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VIRGINIA
DAILY MUNICIPAL 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
INCOME FUND, INC. 212-830-5200
================================================================================
Dear Shareholder:
We are pleased to present the annual report of Virginia Daily Municipal Income
Fund, Inc. for the year ended September 30, 1999.
The Fund had net assets of $3,282,808 and 10 active shareholders as of September
30, 1999.
We 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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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1999
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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 (4.56%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 Arlington County, VA IDA RB Multifamily Housing
(Arna Valley View Apartments)(b)
Insured by FGIC 08/01/00 3.60% $ 150,000
----------- -----------
150,000 Total Other Tax Exempt Investments 150,000
----------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (66.10%) (c)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000 Amelia County, VA IDA (Chambers Waste Project)
LOC Morgan Guaranty Trust Company 07/01/07 3.90% $ 250,000 VMIG-1
150,000 Capital Region Airport Community, VA (Richmond International Airport)
Insured by AMBAC Indemnity Corp. 07/01/25 3.70 150,000 VMIG-1 A1+
300,000 City of Lynchburg, VA IDA (Aerofin Corporation Project) - Series 1999(b)
LOC PNC Bank, N.A. 03/01/29 3.95 300,000
150,000 City of Norfolk, VA IDA - Series 1998
LOC Branch Bank & Trust Company 09/01/20 3.85 150,000 A1
100,000 Fairfax, VA IDA
(Fairfax Hospital System, Inc. INOVA Health) 10/01/25 3.75 100,000 VMIG-1 A1+
150,000 King George County, VA IDA (Birchwood Power Partners)
LOC Credit Suisse First Boston 11/01/25 3.95 150,000 A1+
50,000 Penninsula Port Authority, VA
(Dominion Terminal Association Project) - Series 1987D
LOC Barclays Bank 07/01/16 3.90 50,000 P1 A1+
150,000 Petersburg Virginia Hospital (Hospital Facilities - Southside)
LOC First Union National Bank 07/01/17 3.95 150,000 A1
145,000 Puerto Rico Industrial Tourist Education
(Ana Mendez University System Project)
LOC Banco Santander 10/01/21 3.70 145,000 A1+
50,000 Richmond, VA IDA RB (Virginia Union University Project)
LOC Bank of America 12/01/07 3.80 50,000 A1+
100,000 Richmond, VA Redevelopment Housing - Series A
LOC Merrill Lynch 11/01/29 3.99 100,000 A1+
175,000 Staunton, VA IDA (Diebold, Inc. Staunton Project)
LOC Bank One 04/01/17 3.90 175,000 A1
250,000 Tazewell County, VA IDA (Coal Fillers Inc.)(b)
LOC Wachovia Bank 01/01/03 4.00 250,000
150,000 Virginia College Building Authority (University of Richmond Project) 11/01/26 3.80 150,000 VMIG-1
----------- -----------
2,170,000 Total Other Variable Rate Demand Instruments 2,170,000
----------- -----------
</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
------ ---- ----- ------ ------- -------
Put Bonds (17.55%)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 Puerto Rico Industrial Environment PCRB (Reynolds Metal) 09/01/00 3.50% $ 150,000 VMIG-1 A1+
250,000 Puerto Rico Industrial Medical & Environmental RB
(Abbott Laboratory Project) 03/01/00 2.90 250,000 Aa1 AAA
175,000 City of Norfolk, VA GO Capital Improvements Bond 06/01/00 3.53 176,017 A1 AA
----------- -----------
575,000 Total Put Bonds 576,017
----------- -----------
<CAPTION>
Tax Exempt Commercial Paper (7.62%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 Louisa, VA (Virginia Electric & Power Co.) 02/03/00 3.40% $ 100,000 P1 A1+
150,000 Puerto Rico Government Development Bank 01/20/00 3.20 150,000 A1+
----------- -----------
250,000 Total Tax Exempt Commercial Paper $ 250,000
----------- -----------
Total Investments (95.83%) (Cost $3,146,017+) $ 3,146,017
Cash and Other Assets, Net of Liabilities (4.17%) 136,791
-----------
Net Assets (100.00%) $ 3,282,808
===========
Net asset value, offering and redemption price per share:
Class A Shares, 3,259,348 shares outstanding (Note 3) $ 1.00
===========
Class B Shares, 23,460 shares outstanding (Note 3) $ 1.00
===========
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings are those of the holding company of the bank whose letter of
credit guarantees the issue or the insurance company who insures the issue.
All letters of credit and insurance are irrevocable and direct pay covering
both principal and interest. Certain issuers have either a line of credit,
a liquidity facility, a standby purchase agreement or some other financing
mechanism to ensure the remarketing of the securities. This is not a
guarantee and does not serve to insure or collateralize the issue.
(b) Securities that are not rated have been determined by the Fund's Board of
Directors to be of comparable quality to the rated securities in which the
Fund may invest.
(c) Securities payable on demand at par including accrued interest (usually
with seven days notice) and where indicated are unconditionally secured as
to principal and interest by a bank letter of credit. The interest rates
are adjustable and are based on bank prime rates or other interest rate
adjustment indices. The rate shown is the rate in effect at the date of
this statement.
(d) Maturity date indicated is the next put date.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note LOC = Letter of Credit
FGIC = Financial Guaranteed Insurance Company PCRB = Pollution Control Revenue Bond
GO = General Obligation RB = Revenue Bond
IDA = Industrial Development Authority
</TABLE>
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See Notes to Financial Statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1999
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest............................................................................. $ 98,922
--------------
Expenses: (Note 2)
Investment management fee............................................................ 12,932
Administration fee................................................................... 6,790
Shareholder servicing fee............................................................ 7,914
Custodian expenses................................................................... 820
Shareholder servicing and related shareholder expenses............................... 998
Legal, compliance and filing fees.................................................... 33,618
Audit and accounting................................................................. 50,238
Directors' fees...................................................................... 6,137
Other................................................................................ 670
--------------
Total expenses..................................................................... 120,117
Less: Fees waived (Note 2)........................................................ ( 19,722)
Expense paid indirectly (Note 2)........................................... ( 2,645)
Expenses reimbursed (Note 2)................................................ ( 73,671)
--------------
Net expenses....................................................................... 24,079
--------------
Net investment income................................................................... 74,843
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments................................................. -0-
--------------
Increase in net assets from operations.................................................. $ 74,843
==============
</TABLE>
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See Notes to Financial Statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
July 14, 1998
Year (Commencement of Sales)
Ended through
September 30, 1999 September 30, 1998
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income.................................... $ 74,843 $ 17,931
Net realized gain (loss) on investments.................. -0- -0-
------------- -------------
Increase in net assets from operations...................... 74,843 17,931
Dividends to shareholders from net investment income:
Class A.................................................. ( 73,150)* ( 17,931)*
Class B.................................................. ( 1,693)* -0-
Capital share transactions (Note 3)
Class A................................................. 145,389 3,013,959
Class B................................................. 23,460 -0-
------------- -------------
Total increase (decrease)............................ 168,849 3,013,959
Net assets:
Beginning of period...................................... 3,113,959 100,000
------------- -------------
End of period............................................ $ 3,282,808 $ 3,113,959
============= =============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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See Notes to Financial Statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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1. Summary of Accounting Policies.
Virginia Daily Municipal Income Fund, Inc. 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 shareholder servicing 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. 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 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), equal to .40% of the Fund's
average daily net assets.
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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.
Pursuant to the Distribution and Service Plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors, Inc.,
(the Distributor), an affiliate of the Manager, have entered into a Distribution
Agreement and a Shareholder Servicing Agreement, only with respect to its Class
A shares. For its services under the Shareholder Servicing Agreement, the
Distributor receives from the Fund, only with respect to its Class A shares a
service fee equal to .25% of the Fund's average daily net assets.
For the year ended September 30, 1999 the Manager voluntarily waived investment
management fees and administration fees of $12,932 and $6,790, respectively. In
addition, although not required to do so, the Manager has agreed to reimburse
expenses amounting to $73,671.
Included under the caption "Custodian expenses" are expense offsets of $2,645.
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 September 30, 1999, an 20,000,000,000 of shares of $.001 par stock were
authorized and capital paid in amounted to $3,282,808. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
July 14, 1998
(Commencement of Sales)
Year Ended through
September 30, 1999 September 30, 1998
------------------ ------------------
Class A
<S> <C> <C>
Sold...................................... 82,280 3,000,000
Issued on reinvestment of dividends....... 73,469 13,959
Redeemed.................................. ( 10,360) -0-
--------------- ---------------
Net increase (decrease)................... 145,389 3,013,959
=============== ===============
<CAPTION>
Class B
<S> <C>
Sold...................................... 3,780,209
Issued on reinvestment of dividends....... 987
Redeemed.................................. ( 3,757,736)
---------------
Net increase (decrease)................... 23,460
===============
</TABLE>
4. Concentration of Credit Risk.
The Fund invests primarily in obligations of political subdivisions of the State
of Virginia 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.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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5. Financial Highlights.
<TABLE>
<CAPTION>
Year July 14, 1998
Class A Ended (Commencement of Sales) through
------- September 30, 1999 September 30, 1998
------------------ -------------------------------
<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............................................... 0.023 0.006
Less distributions:
Dividends from net investment income................................ ( 0.023 ) ( 0.006 )
--------------- --------------
Net asset value, end of period........................................ $ 1.00 $ 1.00
=============== ==============
Total Return.......................................................... 2.33% 2.70%*
Ratios/Supplemental Data
Net assets, end of period (000)....................................... $ 3,259 $ 3,114
Ratios to average net assets:
Expenses (net of fees waived and expenses reimbursed)+.............. 0.83% 1.05%*
Net investment income (net of fees waived and expenses reimbursed).. 2.31% 2.67%*
Management and administration fees waived........................... 0.61% 0.61%*
Expenses reimbursed................................................. 2.28% 10.13%*
Expense offsets..................................................... 0.08% 0.30%*
* Annualized
+ Includes expense offsets
</TABLE>
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5. Financial Highlights. (Continued)
<TABLE>
<CAPTION>
April 1, 1999
Class B (Commencement of Sales) through
- ------- September 30, 1999
------------------
<S> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period................................... $ 1.00
-----------
Income from investment operations:
Net investment income............................................... 0.013
Less distributions:
Dividends from net investment income................................ ( 0.013 )
-----------
Net asset value, end of period......................................... $ 1.00
===========
Total Return........................................................... 2.59%*
Ratios/Supplemental Data
Net assets, end of period (000)........................................ $ 23
Ratios to average net assets:
Expenses (net of fees waived and expenses reimbursed)+.............. 0.58%*
Net investment income (net of fees waived and expenses reimbursed).. 2.51%*
Management and administration fees waived........................... 0.61%*
Expenses reimbursed................................................. 2.28%*
Expense offsets..................................................... 0.08%*
* Annualized
+ Includes expense offsets
</TABLE>
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Board of Directors and Shareholders of
Virginia Daily Municipal Income Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Virginia Daily Municipal Income Fund, Inc., (the "Fund") at September 30, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at September 30, 1999 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above. The financial statements for the period July 14, 1998
(Commencement of Sales) to September 30, 1998, including the financial
highlights for the period then ended, were audited by other independent
accountants whose report dated October 16, 1998 expressed an unqualified opinion
on those financial statements.
PricewaterhouseCoopers LLP
New York, New York
November 1, 1999
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
CHANGE IN INDEPENDENT ACCOUNTANTS
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On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP
(PwC) to acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition have joined
PwC.
The report of McGladrey on the financial statements of the Fund for the past
fiscal year contained no adverse opinion or a disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audit for the most recent fiscal year and through August
13, 1999, there were no disagreements with McGladrey on any matter of accounting
principle or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of McGladrey
would have caused it to make reference to the subject matter of disagreement in
connection with its report.
Effective August 13, 1999, the Fund, with the approval of its Board of Directors
and its Audit Committee, engaged PwC as its independent auditors.
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VIRGINIA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Annual Report
September 30, 1999
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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.
- -------------------------------------------------------
Virginia Daily Municipal Income Fund, Inc.
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, Inc.
600 Fifth Avenue
New York, New York 10020
VA999A
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