income......... ( 0.015 ) ( 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 $ 1.00
========= ========= ========= ========= ========= =========
Total Return................................... 3.02% 3.05% 3.01% 3.50% 2.44% 2.28%
Ratios/Supplemental Data
Net assets, end of period (000)................ $ 14,871 $ 43,064 $ 36,335 $ 40,980 $ 43,559 $ 38,817
Ratios to average net assets:
Expenses..................................... 0.70%* 0.70% 0.68% 0.59% 0.49% 0.22%*
Net investment income........................ 2.97%* 3.00% 2.97% 3.44% 2.44% 2.26%*
Management and administration fees waived.... 0.58%* 0.49% 0.49% 0.61% 0.68% 0.85%*
Expenses reimbursed.......................... 0.66%* -- -- -- -- 0.33%*
Expense offsets.............................. -- -- 0.01% -- -- --
* Annualized
</TABLE>
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PENNSYLVANIA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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<TABLE>
<CAPTION>
6. Financial Highlights. (Continued)
Six October 10, 1996
Months Year (Commencement of
Class B Ended Ended Offering) to
- ------- May 31, 1998 November 30, 1997 November 30, 1996
------------ ----------------- -----------------
<S> <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
-------- -------- --------
Income from investment operations:
Net investment income............................ 0.017 0.033 0.005
Less distributions:
Dividends from net investment income............. ( 0.017) ( 0.033) ( 0.005)
-------- -------- --------
Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return....................................... 3.38% 3.31% 3.25%*
Ratios/Supplemental Data
Net assets, end of period (000).................... $ 687 $ 392 $ 5
Ratios to average net assets:
Expenses......................................... 0.45%* 0.45% 0.42%*
Net investment income............................ 3.40%* 3.28% 3.21%*
Management and administration fees waived........ 0.58%* 0.49% 0.27%*
Expense reimbursed............................... 0.66%* -- --
Expense offsets.................................. -- -- 0.01%*
* Annualized
</TABLE>
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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
801 Pennsylvania
Kansas City, Missouri 64105-1716
Transfer Agent & Dividend
Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
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PENNSYLVANIA
DAILY
MUNICIPAL
INCOME
FUND
Semi-Annual Report
May 31, 1998
(Unaudited)
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