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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 semi-annual report of Virginia Daily Municipal
Income Fund, Inc. for the period October 1, 1999 through March 31, 2000.
The Fund had net assets of $3,974,263 and 17 active shareholders as of March 31,
2000.
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
MARCH 31, 2000
(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 (5.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 Virginia State Public School Authority - Series A 08/01/00 4.07% $ 201,298 Aa2 AA
- ---------- -----------
200,000 Total Other Tax Exempt Investments 201,298
- ---------- -----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (69.70%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 Alexandria, VA IDA (Pooled Loan Project) - Series A
LOC Bank of America 07/01/26 4.00% $ 100,000 A1+
150,000 Arlington County, VA IDA (Arna Valley View Apartments Project)
LOC Fleet Bank 08/01/32 3.95 150,000 VMIG-1
150,000 Capital Region Airport Community, VA (Richmond International Airport)
Insured by AMBAC Indemnity Corp. 07/01/25 3.80 150,000 VMIG-1 A1+
200,000 City of Lynchburg, VA IDA (Aerofin Corporation Project) - Series 1999 (b)
LOC PNC Bank, N.A. 03/01/29 4.10 200,000
150,000 City of Norfolk, VA IDA - Series 1998
LOC Branch Bank & Trust Company 09/01/2 4.00 150,000 A1
100,000 Fairfax, VA IDA (Fairfax Hospital System, Inc. INOVA Health) 10/01/25 3.75 100,000 VMIG-1 A1+
100,000 Hanover, VA IDA
(Covenant Woods) - Series 1999
LOC Branch Bank & Trust Company 07/01/29 4.00 100,000 A1
150,000 Henrico County, VA EDA (White Oak Semiconductor)
LOC Citibank 10/01/27 3.95 150,000 A1+
150,000 King George County, VA IDA (Birchwood Power Partners)
LOC Credit Suisse First Boston 10/01/24 4.15 150,000 A1+
50,000 Norfolk, VA IDA RB (Hospital Facilities Childrens Project) (b)
LOC Wachovia Bank 06/01/20 4.00 50,000
150,000 Peninsula Port Authority, VA
(Dominion Terminal Association Project) - Series 1987D
LOC Barclays Bank 07/01/16 4.00 150,000 P1 A1+
150,000 Petersburg, VA Hospital Authority
LOC First Union National Bank 07/01/17 4.05 150,000 A1
100,000 Portsmouth, VA IDA (Fairwood Homes Project)
LOC Bank of America 11/01/27 3.90 100,000 A1+
145,000 Puerto Rico Industrial Tourist Education
(Ana Mendez University System Project)
LOC Banco Santander 10/01/21 3.45 145,000 A1+
50,000 Richmond, VA IDA RB (Virginia Union University Project)
LOC Bank of America 12/01/07 4.00 50,000 A1+
</TABLE>
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The accompanying notes are an integral part of these 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>
$ 100,000 Richmond, VA Redevelopment and Housing Authority - Series A
LOC Merrill Lynch 11/01/29 4.04% $ 100,000 A1+
175,000 Staunton, VA IDA (Diebold, Inc. Staunton Project)
LOC Bank One 04/01/17 4.00 175,000 A1
300,000 Suffolk, VA Redevelopment and Housing Authority
(Oak Spring Apartments, LLC)
Guaranteed by Federal National Mortgage Corporation 12/01/19 3.90 300,000 VMIG-1
150,000 Tazewell County, VA IDA (Coal Fillers Inc.)
LOC Wachovia Bank 01/01/03 4.10 150,000
150,000 Virginia College Building Authority (University of Richmond Project) 11/01/26 3.90 150,000 VMIG-1
- ---------- -----------
2,770,000 Total Other Variable Rate Demand Instruments 2,770,000
- ---------- -----------
<CAPTION>
Put Bonds (d) (8.18%)
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<S> <C> <C> <C> <C> <C> <C>
$ 150,000 Puerto Rico Industrial Environment PCRB (Reynolds Metal)
LOC ABN AMRO Bank 09/01/00 3.50% $ 150,000 VMIG-1 A1+
175,000 City of Norfolk, VA GO Capital Improvements Bond 06/01/00 3.51 175,246 A1 AA
- ---------- -----------
325,000 Total Put Bonds 325,246
- ---------- -----------
<CAPTION>
Tax Exempt Commercial Paper (16.36%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 City of Hampton, VA IDA RB (Sentara Health System) 07/18/00 3.85% $ 200,000 VMIG-1 A1+
150,000 Puerto Rico Government Development Bank 04/06/00 3.00 150,000 A1+
300,000 Town of Louisa, VA (Virginia Electric & Power Co) 04/13/00 3.45 300,000 P1 A1
- ---------- -----------
650,000 Total Tax Exempt Commercial Paper 650,000
- ---------- -----------
Total Investments (99.30%) (Cost $3,946,544+) 3,946,544
Cash and Other Assets, Net of Liabilities (0.70%) 27,719
-----------
Net Assets (100.00%) $ 3,974,263
===========
Net asset value Offering and redemption price per share:
Class A Shares, 3,282,071 shares outstanding (Note 3) $ 1.00
===========
Class B Shares, 692,192 shares outstanding (Note 3) $ 1.00
===========
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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The accompanying notes are an integral part of these financial statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
MARCH 31, 2000
(UNAUDITED)
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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>
EDA = Economic Development Authority LOC = Letter of Credit
GO = General Obligation PCRB = Pollution Control Revenue Bond
IDA = Industrial Development Authority RB = Revenue Bond
</TABLE>
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The accompanying notes are an integral part of these financial statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest............................................................................. $ 67,641
----------------
Expenses: (Note 2)
Investment management fee............................................................ 7,724
Administration fee................................................................... 4,055
Shareholder servicing fee............................................................ 4,160
Custodian expenses................................................................... 753
Shareholder servicing and related shareholder expenses............................... 499
Legal, compliance and filing fees.................................................... 5,546
Audit and accounting................................................................. 25,094
Directors' fees...................................................................... 3,095
Other................................................................................ 613
----------------
Total expenses..................................................................... 51,539
Less: Fees waived (Note 2)........................................................ ( 11,779)
Expense paid indirectly (Note 2)........................................... ( 910)
Expenses reimbursed (Note 2)................................................ ( 25,035)
----------------
Net expenses....................................................................... 13,815
----------------
Net investment income.................................................................... 53,826
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments.................................................. -0-
----------------
Increase in net assets from operations................................................... $ 53,826
================
</TABLE>
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The accompanying notes are an integral part of these financial statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Six Months
Ended Year
March 31, 2000 Ended
(Unaudited) September 30, 1999
--------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income.................................... $ 53,826 $ 74,843
Net realized gain (loss) on investments.................. -0- -0-
------------- -------------
Increase in net assets from operations....................... 53,826 74,843
Dividends to shareholders from net investment income:
Class A.................................................. ( 45,981)* ( 73,150)*
Class B.................................................. ( 7,845)* ( 1,693)*
Capital share transactions (Note 3)
Class A................................................. 22,723 145,389
Class B................................................. 668,732 23,460
------------- -------------
Total increase (decrease)............................ 691,455 168,849
Net assets:
Beginning of period...................................... 3,282,808 3,113,959
------------- -------------
End of period............................................ $ 3,974,263 $3,282,808
============= =============
* Designated as exempt-interest dividends for federal income tax purposes.
</TABLE>
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The accompanying notes are an integral part of these financial statements.
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
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 accounting
principles generally accepted in the United States 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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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
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.
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 period ended March 31, 2000 the Manager voluntarily waived investment
management fees and administration fees of $7,724 and $4,055, respectively. In
addition, although not required to do so, the Manager has agreed to reimburse
expenses amounting to $25,035.
Included under the caption "Custodian expenses" and "Audit and accounting" are
expense offsets of $910.
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 March 31, 2000, an 20,000,000,000 of shares of $.001 par stock were
authorized and capital paid in amounted to $3,974,263. Transactions in capital
stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year
March 31, 2000 Ended
(Unaudited) September 30, 1999
--------- ------------------
Class A
<S> <C> <C>
Sold...................................... 657,986 82,280
Issued on reinvestment of dividends....... 44,773 73,469
Redeemed.................................. ( 680,036) ( 10,360)
--------------- -------------
Net increase (decrease)................... 22,723 145,389
=============== =============
<CAPTION>
Class B
<S> <C> <C>
Sold...................................... 4,912,775 3,780,209
Issued on reinvestment of dividends....... 5,617 987
Redeemed.................................. ( 4,249,660) ( 3,757,736)
--------------- -------------
Net increase (decrease)................... 668,732 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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<TABLE>
<CAPTION>
5. Financial Highlights.
Six Months July 14, 1998
Class A Ended Year (Commencement of Sales)
- ------- March 31, 2000 Ended through
(Unaudited) September 30, 1999 September 30, 1998
--------- ------------------ ------------------
<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............................. 0.014 0.023 0.006
Less distributions:
Dividends from net investment income.............. ( 0.014) ( 0.023) ( 0.006)
------------- ------------- -------------
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00
============= ============= =============
Total Return...................................... 2.79%* 2.33% 2.70%*
Ratios/Supplemental Data
Net assets, end of period (000)................... $ 3,282 $ 3,259 $ 3,114
Ratios to average net assets:
Expenses (net of fees waived and expenses reimbursed)+ 0.80%* 0.83% 1.05%*
Net investment income........................... 2.76%* 2.31% 2.67%*
Management and administration fees waived....... 0.61%* 0.61% 0.61%*
Expenses reimbursed............................. 1.30%* 2.28% 10.13%*
Expense offsets................................. 0.05%* 0.08% 0.30%*
* Annualized
+ Includes expense offsets
</TABLE>
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VIRGINIA DAILY MUNICIPAL INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
5. Financial Highlights (Continued).
Six Months
Class B Ended April 1, 1999
- ------- March 31, 2000 (Commencement of Sales) to
(Unaudited) September 30, 1999
--------- ------------------
<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.............................. 0.015 0.013
Less distributions:
Dividends from net investment income............... ( 0.015 ) ( 0.013 )
------------- ---------------
Net asset value, end of period..................... $ 1.00 $ 1.00
============= ===============
Total Return....................................... 3.05%* 2.59%*
Ratios/Supplemental Data
Net assets, end of period (000).................... $ 692 $ 23
Ratios to average net assets:
Expenses (net of fees waived and expenses reimbursed)+ 0.55%* 0.58%*
Net investment income............................ 2.94%* 2.51%*
Management and administration fees waived........ 0.61%* 0.61%*
Expenses reimbursed.............................. 1.30%* 2.28%*
Expense offsets.................................. 0.05%* 0.08%*
</TABLE>
* Annualized
+ Includes expense offsets
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VIRGINIA
DAILY
MUNICIPAL
INCOME
FUND, INC.
Semi-Annual Report
March 31, 2000
(Unaudited)
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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
State Street Kansas City
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
VA3/00S
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