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FLORIDA
DAILY
MUNICIPAL
INCOME
FUND
Semi-Annual Report
February 29, 1996
(Unaudited)
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<PAGE>
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FLORIDA
DAILY MUNICIPAL 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
INCOME FUND 212/830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Florida Daily Municipal
Income Fund for the period September 1, 1995 through February 29, 1996.
The Fund had net assets of $55,882,928 and 338 active shareholders as of
February 29, 1996. Dividends earned on a share held throughout the period were
$.016 and $.017, for Class A shares and Class B shares, respectively. When
adjusted for the compounding effect of the reinvestment of dividends, this
represents a yield of 3.20% and 3.45% on an annual basis for Class A shares and
Class B shares, respectively.
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
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<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Tax Exempt Commercial Paper (13.60%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1,200,000 City of Gainesville, FL Utilities System - Series C 05/31/96 3.25% $ 1,200,000 P1 A1+
1,300,000 City of Jacksonville, FL - Series A 04/08/96 3.35 1,300,000 P1 A1
1,100,000 City of Orlando, FL 04/02/96 3.15 1,100,000 P1 A1+
1,000,000 Florida Municipal Power Agency RB
(Initial Pooled Loan Project) - Series A
LOC First Union National Bank 08/06/96 3.15 1,000,000 VMIG-1 A1+
1,000,000 Palm Beach, FL HFA Refunding RB
(Pooled Hospital) - Series 1985
MBIA Insured 04/04/96 3.30 1,000,000 VMIG-1 A1+
2,000,000 Sunshine State Government Financing Commission RB - Series 1986
LOC Union Bank of Switzerland/Morgan Guaranty/National
Westminster Bank PLC 03/07/96 3.75 2,000,000 VMIG-1
- ---------- ----------
7,600,000 Total Tax Exempt Commercial Paper 7,600,000
- ---------- ----------
<CAPTION>
Other Tax Exempt Investments (0.46%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 250,000 Pasco County, FL Water and Sewer
FGIC Insured 10/01/96 4.77% $ 254,205 Aaa AAA
- ---------- ----------
250,000 Total Other Tax Exempt Investments 254,205
- ---------- ----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (81.29%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 400,000 Broward County, FL IDRB (Allied Signal Incorporated) 03/01/99 3.40% $ 400,000 A1
100,000 City of Naples, FL (Naples County Hospital Incorporated Project)
LOC Mellon Bank, N.A. 11/01/22 3.45 100,000 A1
530,000 Dade County, FL Aviation RB - Series V
LOC Sun Bank, N.A. 10/01/07 3.20 530,000 VMIG-1 A1
1,900,000 Dade County, FL HFA MHRB (Gables Point) - Series 1985 05/15/05 3.15 1,900,000 A1+
2,700,000 Dade County, FL IDA RB (Florida Convalescent Association)
LOC Bank of Tokyo, Ltd. 12/01/11 3.60 2,700,000 VMIG-1
1,100,000 Florida HFA MHRB (Falls of Venice Project)
LOC PNC Bank (b) 12/01/11 3.45 1,100,000
1,100,000 Florida HFA MHRB
(Monterey Meadows Apartment Project) - Series 1985
LOC Citibank 12/01/07 3.15 1,100,000 A1+
1,315,000 Gulf Breeze, FL RB - Series 1985B
FGIC Insured 12/01/15 3.10 1,315,000 VMIG-1 A1+
1,400,000 Gulf Breeze, FL RB - Series 1985C
FGIC Insured 12/01/15 3.10 1,400,000 VMIG-1 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------- ---- ----- ----- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1,400,000 Hillsborough County, FL IDA PCRB
(Tampa Electric Company Cannon) 05/15/18 3.35% $ 1,400,000 VMIG-1 A1+
1,150,000 Indian River County, FL IDRB (Florida Convention Centers Project)
LOC Toronto-Dominion Bank 01/01/11 3.65 1,150,000 P1
2,000,000 Jacksonville, FL HFFA (Baptist Health Properties Project)
LOC Barnett Bank of Jacksonville 06/01/20 3.40 2,000,000 A1
2,700,000 Jacksonville, FL HRB (University Medical Center) - Seris 1989
LOC Sumitomo Bank, Ltd. 02/01/19 3.35 2,700,000 VMIG-1
1,000,000 Jacksonville, FL IDRB
(Univ. of Florida Health Science Center) - Series 1989
LOC Barnett Bank of Jacksonville 07/01/19 3.40 1,000,000 VMIG-1
710,000 Lee, FL IDRB (Christian & Missionary Alliance) - Series 1985
LOC Banque Paribas 04/01/10 3.28 710,000 A1
1,250,000 Marion County, FL IDA
(Hamilton Products, Inc. Project) - Series 1995
LOC Comerica Bank (b) 11/01/15 3.40 1,250,000
200,000 Monroe County, FL IDA (Beverly Enterprises) - Series 1985 06/01/10 3.25 200,000 VMIG-1
1,900,000 Ocean Highway & Port Authority, FL RB
(Port, Airport & Marina Improvement)
LOC ABN AMRO Bank N.V. 12/01/20 3.35 1,900,000 VMIG-1 A1+
1,000,000 Orange County Health Facilities Authority RB
(Adventist Health System/Sunbelt Obligation)
LOC Rabobank Nederland 11/15/26 3.25 1,000,000 A1+
1,200,000 Orange County, FL Health Facility
(Adventist Orange County Health Facility)
LOC Banque Paribas 11/15/14 3.15 1,200,000 VMIG-1 A1
1,000,000 Orange County, FL IDRB
(Florida Convention Centers Project) - Series A
LOC Toronto-Dominion Bank 01/01/11 3.45 1,000,000 P1
2,000,000 Palm Beach County, FL
(Norton Gallery of Art Project) - Series 1995
LOC Northern Trust 05/01/25 3.25 2,000,000 A1+
1,000,000 Pinellas County, FL (Indian Country Project)
LOC Wachovia Bank & Trust Co., N.A. (b) 10/01/01 3.15 1,000,000
1,900,000 Pinellas County, FL HFFA (St. Mark Village Project) - Series 1987
LOC Nations Bank 03/01/17 3.35 1,900,000 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1,000,000 Pinellas County, FL Industry Council IDRB
(Genca Corporation Project)
LOC PNC Bank (b) 11/01/09 3.55% $ 1,000,000
675,000 Polk County, FL IDA PCRB (IMC Fertilizer Incorporate Project)
LOC Rabobank Nederland 02/01/00 3.20 675,000 P1
2,300,000 St. Johns County, FL HRB (Flagler Hospital, Inc.) - Series 1986A
LOC Kredietbank 08/01/16 3.25 2,300,000 VMIG-1
10,500,000 St. Lucie County, FL PCRB (Florida Power & Light Company Project) 03/01/27 3.35 10,500,000 VMIG-1 A1+
- ---------- ----------
45,430,000 Total Other Variable Rate Demand Instruments 45,430,000
- ---------- ----------
<CAPTION>
Put Bonds (d) (3.58%)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1,000,000 Putnam County, FL Development Authority
(Seminole Electric) - Series H-3 03/15/96 3.75% $ 1,000,000 VMIG-1 A1+
1,000,000 Putnam County, FL Development Authority
(Seminole Electric) - Series 1984D 06/15/96 3.30 1,000,000 VMIG-1 A1+
- ---------- ----------
2,000,000 Total Put Bonds 2,000,000
- ---------- ----------
<CAPTION>
Revenue Bond (0.89%)
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 500,000 Osceola County, FL (School Board Master
Lease Certificates of Participation) - Series 1995A
AMBAC Insured 06/01/96 3.75% $ 500,000 Aaa AAA
- ---------- ----------
500,000 Total Revenue Bond 500,000
- ---------- ----------
Total Investments(99.82%)(Cost $55,784,205+) 55,784,205
Cash and Other Assets in Excess of Liabilities (0.18%) 98,723
----------
Net Assets (100.00%) $55,882,928
==========
Net Asset Value, offering and redemption price per share:
Class A Shares, 29,237,242 Shares Outstanding (Note 3) $ 1.00
==========
Class B Shares, 26,649,583 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.
<PAGE>
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FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings noted are those of the holding company of the bank whose letter
of credit collateralizes such instruments. P1 and A1+ are the highest
ratings assigned for tax exempt commercial paper.
(b) Securities that are not rated which the Fund's Board of Trustees has
determined to be of comparable quality to those rated securities in which
the Fund invests.
(c) Securities payable on demand at par including accrued interest (usually
with seven days notice) and 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 is the next put date.
<TABLE>
<CAPTION>
KEY:
<C> <C> <C> <C> <C> <C>
HFA = Housing Finance Authority IDRB = Industrial Development Revenue Bond
HFFA = Health Facility Finance Authority MHRB = Multi-family Housing Revenue Bond
HRB = Hospital Revenue Bond PCRB = Pollution Control Revenue Bond
IDA = Industrial Development Authority RB = Revenue Bond
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<C> <C>
Income:
Interest....................................................................$ 792,542
----------------
Expenses: (Note 2)
Investment management fee................................................... 86,163
Administration fee.......................................................... 44,312
Shareholder servicing fee................................................... 30,349
Custodian fee............................................................... 5,374
Shareholder servicing and related shareholder expenses...................... 40,126
Legal, compliance and filing fees........................................... 6,462
Audit and accounting........................................................ 28,429
Trustees' fees.............................................................. 3,325
Amortization of organization expenses....................................... 5,706
Other....................................................................... 1,276
----------------
Total expenses........................................................... 251,522
Less: Expenses paid indirectly (Note 2)..................................( 25,312)
Less: Fees waived and expenses reimbursed (Note 2).......................( 141,983)
----------------
Net expenses............................................................. 84,227
----------------
Net investment income....................................................... 708,315
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<C> <C>
Net realized gain (loss) on investments..................................... -0-
----------------
Increase in net assets from operations......................................$ 708,315
================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
Six Months September 19, 1994
Ended (Commencement of
February 29, 1996 Operations) to
(Unaudited) August 31, 1995
----------- ---------------
<C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income...................................... $ 708,315 $ 1,503,482
Net realized gain (loss) on investments.................... -0- ( 3,897)
----------------- ------------------
Increase in net assets from operations.......................... 708,315 1,499,585
Dividends to shareholders from net investment income:
Class A.................................................... ( 384,999)* ( 894,135)*
Class B.................................................... ( 323,316)* ( 609,347)*
Transactions in shares of beneficial interest (Note 3):
Class A.................................................... 8,260,912 20,976,330
Class B.................................................... 16,474,177 10,075,406
----------------- ------------------
Total increase......................................... 24,735,089 31,047,839
Net assets:
Beginning of period........................................ 31,147,839 100,000
----------------- ------------------
End of period.............................................. $ 55,882,928 $ 31,147,839
================= ==================
* Designated as exempt-interest dividend for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
1. Summary of Accounting Policies.
Florida 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. The 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. In all other respects the Class A and Class B shares represent the same
interest in the income and assets of the Fund. 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 Directors.
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) at the annual rate of .40%
of the Fund's average daily net assets. The Manager is required to reimburse the
Fund for its expenses (exclusive of interest, taxes, brokerage, and
extraordinary expenses) to the extent that such expenses, including the
investment management and the shareholder servicing and administration fees, for
any fiscal year exceed the limits on investment company expenses prescribed by
any state in which the Fund's shares are qualified for sale. No such
reimbursement was required for the period ended February 29, 1996. 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
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
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===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
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.
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. Prior to December 1,
1995, the Administration fee was .20%.
Pursuant to a Distribution Plan adopted under Securities and Exchange Commission
Rule 12b-1, the Fund and Reich & Tang Distributors L.P. (the Distributor) have
entered into a Distribution Agreement and a Shareholder Servicing Agreement,
only with respect to Class A shares of the Fund. For its services under the
Shareholder Servicing Agreement, the Distributor receives from the Fund with
respect only to the Class A shares, 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.
During the period ended February 29, 1996, the Manager voluntarily waived
investment management fees and administration fees of $86,163 and $43,082,
respectively, and reimbursed other operating expenses amounting to $12,738.
Included in the statement of operations under the caption "Custodian fee" are
expense offsets of $25,312.
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 $1,932 paid to Reich & Tang
Services L.P., an affiliate of the Manager, as servicing agent for the Fund.
3. Transactions in Shares of Beneficial Interest.
At February 29, 1996, an unlimited number of shares of beneficial interest ($.01
par value) were authorized and capital paid in amounted to $55,886,825.
Transactions, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A
Six Months October 6, 1994
Ended (Commencement of Operations)
February 29, 1996 to August 31, 1995
----------------- -----------------
<C> <C> <C>
Sold............................................ 52,473,815 221,569,078
Issued on reinvestment of dividends............. 362,579 816,529
Redeemed........................................ ( 44,575,482) ( 201,409,277)
---------------- -----------------
Net increase................................... 8,260,912 20,976,330
================ =================
</TABLE>
<TABLE>
<CAPTION>
Class B
Six Months September 19, 1994
Ended (Commencement of Operations)
February 29, 1996 to August 31, 1995
----------------- -----------------
<C> <C> <C>
Sold............................................ 125,393,612 185,971,722
Issued on reinvestment of dividends............. 293,725 576,818
Redeemed........................................ ( 109,213,160) ( 176,473,134)
---------------- ------------------
Net increase.................................... 16,474,177 10,075,406
================ ==================
</TABLE>
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<PAGE>
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FLORIDA DAILY MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
4. Sales of Securities.
Accumulated undistributed realized losses at February 29, 1996, amounted to
$3,897. Such amount represents tax basis capital losses which may be carried
forward to offset future capital gains. Such losses expire August 31, 2003.
5. Concentration of Credit Risk
The Fund invests primarily in obligations of political subdivisions of the State
of Florida and, accordingly, is subject to the credit risk associated with the
non-performance of such issuers. Approximately 56% 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. Selected Financial Information.
<TABLE>
<CAPTION>
Six Months Ended Period Ended
February 29, 1996 August 31, 1995**
---------------------------- ----------------------------
Class A Class B Class A Class B
------- ------- ------- -------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- ----------
Income from investment operations
Net investment income................. 0.016 0.017 0.032 0.036
Less distributions:
Dividends from net investment income.... ( 0.016) ( 0.017) ( 0.032) ( 0.036)
-------- -------- -------- ---------
Net asset value, end of period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========== ========== ==========
Total Return............................ 3.20%* 3.45%* 3.60%* 3.84%*
Ratios/Supplemental Data................
Net assets, end of period(000).......... $ 29,235 $ 26,648 $ 20,974 $ 10,174
Ratios to average net assets:
Expenses............................. .62%*+^ 0.37%*+^ 0.40%*+ 0.14%*+
Net investment income................ 3.17%*+ 3.44%*+ 3.54%*+ 3.78%*+
* Annualized.
** Class A commenced operations on October 6, 1994 and Class B commenced
operations on September 19, 1994.
+ Net of management and administration fees waived and expenses reimbursed
equivalent to .66% and .95% of average net assets, respectively.
^ Includes custodian fees paid indirectly.
</TABLE>
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<PAGE>
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[This Page Intentionally Left Blank.]
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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.
- -------------------------------------------------------------------------------
Florida 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, Transfer Agent & Dividend
Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
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