As filed with the Securities and Exchange Commission on December 7, 2006
Investment Company Act File Number 811-8312
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
DAILY INCOME FUND
(Exact name of registrant as specified in charter)
600 FIFTH AVENUE
NEW YORK, NY 10020
(Address of principal executive offices) (Zip code)
ROSANNE HOLTZER
C/O REICH & TANG ASSET MANAGEMENT, LLC
600 FIFTH AVENUE
NEW YORK, NEW YORK 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-830-5200
Date of fiscal year end: March 31
Date of reporting period: September 30, 2006
ITEM 1: REPORT TO STOCKHOLDERS
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DAILY INCOME FUND 600 FIFTH AVENUE
(Formerly Institutional Daily Income Fund) NEW YORK, NY 10020
(212) 830-5200
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Dear Shareholder:
We are pleased to present the semi-annual report of Daily Income Fund (the
"Fund") for the period ended September 30, 2006.
The Fund's Money Market Portfolio had 676 shareholders and net assets of
$877,190,049 as of September 30, 2006. The U.S. Treasury Portfolio had 197
shareholders and net assets of $845,287,116 as of September 30, 2006.
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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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
As a shareholder of the Fund, you incur the following ongoing costs: management
fees and other Fund expenses. You may also incur distribution and/or service
(12b-1) fees. This example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period April 1, 2006 through September 30, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees that you may incur in other
mutual funds. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
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================================================================================
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Money Market Portfolio
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Institutional Service Shares Beginning Account Value Ending Account Value Expenses Paid During the
(Formerly Class A) 04/01/06 09/30/06 Period*
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Actual $1,000.00 $1,023.90 $2.28
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Hypothetical (5% return before $1,000.00 $1,022.81 $2.28
expenses)
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- ----------------------------------------------------------------------------------------------------------------------
Institutional Shares Beginning Account Value Ending Account Value Expenses Paid During the
(Formerly Class B) & Pinnacle Shares 04/01/06 09/30/06 Period*
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Actual $1,000.00 $1,025.20 $1.02
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,024.07 $1.01
expenses)
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U.S. Treasury Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Institutional Service Shares Beginning Account Value Ending Account Value Expenses Paid During the
(Formerly Class A) 04/01/06 09/30/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,023.00 $2.28
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,022.81 $2.28
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Institutional Shares Beginning Account Value Ending Account Value Expenses Paid During the
(Formerly Class B) & Pinnacle Shares 04/01/06 09/30/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,024.20 $1.01
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,024.07 $1.01
expenses)
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<FN>
* Expenses are equal to the Fund's annualized expense ratios of 0.45%, 0.20%,
and 0.20%, for the Money Market Portfolio Institutional Service,
Institutional, and Pinnacle shares, respectively and 0.45%, 0.20%, and
0.20% for the U.S. Treasury Portfolio Institutional Service, Institutional,
and Pinnacle shares, respectively, multiplied by the average account value
over the period (April 1, 2006 through September 30, 2006), multiplied by
183/365 (to reflect the most recent fiscal half-year).
</FN>
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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- ------
Asset Back Commercial Paper (15.54%)
- ------------------------------------------------------------------------------------------------------------------------
$ 15,000,000 ASAP Funding Limited, Inc. 10/20/06 5.41% $ 14,957,646
15,000,000 Chesham Finance Limited 10/02/06 5.38 14,997,758
20,000,000 Govco Incorporated 10/18/06 5.47 19,949,094
7,000,000 Greyhawk Funding, LLC 10/24/06 5.30 6,976,454
15,000,000 Greyhawk Funding, LLC 03/19/07 5.38 14,631,017
20,000,000 Lockhart Funding, LLC 10/04/06 5.33 19,991,183
20,000,000 Lockhart Funding, LLC 10/26/06 5.33 19,926,667
25,000,000 Market Street Funding, LLC 10/27/06 5.30 24,904,938
- -------------- --------------
137,000,000 Total Asset Back Commercial Paper 136,334,757
- -------------- --------------
Domestic Certificates of Deposit (6.27%)
- ------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 M&I Marshall & Ilsley Bank 10/10/06 5.48% $ 20,000,000
25,000,000 Wilmington Trust Company 12/07/06 5.47 25,000,000
10,000,000 Wilmington Trust Company 01/22/07 5.41 10,000,000
- -------------- --------------
55,000,000 Total Domestic Certificates of Deposit 55,000,000
- -------------- --------------
Eurodollar Certificate of Deposit (2.28%)
- ------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Societe Generale 02/02/07 4.90% $ 20,000,656
- -------------- --------------
20,000,000 Total Eurodollar Certificate of Deposit 20,000,656
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Floating Rate Securities (7.41%)
- ------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Bank of America Federal Funds Floater (b) 12/15/06 5.31% $ 20,000,000
20,000,000 Bear Stearns Federal Funds Floater (c) 01/19/07 5.46 20,000,000
15,000,000 Merrill Lynch Floating Medium Term Note (d) 05/14/07 5.29 15,000,000
10,000,000 Merrill Lynch Extendible Floater (e) 10/15/07 5.34 10,000,000
- -------------- --------------
65,000,000 Total Floating Rate Securities 65,000,000
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Foreign Commercial Paper (13.75%)
- ------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Alliance & Leicester PLC 11/07/06 5.44% $ 29,834,579
21,450,000 Caisse Centrale Desjardins du Quebec 10/05/06 5.44 21,437,178
10,000,000 Depfa Bank, PLC 11/22/06 5.31 9,923,950
20,000,000 Nationwide Building Society 11/01/06 5.42 19,907,861
20,000,000 Northern Rock PLC 11/07/06 5.40 19,890,439
20,000,000 Yorkshire Building Society 02/12/07 5.38 19,608,422
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121,450,000 Total Foreign Commercial Paper 120,602,429
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The accompanying notes are an integral part of these financial statements.
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================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- ------
Letter of Credit Commercial Paper (4.54%)
- ------------------------------------------------------------------------------------------------------------------------
$ 10,000,000 Dean Health System Incorporated
LOC Marshall & Ilsley 10/05/06 5.33% $ 9,994,122
20,000,000 ICICI Bank Ltd.
LOC Fortis Bank S.A. / N.V. 11/15/06 5.14 19,871,500
10,000,000 ICICI Bank Ltd.
LOC Fortis Bank S.A. / N.V. 12/01/06 5.35 9,911,720
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40,000,000 Total Letter of Credit Commercial Paper 39,777,342
- -------------- --------------
Loan Participations (2.85%)
- ------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 AXA Equitable Life Insurance Company with J.P. Morgan Chase (f) 03/21/07 5.35% $ 20,000,000
5,000,000 Mt. Vernon Phenol (General Electric Co.) with
J.P. Morgan Chase (f)
Guaranteed by General Electric Company 05/21/07 5.35 5,000,000
- -------------- --------------
25,000,000 Total Loan Participations 25,000,000
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Medium Term Note (2.28%)
- ------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Royal Bank of Canada 08/10/07 5.60% $ 20,000,000
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20,000,000 Total Medium Term Note 20,000,000
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Repurchase Agreement (4.10%)
- ------------------------------------------------------------------------------------------------------------------------
$ 36,000,000 UBS Securities, LLC, purchased on 09/29/06,
repurchase proceeds at maturity $36,015,900 (Collateralized by
$186,023,607, GNMA, 5.125% to
9.500%, due 06/20/18 to 01/15/36, value $36,721,974) 10/02/06 5.30% $ 36,000,000
- -------------- --------------
36,000,000 Total Repurchase Agreement 36,000,000
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U.S. Government Agency Medium Term Notes (6.27%)
- ------------------------------------------------------------------------------------------------------------------------
$ 10,000,000 Federal Home Loan Bank 08/14/07 5.58% $ 10,000,000
20,000,000 Federal Home Loan Bank 10/02/07 5.50 20,000,000
20,000,000 Federal Home Loan Mortgage Corporation 02/09/07 4.76 20,000,000
5,000,000 Federal Home Loan Mortgage Corporation 04/27/07 5.25 5,000,000
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55,000,000 Total U.S. Government Agency Medium Term Note 55,000,000
- -------------- --------------
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The accompanying notes are an integral part of these financial statements.
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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- ------
Variable Rate Demand Instruments (g) (10.41%)
- ------------------------------------------------------------------------------------------------------------------------
$ 2,260,000 Atlas Metal Investment Corporation - Series 2000
LOC Fifth Third Bank 10/01/20 5.37% $ 2,260,000
445,000 Automated Packaging Systems
LOC National City Bank 10/01/08 5.43 445,000
925,000 Big Brothers Big Sisters Association of Greater Columbus -
Series 2000
LOC Fifth Third Bank 12/01/20 5.37 925,000
2,730,000 Briarwood Investments, LLC - Series 2003
LOC Federal Home Loan Bank of Cincinnati 04/01/23 5.34 2,730,000
5,255,000 Capital Markets Access Company, LLC.
(Cape Coral Medical & Surgical Suites, LLC Project)
LOC Suntrust Bank 08/01/20 5.31 5,255,000
4,200,000 CFM International Inc. - Series 1999A (h)
Guaranteed by General Electric Company 01/01/10 5.33 4,200,000
5,000,000 Cubba Capital II, LLC - Series 2006B
LOC Charter One Bank 09/01/56 5.35 5,000,000
2,025,000 D.E.D.E. Realty - Series 1998
LOC Fifth Third Bank 12/01/11 5.37 2,025,000
1,940,000 Delta Capital LLC - Series 1996B
LOC JPMorgan Chase Bank 10/01/26 5.42 1,940,000
700,000 Dickinson Press, Inc. - Series 1997
LOC Huntington National Bank 01/01/27 5.42 700,000
2,300,000 Erie County, NY IDA RB (Niagara-Maryland LLC Project) -
Series 2003
LOC Manufacturers and Traders Trust Co. 06/01/23 5.40 2,300,000
2,745,000 Fiore Capital LLC - Series 2005A
LOC M & I Marshall & Ilsley Bank 08/01/45 5.32 2,745,000
960,000 First Metropolitan Title Company Demand Notes - Series 1999
LOC LaSalle Bank, N.A. 05/01/24 5.42 960,000
1,490,000 G & J Land Management - Series 1996
LOC Fifth Third Bank. 12/01/17 5.32 1,490,000
2,660,000 Governor's Village LLC - Series 2000
LOC Fifth Third Bank 03/01/20 5.37 2,660,000
9,914,900 Herman & Kittle Capital, LLC - Series 2005 (i)
LOC Fifth Third Bank 06/01/55 5.30 9,914,900
1,970,000 HFA of Lee County, FL Multifamily Housing RB
(University Club Apartments) - Series 2002B
Guaranteed by Federal National Mortgage Association 05/15/35 5.32 1,970,000
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The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- ------
Variable Rate Demand Instruments (g) (Continued)
- ------------------------------------------------------------------------------------------------------------------------
$ 1,260,000 Joe Holland Chevrolet
LOC Fifth Third Bank 07/01/24 5.37% $ 1,260,000
3,250,000 Kenwood Country Club, Incorporated - Series 2005
LOC U.S. Bank, N.A. 12/01/15 5.32 3,250,000
4,800,000 Lake Mary Bay Limited Partnership - Series 2005
LOC Amsouth Bank 03/01/25 5.40 4,800,000
2,700,000 Landmark Church of Christ - Series 2005
LOC Columbus Bank & Trust Company 04/01/20 5.33 2,700,000
1,900,000 Lauren Company, LLC - Series 2003
LOC Wells Fargo Bank, N.A. 07/01/33 5.37 1,900,000
315,000 LRV Enterprises, LLC - Series 1996
LOC National City Bank 09/01/21 5.48 315,000
900,000 Mayfair Village Retirement Center, Inc., KY
(Variable Rate Term Notes) - Series 1995
LOC PNC Bank, N.A. 05/15/09 5.32 900,000
3,500,000 Mississippi Business Finance Corporation
(Attala Steel Industries, LLC Project) - Series 2005
Guaranteed by Federal Home Loan Bank 07/01/20 5.33 3,500,000
730,000 Mississippi Business Finance Corporation IDRB
(Howard Industries Inc. Project) - Series 1995
LOC Amsouth Bank 06/01/10 5.33 730,000
2,400,000 Mt. Carmel West Medical Office Building - Series 1999
LOC National City Bank 08/01/19 5.38 2,400,000
3,600,000 Parker Towing Company, Inc. - Series 2006
LOC Amsouth Bank 06/01/11 5.40 3,600,000
2,400,000 Santa Rosa Property Holdings, LLC - Series 2006
LOC Columbus Bank & Trust Company 08/01/31 5.37 2,400,000
5,000,000 St. Johns County IDA TVR First Mortgage RB
(Presbyterian Retirement Communities Project) - Series 2004B
LOC Allied Irish Bank 08/01/34 5.42 5,000,000
1,520,000 Trendway Corporation
LOC LaSalle Bank Midwest, N.A. 12/01/26 5.42 1,520,000
3,872,000 Washington State HFC Non-Profit Housing RB
(Rockwood Program) - Series B (i)
LOC Wells Fargo Bank, N.A. 01/01/30 5.40 3,872,000
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The accompanying notes are an integral part of these financial statements.
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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
------ ---- --------- ------
Variable Rate Demand Instruments (g) (Continued)
- ------------------------------------------------------------------------------------------------------------------------
$ 1,915,000 Wholesome Group, LLC - Series 2005
LOC Fifth Third Bank 10/01/20 5.37% $ 1,915,000
1,620,000 Wisconsin Housing Preservation Corporation - Series 2005
LOC M & I Marshall & Ilsley Bank 05/01/35 5.32 1,620,000
2,100,000 Woods Group TN, LLC - Series 2006
LOC Amsouth Bank 09/01/31 5.41 2,100,000
- -------------- --------------
91,301,900 Total Variable Rate Demand Instruments 91,301,900
- -------------- --------------
Yankee Certificates of Deposit (25.99%)
- ------------------------------------------------------------------------------------------------------------------------
$ 15,000,000 BNP Paribas 02/08/07 5.42% $ 15,000,000
25,000,000 Canadian Imperial Bank of Commerce 11/24/06 5.07 25,000,000
15,000,000 Canadian Imperial Bank of Commerce 02/12/07 5.34 15,000,000
20,000,000 Credit Industriel et Commercial 11/24/06 5.35 20,000,000
30,000,000 Credit Suisse First Boston 11/08/06 5.38 30,000,156
25,000,000 Deutsche Zentral-Genossenschaftsb 11/17/06 5.38 25,000,000
25,000,000 HSH Nordbank AG 11/06/06 5.44 25,000,123
15,000,000 Kreditbank 05/22/07 5.35 15,000,000
18,000,000 Landesbank Baden Wurtemburg 05/24/07 5.35 17,983,790
25,000,000 Toronto Dominion Bank 02/21/07 5.62 25,000,000
15,000,000 Westpac Banking Corp. 11/22/06 5.35 15,000,000
- -------------- --------------
228,000,000 Total Yankee Certificates of Deposit 227,984,069
- -------------- --------------
Total Investments (101.69%) (cost $892,001,153+) 892,001,153
Liabilities in excess of cash and other assets (-1.69%) (14,811,104)
--------------
Net Assets (100.00%) $ 877,190,049
==============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
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The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
FOOTNOTES:
(a) The interest rate shown reflects the security's current coupon, unless
yield is available.
(b) The interest rate is adjusted daily based upon Federal Funds Target plus
0.06%.
(c) The interest rate is adjusted daily based upon Federal Funds Target plus
0.09%.
(d) The interest rate is adjusted monthly based upon one month LIBOR minus
0.035%.
(e) The interest rate is adjusted monthly based upon one month LIBOR minus
0.02%.
(f) Loan participation agreement with the interest rate adjusted monthly based
upon one month LIBOR plus 0.02%.
(g) Securities payable on demand at par including accrued interest (with seven
days' notice). Interest rate is adjusted weekly.
(h) The interest rate is adjusted weekly based upon average of prior week one
month LIBOR plus 0.05%; weekly put at par.
(i) Securities payable on demand at par including accrued interest (with one
day notice). Interest rate is adjusted daily.
KEY:
GNMA = Government National Mortgage Association IDRB = Industrial Development Revenue Bond
HFA = Housing Finance Authority LOC = Letter of Credit
HFC = Housing Finance Commission RB = Revenue Bond
IDA = Industrial Development Authority TVR = Taxable Variable Rate
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
- --------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------
Less than 31 Days $ 420,436,940 47.14%
31 through 60 Days 239,428,609 26.84
61 through 90 Days 34,911,719 3.91
91 through 120 Days 30,000,000 3.36
121 through 180 Days 114,240,095 12.81
Over 180 Days 52,983,790 5.94
- --------------------------------------------------------------------------------
Total $ 892,001,153 100.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
U.S. TREASURY PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements (49.10%)
- ------------------------------------------------------------------------------------------------------------------------
$ 90,000,000 Bank of America Securities, LLC, purchased on 09/29/06,
repurchase proceeds at maturity $90,036,375 (Collateralized by
$111,267,000, U.S. Treasury Note, 4.000% to 5.625%,
due 05/15/08 to 02/15/14, value $69,865,784, U.S. Treasury TINT,
0.00%, due 11/15/19, value $21,935,164) 10/02/06 4.85% $ 90,000,000
155,000,000 Bear, Stearns & Co., Inc., purchased on 09/29/06, repurchase
proceeds at maturity $155,067,167 (Collateralized by
$451,741,972, GNMA, 3.50% to 13.00%, due12/15/06 to 09/20/36,
value $158,100,809) 10/02/06 5.20 155,000,000
90,000,000 Merrill Lynch Pierce Fenner & Smith Co., purchased on 09/29/06,
repurchase proceeds at maturity $90,037,125 (Collateralized by
$92,185,000, U.S. Treasury Note, 4.125%, 08/15/08, value
$91,803,737) 10/02/06 4.95 90,000,000
80,000,000 UBS Securities, LLC, purchased on 09/29/06, repurchase proceeds
at maturity $80,033,333 (Collateralized by $158,050,000, TPRX,
8.125% to 9.000%, due 11/15/18 to 05/15/21, value $81,600,258) 10/02/06 5.00 80,000,000
- -------------- --------------
415,000,000 Total Repurchase Agreements 415,000,000
- -------------- --------------
U.S. Government Obligations (50.72%)
- ------------------------------------------------------------------------------------------------------------------------
$ 225,000,000 U.S. Treasury Bill 10/05/06 4.22% $ 224,894,500
95,000,000 U.S. Treasury Bill 10/05/06 4.30 94,954,611
10,000,000 U.S. Treasury Bill 10/05/06 4.50 9,995,000
55,000,000 U.S. Treasury Note, 3.125% 05/15/07 4.94 54,407,108
25,000,000 U.S. Treasury Note, 3.125% 05/15/07 5.02 24,717,638
20,000,000 U.S. Treasury Note, 3.125% 05/15/07 5.06 19,768,890
- -------------- --------------
430,000,000 Total U.S. Government Obligations 428,737,747
- -------------- --------------
Total Investments (99.82%) (cost $843,737,747+) 843,737,747
Cash and other assets, net of liabilities (0.18%) 1,549,369
--------------
Net Assets (100.00%) $ 845,287,116
==============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
KEY:
GNMA = Government National Mortgage Association
TINT = U.S. Treasury Interest Strip
TPRX = U.S. Treasury Principal Strip
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund
U.S TREASURY PORTFOLIO
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
- --------------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------------
Less than 31 Days $ 744,844,111 88.28%
31 through 60 Days -- 0.00
61 through 90 Days -- 0.00
91 through 120 Days -- 0.00
121 through 180 Days -- 0.00
Over 180 Days 98,893,636 11.72
- --------------------------------------------------------------------------------------
Total $ 843,737,747 100.00%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Money Market U.S. Treasury
Portfolio Portfolio
----------------- ------------------
ASSETS
Investments in securities, at amortized cost (Note 1)......... $ 856,001,153 $ 428,737,747
Repurchase agreements......................................... 36,000,000 415,000,000
Cash ........................................................ 1,014,331 1,726,042
Accrued interest receivable................................... 4,689,214 1,296,367
Prepaid expenses.............................................. 23,876 26,443
Other receivables............................................. 2,464 -0-
----------------- ------------------
Total assets........................................... 897,731,038 846,786,599
----------------- ------------------
LIABILITIES
Payable to affiliates*........................................ 24,468 22,568
Payable for securities purchased.............................. 20,000,000 -0-
Accrued expenses.............................................. 152,465 143,977
Dividends payable............................................. 364,056 1,332,938
----------------- ------------------
Total liabilities...................................... 20,540,989 1,499,483
----------------- ------------------
Net assets.................................................... $ 877,190,049 $ 845,287,116
================= ==================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 3)....... $ 877,190,266 $ 845,287,116
Accumulated net realized loss................................. (217) -0-
----------------- ------------------
Net assets.................................................... $ 877,190,049 $ 845,287,116
================= ==================
Net asset value, per share (Note 3):
Money Market Portfolio:
Institutional Service (Formerly Class A) shares,
($227,151,441 applicable to 227,151,497 shares outstanding) $ 1.00
=========
Institutional (Formerly Class B) shares,
($498,138,583 applicable to 498,138,706 shares outstanding) $ 1.00
=========
Pinnacle shares,
($151,900,025 applicable to 151,900,063 shares outstanding) $ 1.00
=========
U.S. Treasury Portfolio:
Institutional Service (Formerly Class A) shares,
($193,336,296 applicable to 193,336,296 shares outstanding) $ 1.00
=========
Institutional (Formerly Class B) shares,
($620,625,126 applicable to 620,625,126 shares outstanding) $ 1.00
=========
Pinnacle shares,
($31,325,694 applicable to 31,325,694 shares outstanding) $ 1.00
=========
<FN>
* Includes fees payable to Reich & Tang Asset Management, LLC, Reich & Tang
Distributors, Inc. and Reich & Tang Services, Inc.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED)
================================================================================
Money Market U.S. Treasury
Portfolio Portfolio
----------------- -----------------
INVESTMENT INCOME
Income:
Interest................................................... $ 20,569,478 $ 22,762,585
----------------- -----------------
Expenses: (Note 2)
Investment management fee.................................. 476,673 550,232
Administration fee......................................... 198,614 229,263
Shareholder servicing fee (Institutional Service
(Formerly Class A) shares).............................. 270,080 291,322
Custodian expenses......................................... 20,315 15,988
Shareholder servicing and related shareholder expenses+.... 106,691 100,860
Legal, compliance and filing fees.......................... 112,358 57,470
Audit and accounting....................................... 69,666 48,586
Trustees' fees and expenses................................ 23,033 21,034
Other...................................................... 10,606 12,076
----------------- -----------------
Total expenses.......................................... 1,288,036 1,326,831
Less: Fees waived (Note 2)............................. (219,991) (114,632)
Expense paid indirectly (Note 2)................. (3,509) (3,824)
----------------- -----------------
Net expenses............................................ 1,064,536 1,208,375
----------------- -----------------
Net investment income.......................................... 19,504,942 21,554,210
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments............................... -0- -0-
----------------- -----------------
Increase in net assets from operations......................... $ 19,504,942 $ 21,554,210
================= =================
<FN>
+ Includes class specific transfer agency expenses of $21,606, $43,739 and
$14,101 for Money Market Portfolio Institutional Service (Formerly Class A),
Institutional (Formerly Class B) and Pinnacle Shares and $23,306, $65,649 and
$2,751 for U.S. Treasury Portfolio Institutional Service (Formerly Class A),
Institutional (Formerly Class B) and Pinnacle Shares, respectively.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Money Market Portfolio U.S. Treasury Portfolio
---------------------------------- ---------------------------------
Six Months Ended Year Six Months Ended Year
September 30, 2005 Ended September 30, 2005 Ended
(Unaudited) March 31, 2005 (Unaudited) March 31, 2005
--------- -------------- --------- --------------
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income............................ $ 19,504,942 $ 22,046,040 $ 21,554,210 $ 28,863,097
Net realized gain (loss) on investments.......... -0- -0- -0- 1,672
------------- -------------- ------------- --------------
Increase in net assets from operations........... 19,504,942 22,046,040 21,554,210 28,864,769
Dividends to shareholders from net investment income:
Institutional Service (Formerly Class A) shares.. (5,110,763) (5,513,078) (5,270,828) (8,591,800)
Institutional (Formerly Class B) shares.......... (10,884,387) (12,262,789) (15,624,601) (19,126,850)
Pinnacle shares.................................. (3,509,800) (4,270,165) (658,781) (1,144,447)
------------- -------------- ------------- ---------------
Total dividend to shareholders.................. (19,504,950) (22,046,032) (21,554,210) (28,863,097)
Distributions to shareholders from realized gains on investments:
Institutional Service (Formerly Class A) shares.. -0- -0- -0- (180)
Institutional (Formerly Class B) shares.......... -0- -0- -0- (349)
Pinnacle shares.................................. -0- -0- -0- (22)
------------- -------------- ------------- ---------------
Total distributions to shareholders............. -0- -0- -0- (551)
Capital share transactions (Note 3):
Institutional Service (Formerly Class A) shares.. 3,101,341 104,061,556 (110,832,103) 67,546,979
Institutional (Formerly Class B) shares.......... 125,417,443 157,407,181 (209,088,901) 346,279,295
Pinnacle shares.................................. 17,217,798 19,889,808 2,820,791 (11,304,642)
------------- -------------- ------------- --------------
Total capital share transactions................ 145,736,582 281,358,545 (317,100,213) 402,521,632
------------- -------------- ------------- --------------
Total increase (decrease)........................ 145,736,574 281,358,553 (317,100,213) 402,522,753
Net assets:
Beginning of period.............................. 731,453,475 450,094,922 1,162,387,329 759,864,576
------------- -------------- ------------- --------------
End of period.................................... $ 877,190,049 $ 731,453,475 $ 845,287,116 $1,162,387,329
============= ============== ============= ==============
Undistributed net investment income................. $ -0- $ 8 $ -0- $ -0-
============= ============== ============= ==============
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies
Daily Income Fund (the "Fund") is a, diversified, open-end management investment
company registered under the Investment Company Act of 1940. The Fund has
authorized the creation of three managed portfolios of money market instruments:
U.S. Treasury Portfolio, Money Market Portfolio and Municipal Portfolio (each
referred to as "Portfolio"). Presently only the Money Market Portfolio and U.S.
Treasury Portfolio have been activated. The Money Market and U.S. Treasury
Portfolios each have three classes of stock authorized, Institutional Service
(Formerly Class A), Institutional (Formerly Class B) and Pinnacle shares. The
Institutional Service shares of each Portfolio are subject to a service fee
pursuant to each Portfolio's distribution and service plan. The Institutional
and Pinnacle 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 shareholder
servicing fees and transfer agent expenses. Income, expenses (other than
expenses attributable to a specific class), and realized and unrealized gains
and losses on investments are allocated to each class of shares based on its
relative net assets. In all other respects, all share classes represent the same
interest in the income and assets of each respective Portfolio. The Fund's
financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America for investment companies as
follows:
a) Valuation of Securities -
Investments are valued at amortized cost, which approximates market value.
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. If fluctuating interest rates cause the market value of the
Fund's portfolio to deviate more than 1/2 of 1% from the value determined
on the basis of amortized cost, the Board of Directors will consider
whether any action should be initiated. 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) Repurchase Agreements -
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the
seller defaults, and the fair market value of the collateral declines,
realization of the collateral by the Fund may be delayed or limited.
c) 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.
d) Dividends and Distributions -
Dividends from net investment income (excluding long-term capital gains and
losses, if any, and amortization of market discount) are declared daily,
paid monthly and taxable as ordinary income. 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies (continued)
e) Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect 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.
f) General -
Securities transactions are recorded on a trade date basis. Interest
income, including accretion of discount and amortization of premium, 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, each Portfolio pays an investment
management fee to Reich & Tang Asset Management, LLC (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"), an affiliate of the Manager, have entered into a
Distribution Agreement and a Shareholder Servicing Agreement (with respect to
the Institutional Service shares of the Fund only). For its services under the
Shareholder Servicing Agreement, the Distributor receives from each Portfolio a
service fee equal to .25% per annum of each Portfolio's average daily net assets
with respect only to the Class A shares.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $79,228 for the Money
Market Portfolio and $91,465 for the U.S Treasury Portfolio, paid to Reich &
Tang Services, Inc., an affiliate of the Manager, as shareholder servicing agent
for each Portfolio. Pursuant to the Transfer Agency Agreement, the Transfer
Agent receives a fee of $17.40 per account per year or a minimum of 0.02% of the
monthly average net assets of the Institutional Service, Institutional and
Pinnacle shares of the Fund. For the period ended September 30, 2006, these fees
amounted to an annual rate of 0.02% of the monthly average net assets of the
Institutional Service, Institutional and Pinnacle shares of each portfolio.
For the period ended September 30, 2006, the following fees were voluntarily
waived by the Manager:
Money Market Portfolio U.S. Treasury Portfolio
---------------------- -----------------------
Investment management fees $ 35,834 $ -0-
Administration fees 184,157 114,632
------------- --------------
Total $ 219,991 $ 114,632
============= ==============
The Manager has no right to recoup prior fee waivers.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (continued)
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$5,000 per annum plus $1,200 per meeting attended (there are five scheduled
Board Meetings each year). In addition, the Audit Committee Chairman receives an
aggregate payment of $1,000 per quarter allocated among the funds of the Reich &
Tang Complex on whose Audit Committee he serves and each member of the Audit
Committee will receive an aggregate payment of $750 per Audit Committee meeting
attended allocated among the funds of the Reich & Tang Complex. The Lead
Independent Director will receive an additional annual fee of $8,000 and the
Deputy Lead Director will receive an additional annual fee of $4,000, both fees
paid quarterly and allocated among the funds of the Reich & Tang Complex.
For the period ended September 30, 2006, the breakdown of expenses paid
indirectly by the Fund were as follows:
Money Market Portfolio U.S. Treasury Portfolio
---------------------- -----------------------
Custodian expenses $ 3,509 $ 3,824
============ ============
3. Transactions in Shares of Beneficial Interest
At September 30, 2006, an unlimited number of shares of beneficial interest
($0.001 par value) were authorized. Transactions, all at $1.00 per share, were
as follows:
Money Market Portfolio U.S. Treasury Portfolio
------------------------------------- --------------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
September 30, 2006 March 31, 2006 September 30, 2006 March 31, 2006
Institutional Service ------------------ -------------- ------------------ --------------
(Formerly Class A) shares
------------------------
Sold................................ 1,097,684,702 2,100,732,666 341,706,673 1,043,607,042
Issued on reinvestment of dividends. 5,112,335 5,277,442 2,952,488 3,409,207
Redeemed............................ (1,099,695,696) (2,001,948,552) (455,491,264) (979,469,270)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 3,101,341 104,061,556 (110,832,103) 67,546,979
============== ============== ============== ==============
Institutional (Formerly Class B) shares
- ---------------------------------------
Sold................................ 1,230,860,919 2,222,373,090 898,373,656 2,421,293,275
Issued on reinvestment of dividends. 10,903,499 12,076,068 2,921,803 3,590,453
Redeemed............................ (1,116,346,974) (2,077,041,977) (1,110,384,360) (2,078,604,433)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 125,417,443 157,407,181 (209,088,901) 346,279,295
============== ============== ============== ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
3. Transactions in Shares of Beneficial Interest (continued)
Money Market Portfolio U.S. Treasury Portfolio
------------------------------------- --------------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Pinnacle shares September 30, 2006 March 31, 2006 September 30, 2006 March 31, 2006
- --------------- ------------------ -------------- ------------------ --------------
Sold................................ 71,567,131 183,496,040 27,474,636 34,672,577
Issued on reinvestment of dividends. 3,531,282 4,303,379 662,485 1,151,037
Redeemed............................ (57,880,615) (167,909,611) (25,316,330) (47,128,256)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 17,217,798 19,889,808 2,820,791 (11,304,642)
============== ============== ============== ==============
4. Tax Information
The tax character of all dividends and distributions paid during the years ended
March 31, 2006 and 2005 were as follows:
Money Market Portfolio U.S. Treasury Portfolio
------------------------------------ ------------------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Ordinary income..................... $22,046,032 $ 5,815,811 $28,863,648 $10,218,410
At March 31 2006, the Money Market Portfolio had unused capital loss
carryforwards of $217, available for Federal income tax purposes to be applied
against future gains, if any. If not applied against future gains, $151 will
expire in 2012 and $66 will expire in 2014.
During the year ended March 31, 2006, the U.S. Treasury Portfolio utilized
capital loss carryforwards of $1,121.
At March 31, 2006, there were $8 of distributable earnings for the Money Market
Portfolio and no distributable earnings for the U.S. Treasury Portfolio.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48 - Accounting for Uncertainty in Income Taxes that requires
the tax effects of certain tax positions to be recognized. These tax positions
must meet a "more likely than not" standard that based on their technical
merits, they have a more than 50 percent likelihood of being sustained upon
examination. FASB interpretation No. 48 is effective for fiscal periods
beginning after December 15, 2006. At adoption, the financial statements must be
adjusted to reflect only those tax positions that are more likely than not of
being sustained. Management of the Fund is currently evaluating the impact FASB
Interpretation No. 48 will have on the Fund's financial statements.
5. Subsequent Events
Effective October 16, 2006, the Fund's name was changed to Daily Income Fund,
the name of the Class A shares was changed to Institutional Service Shares and
the name of the Class B shares was changed to Institutional Shares. In addition,
the Municipal Portfolio was activated and the U.S. Government Portfolio was
created along with additional share classes in all four portfolios. The Fund's
prospectus contains a description of the Portfolios and each of the share
classes.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights
Money Market Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
Institutional Service September 30, 2006 --------------------------------------------------------------
(Formerly Class A) shares (Unaudited) 2006 2005 2004 2003 2002
------------------------ --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income....................... 0.024 0.033 0.013 0.007 0.013 0.028
Net realized and unrealized gain(loss)
on investments............................. -- -- 0.000 0.000 0.000 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations............ 0.024 0.033 0.013 0.007 0.013 0.028
Less distributions from:
Dividends from net investment income........ (0.024) (0.033) (0.013) (0.007) (0.013) (0.028)
Net realized gain(loss) on investment....... -- -- (0.000) (0.000) (0.000) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions......................... (0.024) (0.033) (0.013) (0.007) (0.013) (0.028)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return................................... 2.39%(a) 3.36% 1.34% 0.73% 1.33% 2.85%
Ratios/Supplemental Data
Net assets, end of period (000's).............. $ 227,151 $ 224,050 $ 119,989 $ 53,373 $ 114,337 $ 67,459
Ratios to average net assets:
Expenses (net of fees waived) (b)........... 0.45%(c) 0.47% 0.47% 0.47% 0.47% 0.45%
Net investment income....................... 4.73%(c) 3.39% 1.49% 0.73% 1.32% 3.39%
Management and administration fees waived... 0.06%(c) 0.06% 0.08% 0.06% 0.06% 0.02%
Transfer agency fees waived................. -- 0.01% 0.02% -- -- --
Expenses paid indirectly.................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly (c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
6. Financial Highlights (continued)
Money Market Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
Institutional September 30, 2006 --------------------------------------------------------------
(Formerly Class B) shares (Unaudited) 2006 2005 2004 2003 2002
------------------------ --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income....................... 0.025 0.036 0.016 0.010 0.016 0.031
Net realized and unrealized gain(loss)
on investments............................. -- -- 0.000 0.000 0.000 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations............ 0.025 0.036 0.016 0.010 0.016 0.031
Less distributions from:
Dividends from net investment income........ (0.025) (0.036) (0.016) (0.010) (0.016) (0.031)
Net realized gain(loss) on investments...... -- -- (0.000) (0.000) (0.000) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions......................... (0.025) (0.036) (0.016) (0.010) (0.016) (0.031)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return................................... 2.52%(a) 3.63% 1.61% 1.00% 1.61% 3.12%
Ratios/Supplemental Data
Net assets, end of period (000's).............. $ 498,139 $ 372,721 $ 215,314 $ 163,829 $ 132,837 $ 123,267
Ratios to average net assets:
Expenses (net of fees waived) (b)........... 0.20%(c) 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income....................... 4.98%(c) 3.66% 1.63% 0.99% 1.60% 3.15%
Management and administration fees waived... 0.06%(c) 0.06% 0.08% 0.06% 0.06% 0.02%
Transfer agency fees waived................. -- 0.02% 0.02% 0.02% 0.02% 0.01%
Expenses paid indirectly.................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights (continued)
Money Market Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
September 30, 2006 --------------------------------------------------------------
Pinnacle shares (Unaudited) 2006 2005 2004 2003 2002
- --------------- --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income...................... 0.025 0.036 0.016 0.010 0.016 0.031
Net realized and unrealized gain(loss)
on investments............................ -- -- 0.000 0.000 0.000 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations........... 0.025 0.036 0.016 0.010 0.016 0.031
Less distributions from:
Dividends from net investment income....... (0.025) (0.036) (0.016) (0.010) (0.016) (0.031)
Net realized gain(loss) on investments..... -- -- (0.000) (0.000) (0.000) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions........................ (0.025) (0.036) (0.016) (0.010) (0.016) (0.031)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return.................................. 2.52%(a) 3.63% 1.61% 1.00% 1.61% 3.12%
Ratios/Supplemental Data
Net assets, end of period (000's)............. $ 151,900 $ 134,682 $ 114,792 $ 122,839 $ 130,135 $ 153,182
Ratios to average net assets:
Expenses (net of fees waived) (b).......... 0.20%(c) 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income...................... 4.98%(c) 3.66% 1.63% 0.99% 1.60% 3.15%
Management and administration fees waived.. 0.06%(c) 0.06% 0.08% 0.06% 0.06% 0.02%
Transfer agency fees waived................ -- 0.02% 0.02% 0.02% 0.02% 0.01%
Expenses paid indirectly................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
6. Financial Highlights (continued)
U.S. Treasury Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
Institutional Service September 30, 2006 --------------------------------------------------------------
(Formerly Class A) shares (Unaudited) 2006 2005 2004 2003 2002
------------------------ --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income...................... 0.023 0.032 0.012 0.007 0.013 0.028
Net realized and unrealized gain(loss)
on investments ........................... -- 0.000 0.000 0.000 -- --
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations........... 0.023 0.032 0.012 0.007 0.013 0.028
Less distributions from:
Dividends from net investment income....... (0.023) (0.032) (0.012) (0.007) (0.013) (0.028)
Net realized gain on investments........... -- (0.000) (0.000) (0.000) -- --
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions........................ (0.023) (0.032) (0.012) (0.007) (0.013) (0.028)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return.................................. 2.30%(a) 3.22% 1.19% 0.66% 1.28% 2.86%
Ratios/Supplemental Data
Net assets, end of period (000's)............. $ 193,336 $ 304,168 $ 236,621 $ 261,931 $ 276,174 $ 253,948
Ratios to average net assets:
Expenses (net of fees waived) (b).......... 0.45%(c) 0.45% 0.45% 0.45% 0.45% 0.45%
Net investment income...................... 4.52%(c) 3.17% 1.18% 0.66% 1.28% 3.12%
Management and administration fees waived 0.03%(c) 0.05% 0.03% 0.04% 0.03% 0.02%
Expenses paid indirectly................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights (continued)
U.S. Treasury Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
Institutional September 30, 2006 --------------------------------------------------------------
(Formerly Class B) shares (Unaudited) 2006 2005 2004 2003 2002
------------------------ --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income....................... 0.024 0.034 0.014 0.009 0.015 0.031
Net realized and unrealized gain(loss)
on investments ............................ -- 0.000 0.000 0.000 -- --
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations............ 0.024 0.034 0.014 0.009 0.015 0.031
Less distributions from:
Dividends from net investment income........ (0.024) (0.034) (0.014) (0.009) (0.015) (0.031)
Net realized gain on investments............ -- (0.000) (0.000) (0.000) -- --
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions......................... (0.024) (0.034) (0.014) (0.009) (0.015) (0.031)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return................................... 2.42%(a) 3.48% 1.44% 0.91% 1.53% 3.12%
Ratios/Supplemental Data
Net assets, end of period (000's).............. $ 620,625 $ 829,714 $ 484,434 $ 466,041 $ 383,677 $ 348,701
Ratios to average net assets:
Expenses (net of fees waived) (b)........... 0.20%(c) 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income....................... 4.76%(c) 3.51% 1.45% 0.90% 1.51% 2.66%
Management and administration fees waived... 0.03%(c) 0.05% 0.03% 0.04% 0.03% 0.02%
Expenses paid indirectly.................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
6. Financial Highlights (continued)
U.S. Treasury Portfolio
--------------------------------------------------------------
Six Months Ended For the Years Ended March 31,
September 30, 2006 --------------------------------------------------------------
Pinnacle shares (Unaudited) 2006 2005 2004 2003 2002
-------------- --------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income...................... 0.024 0.034 0.014 0.009 0.015 0.031
Net realized and unrealized gain(loss)
on investments ........................... -- 0.000 0.000 0.000 -- --
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations........... 0.024 0.034 0.014 0.009 0.015 0.031
Less distributions from:
Dividends from net investment income....... (0.024) (0.034) (0.014) (0.009) (0.015) (0.031)
Net realized gain on investments........... -- (0.000) (0.000) (0.000) -- --
--------- ---------- ---------- ---------- ---------- ----------
Total Distributions........................ (0.024) (0.034) (0.014) (0.009) (0.015) (0.031)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return.................................. 2.42%(a) 3.48% 1.44% 0.91% 1.53% 3.12%
Ratios/Supplemental Data
Net assets, end of period (000's)............. $ 31,326 $ 28,505 $ 39,809 $ 29,252 $ 25,526 $ 17,871
Ratios to average net assets:
Expenses (net of fees waived) (b).......... 0.20%(c) 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income...................... 4.76%(c) 3.51% 1.45% 0.90% 1.51% 2.66%
Management and administration fees waived.. 0.03%(c) 0.05% 0.03% 0.04% 0.03% 0.02%
Expenses paid indirectly................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
ADDITIONAL INFORMATION
(UNAUDITED)
================================================================================
ADDITIONAL INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund is required to file its complete schedule of portfolio holdings with
the Securities and Exchange Commission ("SEC") on Form N-Q for its first and
third fiscal quarters. The Fund's Form N-Q is available without charge on the
SEC's website (http://www.sec.gov) or by calling the Fund toll free at (800)
433-1918. You can also obtain copies of the Fund's Form N-Q by visiting the
SEC's Public Reference Room in Washington, DC (please call the SEC at (800)
732-0330 for information on the operation of the Public Reference Room).
INFORMATION ABOUT PROXY VOTING
Information regarding the Fund's proxy voting record for the 12 month period
ending June 30 of each year is filed with the SEC on Form N-PX no later than
August 31 of each year. The Fund's Form N-PX is available without charge, upon
request, by calling the Fund at (800) 433-1918 and on the SEC's website
(http//www.sec.gov). The Fund does not presently invest in voting securities and
has therefore not adopted proxy voting policies and procedures.
QUALIFIED INTEREST INCOME
For the fiscal year ended March 31, 2006, the Funds' designate the following
percentages of ordinary distributions paid during the fiscal year that are from
qualified interest income to foreign shareholders:
Qualified Interest
Income
------
Institutional Daily Income Fund - Money Market Portfolio 68%
Institutional Daily Income Fund - U.S. Treasury Portfolio 100%
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT
(Relating only to the Fund's Municipal Portfolio and U.S. Government Portfolio)
On July 20, 2006, and October 19, 2006, the Board of Trustees approved the
Investment Management Contract, with respect to the Fund's Municipal Portfolio
and U.S. Government Portfolio. A discussion regarding the basis for the Board of
Trustees approving the continuance of the Investment Management Contract, with
respect to the Fund's Money Market Portfolio and U.S. Treasury Portfolio, is
available in the Fund's annual report for the period ended March 31, 2006. In
determining whether to approve the Investment Management Contract for the
Municipal Portfolio and U.S. Government Portfolio, the Trustees considered the
following information:
The nature, extent and quality of services provided by the Manager
The Board reviewed in detail the nature and extent of the services provided by
the Manager under the terms of the Fund's Investment Management Contract and the
quality of those services provided to the Fund's other portfolios. The Board
noted that the services include managing the investment and reinvestment of the
Fund's assets; the provision of reports to the Board regarding changes in
portfolio holdings, important developments affecting the entities whose
securities are included in the Fund's portfolio, and the money market industry
and the economy in general; and the compensation of all officers, trustees and
employees of the Fund who are officers of the Manager or its affiliates. The
Board also observed that the Manager provides various administrative services to
the Fund pursuant to the terms of a separate Administrative Services Contract
and considered the nature, extent and quality of services provided under that
agreement as well. The Board
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DAILY INCOME FUND (Formerly Institutional Daily Income Fund)
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
================================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT
(Relating only to the Fund's Municipal Portfolio and U.S. Government Portfolio)
(Continued)
The nature, extent and quality of services provided by the Manager (continued)
evaluated these factors based on their direct experience with the Manager and in
consultation with counsel to the independent trustees and Fund counsel. The
Board concluded that the nature and extent of the services provided under the
Investment Management Contract were reasonable and appropriate in relation to
the management fees, that the level of services provided by the Manager with
respect to other portfolios of the Fund was excellent and that the quality of
services with respect to the other portfolios of the Fund is high. The Board
reviewed the personnel responsible for providing advisory services to the Fund
and concluded, based on their experience and interaction with the Manager, that
(i) the Manager was able to retain quality portfolio managers and other
personnel; (ii) the Manager exhibited a high level of diligence and attention to
detail in carrying out its advisory responsibilities under the Investment
Management Contract with respect to the Fund's other portfolios; (iii) the
Manager was responsive to requests of the Trustees; and (iv) the Manager had
kept the Trustees apprised of developments relating to the Fund and the industry
in general. The Board also focused on the Manager's reputation and long-standing
relationship with the Fund and, in particular, the experience of the Manager in
advising money market funds. The Board also noted the high quality of services
provided by the Manager to the Fund's other portfolios under the Administrative
Services Contract.
The performance of the Fund and the Manager.
The Board noted that performance numbers for the U.S. Government Portfolio and
the Municipal Portfolio were not available as these Portfolios had yet to
commence operations.
The cost of the advisory services and the profits to the Manager and its
affiliates from the relationship with the Fund.
In connection with the Trustee's consideration of the level of the management
fees, the Board considered a number of factors. The Board compared the level of
the management fee for each Portfolio against the advisory fees charged to the
funds in the respective peer groups and each Portfolio's combined
management-administrative fees against fees covering both advisory and
administrative services charged to the funds in the respective peer groups. The
peer group categories included: (i) an asset-based peer group of retail
tax-exempt money market funds, as classified by Lipper, as the peer group for
the Municipal Portfolio's Retail Class shares, and U.S. government money market
funds, as classified by Lipper, as the peer group for the U.S. Government
Portfolio's Retail Class shares ("expense group 1"); (ii) a competitors class
peer group for each of the Portfolios' Retail Class shares, representing other
retail tax-exempt money market funds and one institutional tax-exempt money
market fund that are considered to be competitors of the Municipal Portfolio
with similar distribution channels and other retail U.S. government money market
funds and one institutional U.S. government money market fund that are
considered to be competitors of the U.S. Government Portfolio with similar
distribution channels ("expense group 2"); (iii) a peer group of all funds in
each Portfolio's Lipper universe regardless of asset size ("expense universe");
and (iv) with respect to the Municipal Portfolio only, other funds with similar
investment objectives to the Municipal Portfolio that are advised or sub-advised
by the Manager. These peer groups are referred to collectively as the "Peer
Groups." The Manager advised the Board that it does not advise or sub-advise
other types of accounts, such as institutional and pension accounts, with
similar investment policies to the respective Portfolios. The Board also
considered comparative total fund expenses of the Retail Class shares of the
Portfolios and the respective Peer Groups. The Board used this combined fee
information and total expense data as a guide to help assess the reasonableness
of each Portfolio's management fee, although they acknowledged that it was
difficult to make precise comparisons with other funds since the exact nature of
services provided under the Peer Group fund agreements is often not apparent.
The Board also viewed the Peer Group fee information as a whole as useful
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================================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT
(Relating only to the Fund's Municipal Portfolio and U.S. Government Portfolio)
(Continued)
The cost of the advisory services and the profits to the Manager and its
affiliates from the relationship with the Fund. (continued)
in assessing whether the Manager was providing services at a cost that was
competitive with other, similar funds. In assessing this information, the Board
considered both the comparative contract rates as well as the level of the
management fees after waivers and/or reimbursements. The Board noted that the
contract rate of each Portfolio's management fee and combined fees (management
and administrative) were reasonable when compared to the combined fees of the
respective Peer Groups. The Board also noted that the Manager did not advise or
sub-advise any other types of accounts, such as institutional or pension
accounts, with similar investment policies to the Portfolios. The Board
concluded that the level of each Portfolio's management fee was reasonable in
light of these factors. The Board noted that because these Portfolios had yet to
commence operations, there was no profitability data to discuss. The Board did,
however, note their review of the Manager's profitability at the January 2006
Board meeting and the Manager provided a oral update to its profitability with
respect to the Fund's other portfolios since that time. The Board noted that it
had previously considered revenues received by the Manager under the Investment
Management Contract and Administrative Services Contract as well as revenues
received by the Manager's affiliates under the 12b-1 Plans and related
agreements, Transfer Agency Agreement and revenues derived from Reich & Tang's
cash management business (e.g. checking and debit card services that are offered
by Reich & Tang to Fund shareholders through certain Participating
Organizations). The Board concluded that the profitability of the Fund to the
Manager and its affiliates was not excessive.
The extent to which economies of scale will be realized as the Fund grows and
whether fee levels reflect those economies of scale.
With respect to the Boards' consideration of economies of scale, the Board
discussed with the Manager whether economies of scale would be realized by it in
its management of the Fund at higher asset levels. The Board also discussed with
the Manager whether certain of the Manager's costs would increase if asset
levels rise and observed that as assets rise, the Manager and its affiliates may
be required to pay increased fees to Participating Organizations. The Board also
reviewed the Peer Group data to assess whether the Peer Group funds had advisory
or administrative fee breakpoints and, if so, at what asset levels. The Board
concluded that they were unable to assess at this time whether economies of
scale would be realized if the Fund were to experience significant asset growth.
In the event there were significant asset growth in the future, the Board
determined to reassess whether the management fees appropriately took into
account any economies of scale that had been realized as a result of that
growth.
Other Factors.
In addition to the above factors, the Board acknowledged the importance of the
ability of the Manager's affiliate, the distributor, to market the Fund through
its distribution networks, including its customer service and administration
system with banks and bank customers.
Based on a consideration of all these factors in their totality, the Trustees,
including all of the disinterested Trustees, determined that the Fund's
management fees were fair and reasonable with respect to the quality of services
that the Manager is expected to provide and in light of the other factors
described above that the Board deemed relevant. The Board based their decision
on evaluations of all these factors as a whole and did not consider any one
factor as all-important or controlling.
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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.
- --------------------------------------------------------------------------------
Daily Income Fund
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, LLC
600 Fifth Avenue
New York, New York 10020
Custodian
The Bank of New York
2 Hanson Place, 7th Floor,
Brooklyn, New York 11217
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
DIF 9/06S
DAILY
INCOME
FUND
(Formerly Institutional Daily Income Fund)
Semi-Annual Report
September 30, 2006
(Unaudited)
Item 2: Code of Ethics
Not Applicable (disclosure required in annual report on N-CSR only).
Item 3: Audit Committee Financial Expert
Not Applicable (disclosure required in annual report on N-CSR only).
Item 4: Principal Accountant Fees and Services
Not Applicable (disclosure required in annual report on N-CSR only).
Item 5: Audit Committee of Listed Registrants
Not Applicable.
Item 6: Schedule of Investments
Schedule of Investments in securities of unaffiliated issuers is included under
Item 1.
Item 7: Discholsure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not Applicable.
Item 8: Purchase of Equity Securties by Closed-End Management Investment Company
and Affiliated Purchasers
Not Applicable.
Item 9: Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors that were implemented
after the registrant last provided disclosure in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A, or this Item 9.
Item 10: Controls and Procedures
(a) The registrant's Principal Executive Officer and Principal Financial
Officer have evaluated the design and operation of the registrant's
disclosure controls and procedures within 90 days of this filing and
have concluded that the registrant's disclosure controls and procedures
were effective in ensuring that information required to be disclosed by
the registrant in this Form N-CSR was recorded, processed, summarized
and reported on a timely basis.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the second fiscal quarter of
the period covered by this report that have materially affected, or are
reasonably likely to affect, the registrant's internal controls over
financial reporting.
Item 11: Exhibits
(a)(1) Not Applicable (disclosure required in annual report on N-CSR only).
(a)(2) Certifications of Principal Executive Officer and Principal Financial
Officer, under Rule 30a-2 of the Investment Company Act of 1940.
(a)(3) Not Applicable.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer, under Section 906 of the Sarbanes-Oxley Act of 2002 and 18
U.S.C. ss.1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Daily Income Fund
By (Signature and Title)* /s/ Rosanne Holtzer
-------------------
Rosanne Holtzer, Secretary
Date: December 7, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Steven W. Duff
------------------
Steven W. Duff, President
Date: December 7, 2006
By (Signature and Title)* /s/ Anthony Pace
----------------
Anthony Pace, Treasurer
Date: December 7, 2006
* Print the name and title of each signing officer under his or her signature.