<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL
DAILY
INCOME FUND
Annual Report
March 31, 1998
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
DAILY INCOME FUND 212-830-5200
================================================================================
Dear Shareholder,
We are pleased to present the annual report of Institutional Daily Income Fund
for the year ended March 31, 1998.
The Fund's Money Market Portfolio had 249 shareholders and net assets of
$336,549,942 as of March 31, 1998. The U.S. Treasury Portfolio had 688
shareholders and net assets of $474,204,867 as of March 31, 1998.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
\s\Steven W. Duff
Steven W. Duff
President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Commercial Paper (13.29%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Abbey National North America 04/20/98 5.50% $ 14,957,013
15,000,000 General Electric Capital Corporation 06/03/98 5.52 14,857,725
15,000,000 Island Finance Puerto Rico, Incorporated 05/07/98 5.54 14,918,100
-------------- -------------
45,000,000 Total Commercial Paper 44,732,838
-------------- -------------
<CAPTION>
Letter of Credit Commercial Paper (14.72%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Banco De Galicia Y Buenos Aires S.A.
LOC Bayerische Vereinsbank, A.G. 09/15/98 5.64% $ 14,619,379
10,000,000 Bancomer, S.A.
LOC Bank of Montreal 04/03/98 5.55 9,996,944
10,000,000 Pemex Capital Incorporated
LOC Societe Generale 04/30/98 5.53 9,956,097
15,000,000 Unifunding, Incorporated
Unibank, A/S 04/20/98 5.50 14,957,013
-------------- -------------
50,000,000 Total Letter of Credit Commercial Paper 49,529,433
-------------- -------------
<CAPTION>
Master Note (1.49%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 The Goldman Sachs Group L.P. 04/28/98 5.72% $ 5,000,000
-------------- -------------
5,000,000 Total Master Note 5,000,000
-------------- -------------
<CAPTION>
Medium Term Note (4.45%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 First USA Credit Master Trust - Series 1995 12/10/98 5.63% $ 15,000,000
-------------- -------------
15,000,000 Total Medium Term Note 15,000,000
-------------- -------------
<CAPTION>
Other Notes (48.67%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,675,000 Alpine Capital Investments L.L.C.
LOC First of America 09/15/27 (a) 5.68% $ 2,675,000
4,225,000 American West Michigan Properties
LOC Comerica Bank 12/01/25 (a) 5.68 4,225,000
867,000 Antonio Sofo & Son Importing Co.
LOC PNC Bank, N.A. 12/31/09 (a) 5.72 867,000
10,000,000 Asset-Backed Securities Investment Trust - Series 1997 06/15/98 (b) 5.69 10,000,000
1,705,000 Bardstown, KY IDRB (R & J Tower Corporation Project)
LOC Comerica Bank 06/01/24 (a) 5.68 1,705,000
13,400,000 City of Anaheim
LOC Credit Suisse First Boston 04/01/98 (b) 5.65 13,400,000
1,000,000 City of Colorado Springs Adj. Rate Taxable/Convertible Bonds
(Goodwill Industries) - 1997B
LOC Bank One Ohio 02/01/07 (a) 5.66 1,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,080,000 Crystal Enterprises Inc.
LOC National Bank of Detroit 06/01/25 (a) 5.68% $ 1,080,000
3,250,000 Delta Capital L.L.C.
LOC First Michigan Bank 10/01/16 (a) 5.68 3,250,000
930,000 Delta Capital L.L.C. - Series A
LOC First Michigan Bank 01/01/26 (a) 5.68 930,000
2,085,000 Dickenson Press, Inc. - Series 1997
LOC First Michigan Bank 01/01/27 (a) 5.68 2,085,000
3,500,000 Emory University Project Dekalb County, GA 04/07/98 5.70 3,500,000
3,400,000 Emory University Project Dekalb County, GA 1997B 11/01/27 (a) 5.65 3,400,000
15,000,000 Equitable Life Assurance Society
LOC Chase Manhattan Bank, N.A. 03/22/99 5.73 15,000,000
1,350,000 GCG Portage L.L.C.
LOC Old Kent Bank & Trust Co. 02/01/26 (a) 5.68 1,350,000
965,000 Hendricks County (Heartland Crossing)
LOC Bank One Ohio 01/01/22 (a) 5.82 965,000
9,000,000 Jacksonville Health Charity Group (Baptist/St. Vincent)
MBIA Insured 08/15/19 (a) 5.75 9,000,000
6,620,000 Jake Sweeney Automotive, Inc.
LOC Star Bank, N.A. 04/01/05 (a) 5.74 6,620,000
985,000 LRV Enterprises, L.L.C.
LOC First of America 09/01/21 (a) 5.68 985,000
5,000,000 Long Lane Master Trust III
LOC Bank of Boston 11/02/98 (b) 5.78 5,000,000
3,600,000 Mayfair Village Retirement Center, Inc., KY
(Variable Rate Term Notes) - Series 1995
LOC PNC Bank, N.A. 05/01/00 (a) 5.68 3,600,000
5,855,000 Medic Funding Corporation
LOC Federal Home Loan Bank 05/01/27 (a) 5.66 5,855,000
2,906,000 Mercer County Improvement Authority RB
(County Baseball Stadium Project) - Series 1997 04/15/98 6.25 2,906,209
4,250,000 Mississippi Business Finance Corporation IDRB
(ABTCO, Inc. Project) - Series 1997B
LOC First Union National Bank 04/01/22 (a) 5.65 4,250,000
1,800,000 Mississippi Business Finance Corporation IDRB
(Howard Industries, Inc.) - Series 1995
LOC National Bank of Detroit 06/01/10 (a) 5.75 1,800,000
14,000,000 New York City GO Bonds
FGIC Insured 05/21/98 5.66 14,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 9,000,000 New York, NY Taxable - Series G 08/01/98 5.73% $ 8,996,363
4,600,000 Ohio, Stark City IDRB (Shearers Foods)
LOC Bank One Ohio 12/01/23 (a) 5.66 4,600,000
3,000,000 Passaic County, NJ GO Refunding Bond - Series B
LOC Bank of Nova Scotia 09/01/20 (a) 5.75 3,000,000
1,000,000 Pennsylvania EDFA (Oglevee Ltd. Project)
LOC PNC Bank, N.A. 08/01/02 (a) 5.65 1,000,000
900,000 Pennsylvania EDFA
(Philadelphia Business & Technical Center Project) - Series A1
LOC PNC Bank, N.A. 04/01/04 (a) 5.65 900,000
900,000 Pennsylvania EDFA (Quality Foods L.P. Project)
Taxable Development RB - Series 1995D
LOC PNC Bank, N.A. 12/01/14 (a) 5.65 900,000
800,000 Pennsylvania EDFA (Southpointe Rink Assoc. Project)
Taxable Development RB - Series 1994D7
LOC PNC Bank, N.A. 12/01/09 (a) 5.65 800,000
2,600,000 Pennsylvania EDFA (West 914 Incorporation Project)
Taxable Development RB - Series 1991A
LOC PNC Bank, N.A. 05/01/21 (a) 5.65 2,600,000
1,500,000 Pennsylvania EDFA Taxable Development RB (C & D Charter Power
System) - Series 1991B2
LOC PNC Bank, N.A. 12/01/00 (a) 5.65 1,500,000
5,000,000 Reading Ohio Taxable IDRB
LOC Bank of Montreal 03/01/08 (a) 5.63 5,000,000
2,075,000 Rockside Road Properties Variable Rate Taxable Notes
(Rockside Road Properties Project) - Series 1995
LOC First National Bank of Ohio 07/01/10 (a) 5.70 2,075,000
1,350,000 SDR Capital, L.L.C.
LOC First Michigan Bank 10/15/01 (a) 5.68 1,350,000
2,930,000 State of Connecticut Resource Recovery Authority
LOC National Westminster Bank PLC 11/15/98 (b) 5.95 2,930,000
2,200,000 State of Missouri HEFA (SSM Health Care System) 1995 - Series D
MBIA Insured 06/01/25 (a) 5.75 2,200,000
1,000,000 State of Tennessee Adjustable Taxable BAN - Series B 07/02/01 (a) 5.75 1,000,000
2,000,000 State of Tennessee Adjustable Taxable BAN - Series D 07/02/01 (a) 5.65 2,000,000
1,990,000 Trendway Corporation
LOC Michigan National Bank 12/01/26 (a) 5.68 1,990,000
1,500,000 Zylstra Funding, Inc.
LOC First Michigan Bank 06/01/27 (a) 5.68 1,500,000
-------------- --------------
163,793,000 Total Other Notes 163,789,572
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements, Overnight (14.56%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 49,000,000 Morgan Stanley & Co., Incorporated (Collateralized
by $50,775,000, GNMA, 6.500%, due 3/20/28) 04/01/98 6.05% $ 49,000,000
-------------- --------------
49,000,000 Total Repurchase Agreements, Overnight 49,000,000
-------------- --------------
<CAPTION>
Yankee Certificate of Deposit (4.45%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Canadian Imperial Bank of Commerce 05/26/98 5.53% $ 15,000,000
-------------- --------------
15,000,000 Total Yankee Certificate of Deposit 15,000,000
-------------- --------------
Total Investments (101.63%) (Cost $342,051,843+) 342,051,843
Liabilities In Excess of Cash And Other Assets (-1.63%) ( 5,501,901)
--------------
Net Assets (100.00%) $ 336,549,942
==============
Net Asset Value, offering and redemption price per share:
Class A shares, 108,657,122 shares outstanding (Note 3) $ 1.00
==============
Class B shares, 227,892,820 shares outstanding (Note 3) $ 1.00
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) Securities are payable on demand at par including accrued interest (usually
with seven days notice) and where applicable are unconditionally secured as
to principal and interest by a letter of credit. The interest rates are
adjustable and are based on market rates. The rate shown is the rate in
effect at the date of this statement.
(b) The maturity date indicated for this security is the mandatory put date.
<TABLE>
<CAPTION>
KEYS:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note IDRB = Industrial Development Revenue Bond
EDFA = Economic Development Finance Authority RB = Revenue Bond
GO = General Obligation
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
STATEMENT OF NET ASSETS
MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements (44.92%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 50,000,000 Morgan (J.P.) Securities, Inc. (Collateralized by $48,104,000,
U.S. Treasury Notes, 6.63%, due 04/30/02) 04/01/98 5.95% $ 50,000,000
68,000,000 Morgan Stanley & Company, Inc. (Collateralized by $97,064,388,
GNMA, 6.00% to 8.50%, due 02/15/06 to 03/15/28) 04/01/98 6.05 68,000,000
75,000,000 The Goldman Sachs Group L.P. (Collateralized by $79,486,811,
GNMA, 6.50%, due 08/15/27) 04/01/98 6.05 75,000,000
20,000,000 The Goldman Sachs Group L.P. (Collateralized by $21,295,595,
GNMA, 5.50% to 6.13%, due 08/20/27 to 10/20/27) 04/09/98 5.53 20,000,000
-------------- --------------
213,000,000 Total Repurchase Agreements 213,000,000
-------------- --------------
<CAPTION>
U.S. Government Obligations (54.83%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 U.S. Treasury Bills 04/02/98 4.62% $ 24,996,792
25,000,000 U.S. Treasury Bills 04/02/98 4.65 24,996,771
100,000,000 U.S. Treasury Bills 04/02/98 4.95 99,986,250
20,000,000 U.S. Treasury Bills 04/16/98 5.40 19,955,292
10,000,000 U.S. Treasury Notes, 5.87% 04/30/98 5.48 10,002,262
5,000,000 U.S. Treasury Notes, 6.12% 05/15/98 5.46 5,003,268
5,000,000 U.S. Treasury Notes, 6.12% 05/15/98 5.53 5,002,854
5,000,000 U.S. Treasury Notes, 6.25% 06/30/98 5.54 5,007,294
5,000,000 U.S. Treasury Notes, 6.25% 07/31/98 5.63 5,008,707
5,000,000 U.S. Treasury Notes, 4.75% 08/31/98 5.52 4,980,047
5,000,000 U.S. Treasury Notes, 6.00% 09/30/98 5.44 5,010,784
5,000,000 U.S. Treasury Notes, 6.00% 09/30/98 5.49 5,008,716
5,000,000 U.S. Treasury Notes, 6.00% 09/30/98 5.54 5,007,407
5,000,000 U.S. Treasury Notes, 5.87% 10/31/98 5.41 5,008,149
5,000,000 U.S. Treasury Notes, 5.50% 11/15/98 5.61 4,994,918
5,000,000 U.S. Treasury Notes, 5.12% 11/30/98 5.66 4,980,748
5,000,000 U.S. Treasury Notes, 5.62% 11/30/98 5.55 4,999,432
10,000,000 U.S. Treasury Notes, 5.87% 01/31/99 5.41 10,033,289
10,000,000 U.S. Treasury Notes, 5.87% 01/31/99 5.49 10,026,631
------------- -------------
260,000,000 Total U.S. Government Obligations 260,009,611
------------- -------------
Total Investments (99.75%) (Cost $473,009,611+) 473,009,611
Cash and Other Assets, Net of Liabilities (0.25%) 1,195,256
-------------
Net Assets (100%) $ 474,204,867
=============
Net Asset Value offering and redemption price per share:
Class A Shares, 467,372,275 shares outstanding (Note 3) $ 1.00
=============
Class B Shares, 6,832,592 shares outstanding (Note 3) $ 1.00
=============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
================================================================================
<TABLE>
<CAPTION>
Money Market U.S. Treasury
Portfolio Portfolio
------------------ -----------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest................................................... $ 16,533,164 $ 21,615,678
------------------ -----------------
Expenses: (Note 2)
Investment management fee.................................. 348,323 468,085
Administration fee......................................... 145,134 195,035
Distribution fee (Class A)................................. 181,149 956,793
Custodian expenses......................................... 31,554 39,146
Shareholder servicing and related shareholder expenses..... 63,323 86,751
Legal, compliance and filing fees.......................... 92,982 80,738
Audit and accounting....................................... 67,243 62,938
Trustees' fees ............................................ 6,443 6,608
Amortization of organization costs......................... 10,271 --
Miscellaneous.............................................. 12,581 14,459
------------------ -----------------
Total expenses......................................... 959,003 1,910,553
Less:
Fees waived (Note 2).................................. ( 203,066) ( 273,050)
Expenses paid indirectly.............................. ( 12,841) ( 15,789)
----------------- ----------------
Net expenses................................... 743,096 1,621,714
------------------ -----------------
Net investment income.......................................... 15,790,068 19,993,964
------------------ -----------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C> <C>
Net realized gain (loss) on investments........................ 3,299 11,744
------------------ -----------------
Increase in net assets from operations......................... $ 15,793,367 $ 20,005,708
================== =================
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED MARCH 31, 1998 AND 1997
================================================================================
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Treasury Portfolio
----------------------------------- ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................. $ 15,790,068 $ 8,746,758 $ 19,993,964 $ 14,333,683
Net realized gain (loss) on investments 3,299 287 11,744 3,711
------------- ------------- ------------- -------------
Increase in net assets from operations. 15,793,367 8,747,045 20,005,708 14,337,394
Dividends to shareholders:
Net investment income
Class A.............................. ( 3,807,170) ( 581,612) ( 19,599,207) ( 14,207,747)
Class B.............................. ( 11,982,898) ( 8,165,146) ( 394,757) ( 125,936)
Net realized gain on investments
Class A.............................. ( 1,031) -- ( 11,553) ( 3,638)
Class B.............................. ( 2,268) ( 287) ( 191) ( 73)
Capital share transactions (Note 3):
Class A.............................. 70,436,963 38,214,898 157,082,320 18,542,509
Class B.............................. 69,367,687 31,243,369 ( 966,631) 7,799,223
------------- ------------- ------------ -------------
Total increase (decrease)............ 139,804,650 69,458,267 156,115,689 26,341,732
Net assets:
Beginning of year.................... 196,745,292 127,287,025 318,089,178 291,747,446
------------- ------------- ------------- -------------
End of year.......................... $ 336,549,942 $ 196,745,292 $ 474,204,867 $ 318,089,178
============= ============= ============= =============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Summary of Accounting Policies.
Institutional Daily Income Fund (the "Fund") is a no-load, diversified, open-end
management investment company registered under the Investment Company Act of
1940. The Fund offers investors three managed portfolios of money market
instruments: U.S. Treasury Portfolio, Money Market Portfolio and Municipal
Portfolio. Presently only the Money Market Portfolio and U.S. Treasury Portfolio
have been activated. Each Portfolio has two classes of stock authorized, Class A
and Class B. The Class A shares of each Portfolio are subject to a service fee
pursuant to each Portfolio's distribution and service plan. The Class B shares
are not subject to a service fee. Additionally, each Portfolio 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 each respective Portfolio.
Distribution of Class A shares of the Money Market Portfolio commenced April 6,
1995. All Portfolio shares outstanding before April 6, 1995 were designated as
Class B shares. Distribution of Class B shares of the U.S. Treasury Portfolio
commenced November 18, 1996. All Portfolio shares outstanding before November
18, 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.
b) Federal Income Taxes -
It is the policy of each Portfolio to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision for federal income tax is required.
c) Dividends and Distributions -
Dividends from investment income (including net realized short-term capital
gains) are declared daily and paid monthly. Capital gains distributions if
any, will be made at least annually and in no event later than sixty days
after the end of the Fund's fiscal year.
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. It is the Fund's
policy to take possession of securities as collateral under repurchase
agreements and to determine on a daily basis that the value of such
securities are sufficient to cover the value of the repurchase agreements.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, each Portfolio pays an investment
management fee to Reich & Tang Asset Management, L.P. (the Manager) at the
annual rate of .12% of the Portfolio's average daily net assets.
Pursuant to an Administrative Services Contract each Portfolio pays to the
Manager an annual fee of .05% of the Portfolio's average daily net assets.
Pursuant to a distribution and service plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors, Inc.
(the Distributor) have entered into a Distribution Agreement and a Shareholder
Servicing Agreement (with respect to the Class A shares of the Fund only). For
its services under the Shareholder Servicing Agreement, the Distributor receives
from each Portfolio with respect only to the Class A shares, a service fee equal
to .25% per annum of each Portfolio's average daily net assets.
During the year ended March 31, 1998, the Manager voluntarily waived investment
management fees and administration fees of $115,985 and $87,081, respectively,
for the Money Market Portfolio and $156,029 and $117,021, respectively, for the
U.S. Treasury Portfolio.
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$1,000 per annum plus $250 per meeting attended.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $58,043 and $78,074 paid to Reich
& Tang Services, L.P., an affiliate of the Manager, as servicing agent for the
Fund, for the Money Market Portfolio and U.S Treasury Portfolio, respectively.
Included in the Statements of Operations under the caption "Custodian expenses"
and "Shareholder servicing and related shareholder expenses" are expense offsets
of $12,841 and $15,789 for the Money Market Portfolio and U.S. Treasury
Portfolio, respectively.
3. Transactions in Shares of Beneficial Interest.
At March 31, 1998, an unlimited number of shares of beneficial interest were
authorized and capital paid in for the Money Market Portfolio and the U.S.
Treasury Portfolio amounted to $336,549,942 and $474,204,867, respectively.
Transactions in shares of beneficial interest, all at $1.00 per share, were as
follows:
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
3. Transactions in Shares of Beneficial Interest. (Continued)
Money Market Portfolio
------------------------------------------
For the Year Ended For the Year Ended
March 31, 1998 March 31, 1997
-------------- --------------
CLASS A
- -------
<S> <C> <C>
Sold.................................... $ 814,098,188 $ 225,303,821
Issued on reinvestment of dividends..... 3,558,103 511,560
Redeemed................................ ( 747,219,328) ( 187,600,483)
------------- -------------
Net increase (decrease)................. 70,436,963 38,214,898
============= =============
<CAPTION>
For the Year Ended For the Year Ended
March 31, 1998 March 31, 1997
-------------- --------------
CLASS B
- -------
<S> <C> <C>
Sold.................................... $1,041,115,865 $ 585,658,049
Issued on reinvestment of dividends..... 11,473,035 6,523,737
Redeemed................................ ( 983,221,213) ( 560,938,417)
------------- -------------
Net increase (decrease)................. 69,367,687 31,243,369
============= =============
<CAPTION>
U.S. Treasury Portfolio
-----------------------------------------
For the Year Ended For the Year Ended
March 31, 1998 March 31, 1997
-------------- --------------
CLASS A
- -------
<S> <C> <C>
Sold.................................... $ 967,765,949 $ 566,923,016
Issued on reinvestment of dividends..... 19,073,209 14,118,326
Redeemed................................ ( 829,756,838) ( 562,498,833)
-------------- -------------
Net increase (decrease)................. 157,082,320 18,542,509
============== =============
<CAPTION>
November 18, 1996
For the Year Ended (Commencement of Sales) to
March 31, 1998 March 31, 1997
-------------- --------------
CLASS B
- -------
<S> <C> <C>
Sold.................................... $ 24,810,119 $ 9,174,613
Issued on reinvestment of dividends..... 388,146 126,008
Redeemed................................ ( 26,164,896) ( 1,501,398)
------------- -------------
Net increase (decrease)................. ( 966,631) 7,799,223
============= =============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
4. Financial Highlights.
Money Market Portfolio
------------------------------------------------------------------
April 6, 1995
CLASS A For the Year Ended March 31, (Commencement of Sales) to
- ------- ----------------------------------
1998 1997 March 31, 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......................... 0.053 0.050 0.054
Less distributions:
Dividends from net investment income.......... ( 0.053) ( 0.050) ( 0.054)
---------- ---------- -----------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00
========== ========== ===========
Total Return..................................... 5.38% 5.16% 5.58%*
Ratios/Supplemental Data
Net assets, end of period (000).................. $ 108,657 $ 38,220 $ 5
Ratios to average net assets:
Expenses (net of fees waived and reimbursed)+. 0.45% 0.42% 0.41%*
Net investment income......................... 5.25% 5.07% 5.46%*
Expenses paid indirectly...................... 0.00% 0.01% 0.04%
Management and administration fees waived..... 0.07% 0.09% 0.13%
Expenses reimbursed........................... 0.00% 0.00% 0.03%
<CAPTION>
Money Market Portfolio
------------------------------------------------------------------
April 14, 1994
CLASS B For the Year Ended March 31, (Commencement of Sales) to
- ------- ----------------------------------
1998 1997 1996 March 31, 1995
---------- ---------- ---------- --------------
<S> <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
--------- --------- --------- ----------
Income from investment operations:
Net investment income......................... 0.055 0.053 0.057 0.045
Less distributions:
Dividends from net investment income.......... ( 0.055) ( 0.053) ( 0.057) ( 0.045)
--------- --------- --------- ----------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ==========
Total Return..................................... 5.64% 5.42% 5.85% 5.16%*
Ratios/Supplemental Data
Net assets, end of period (000).................. $ 227,893 $ 158,525 $ 127,282 $ 35,857
Ratios to average net assets:
Expenses (net of fees waived and reimbursed)+. 0.20% 0.17% 0.16% 0.02%*
Net investment income......................... 5.50% 5.29% 5.64% 5.14%*
Expenses paid indirectly...................... 0.00% 0.01% 0.04% 0.00%
Management and administration fees waived..... 0.07% 0.09% 0.13% 0.13%
Expenses reimbursed........................... 0.00% 0.00% 0.03% 0.25%
* Annualized
+ Includes expenses paid indirectly.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
4. Financial Highlights. (Continued)
U.S. Treasury Portfolio
------------------------------------------------------------------
November 29, 1995
CLASS A For the Year Ended March 31, (Commencement of Sales) to
- ------- ----------------------------------
1998 1997 March 31, 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......................... 0.051 0.049 0.017
Less distributions:
Dividends from net investment income.......... ( 0.051) ( 0.049) ( 0.017)
---------- ---------- -----------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00
========== ========== ===========
Total Return..................................... 5.24% 5.00% 5.18%*
Ratios/Supplemental Data
Net assets, end of period (000).................. $ 467,372 $ 310,290 $ 291,747
Ratios to average net assets:
Expenses (net of fees waived and reimbursed)+. 0.42% 0.42% 0.43%*
Net investment income......................... 5.12% 4.89% 5.07%*
Expenses paid indirectly...................... 0.00% 0.01% 0.00%
Management and administration fees waived..... 0.07% 0.05% 0.08%
<CAPTION>
U.S. Treasury Portfolio
-----------------------------------------------------
For the Year November 18, 1996
CLASS B Ended (Commencement of Sales) to
- ------- March 31, 1998 March 31, 1997
-------------- --------------
<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......................... 0.054 0.019
Less distributions:
Dividends from net investment income.......... ( 0.054) ( 0.019)
------------- -------------
Net asset value, end of period................... $ 1.00 $ 1.00
============= =============
Total Return..................................... 5.50% 5.27%*
Ratios/Supplemental Data
Net assets, end of period (000).................. $ 6,833 $ 7,799
Ratios to average net assets:
Expenses (net of fees waived and reimbursed)+. 0.17% 0.17%*
Net investment income......................... 5.37% 5.14%*
Expenses paid indirectly...................... 0.00% 0.01%*
Management and administration fees waived..... 0.07% 0.05%*
* Annualized
+ Includes expenses paid indirectly.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL DAILY INCOME FUND
INDEPENDENT AUDITOR'S REPORT
================================================================================
The Board of Trustees and Shareholders
Institutional Daily Income Fund
We have audited the accompanying statements of net assets of the Money Market
Portfolio and the U.S. Treasury Portfolio of Institutional Daily Income Fund as
of March 31, 1998, and the related statements of operations, the statements of
changes in net assets, and the financial highlights for each of the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights 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 March
31, 1998, by correspondence with the custodian and brokers. 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.
/s/McGladrey & Pullen, LLP
April 27, 1998
New York, New York
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
- --------------------------------------------------------------------------------
Institutional Daily 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
- --------------------------------------------------------------------------------
