As filed with the Securities and Exchange Commission on December 4, 2008
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)
CHRISTINE MANNA
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, 2008
ITEM 1: REPORT TO STOCKHOLDERS
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DAILY 600 Fifth Avenue
INCOME NEW YORK, NY 10020
FUND (212)830-5200
================================================================================
Semi-Annual
Report
September 30, 2008
(Unaudited)
<page>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
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DAILY INCOME FUND
TABLE OF CONTENTS
================================================================================
<table>
<caption>
<s> <c> <c> <c>
Shareholder Letter 4
Money Market Portfolio Municipal Portfolio
Expense Chart 5 Expense Chart 45
Schedule of Investments 7 Schedule of Investments 47
Statement of Assets and Liabilities 18 Statement of Assets and Liabilities 58
Statement of Operations 19 Statement of Operations 59
Statements of Changes in Net Assets 20 Statements of Changes in Net Assets 60
Financial Highlights 21 Financial Highlights 61
U.S Treasury Portfolio Notes to Financial Statements 65
Expense Chart 26 Additional Information 75
Schedule of Investments 28
Statement of Assets and Liabilities 29
Statement of Operations 30
Statements of Changes in Net Assets 31
Financial Highlights 32
U.S. Government Portfolio
Expense Chart 36
Schedule of Investments 37
Statement of Assets and Liabilities 39
Statement of Operations 40
Statements of Changes in Net Assets 41
Financial Highlights 42
</table>
<page>
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DAILY INCOME FUND
SHAREHOLDER LETTER
================================================================================
Dear Shareholder:
In a time of uncertainty it is comforting to know that some things never change.
Since its inception in 1974, Reich & Tang Funds has taken a proactive approach
to risk management. Our investment philosophy and process is more credit focused
than yield focused. Our goals of safety and preservation of capital continually
drive our investment analysis and decisions.
On October 2, 2008, the Boards of Directors and Trustees of all U.S.-registered
money market funds advised by Reich & Tang Asset Management, LLC approved the
participation of those funds in the U.S. Treasury Department's Temporary
Guarantee Program for Money Market Funds. The Guarantee Program for
U.S.-registered money market funds is a timely and direct response to our
troubled markets, providing stability at a time when investor confidence has
been eroded. The Guarantee Program guarantees shareholders that they will
receive $1.00 for each money market fund share held at the close of business on
September 19, 2008.
Below are the essential aspects of the Guarantee Program:
o the guarantee is based upon the number of shares invested in the fund at
the close of business on September 19, 2008;
o any increase in the number of shares held after the close of business on
September 19, 2008 will not be guaranteed;
o if the number of shares fluctuates over the period, investors will be
covered for either the number of shares held as of the close of business on
September 19, 2008 or the current amount, whichever is less;
o in the event a customer closes their account with a fund or broker/dealer,
any future investment in the fund will not be guaranteed;
o and the program expires on December 18, 2008, unless extended by the U.S.
Treasury.
Reich & Tang continues to be very cautious given the recent events in our
markets. As an organization, we continue to believe that thorough, fundamental
credit analysis is the key to continued success in our business. Our credit
analysts are constantly monitoring the activity in the credit markets.
Throughout this period of market turbulence, we have not owned any securities
that have experienced credit delinquency or have been downgraded below Tier 1,
however current and future portfolio holdings are subject to market risk. Most
recently, we have shortened the average maturities of our portfolios to be able
to react quickly to the changing market conditions, and we will continue to
monitor the markets to ensure that liquidity and safety remain our top
priorities.
Reich & Tang is proud to be part of Natixis Global Asset Management, one of the
world's largest money management organizations. Natixis brings together the
expertise of multiple specialized investment managers based in the United
States, Europe and Asia to offer a wide spectrum of equity, fixed income and
alternative investment strategies. For more information on Natixis Global Asset
Management, please visit us at www.natixis.com.
We appreciate your support during this turbulent period and thank you for your
business. While it is difficult to predict the future as we navigate through
multiple complex factors in the market, we believe that our fundamental approach
to money market funds and our corporate structure enable us to continue to be a
leader in providing funds that focus on preservation of capital and liquidity
for our shareholders and valued clients.
We welcome any questions you may have about the investments in any of our
portfolios and stand ready to respond to you as we have for over 34 years.
Sincerely,
\s\ Michael P. Lydon
Michael P. Lydon
President
<page>
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DAILY INCOME FUND
MONEY MARKET PORTFOLIO
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
As a shareholder of the Portfolio, you incur the following ongoing costs:
management fees and other Portfolio 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 Portfolio 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, 2008 through September 30,
2008.od and held for the entire period April 1, 2008 through September 30, 2008.
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.
<table>
<caption>
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Institutional Class Shares
("Institutional Shares") & Pinnacle Beginning Account Ending Account Value Expenses Paid Annualized
Class Shares ("Pinnacle Shares") Value 04/01/08 09/30/08 During the period * Expense Ratio *
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<s> <c> <c> <c> <c>
Actual $1,000.00 $1,014.30 $1.01 0.20%
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Hypothetical (5% return before $1,000.00 $1,024.07 $1.01 0.20%
expenses)
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Institutional Service Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Service Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,013.00 $2.27 0.45%
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Hypothetical (5% return before $1,000.00 $1,022.81 $2.28 0.45%
expenses)
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Investor Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Investor Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,012.00 $3.28 0.65%
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Hypothetical (5% return before $1,000.00 $1,021.81 $3.29 0.65%
expenses)
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Short Term Income Shares Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Short Term Income Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
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Actual $1,000.00 $1,010.50 $4.74 0.94%
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Hypothetical (5% return before $1,000.00 $1,020.36 $4.76 0.94%
expenses)
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</table>
<page>
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DAILY INCOME FUND
MONEY MARKET PORTFOLIO
EXPENSE CHART (CONTINUED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
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Retail Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Retail Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
- ---------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Actual $1,000.00 $1,010.20 $5.04 1.00%
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Hypothetical (5% return before $1,000.00 $1,020.05 $5.06 1.00%
expenses)
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Advantage Primary Liquidity Fund Beginning Account Ending Account Value Expenses Paid Annualized
("Advantage Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.10 $5.14 1.02%
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Hypothetical (5% return before $1,000.00 $1,019.95 $5.16 1.02%
expenses)
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money market Xpress Fund Beginning Account Ending Account Value Expenses Paid Annualized
("Xpress Shares") Value 04/01/08 09/30/08 During the Period * Expense Ratio *
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.00 $6.30 1.25%
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Hypothetical (5% return before $1,000.00 $1,018.80 $6.33 1.25%
expenses)
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<fn>
* Expenses are equal to the Fund's annualized expense ratios multiplied by the average account value over the period (April 1, 2008
through September 30, 2008), multiplied by 183/365 (to reflect the most recent fiscal half-year).
</fn>
</table>
<page>
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DAILY INCOME FUND
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Commercial Paper (0.71%)
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<s> <c> <c> <c> <c>
$ 35,400,000 Vermont EDA Economic Development Capitalization Program - Series A
LOC Calyon 12/02/08 2.93% $ 35,400,000
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35,400,000 Total Commercial Paper 35,400,000
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Domestic Certificates of Deposit (4.46%)
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$ 123,000,000 Wilmington Trust Company 10/09/08 2.85% $ 123,000,425
100,000,000 Wilmington Trust Company 10/27/08 2.86 100,000,000
- -------------- --------------
223,000,000 Total Domestic Certificates of Deposit 223,000,425
- -------------- --------------
Eurodollar Certificates of Deposit (5.00%)
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$ 100,000,000 Societe Generale North America 10/31/08 2.55% $ 100,000,830
150,000,000 Ulster Bank Limited 12/11/08 3.00 150,002,935
- -------------- --------------
250,000,000 Total Eurodollar Certificates of Deposit 250,003,765
- -------------- --------------
Floating Rate Securities (0.50%)
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$ 25,000,000 JPMorgan Chase & Co. Extendable Floating Rate Note (1) (2) 12/11/08 2.49% $ 25,000,000
- -------------- --------------
25,000,000 Total Floating Rate Securities 25,000,000
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Foreign Commercial Paper (5.70%)
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$ 150,000,000 Anglo Irish Bank Corporation PLC (3) 10/06/08 2.83% $ 149,941,250
125,000,000 Anglo Irish Bank Corporation PLC (3) 10/15/08 2.86 124,861,458
10,000,000 Bank of Scotland Treasury 11/17/08 2.68 9,965,207
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285,000,000 Total Foreign Commercial Paper 284,767,915
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Letter of Credit Commercial Paper (1.62%)
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$ 81,100,000 Dean Health Systems, Inc.
LOC U.S. Bank, N.A. 10/02/08 2.60% $ 81,094,143
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81,100,000 Total Letter of Credit Commercial Paper 81,094,143
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Loan Participations (2.70%)
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$ 135,000,000 Army & Air Force Exchange Service with JPMorgan Chase as agent (2) 11/17/08 2.87% $ 135,000,000
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135,000,000 Total Loan Participation 135,000,000
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Repurchase Agreement (3.00%)
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$ 150,000,000 Annaly Mortgage Management, purchased on 09/30/08, repurchase
proceeds at maturity $150,009,375 (Collateralized by $187,429,145
FAMC, 3.04% to 6.00%, due 03/15/36 to 04/15/36, value $157,500,000) 10/01/08 2.25% $ 150,000,000
- -------------- --------------
150,000,000 Total Repurchase Agreement 150,000,000
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Time Deposit (11.91%)
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$ 250,000,000 BNP Paribas 10/01/08 5.00% $ 250,000,000
295,000,000 National Bank of Canada 10/01/08 5.50 295,000,000
50,000,000 Royal Bank of Canada 10/01/08 2.00 50,000,000
- -------------- --------------
595,000,000 Total Time Deposit 595,000,000
- -------------- --------------
</table>
The accompanying notes are an integral part of these financial statements.
<page>
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MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (9.17%) (4)
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<s> <c> <c> <c> <c>
$ 2,000,000 1212 Jackson LLC - Series 2004
LOC Fifth Third Bank 09/01/24 10.00% $ 2,000,000
1,875,000 1800 Indian Wood Ltd. - Series 2005
LOC Fifth Third Bank 04/01/26 10.00 1,875,000
1,635,000 2150 Investment Company - Series 1997
LOC Fifth Third Bank 02/01/17 10.00 1,635,000
4,155,000 A&M Associates Project - Series 2002
LOC U.S. Bank, N.A. 12/01/34 8.75 4,155,000
1,740,000 Alatrade Foods LLC - Series 2004
LOC Regions Bank 12/01/14 3.68 1,740,000
1,955,000 Albany, NY Industrial Development Agency Civic Facilities RB
(Albany Medical Center Project) - Series 2006B
LOC Citizens Bank RI 05/01/35 8.25 1,955,000
2,250,000 Alta Mira LLC - Series 2004
LOC Marshall & Ilsley Bank 11/01/34 8.40 2,250,000
800,000 Atlantic Tool & Die Company - Series 1996
LOC Key Bank, N.A. 12/01/11 10.00 800,000
1,560,000 Atlantic Tool & Die Company - Series 2002
LOC Key Bank, N.A. 03/01/17 10.00 1,560,000
1,678,000 Aztec Properties, LLC
LOC U.S. Bank, N.A. 08/01/20 8.00 1,678,000
5,285,000 Baldwin County Sewer Service, LLC - Series 2005
LOC Amsouth Bank 05/01/25 3.68 5,285,000
1,160,000 Bank of Kentucky Building, LLC - Series 1999
LOC U.S. Bank, N.A. 12/01/19 8.00 1,160,000
100,000 Barnes & Thornburg LLP - Series 2005
LOC Fifth Third Bank 12/01/55 10.00 100,000
7,935,000 Beacon Orthopedics Facilities, LLC - Series 2004
LOC Fifth Third Bank 02/01/24 8.00 7,935,000
720,000 Berkeley Square Retirement Center - Series 1998A
LOC Fifth Third Bank 02/01/13 8.00 720,000
200,000 Brookville Enterprises - Series 2004
LOC Fifth Third Bank 10/01/25 10.00 200,000
1,750,000 Burke County, GA Development Authority IDRB
(Lichtenberg Holdings II, LLC Project) - Series 2002
LOC JPMorgan Chase Bank, N.A. 01/01/13 7.50 1,750,000
4,815,000 Bybee Food LLC
LOC Key Bank, N.A. 11/01/26 10.00 4,815,000
4,740,000 Capital Markets Access Company, LLC.
(Cape Coral Medical & Surgical Suites, LLC Project)
LOC SunTrust Bank 08/01/20 6.50 4,740,000
317,000 Capital One Funding Corporation
Floating Rate Option Notes - Series 1997 D
LOC JPMorgan Chase Bank, N.A. 07/02/18 8.20 317,000
3,125,000 Carmichael Imaging, LLC - Series 2002
LOC Regions Bank 11/01/10 7.65 3,125,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
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================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 1,100,000 CEGW, Inc
LOC PNC Bank, N.A. 03/31/09 3.14% $ 1,100,000
935,000 Central Michigan Inns, LLC (Pohlcat Inc) - Series 2000A
LOC Wachovia Bank, N.A. 04/01/30 6.00 935,000
4,100,000 Charles K. Blandin Foundation - Series 2004 (5)
LOC Wells Fargo Bank, N.A. 05/01/19 6.50 4,100,000
1,500,000 Church of the Highlands, Inc.
LOC Amsouth Bank 01/01/23 7.65 1,500,000
2,475,000 Cinnamon Properties, Inc.
LOC U.S. Bank, N.A. 04/01/20 8.00 2,475,000
1,805,000 Cirrus Development Ltd. - Series 1999
LOC U.S. Bank, N.A. 05/01/14 8.00 1,805,000
1,960,000 CMW Real Estate, LLC - Series 2000
LOC U.S. Bank, N.A. 06/01/20 12.00 1,960,000
3,570,000 Columbus Area, Inc. - Series 2004
LOC Key Bank 07/01/24 8.00 3,570,000
2,850,000 Columbus, GA Development Authority RB
(Columbus Economic Development Corporation/
Bricken Financial Project) - Series 2006
LOC Wachovia Bank, N.A. 02/01/26 6.00 2,850,000
805,000 Community Limited Care Dialysis Center - Series 1997
LOC Fifth Third Bank 12/01/12 8.00 805,000
1,210,000 Consolidated Equities, LLC - Series 1995
LOC Fifth Third Bank 12/01/25 10.00 1,210,000
3,500,000 D&G Conduit LLC
LOC Regions Bank 10/01/23 9.00 3,500,000
8,850,000 D.G.Y. Real Estate LP - Series 2000A
LOC PNC Bank, N.A. 05/01/20 2.84 8,850,000
2,135,000 Deerfoot Market Place, LLC - Series 2002
LOC First Commercial Bank 03/01/28 7.95 2,135,000
1,720,000 Delta Capital LLC - Series 1996B
LOC JPMorgan Chase Bank, N.A. 10/01/26 8.40 1,720,000
1,730,000 Devin F. & Janis L. McCarthy - Series 1997
LOC U.S. Bank, N.A. 07/01/17 8.00 1,730,000
1,935,000 Eagles Landing, LLC
LOC Regions Bank 12/01/26 9.00 1,935,000
2,870,000 Eckert Seamans Cherin & Mellott, LLC - Series 2000
LOC PNC Bank, N.A. 01/01/15 8.50 2,870,000
6,710,000 El Dorado Enterprises of Miami, Inc. - Series 2000
LOC Wachovia Bank, N.A. 06/01/20 6.00 6,710,000
2,145,000 Erie County, NY IDA RB
(Niagara-Maryland LLC Project) - Series 2003
LOC Manufacturers and Traders Trust Co. 06/01/23 8.25 2,145,000
1,000,000 Falls Village Realty, LLC - Series 2004
LOC Fifth Third Bank 12/01/29 10.00 1,000,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
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DAILY INCOME FUND
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 4,412,251 Federal Home Loan Mortgage Corporation
Class A Certificates - Series M006 10/15/45 8.50% $ 4,412,251
2,690,000 Fiore Capital LLC - Series 2005A
LOC Marshall & Ilsley Bank 08/01/45 8.00 2,690,000
2,900,000 First United Methodist Church of Fort Walton, Inc. - Series 2005
LOC Regions Bank 09/04/29 3.93 2,900,000
945,000 G&J Land Management - Series 1996
LOC Royal Bank of Scotland 12/01/17 8.00 945,000
925,000 Gardner Publications - Series 2000
LOC Fifth Third Bank 10/01/10 10.00 925,000
10,260,000 Gastro Partners Land Company, LLC - Series 2005
LOC Regions Bank 03/01/35 9.00 10,260,000
1,060,000 GCG Portage L.L.C.
LOC Old Kent Bank & Trust Company 02/01/26 8.40 1,060,000
2,280,000 GMC Financing LLC, - Series 2005
LOC Federal Home Loan Bank 06/01/30 7.50 2,280,000
1,225,000 Goson Project - Series 1997
Guaranteed by Federal Home Loan Bank 11/01/17 10.00 1,225,000
535,000 Graves Lumber Co. Project - Series 2000
Guaranteed by Federal Home Loan Bank of Cincinnati 11/01/10 10.00 535,000
1,205,000 Great Expectations Ltd. (Bass Chevrolet) - Series 1996
LOC Fifth Third Bank 07/01/17 8.00 1,205,000
1,078,300 Gutwein & Co., Inc. and Gutwein Properties LLC - Series 2004
LOC Fifth Third Bank 12/01/24 10.00 1,078,300
1,215,000 HCH, LLC - Series 2000
LOC Key Bank, N.A. 08/01/15 10.00 1,215,000
1,030,000 HCS & DJS Leasing - Series 2004
LOC Fifth Third Bank 06/01/34 9.00 1,030,000
3,165,000 Healtheum, LLC - Series 2004
LOC Wells Fargo Bank, N.A. 11/01/29 5.00 3,165,000
2,145,000 Henderson, OH Regional Authority
LOC Fifth Third Bank 07/01/23 10.00 2,145,000
14,388,450 Herman & Kittle Capital, LLC - Series 2005 (5)
LOC Fifth Third Bank 06/01/55 10.00 14,388,450
1,655,000 HFA of Lee County, FL MHRB
(University Club Apartments) - Series 2002B
Guaranteed by Federal National Mortgage Association 05/15/35 6.50 1,655,000
1,600,000 Hoosier Stamping Manufacturing Corp. - Series 2004
LOC Fifth Third Bank 07/01/36 9.00 1,600,000
770,000 Hope Realty, Ltd. & Harmony Realty, Ltd. (Kurtz Bros., Inc.) - Series 2000
LOC Key Bank, N.A. 08/01/15 10.00 770,000
2,755,000 Hostun LLC - Series 2004
LOC Fifth Third Bank 12/01/27 10.00 2,755,000
4,705,000 IHA Capital Development LLC - Series 2007A
LOC Key Bank, N.A. 12/01/37 8.00 4,705,000
1,500,000 IHA Capital Development LLC - Series 2003-A
LOC Fifth Third Bank 07/01/28 10.00 1,500,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 600,000 Illinois Development Finance Authority
(Harbortown Industry Inc. Project) - Series 2000
LOC LaSalle National Bank, N.A. 12/01/20 6.15% $ 600,000
900,000 Indian Creek Christian Church Inc.
LOC Fifth Third Bank 12/01/55 10.00 900,000
1,537,500 IOP Properties LLC
LOC Fifth Third Bank 04/01/44 9.00 1,537,500
2,375,000 Jacksons Food Stores, Inc. - Series 2006
LOC Key Bank, N.A. 03/01/16 10.00 2,375,000
950,000 James B. Krewatch & Marden H. Krewatch
Revocable Living Trust - Series 2005
LOC Fifth Third Bank 11/01/25 10.00 950,000
3,950,000 Jeff Wyler Automotive Family, Inc.
LOC U.S. Bank, N.A. 01/02/26 8.00 3,950,000
1,235,000 Joe Holland Chevrolet, Inc. - Joe Holland Chrysler LLC
(The Holland Family Limited Partnership Number 1) - Series 2004
LOC Fifth Third Bank 07/01/24 10.00 1,235,000
1,830,000 Keating Meuthing Klekamp
LOC Fifth Third Bank 11/01/24 10.00 1,830,000
2,600,000 Kenwood County Club, Incorporated - Series 2005
LOC U.S. Bank, N.A. 12/01/15 8.00 2,600,000
2,791,000 KFDT LP - Series 2005
LOC Fifth Third Bank 03/01/35 10.00 2,791,000
2,070,000 Kingston Healthcare Company - Series 1997A
LOC Fifth Third Bank 11/01/17 8.00 2,070,000
1,610,000 Kingston Healthcare Company - Series 1998A
LOC Fifth Third Bank 03/01/18 8.00 1,610,000
700,000 Kit Carson County, CO Agricultural Development RB
(Midwest Farms, LLC) - Series 1997
LOC Wells Fargo Bank, N.A. 06/01/27 8.25 700,000
3,650,000 Kool Capital, LLC
LOC Bank of America 04/01/29 6.05 3,650,000
1,950,000 L3 Corporation - Series 2002
LOC Fifth Third Bank 11/01/17 10.00 1,950,000
4,400,000 Lake Mary Bay Limited Partnership - Series 2005
LOC Amsouth Bank 03/01/25 3.68 4,400,000
4,115,000 Lake Mary Bay Limited Partnership - Series 2007
LOC Regions Bank 12/01/27 3.93 4,115,000
1,810,000 Lauren Company, LLC - Series 2003
LOC Wells Fargo Bank, N.A. 07/01/33 6.75 1,810,000
1,505,000 Le Sportsac Inc. - Series 2005
LOC Fifth Third Bank 11/01/14 10.00 1,505,000
270,000 Lee County, FL MHRB (Crossings at Cape Coral Apartments
Projects) - Series 1999 B
LOC SunTrust Bank 06/01/14 6.00 270,000
925,000 Louisiana Endoscopy Center, Inc.
LOC Regions Bank 03/01/35 9.00 925,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 2,615,000 Louisiana Housing Finance Agency MHRB
(Restoration Baton Rouge - I, II, III & IV Projects) - Series 2002B
LOC Regions Bank 12/01/32 3.93% $ 2,615,000
1,835,000 Louisville/Jefferson County Metro Government, KY
Industrial Development Refunding and Improvement RB
(First Trust Restoration Partnership Project) - Series 2005B
LOC Regions Bank 01/01/25 3.93 1,835,000
435,000 LRC - B Wadsworth Investors, Ltd. - Series 1997
LOC U.S. Bank, N.A. 09/01/17 8.00 435,000
1,000,000 LRC Meadows Investor LLC
LOC JPMorgan Chase Bank, N.A. 12/01/34 10.00 1,000,000
430,000 Machining Center Inc. - Series 1997
LOC Comerica Bank 10/01/27 8.40 430,000
615,000 Manatee County, FL MHRB - Series 2002B
(La Mirada Gardens Project)
LOC SunTrust Bank 11/01/33 6.50 615,000
3,280,000 Maryland Health & Higher Educational Facilities Authority
(Glen Meadows Retirement Community) - Series 1999B
LOC Wachovia Bank, N.A. 07/01/29 6.00 3,280,000
300,000 Mayfair Village Retirement Center, Inc., KY - Series 1995
LOC PNC Bank, N.A. 05/15/09 7.25 300,000
1,680,000 Mercer County, OH HealthCare Facilities RB
LOC Fifth Third Bank 04/01/23 10.00 1,680,000
2,150,000 Michigan City, IN Economic Development RB
(Consolidated Biscuit Co., Project) - Series 1998
LOC Fifth Third Bank 10/01/13 10.00 2,150,000
1,880,000 Michigan HEFA RB (Hope College Project) - Series 1996A
LOC Old Kent Bank & Trust Co. 10/01/16 10.00 1,880,000
865,000 Milwaukee, WI (Historic Third Ward Parking Project)
LOC Northern Trust Bank 09/01/28 8.40 865,000
2,500,000 Mississippi Business Finance Corporation IDRB
(Attala Steel Industries, LLC Project) - Series 2005
Guaranteed by Federal Home Loan Bank of Dallas 07/01/20 7.50 2,500,000
1,240,000 Mississippi Business Finance Corporation IDRB
(Howard Industries Inc. Project) - Series 1995
LOC Regions Bank 06/01/10 7.65 1,240,000
7,225,000 Mississippi Business Finance Corporation IDRB
(Lextron - Visteon Leasing, LLC Project) - Series 2003
LOC JPMorgan Chase Bank, N.A. 12/01/27 9.50 7,225,000
4,300,000 Mississippi Business Finance Corporation IDRB
(Pottery Barn Inc. Project) - Series 2004
LOC Bank of America, N.A. 06/01/24 3.28 4,300,000
1,800,000 Mississippi Business Finance Corporation IDRB
(TT & W Farm Products Inc. Project) - Series 2000B
LOC Amsouth Bank 11/01/11 7.65 1,800,000
2,550,000 Mississippi Business Finance Corporation
(Wade Inc. Project) - Series 2006
LOC Regions Bank 02/01/21 7.65 2,550,000
905,000 MMR Development Corp. - Series 2003
LOC Fifth Third Bank 05/01/23 10.00 905,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 4,000,000 Montgomery, AL Health Facilities Development Inc.
LOC First Commercial Bank 11/01/33 9.21% $ 4,000,000
6,560,000 Montgomery County, PA MHRB
(Brookside Manor Apartments) - Series 2001A
Collateralized by Federal National Mortgage Association 08/15/31 10.00 6,560,000
2,865,000 Mount Ontario Holdings LLC - Series 2001(5)
LOC U.S. Bank, N.A. 04/01/21 6.25 2,865,000
1,715,000 Mrs. K.C. Jordan & Associates, Inc.
LOC Fifth Third Bank 04/01/23 10.00 1,715,000
2,540,000 Nebar Investments, LLC - Series 2005
LOC Fifth Third Bank 07/01/50 10.00 2,540,000
3,745,000 New Hampshire Health & Educational Facility Authority RB
(Weeks Medical Center Issue) - Series 2005B
LOC Allied Irish Bank PLC 07/01/35 6.03 3,745,000
1,310,000 New Lexington Clinic, P.S.C. - Series 2003
LOC Fifth Third Bank 05/01/18 10.00 1,310,000
800,000 New York State HFA RB (345 East 94th Street)
Guaranteed by Federal Home Loan Mortgage Corporation 11/01/30 9.00 800,000
1,500,000 NO S Properties, LLC - Series 2004
LOC Fifth Third Bank 08/01/24 10.00 1,500,000
2,905,000 Northern Kentucky Cancer Center, LLC - Series 2003
LOC U.S. Bank, N.A. 05/01/24 8.00 2,905,000
1,650,000 NPI Capital, LLC - Series 1999A
LOC Bank of America 07/01/29 8.40 1,650,000
2,490,000 OHC Real Estate LLC - Series 2006A
LOC U.S. Bank, N.A. 11/01/26 8.00 2,490,000
1,275,000 OHC Real Estate LLC - Series 2006B
LOC U.S. Bank, N.A. 11/01/26 8.00 1,275,000
6,900,000 Olathe, KS IDRB (Diamant Board Project) - Series 1997B
LOC Svenska Handelsbanken 03/01/27 3.91 6,900,000
950,000 Oswego County, NY IDA Facilities
(OH Properties, Inc Project - B)
LOC Manufacturers & Traders Trust Company 06/01/24 3.47 950,000
2,000,000 Parisi Investment, LP & Supply Co. - Series 1998
LOC U.S. Bank, N.A. 05/01/18 8.00 2,000,000
7,395,000 Parker Towing Company Inc. - Series 2006
LOC Regions Bank 06/01/11 3.93 7,395,000
1,300,000 Pennsylvania EDFA Taxable Development RB
(West 914 Incorporation Project) - Series 1991A
LOC PNC Bank, N.A. 05/01/21 8.25 1,300,000
246,000 Pine Tree Country Club - Series 2003
LOC Regions Bank 08/01/23 4.43 246,000
2,600,000 Plant City Church of God, Inc. - Series 2004
LOC Regions Bank 12/02/24 3.93 2,600,000
3,830,000 Pomegranate Development Ltd - Series 2006
LOC Key Bank, N.A. 12/01/27 8.00 3,830,000
915,000 Putnam County, NY IDA IDRB
(Broad Reach, LLC Project) - Series 2006B
LOC Charter One Bank 07/01/14 8.25 915,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 2,885,000 Putnam County, NY IDA IDRB
(Broad Reach, LLC Project) - Series 2006A
LOC Charter One Bank 07/01/32 8.25% $ 2,885,000
200,000 RDV Finance LLC
LOC Fifth Third Bank 10/01/39 10.00 200,000
4,880,000 Real Estate, LLC and White Wilson Medical Center
LOC Fifth Third Bank 05/01/57 10.00 4,880,000
2,355,000 Realty Holdings Co. LLC - Series 2004
LOC Fifth Third Bank 05/01/24 10.00 2,355,000
3,490,000 Robert C. Fox Jr. (Fox Racing Shoe Project) - Series A
LOC Comerica Bank 06/01/33 5.00 3,490,000
9,265,000 Rural Electric Cooperative Grantor Trust Certificates
(Kansas Electric Power Cooperative, Inc.) - Series 1997
LOC U.S. Government 12/18/17 8.50 9,265,000
920,000 S & S Partnership (Model Graphics) - Series 1999
LOC U.S. Bank, N.A. 09/01/19 8.00 920,000
10,000 Saber Management LLC - Series 2006
LOC Charter One Bank 07/01/56 10.00 10,000
1,240,000 Sand Run Nursery & Preserve LLC - Series 2004
LOC U.S. Bank, N.A. 03/01/24 8.00 1,240,000
2,270,000 Savoy Properties, Ltd. - Series 2000
LOC Key Bank, N.A. 08/01/20 10.00 2,270,000
3,850,000 Security Self-Storage, Inc. - Series 1999
LOC JPMorgan Chase Bank, N.A. 02/01/19 12.00 3,850,000
2,875,000 Shepherd Capital LLC
LOC Fifth Third Bank 03/15/49 6.05 2,875,000
11,315,000 Southwestern Group Limited - Series 2001
LOC U.S. Bank, N.A. 07/01/21 8.00 11,315,000
10,155,000 St. Johns County IDA First Mortgage RB
(Presbyterian Retirement Communities Project) - Series 2004B
LOC Allied Irish Bank PLC 08/01/34 6.00 10,155,000
2,560,000 St. Tammany Parish Development District
(Main Street Holdings of St. Tammany, LLC Project) - Series 2006B
LOC Regions Bank 12/01/36 3.93 2,560,000
1,055,000 Stallard-Schrier Family Limited Partnership - Series 1996
LOC Fifth Third Bank 09/01/16 8.00 1,055,000
900,000 State Crest Limited - Series 2003
LOC Fifth Third Bank 06/01/23 10.00 900,000
10,090,000 Stonegate-Partners I, LLC (Stonegate Partners Project) - Series 2002
LOC U.S. Bank, N.A. 06/01/34 10.00 10,090,000
650,000 T.D. Management Ltd. - Series 1996
LOC Fifth Third Bank 01/01/11 8.00 650,000
1,900,000 Tampa Bay, FL (Elders Land Development) - Series 2003
LOC Fifth Third Bank 09/01/23 10.00 1,900,000
4,410,000 Tedia Company, Inc. - Series 2006
LOC Key Bank, N.A. 10/01/26 10.00 4,410,000
1,605,000 The Home City Ice Company & HC Transport, Inc., Series - 2004
LOC U.S. Bank, N.A. 05/01/19 8.00 1,605,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Variable Rate Demand Instruments (4) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 2,040,000 The Medical Clinic Board of the City of Mobile, AL - Spring Hill
(Springhill Medical Complex, Inc.) - Series 1996B
LOC Regions Bank 09/01/11 7.65% $ 2,040,000
1,115,000 The Wilmington Iron & Metal Company, Inc. - Series 1999
LOC JPMorgan Chase Bank, N.A. 08/01/14 8.00 1,115,000
6,555,000 Three Reading LP
LOC Federal Home Loan Bank of Pittsburg 06/01/24 3.68 6,555,000
3,615,000 Tom Richards, Inc. (Team Land, LLC / Team Industries)
Guaranteed by Federal Home Loan Bank of Cincinnati 12/01/16 10.00 3,615,000
1,340,000 Trendway Corporation - Series 1996
LOC Bank of America 12/01/26 8.40 1,340,000
5,265,000 Triple Crown Investments, LLC - Series 2004
LOC Federal Home Loan Bank of Dallas 08/01/25 9.00 5,265,000
715,000 Vincent Enterprise & Partners - Series 2000
LOC Key Bank, N.A. 03/01/20 10.00 715,000
570,000 Walt Sweeney Ford - Series 1996
LOC Fifth Third Bank 01/01/12 8.00 570,000
3,333,000 Washington State HFC Non-Profit Housing RB
(Rockwood Program) - Series B (5)
LOC Wells Fargo Bank, N.A. 01/01/30 6.00 3,333,000
1,375,000 Washington State HFC Non-Profit Housing RB
(The Vintage at Richland Project) - Series 2004B
Guaranteed by Federal National Mortgage Association 01/15/38 9.00 1,375,000
12,345,000 Wellington Green, LLC - Series 1999
LOC Royal Bank of Scotland 04/01/29 10.00 12,345,000
8,700,000 Wellstone Mills LLC - Series 2004A
LOC PNC Bank, N.A. 12/15/24 8.50 8,700,000
1,600,000 Westchester County, NY IDA RB
(B.W.P. Distributors Inc.) - Series 1997
LOC Wachovia Bank, N.A. 10/01/28 6.00 1,600,000
395,000 Westchester Presbyterian Church
LOC U.S. Bank, N.A. 09/01/13 8.00 395,000
15,040,000 William Morris Realty Greystone, LLC - Series 2007
LOC Regions Bank 03/01/32 3.47 15,040,000
2,687,563 Wilmington Trust Company (Amtrak Trust 93-A) - Series B Notes
Guaranteed by General Electric Company 01/01/11 7.85 2,687,563
790,000 Windsor Medical Center, Inc. - Series 1997
LOC Federal Home Loan Bank 12/03/18 10.00 790,000
1,555,000 Wisconsin Housing Preservation Corporation - Series 2005
LOC Marshall & Ilsley Bank 05/01/35 8.00 1,555,000
2,000,000 Woods Group TN, LLC - Series 2006
LOC Amsouth Bank 09/01/31 4.93 2,000,000
- -------------- --------------
457,929,064 Total Variable Rate Demand Instruments 457,929,064
- -------------- --------------
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Yankee Certificates of Deposit (55.03%)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 100,000,000 ABN AMRO Bank 12/05/08 3.13% $ 99,951,724
75,000,000 ABN AMRO Bank 12/05/08 3.22 74,951,613
100,000,000 Banco Bilbao de Vizcaya Argentaria 10/03/08 2.81 100,000,023
75,000,000 Bayerische Landesbank Girozentrale 10/29/08 2.75 75,000,580
100,000,000 Calyon North America, Inc. 01/20/09 3.00 100,000,000
100,000,000 Canadian Imperial Bank of Commerce 11/26/08 2.78 100,000,000
150,000,000 Credit Industriel et Commercial 10/08/08 2.75 150,000,290
100,000,000 Credit Industriel et Commercial 11/17/08 2.98 100,000,648
75,000,000 DEPFA Bank 10/29/08 2.75 75,000,000
100,000,000 DEPFA Bank 10/29/08 2.74 100,000,387
50,000,000 Deutsche Zentral-Genossenschaftsb 10/10/08 5.00 50,000,000
75,000,000 Deutsche Zentral-Genossenschaftsb 10/16/08 2.55 75,000,000
125,000,000 Deutsche Zentral-Genossenschaftsb 10/29/08 2.72 125,000,000
175,000,000 HSH Nordbank AG 11/07/08 3.03 175,000,892
100,000,000 HSH Nordbank AG 11/17/08 3.03 100,001,295
200,000,000 Landesbank Baden Wurtemburg 11/12/08 2.96 200,001,157
150,000,000 Landesbank Hessen Thueringen Giroze 10/07/08 2.88 150,000,000
100,000,000 Landesbank Hessen Thueringen Giroze 12/09/08 2.89 100,000,952
75,000,000 Norddeutsche Landesbank Girozentral 10/27/08 3.00 75,000,269
200,000,000 Norddeutsche Landesbank Girozentral 11/07/08 3.00 200,000,000
85,000,000 Skandinav Enskilda Banken, NY 11/17/08 2.85 85,001,850
40,000,000 Skandinav Enskilda Banken, NY 12/04/08 2.90 39,998,944
150,000,000 Standard Chartered Bank PLC 11/03/08 2.79 150,000,684
100,000,000 Unicredito Italiano 10/07/08 2.73 100,000,166
150,000,000 Unicredito Italiano 11/10/08 2.77 150,000,830
- -------------- --------------
2,750,000,000 Total Yankee Certificates of Deposit 2,749,912,304
- -------------- --------------
Total Investments (99.80%) (Cost $4,987,107,616+) 4,987,107,616
Cash and other assets in excess of liabilities (0.20%) 9,859,387
--------------
Net Assets (100.00%) $4,996,967,003
===============
<fn>
+ Aggregate cost for federal income tax purposes is identical.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
FOOTNOTES:
1) The interest rate is adjusted quarterly based upon one month LIBOR minus
0.02%.
2) Security is considered to be illiquid. The Fund is limited to investing 10%
of net assets in illiquid securities at the time of purchase. The value of
securities considered illiquid at the time of this statement represented
3.20% of the Portfolio's net assets.
3) Security purchased in a transaction exempt from registration under the
Securities Act of 1933, as amended. The security may be resold pursuant to
an exemption from registration under the 1933 Act, typically to qualified
institutional buyers. The aggregate value of these securities at the time
of this statement was $274,802,708, which represented 5.50% of the
Portfolio's net assets. Unless otherwise indicated, these securities are
not considered to be illiquid.
4) 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.
5) Securities payable on demand at par including accrued interest (with one
day notice). Interest rate is adjusted daily. The rate shown is the rate in
effect at the date of this statement.
<table>
<caption>
KEY:
<s> <c> <c> <c> <c> <c>
EDA = Economic Development Authority IDA = Industrial Development Authority
EDFA = Economic Development Finance Authority IDRB = Industrial Development Revenue Bond
FAMC = Federal Agriculture Mortgage Corporation LOC = Letter of Credit
HEFA = Health and Education Finance Authority MHRB = Multi-Family Housing Revenue Bond
HFA = Housing Finance Authority RB = Revenue Bond
HFC = Housing Finance Commission
</table>
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
<table>
<caption>
- --------------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------------
<s> <c> <c>
Less than 31 Days $ 2,881,828,055 57.79%
31 through 60 Days 1,504,973,394 30.18
61 through 90 Days 500,306,167 10.03
91 through 120 Days 100,000,000 2.00
121 through 180 Days -0- -0-
Over 180 Days -0- -0-
- --------------------------------------------------------------------------------------
Total $ 4,987,107,616 100.00%
- --------------------------------------------------------------------------------------
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
ASSETS
<s> <c>
Investments in securities, at amortized cost (Note 1)............................. $ 4,837,107,616
Repurchase agreements............................................................. 150,000,000
Accrued interest receivable....................................................... 17,885,129
Receivable for securities sold.................................................... 475,000
Due from Transfer Agent (Note2)................................................... 1,140,710
Prepaid expenses.................................................................. 40,476
Other receivables................................................................. 1,005
------------------
Total assets............................................................... 5,006,649,936
------------------
LIABILITIES
Payable to affiliates (Note 2).................................................... 1,558,186
Due to Custodian.................................................................. 4,324,722
Accrued expenses.................................................................. 669,142
Dividends payable................................................................. 3,130,883
------------------
Total liabilities.......................................................... 9,682,933
------------------
Net assets........................................................................ $ 4,996,967,003
==================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 5)........................... $ 4,998,966,357
Accumulated net realized loss..................................................... (1,928,812)
Overdistributed net Investment income............................................. (70,542)
------------------
Net assets........................................................................ $ 4,996,967,003
==================
</table>
<table>
<caption>
Net asset value, per share (Note 5):
Class Name Net Assets Shares Outstanding Net Asset Value
<s> <c> <c> <c>
Institutional Shares........................ $436,577,522 436,752,490 $1.00
Institutional Service Shares................ $235,218,039 235,312,308 $1.00
Investor Shares............................. $297,006,200 297,125,232 $1.00
Short Term Income Shares.................... $230,404,962 230,497,302 $1.00
Retail Class Shares......................... $1,369,761,565 1,370,310,527 $1.00
Pinnacle Shares............................. $190,641,266 190,717,669 $1.00
Advantage Shares............................ $1,957,919,441 1,958,704,120 $1.00
Xpress Shares............................... $279,438,008 279,549,999 $1.00
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
INVESTMENT INCOME
<s> <c>
Income:
Interest........................................................................ $ 93,359,239
------------------
Expenses: (Note 2)
Investment management fee....................................................... 3,700,538
Administration fee.............................................................. 1,541,891
Shareholder servicing fee (Institutional Service Shares)........................ 519,009
Shareholder servicing fee (Investor Shares)..................................... 389,291
Shareholder servicing fee (Short Term Income Shares)............................ 356,879
Shareholder servicing fee (Retail Shares)....................................... 1,808,216
Shareholder servicing fee (Advantage Shares).................................... 3,254,381
Shareholder servicing fee (Xpress Shares)....................................... 344,082
Distribution fee (Investor Shares).............................................. 311,432
Distribution fee (Short Term Income Shares)..................................... 642,381
Distribution fee (Retail Shares)................................................ 4,701,361
Distribution fee (Advantage Shares)............................................. 9,763,144
Distribution fee (Xpress Shares)................................................ 1,032,247
Sub-Accounting fee (Xpress Shares).............................................. 82,431
Custodian expenses.............................................................. 128,320
Shareholder servicing and related shareholder expenses+......................... 1,223,253
Legal, compliance and filing fees............................................... 788,766
Audit and accounting............................................................ 371,865
Trustees' fees and expenses..................................................... 217,867
Other........................................................................... 84,471
------------------
Total expenses.................................................................. 31,261,825
Less: Fees waived........................................................ (4,901,011)
Expense offsets (Note 4)........................................... (11,351)
------------------
Net expenses.................................................................... 26,349,463
------------------
Net investment income........................................................... 67,009,776
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments............................................. (1,928,579)
------------------
Increase in net assets from operations.............................................. $ 65,081,197
==================
<fn>
+ Includes class specific transfer agency expenses of $32,671, $41,521, $77,858, $85,413, $361,643, and $8,832 for the
Institutional, Institutional Service, Investor, Short Term Income, Retail and Pinnacle Shares respectively.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<table>
<caption>
Six Months Ended Year
September 30, 2008 Ended
(Unaudited) March 31, 2008
---------- --------------
<s> <c> <c>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income......................................... $ 67,009,776 $ 281,728,468
Net realized gain (loss) on investments....................... (1,928,579) (233)
--------------- ----------------
Increase in net assets from operations............................ 65,081,197 281,728,235
Dividends to shareholders from net investment income:
Institutional Shares.......................................... (9,246,777) (29,254,977)
Institutional Service Shares.................................. (5,277,047) (11,820,882)
Investor Shares............................................... (3,697,320) (9,893,960)
Short-Term Income Shares...................................... (2,972,864) (8,887,585)
Retail Shares................................................. (14,645,495) (51,609,017)
Pinnacle Shares............................................... (2,496,092) (8,183,099)
Advantage Shares.............................................. (26,227,215) (131,002,246)
Xpress Shares................................................. (2,446,966) (31,076,702)
--------------- ----------------
Total dividends to shareholders.......................... (67,009,776) (281,728,468)
--------------- ----------------
Distributions to shareholders from realized gains on investments:
Institutional Shares.......................................... (8,619) (5)
Institutional Service Shares.................................. (5,660) (2)
Investor Shares............................................... (3,429) (2)
Short-Term Income Shares...................................... (3,074) -0-
Retail Shares................................................. (16,139) (7)
Pinnacle Shares............................................... (1,904) (1)
Advantage Shares.............................................. (28,594) (23)
Xpress Shares................................................. (3,083) -0-
--------------- ----------------
Total distributions to shareholders...................... (70,502) (40)
--------------- ----------------
Capital share transactions (Note 5):
Institutional Shares.......................................... (314,779,912) 111,959,237
Institutional Service Shares.................................. (25,296,794) (7,255,798)
Investor Shares............................................... (19,422,477) 27,257,449
Short-Term Income Shares...................................... (67,010,701) 199,669,738
Retail Shares................................................. (69,545,881) 505,196,112
Pinnacle Shares............................................... 12,504,873 7,184,587
Advantage Shares.............................................. (1,492,973,430) 338,089,059
Xpress Shares................................................. 7,337,128 272,212,871
Net asset value of shares issued in connection with merger of Cortland
General Money Market into Retail Shares....................... -0- 36,753,053
Net asset value of shares issued in connection with merger of Short Term
Money Market Class A into Short Term Income Shares............ -0- 40,741,544
Net asset value of shares issued in connection with merger of Short Term
Money Market Class B into Investor Shares..................... -0- 137,343,403
--------------- ----------------
Total capital share transactions........................ (1,969,187,194) 1,669,151,255
--------------- ----------------
Total increase/(decrease) .................................... (1,971,186,275) 1,669,150,982
Net assets:
Beginning of period........................................... 6,968,153,278 5,299,002,296
--------------- ----------------
End of period................................................ $ 4,996,967,003 $ 6,968,153,278
=============== ================
Overdistributed net investment income............................. $ (70,502) $ (40)
=============== ================
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
================================================================================
<table>
<caption>
Six Months Ended For the Years Ended March 31,
----------------------------------------------------------
Institutional shares September 30, 2008 2008 2007 2006 2005 2004
- -------------------- (Unaudited) -------- -------- -------- -------- --------
---------
<s> <c> <c> <c> <c> <c> <c>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income.................... 0.014 0.048 0.051 0.036 0.016 0.010
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000 -- 0.000 0.000
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.014 0.048 0.051 0.036 0.016 0.010
Less distributions from:
Dividends from net investment income..... (0.014) (0.048) (0.051) (0.036) (0.016) (0.010)
Net realized gain(loss) on investment.... (0.000) (0.000) 0.000 -- (0.000) (0.000)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions...................... (0.014) (0.048) (0.051) (0.036) (0.016) (0.010)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return................................ 1.43%(a) 4.91% 5.19% 3.63% 1.61% 1.00%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 436,578 $ 751,532 $ 639,573 $ 372,721 $ 215,314 $ 163,829
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.................... 2.83%(c) 4.78% 5.10% 3.66% 1.63% 0.99%
Management and administration fees waived 0.05%(c) 0.02% 0.03% 0.06% 0.08% 0.06%
Transfer agency fees waived.............. 0.01%(c) 0.01% -- 0.02% 0.02% 0.02%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
</table>
<table>
<caption>
Six Months Ended For the Years Ended March 31,
----------------------------------------------------------
Institutional Service shares September 30, 2008 2008 2007 2006 2005 2004
- ---------------------------- (Unaudited) -------- -------- -------- -------- --------
---------
<s> <c> <c> <c> <c> <c> <c>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income.................... 0.013 0.046 0.048 0.033 0.013 0.007
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000 -- 0.000 0.000
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.013 0.046 0.048 0.033 0.013 0.007
Less distributions from:
Dividends from net investment income..... (0.013) (0.046) (0.048) (0.033) (0.013) (0.007)
Net realized gain(loss) on investment.... (0.000) (0.000) 0.000 -- (0.000) (0.000)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions...................... (0.013) (0.046) (0.048) (0.033) (0.013) (0.007)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return................................ 1.30%(a) 4.65% 4.92% 3.36% 1.34% 0.73%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 235,218 $ 260,609 $ 267,865 $ 224,050 $ 119,989 $ 53,373
Ratios to average net assets:
Expenses (net of fees waived) (b)........ 0.45%(c) 0.45% 0.45% 0.47% 0.47% 0.47%
Net investment income.................... 2.54%(c) 4.50% 4.83% 3.39% 1.49% 0.73%
Management and administration fees waived 0.05%(c) 0.02% 0.03% 0.06% 0.08% 0.06%
Shareholder servicing fees waived........ 0.01%(c) 0.01% -- -- -- --
Transfer agency fees waived.............. -- -- -- 0.01% 0.02% 0.00%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
================================================================================
<table>
<caption>
Six Month Ended Commencement of Operations
Investor shares September 30, 2008 Year Ended November 28, 2006 through
- --------------- (Unaudited) March 31, 2008 March 31, 2007
---------- -------------- ---------------
<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............................... 0.012 0.044 0.016
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000
--------- --------- ---------
Total from investment operations.................... 0.012 0.044 0.016
Less distributions from:
Dividends from net investment income................ (0.012) (0.044) (0.016)
Net realized gain on investments.................... (0.000) (0.000) (0.000)
--------- --------- ---------
Total Distributions................................. (0.012) (0.044) (0.016)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 1.20%(a) 4.44% 1.62%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $297,006 $316,547 $151,947
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 0.65%(c) 0.65% 0.65%(c)
Net investment income............................... 2.37%(c) 4.25% 4.76%(c)
Administration fees waived.......................... 0.05%(c) 0.02% 0.03%(c)
Distribution fees waived............................ 0.04%(c) 0.04% --
Transfer Agency Account fees waived................. -- -- 0.03%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
Six Month Ended Commencement of Operations
Short Term Income shares September 30, 2008 Year Ended February 12, 2007 through
- ------------------------ (Unaudited) March 31, 2008 March 31, 2007
--------- -------------- --------------
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............................... 0.010 0.041 0.006
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000
--------- --------- ---------
Total from investment operations.................... 0.010 0.041 0.006
Less distributions from:
Dividends from net investment income................ (0.010) (0.041) (0.006)
Net realized gain on investments.................... (0.000) (0.000) (0.000)
--------- --------- ---------
Total Distributions................................. (0.010) (0.041) (0.006)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 1.05%(a) 4.14% 0.59%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $230,405 $297,508 $ 57,097
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 0.94%(c) 0.94% 0.94%(c)
Net investment income............................... 2.08%(c) 3.92% 4.47%(c)
Administration fees waived.......................... 0.05%(c) 0.02% 0.03%(c)
Distribution fees waived............................ 0.01%(c) 0.01% --
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Six Month Ended Commencement of Operations
Retail shares September 30, 2008 Year Ended November 28, 2006 through
- ------------- (Unaudited) March 31, 2008 March 31, 2007
--------- -------------- --------------
<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............................... 0.010 0.040 0.015
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000
--------- --------- ---------
Total from investment operations.................... 0.010 0.040 0.015
Less distributions from:
Dividends from net investment income................ (0.010) (0.040) (0.015)
Net realized gain on investments.................... (0.000) (0.000) (0.000)
--------- --------- ---------
Total Distributions................................. (0.010) (0.040) (0.015)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 1.02%(a) 4.08% 1.49%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $1,369,762 $1,439,855 $ 897,904
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 1.00%(a) 1.00% 1.00%(c)
Net investment income............................... 2.02%(c) 3.95% 4.39%(c)
Administration fees waived.......................... 0.05%(c) 0.02% 0.03%(c)
Distribution fees waived............................ 0.14%(c) 0.14% 0.10%(c)
Transfer Agency Account fees waived................. -- -- 0.03%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
</table>
<table>
<caption>
Six Months Ended For the Years Ended March 31,
Pinnacle shares September 30, 2008 2008 2007 2006 2005 2004
- --------------- (Unaudited) -------- -------- -------- -------- --------
---------
<s> <c> <c> <c> <c> <c> <c>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income.................... 0.014 0.048 0.051 0.036 0.016 0.010
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000 -- 0.000 0.000
---------- ---------- ---------- ---------- ---------- ---------
Total from investment operations......... 0.014 0.048 0.051 0.036 0.016 0.010
Less distributions from:
Dividends from net investment income..... (0.014) (0.048) (0.051) (0.036) (0.016) (0.010)
Net realized gain(loss) on investment.... (0.000) (0.000) 0.000 -- (0.000) (0.000)
---------- ---------- ---------- ---------- ---------- ---------
Total Distributions...................... (0.014) (0.048) (0.051) (0.036) (0.016) (0.010)
---------- ---------- ---------- ---------- ---------- ---------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return................................ 1.43%(a) 4.91% 5.19% 3.63% 1.61% 1.00%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 190,641 $ 178,213 $ 171,028 $ 134,682 $ 114,792 $ 122,839
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.................... 2.83%(c) 4.79% 5.08% 3.66% 1.63% 0.99%
Management and administration fees waived 0.05%(c) 0.02% 0.03% 0.06% 0.08% 0.06%
Transfer agency fees waived.............. 0.01%(c) 0.01% -- 0.02% 0.02% 0.02%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
================================================================================
<table>
<caption>
Six Month Ended Commencement of Operations
Advantage shares September 30, 2008 Year Ended November 1, 2006 through
- ---------------- (Unaudited) March 31, 2008 March 31, 2007
--------- -------------- ---------------
<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............................... 0.010 0.040 0.018
Net realized and unrealized gain(loss) on investments 0.000 0.000 0.000
--------- --------- ----------
Total from investment operations.................... 0.010 0.040 0.018
Less distributions from:
Dividends from net investment income................ (0.010) (0.040) (0.018)
Net realized gain on investments.................... (0.000) (0.000) (0.000)
--------- --------- ----------
Total Distributions................................. (0.010) (0.040) (0.018)
--------- --------- ----------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= ==========
Total Return........................................... 1.01%(a) 4.06% 1.81%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $1,957,919 $3,451,676 $3,113,588
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 1.02%(c) 1.02% 1.02%(c)
Net investment income............................... 2.01%(c) 3.95% 4.35%(c)
Administration fees waived.......................... 0.05%(c) 0.02% 0.03%(c)
Distribution fees waived............................ 0.17%(c) 0.17% 0.16%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
</table>
<table>
<caption>
Six Months Ended Commencement of Operations
Xpress shares September 30, 2007 June 20, 2007 through
- -------------- (Unaudited) March 31, 2008
--------- --------------
<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............................... 0.009 0.028
Net realized and unrealized gain(loss) on investments 0.000 0.000
--------- ---------
Total from investment operations.................... 0.009 0.028
Less distributions from:
Dividends from net investment income................ (0.009) (0.028)
Net realized gain on investments.................... (0.000) (0.000)
--------- ---------
Total Distributions................................. (0.009) (0.028)
--------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00
========= =========
Total Return........................................... 0.90%(a) 2.88%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 279,438 $ 272,213
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 1.25%(c) 1.25%(c)
Net investment income............................... 1.78%(c) 3.82%(c)
Management and administration fees waived........... 0.05%(c) 0.02%(c)
Expense offsets..................................... 0.00%(c) 0.00%(c)
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page> .
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
As a shareholder of the Portfolio, you incur the following ongoing costs:
management fees and other Portfolio 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 Portfolio 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, 2008 through September 30, 2008.
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.
<table>
<caption>
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class Shares
("Institutional Shares") & Pinnacle Beginning Account Ending Account Value Expenses Paid Annualized
Class Shares ("Pinnacle Shares") Value 04/01/08 09/30/08 During the period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Actual $1,000.00 $1,008.50 $1.01 0.20%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,024.07 $1.01 0.20%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Service Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Service Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,007.20 $2.26 0.45%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,022.81 $2.28 0.45%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Investor Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Investor Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.30 $3.17 0.63%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,021.91 $3.19 0.63%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Short Term Income Shares Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Short Term Income Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,005.00 $4.47 0.89%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.61 $4.51 0.89%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
</table>
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
- ----------------------------------------------------------------------------------------------------------------------------
Retail Class Shares ("Retail Shares") Beginning Account Ending Account Value Expenses Paid Annualized
Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ----------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Actual $1,000.00 $1,004.50 $4.97 0.99%
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.10 $5.01 0.99%
- ----------------------------------------------------------------------------------------------------------------------------
- -
<fn>
* Expenses are equal to the Fund's annualized expense ratios multiplied by the average account value over the period
(April 1, 2008 through September 30, 2008), multiplied by 183/365 (to reflect the most recent fiscal half-year).
</fn>
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- ------
Repurchase Agreements (49.68%)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 270,000,000 Bank of America Securities, LLC, purchased on 09/30/08, repurchase
proceeds at maturity $270,005,625 (Collateralized by $1,214,433,357,
GNMA, 0.000% to 8.000%, due 09/16/17 to 04/16/50, value
$275,400,000) 10/01/08 0.75% $ 270,000,000
295,000,000 Goldman Sachs, purchased on 09/30/08, repurchase proceeds at
maturity $295,008,194 (Collateralized by $1,196,830,553, GNMA
0.067% to 6.500%, due 06/15/26 to 09/20/38, value
$300,900,000) 10/01/08 1.00 295,000,000
55,000,000 Merrill Lynch Pierce Fenner & Smith Co., purchased on 09/30/08,
repurchase proceeds at maturity $55,000,306 (Collateralized by
$75,843,760 GNMA, 5.000% to 6.000%, due 09/15/33 to 05/20/38, value
$56,100,695) 10/01/08 0.20 55,000,000
100,000,000 UBS Securities, LLC, purchased on 09/30/08, repurchase proceeds at
maturity $100,000,278 (Collateralized by $181,670,000,
U.S. Treasury Bond, 7.625% to 8.750%, due 05/15/20 to 02/15/25,
value $102,002,470) 10/01/08 0.10 100,000,000
- ---------------- --------------
720,000,000 Total Repurchase Agreements 720,000,000
- ---------------- --------------
U.S. Government Obligations (47.86%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 416,360,000 U.S. Treasury Bill 10/09/08 0.10% $ 416,350,748
150,000,000 U.S. Treasury Bill 10/30/08 0.15 149,981,875
40,000,000 U.S. Treasury Note, 4.88% 05/31/09 2.06 40,735,190
50,000,000 U.S. Treasury Note, 4.88% 06/30/09 2.62 50,823,298
35,000,000 U.S. Treasury Note, 4.88% 08/15/09 2.24 35,788,755
- ---------------- --------------
691,360,000 Total U.S. Government Obligations 693,679,866
- ---------------- --------------
Total Investments (97.54%) (Cost $1,413,679,866+) 1,413,679,866
Cash and Other Assets, Net of Liabilities (2.46%) 35,593,886
--------------
Net Assets (100.00%) $1,449,273,752
==============
<fn>
+ Aggregate cost for federal income tax purposes is identical.
</fn>
</table>
<table>
<caption>
KEY:
<s> <c> <c>
GNMA = Government National Mortgage Association
</table>
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
<table>
<caption>
- ------------------------------------ ------------------------ -------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------ ------------------------ -------------------------
<s> <c> <c>
Less than 31 Days $ 1,286,332,623 90.99%
31 through 60 Days -- --
61 through 90 Days -- --
91 through 120 Days -- --
121 through 180 Days -- --
Over 180 Days 127,347,243 9.01
- ------------------------------------ ------------------------ -------------------------
Total $ 1,413,679,866 100.00%
- ------------------------------------ ------------------------ -------------------------
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
ASSETS
<s> <c>
Investments in securities, at amortized cost (Note 1)............................. $ 693,679,866
Repurchase agreements............................................................. 720,000,000
Cash.............................................................................. 34,311,625
Accrued interest receivable....................................................... 1,503,647
Due from Transfer Agent (Note 2).................................................. 317,966
Prepaid expenses.................................................................. 9,351
Other assets...................................................................... 28,717
Other receivables................................................................. 9
------------------
Total assets............................................................... 1,449,851,181
------------------
LIABILITIES
Payable to affiliates (Note 2).................................................... 273,178
Dividends payable................................................................. 304,251
------------------
Total liabilities.......................................................... 577,429
------------------
Net assets........................................................................ $ 1,449,273,752
==================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 5)........................... $ 1,449,273,752
------------------
Net assets........................................................................ $ 1,449,273,752
==================
</table>
<table>
<caption>
Net asset value, per share (Note 5):
Class Name Net Assets Shares Outstanding Net Asset Value
<s> <c> <c> <c>
Institutional Shares........................ $647,906,213 647,906,213 $1.00
Institutional Service Shares................ $244,687,747 244,687,747 $1.00
Investor Shares............................. $266,028,549 266,028,549 $1.00
Short Term Income Shares.................... $174,666,949 174,666,949 $1.00
Retail Shares............................... $16,676,539 16,676,539 $1.00
Pinnacle Shares............................. $99,307,755 99,307,755 $1.00
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
INVESTMENT INCOME
<s> <c>
Income:
Interest........................................................................ $ 13,029,180
------------------
Expenses: (Note 2)
Investment management fee....................................................... 831,560
Administration fee.............................................................. 346,483
Shareholder servicing fee (Institutional Service Shares)........................ 367,866
Shareholder servicing fee (Investor Shares)..................................... 335,763
Shareholder servicing fee (Short Term Income Shares)............................ 230,387
Shareholder servicing fee (Retail Shares)....................................... 22,413
Distribution fee (Investor Shares).............................................. 268,610
Distribution fee (Short Term Income Shares)..................................... 414,696
Distribution fee (Retail Shares)................................................ 58,273
Custodian expenses.............................................................. 18,004
Shareholder servicing and related shareholder expenses+......................... 218,748
Legal, compliance and filing fees............................................... 64,917
Audit and accounting............................................................ 60,330
Trustees' fees and expenses..................................................... 46,358
Miscellaneous .................................................................. 10,376
------------------
Total expenses.................................................................. 3,294,784
Less: Fees waived........................................................ (254,102)
Expense offsets (Note 4)........................................... (1,717)
------------------
Net expenses.................................................................... 3,038,965
------------------
Net investment income........................................................... 9,990,215
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain/loss on investments............................................... -0-
------------------
Increase in net assets from operations.............................................. $ 9,990,215
==================
<fn>
+ Includes class specific transfer agency expenses of $53,804, $29,429, $67,119, $46,023, $4,475, and $8,275 for
the Institutional, Institutional Service, Investor, Short Term Income, Retail Shares, and Pinnacle respectively.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<table>
<caption>
Six Months Ended Year
September 30, 2008 Ended
(Unaudited) March 31, 2008
----------- ----------------
<s> <c> <c>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income......................................... $ 9,990,215 $ 49,756,628
Net realized gain (loss) on investments....................... -0- -0-
--------------- ----------------
Increase in net assets from operations............................ 9,990,215 49,756,628
Dividends to shareholders from net investment income:
Institutional Shares.......................................... (4,487,864) (26,167,548)
Institutional Service Shares.................................. (2,124,962) (9,579,659)
Investor Shares............................................... (1,687,480) (7,173,722)
Short Term Income Shares...................................... (918,319) (4,577,752)
Retail Shares................................................. (80,524) (62,001)
Pinnacle Shares............................................... (691,066) (2,195,946)
--------------- ----------------
Total dividends to shareholders.......................... (9,990,215) (49,756,628)
--------------- ----------------
Distributions to shareholders from realized gains on investments:
Institutional Shares.......................................... -0- -0-
Institutional Service Shares.................................. -0- -0-
Investor Shares............................................... -0- -0-
Short Term Income Shares...................................... -0- -0-
Retail Shares................................................. -0- -0-
Pinnacle Shares............................................... -0- -0-
--------------- ----------------
Total distributions to shareholders...................... -0- -0-
--------------- ----------------
Capital share transactions (Note 5):
Institutional Shares.......................................... 103,160,626 (45,508,503)
Institutional Service Shares.................................. (86,521,507) 82,247,669
Investor Shares............................................... (4,250,030) 82,110,572
Short Term Income Shares...................................... (173,060) 136,417,283
Retail Shares................................................. (4,299,790) 20,604,784
Pinnacle Shares............................................... 28,676,204 31,003,640
Net asset value of shares issued in connection with merger of Short Term
Government Class A into Short Term Income Shares.............. -0- 15,759,403
Net asset value of shares issued in connection with merger of Short Term
Government Class B into Investor Shares....................... -0- 53,257,284
--------------- ----------------
Total capital share transactions........................ 36,592,443 375,892,132
--------------- ----------------
Total increase (decrease) .................................... 36,592,443 375,892,132
Net assets:
Beginning of period........................................... 1,412,681,309 1,036,789,177
--------------- ----------------
End of period................................................. $ 1,449,273,752 $ 1,412,681,309
=============== ================
Undistributed net investment income............................... $ -0- $ -0-
=============== ================
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
================================================================================
<table>
<caption>
For the Years Ended March 31,
Institutional shares Six Months Ended --------------------------------------------------------
- -------------------- September 30, 2008 2008 2007 2006 2005 2004
Per Share Operating Performance: (Unaudited) -------- ------- ------- ------- -------
(for a share outstanding throughout the period) ----------
<s> <c> <c> <c> <c> <c> <c>
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.................... 0.008 0.041 0.049 0.034 0.014 0.009
Net realized and unrealized gain(loss) on investments -- -- -- 0.000 0.000 0.000
--------- -------- ------- -------- --------- --------
Total from investment operations......... 0.008 0.041 0.049 0.034 0.014 0.009
Less distributions from:
Dividends from net investment income..... (0.008) (0.041) (0.049) (0.034) (0.014) (0.009)
Net realized gain(loss) on investment.... -- -- -- (0.000) (0.000) (0.000)
--------- -------- -------- -------- --------- --------
Total Distributions...................... (0.008) (0.041) (0.049) (0.034) (0.014) (0.009)
--------- -------- -------- -------- --------- --------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ========= ========
Total Return................................ 0.85%(a) 4.18% 5.02% 3.48% 1.44% 0.91%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 647,906 $ 544,746 $ 590,254 $ 829,714 $ 484,434 $ 466,041
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.................... 1.67%(c) 4.17% 4.89% 3.51% 1.45% 0.90%
Management and Administration fees waived 0.02%(c) 0.03% 0.03% 0.05% 0.03% 0.04%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
</table>
<table>
<caption>
For the Years Ended March 31,
Institutional Service shares Six Months Ended --------------------------------------------------------
- ------------------------------ September 30, 2008 2008 2007 2006 2005 2004
Per Share Operating Performance: (Unaudited) -------- ------- ------- ------- -------
(for a share outstanding throughout the period) ----------
<s> <c> <c> <c> <c> <c> <c>
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.................... 0.007 0.039 0.047 0.032 0.012 0.007
Net realized and unrealized gain(loss) on investments -- -- -- 0.000 0.000 0.000
--------- -------- -------- -------- --------- --------
Total from investment operations......... 0.007 0.039 0.047 0.032 0.012 0.007
Less distributions from:
Dividends from net investment income..... (0.007) (0.039) (0.047) (0.032) (0.012) (0.007)
Net realized gain(loss) on investment.... -- -- -- (0.000) (0.000) (0.000)
--------- -------- -------- -------- --------- --------
Total Distributions...................... (0.007) (0.039) (0.047) (0.032) (0.012) (0.007)
--------- -------- -------- -------- --------- --------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ========= ========
Total Return................................ 0.72%(a) 3.92% 4.76% 3.22% 1.19% 0.66%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 244,688 $ 331,209 $ 248,962 $ 304,168 $ 236,621 $ 261,931
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.................... 1.44%(c) 3.76% 4.65% 3.17% 1.18% 0.66%
Management and administration fees waived 0.02%(c) 0.03% 0.03% 0.05% 0.03% 0.04%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Six Month Ended Commencement of Operations
Investor shares September 30, 2008 Year Ended February 21, 2007 through
- -------------- (Unaudited) March 31, 2008 March 31, 2007
Per Share Operating Performance: ----------- -------------- --------------
(for a share outstanding throughout the period)
<s> <c> <c> <c>
Net asset value, beginning of period................... $ 1.00 $ 1.00 $ 1.00
--------- --------- ---------
Income from investment operations:
Net investment income............................... 0.006 0.037 0.005
Net realized and unrealized gain(loss) on investments -- -- --
--------- --------- ---------
Total from investment operations.................... 0.006 0.037 0.005
Less distributions from:
Dividends from net investment income................ (0.006) (0.037) (0.005)
Net realized gain on investments.................... -- -- --
--------- --------- ---------
Total Distributions................................. (0.006) (0.037) (0.005)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 0.63%(a) 3.73% 0.50%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 266,029 $ 270,279 $ 134,911
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 0.63%(c) 0.63% 0.63%(c)
Net investment income............................... 1.26%(c) 3.51% 4.62%(c)
Administration fees waived.......................... 0.02%(c) 0.03% 0.03%(c)
Distribution fees waived............................ 0.05%(c) 0.05% 0.05%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
</table>
<table>
<caption>
Six Month Ended Commencement of Operations
Short Term Income Shares September 30, 2008 Year Ended November 2, 2006 through
- ------------------------ (Unaudited) March 31, 2008 March 31, 2007
Per Share Operating Performance: ----------- -------------- --------------
(for a share outstanding throughout the period)
<s> <c> <c> <c>
Net asset value, beginning of period................... $ 1.00 $ 1.00 $ 1.00
--------- --------- ---------
Income from investment operations:
Net investment income............................... 0.005 0.034 0.018
Net realized and unrealized gain(loss) on investments -- -- --
--------- --------- ---------
Total from investment operations.................... 0.005 0.034 0.018
Less distributions from:
Dividends from net investment income................ (0.005) (0.034) (0.018)
Net realized gain on investments.................... -- -- --
--------- --------- ---------
Total Distributions................................. (0.005) (0.034) (0.018)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 0.50%(a) 3.46% 1.80%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 174,667 $ 174,840 $ 22,663
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 0.89%(c) 0.90% 0.90%(c)
Net investment income............................... 1.00%(c) 3.03% 4.32%(c)
Administration fees waived.......................... 0.02%(c) 0.03% 0.03%(c)
Distribution fees waived............................ 0.04%(c) 0.03% 0.03%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
>
The accompanying notes are an integral part of these financial statements.
<Page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. TREASURY PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
================================================================================
<table>
<caption>
Six Month Ended Commencement of Operations
Retail Shares September 30, 2008 Year Ended December 12, 2006 through
- ------------- (Unaudited) March 31, 2008 March 31, 2007
Per Share Operating Performance: ----------- -------------- --------------
(for a share outstanding throughout the period)
<s> <c> <c> <c>
Net asset value, beginning of period................... $ 1.00 $ 1.00 $ 1.00
--------- --------- --------
Income from investment operations:
Net investment income............................... 0.004 0.033 0.013
Net realized and unrealized gain(loss) on investments -- -- --
--------- --------- --------
Total from investment operations.................... 0.004 0.033 0.013
Less distributions from:
Dividends from net investment income................ (0.004) (0.033) (0.013)
Net realized gain on investments.................... -- -- --
--------- --------- --------
Total Distributions................................. (0.004) (0.033) (0.013)
--------- --------- --------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= ========
Total Return........................................... 0.45%(a) 3.36% 1.28%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 16,676 $ 20,976 $ 371
Ratios to average net assets:
Expenses (net of fees waived) (b)................... 0.99%(c) 0.99% 1.00%(c)
Net investment income............................... 0.90%(c) 1.90% 4.22%(c)
Administration fees waived.......................... 0.02%(c) 0.03% 0.03%(c)
Distribution fees waived............................ 0.14%(c) 0.14% 0.10%(c)
Transfer Agency Account fees waived................. -- -- 0.03%(c)
Expense offsets..................................... 0.00%(c) 0.00% 0.00%(c)
</table>
<table>
<caption>
For the Years Ended March 31,
Pinnacle shares Six Month Ended --------------------------------------------------------
- --------------- September 30, 2008 2008 2007 2006 2005 2004
Per Share Operating Performance: (Unaudited) ------- ------- ------- ------- -------
(for a share outstanding throughout the period) ----------
<s> <c> <c> <c> <c> <c> <c>
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.................... 0.008 0.041 0.049 0.034 0.014 0.009
Net realized and unrealized gain(loss) on investments -- -- -- 0.000 0.000 0.000
--------- -------- -------- -------- -------- --------
Total from investment operations......... 0.008 0.041 0.049 0.034 0.014 0.009
Less distributions from:
Dividends from net investment income..... (0.008) (0.041) (0.049) (0.034) (0.014) (0.009)
Net realized gain(loss) on investment.... -- -- -- (0.000) (0.000) 0.000
--------- -------- -------- -------- -------- --------
Total Distributions...................... (0.008) (0.041) (0.049) (0.034) (0.014) (0.009)
--------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ======== ========
Total Return................................ 0.85%(a) 4.18% 5.02% 3.48% 1.44% 0.91%
Ratios/Supplemental Data
Net assets, end of period (000's)........... $ 99,308 $ 70,632 $ 39,628 $ 28,505 $ 39,809 $ 29,252
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.................... 1.67%(c) 3.89% 4.93% 3.51% 1.45% 0.90%
Management and administration fees waived 0.02%(c) 0.03% 0.03% 0.05% 0.03% 0.04%
Expense offsets.......................... 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
>
The accompanying notes are an integral part of these financial statements.
<Page>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
As a shareholder of the Portfolio, you incur the following ongoing costs:
management fees and other Portfolio 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 Portfolio 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, 2008 through September 30, 2008.
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.
<table>
<caption>
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ----------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Actual $1,000.00 $1,010.00 $1.26 0.25%
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,023.82 $1.27 0.25%
expenses)
- ----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Service Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Service Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.00 $2.27 0.45%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,022.81 $2.28 0.45%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Retail Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Retail Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.30 $5.03 1.00%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.05 $5.06 1.00%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Advantage Government Liquidity Fund Beginning Account Ending Account Value Expenses Paid During Annualized
("Advantage Shares") Value 04/01/08 09/30/08 the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.20 $5.13 1.02%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,019.95 $5.16 1.02%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
<fn>
* Expenses are equal to the Fund's annualized expense ratios multiplied by the average account value over the period (April 1,
2008 through September 30, 2008), multiplied by 183/365 (to reflect the most recent fiscal half-year).
</fn>
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Face Maturity Interest Value
Amount Date Rate (Note 1)
------ ---- ---- --------
Loan Participations (3.84%)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 15,000,000 Army & Air Force Exchange Service with JPMorgan Chase as agent(1) 11/17/08 2.87% $ 15,000,000
35,000,000 Army & Air Force Exchange Service with JPMorgan Chase as agent(1) 12/23/08 3.22 35,000,000
- ---------------- --------------
50,000,000 Total Loan Participations 50,000,000
- ---------------- --------------
Repurchase Agreements (48.81%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 274,000,000 Bank of America Securities, LLC, purchased on 09/30/08, repurchase
proceeds at maturity $274,005,708 (Collateralized by $272,327,741
GNMA, 5.50% to 6.50%, due 06/15/38 to 09/20/38, value
$279,480,001) 10/01/08 0.75% $ 274,000,000
162,000,000 Merrill Lynch Pierce Fenner & Smith Co., purchased on 09/30/08,
repurchase proceeds at maturity $162,000,900 (Collateralized by
$320,302,123, GNMA, 4.50% to 7.00%, due 10/15/14 to 08/20/38,
value $165,241,514) 10/01/08 0.20 162,000,000
199,000,000 UBS Securities, LLC, purchased on 09/30/08, repurchase proceeds
at maturity $199,006,081 (Collateralized by $372,451,000, RFIN,
0.00%, due 04/15/18 to 04/15/30, value $202,981,376) 10/01/08 1.10 199,000,000
- ---------------- --------------
635,000,000 Total Repurchase Agreements 635,000,000
- ---------------- --------------
U.S. Government Agency Discount Notes (18.73%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 23,600,000 Federal Farm Credit Bank 08/25/09 2.85% $ 23,600,000
50,000,000 Federal Home Loan Bank 10/03/08 1.75 49,995,139
20,000,000 Federal Home Loan Bank 01/15/09 2.61 19,848,655
25,000,000 Federal Home Loan Bank 01/16/09 2.64 24,806,806
19,685,000 Federal Home Loan Bank 05/27/09 2.44 19,349,239
30,000,000 Federal Home Loan Mortgage Corporation 11/28/08 2.61 29,874,817
20,000,000 Federal Home Loan Mortgage Corporation 01/05/09 2.15 19,886,933
56,625,000 Federal National Mortgage Association 11/28/08 2.60 56,389,183
- ---------------- --------------
244,910,000 Total U.S. Government Agency Discount Notes 243,750,772
- ---------------- --------------
U.S. Government Agency Medium Term Notes (25.98%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Federal Agricultural Mortgage Corporation 04/01/09 2.50% $ 20,000,000
10,000,000 Federal Agricultural Mortgage Corporation 07/27/09 2.84 10,000,000
10,000,000 Federal Agricultural Mortgage Corporation 09/24/09 2.85 10,000,000
20,000,000 Federal Home Loan Bank 10/17/08 1.28 20,000,000
50,000,000 Federal Home Loan Bank 02/02/09 1.65 50,000,000
20,000,000 Federal Home Loan Bank 04/01/09 2.32 20,000,000
40,000,000 Federal Home Loan Bank 04/07/09 2.45 40,000,000
27,000,000 Federal Home Loan Bank 04/14/09 2.25 27,000,000
20,000,000 Federal Home Loan Bank 05/06/09 2.67 20,000,000
10,000,000 Federal Home Loan Bank 05/07/09 2.44 10,006,510
50,000,000 Federal Home Loan Bank 06/10/09 1.42 50,000,000
25,000,000 Federal Home Loan Bank 06/10/09 1.51 25,000,000
25,000,000 Federal Home Loan Bank 06/10/09 1.83 25,000,000
11,000,000 Federal Home Loan Bank 06/25/09 3.15 11,000,000
- ---------------- --------------
338,000,000 Total U.S. Government Agency Medium Term Notes 338,006,510
- ---------------- --------------
Total Investments (97.36%) (Cost $1,266,757,282+) 1,266,757,282
Cash and other assets, net of liabilities (2.64%) 34,319,958
--------------
Net Assets (100.00%) $1,301,077,240
==============
+ Aggregate cost for federal income tax purposes is identical.
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
FOOTNOTES:
1) Security is considered to be illiquid. The Fund is limited to investing 10%
of net assets in illiquid securities at the time of purchase. The value of
securities considered illiquid at the time of this statement represented
3.20% of the Portfolio's net assets.
<table>
<caption>
KEY:
<s> <c> <c>
GNMA = Government National Mortgage Association
RFIN = Resolution Funding Corporation Strip Interest
</table>
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
<table>
<caption>
- ------------------------------------- --------------------------- -----------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------- --------------------------- -----------------------
<s> <c> <c>
Less than 30 Days $ 894,995,139 70.65%
31 through 60 Days 121,263,999 9.57
61 through 90 Days 45,000,000 3.55
91 through 120 Days 64,542,394 5.10
121 through 180 Days -- --
Over 180 Days 140,955,750 11.13
- ------------------------------------- --------------------------- -----------------------
Total $1,266,757,282 100.00%
- ------------------------------------- --------------------------- -----------------------
</table>
The accompanying notes are an integral part of these financial statements
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
ASSETS
<s> <c>
Investments in securities, at amortized cost (Note 1)............................. $ 631,757,282
Repurchase agreements............................................................. 635,000,000
Cash.............................................................................. 32,686,038
Due from transfer agent (Note 2).................................................. 281,213
Accrued interest receivable....................................................... 2,259,334
Prepaid expenses.................................................................. 4,186
Other receivable.................................................................. 99
------------------
Total assets............................................................... 1,301,988,152
------------------
LIABILITIES
Payable to affiliates (Note 2).................................................... 403,566
Accrued expenses.................................................................. 186,086
Dividends payable................................................................. 321,260
------------------
Total liabilities.......................................................... 910,912
------------------
Net assets........................................................................ $ 1,301,077,240
==================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 5)........................... $ 1,301,114,183
Undistributed net investment income............................................... 42,484
Accumulated net realized loss..................................................... (79,427)
------------------
Net assets........................................................................ $ 1,301,077,240
==================
</table>
<table>
<caption>
Net asset value, per share (Note 5):
Class Name Net Assets Shares Outstanding Net Asset Value
<s> <c> <c> <c>
Institutional Shares........................ $10,577 10,578 $1.00
Institutional Service Shares................ $173,092 173,102 $1.00
Retail Shares............................... $198,941,315 198,953,460 $1.00
Advantage Shares............................ $1,101,952,256 1,102,019,527 $1.00
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
INVESTMENT INCOME
<s> <c>
Income:
Interest........................................................................ $ 11,717,116
------------------
Expenses: (Note 2)
Investment management fee....................................................... 627,872
Administration fee.............................................................. 261,613
Shareholder servicing fee (Institutional Service Shares)........................ 398
Shareholder servicing fee (Retail Shares)....................................... 184,022
Shareholder servicing fee (Advantage Shares).................................... 1,123,634
Distribution fee (Retail Shares)................................................ 478,458
Distribution fee (Advantage Shares)............................................. 3,370,900
Custodian expenses.............................................................. 27,500
Shareholder servicing and related shareholder expenses+......................... 61,307
Legal, compliance and filing fees............................................... 134,558
Audit and accounting............................................................ 94,168
Trustees' fees and expenses..................................................... 29,172
Other........................................................................... 4,073
------------------
Total expenses.................................................................. 6,397,675
Less: Fees waived................................................. (1,076,431)
------------------
Net expenses.................................................................... 5,321,244
------------------
Net investment income........................................................... 6,395,872
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments............................................. (12,623)
------------------
Increase in net assets from operations.............................................. $ 6,383,249
==================
<fn>
+ Includes class specific transfer agency expenses of $0, $23, and $36,818 for the Institutional, Institutional
Service, and Retail Shares respectively.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<table>
<caption>
Six Months Ended Year
September 30, 2008 Ended
(Unaudited) March 31, 2008
----------- --------------
INCREASE (DECREASE) IN NET ASSETS
<s> <c> <c>
Operations:
Net investment income....................................................... $ 6,395,872 $ 15,087,433
Net realized gain (loss) on investments..................................... (12,623) (54,070)
--------------- ----------------
Increase in net assets from operations...................................... 6,383,249 15,033,363
Dividends to shareholders from net investment income:
Institutional Shares ....................................................... (105) (455)
Institutional Service Shares ............................................... (2,898) (10,130)
Retail Shares............................................................... (914,858) (3,686,594)
Advantage Shares............................................................ (5,478,011) (11,390,254)
--------------- ----------------
Total dividends to shareholders........................................ (6,395,872) (15,087,433)
--------------- ----------------
Distributions to shareholders from realized gains on investments:
Institutional Shares........................................................ -0- -0-
Institutional Service Shares................................................ -0- -0-
Retail Shares............................................................... -0- -0-
Advantage Shares............................................................ -0- -0-
--------------- ----------------
Total distributions to shareholders.................................... -0- -0-
--------------- ----------------
Capital share transactions (Note 5):
Institutional Shares........................................................ 105 473
Institutional Service Shares................................................ (162,627) 325,729
Retail Shares............................................................... 39,671,525 46,204,413
Advantage Shares............................................................ 439,586,975 468,605,201
Net asset value of shares issued in connection with merger of Cortland
Government into Retail Shares............................................... -0- 56,013,618
--------------- ----------------
Total capital share transactions...................................... 479,095,978 571,149,434
--------------- ----------------
Total increase ............................................................. 479,083,355 571,095,364
Net assets:
Beginning of period......................................................... 821,993,885 250,898,521
--------------- ----------------
End of period............................................................... $ 1,301,077,240 $ 821,993,885
=============== ================
Undistributed net investment income............................................. $ 42,484 $ 42,484
=============== ================
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
U.S. GOVERNMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
================================================================================
<table>
<caption>
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended October 30, 2006 through
Institutional shares (Unaudited) March 31, 2008 March 31, 2007
- -------------------- ----------- -------------- --------------
<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............................... 0.010 0.045 0.009
Net realized and unrealized gain(loss) on investments (0.000) (0.000) 0.000
-------- --------- ---------
Total from investment operations.................... 0.010 0.045 0.009
Less distributions from:
Dividends from net investment income................ (0.010) (0.045) (0.009)
Net realized gain on investments.................... -- -- --
-------- --------- ---------
Total Distributions................................. (0.010) (0.045) (0.009)
-------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
======== ========= =========
Total Return........................................... 1.00%(a) 4.54% 0.88%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 11 $ 10 $ 10
Ratios to average net assets:
Expenses (net of fees waived)....................... 0.25%(b) 0.21% 0.20%(b)
Net investment income............................... 1.99%(b) 4.44% 5.10%(b)
Management and administration fees waived........... 0.05%(b) 0.09% 0.16%(b)
Transfer Agency Account fees waived................. 0.02%(b) -- --
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended March 19, 2007 through
Institutional Service shares (Unaudited) March 31, 2008 March 31, 2007
- ---------------------------- ----------- -------------- --------------
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............................... 0.009 0.042 0.002
Net realized and unrealized gain(loss) on investments (0.000) (0.000) 0.000
-------- -------- --------
Total from investment operations.................... 0.009 0.042 0.002
Less distributions from:
Dividends from net investment income................ (0.009) (0.042) (0.002)
Net realized gain on investments.................... -- -- --
-------- -------- --------
Total Distributions................................. (0.009) (0.042) (0.002)
-------- -------- --------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return........................................... 0.90%(a) 4.31% 0.17%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 173 $ 336 $ 10
Ratios to average net assets:
Expenses (net of fees waived)....................... 0.45%(b) 0.45% 0.45%(b)
Net investment income............................... 1.82%(b) 3.82% 4.85%(b)
Management and administration fees waived........... 0.05%(b) 0.09% 0.16%(b)
<fn>
(a)Unannualized
(b)Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended December 12, 2006 through
Retail shares (Unaudited) March 31, 2008 March 31, 2007
- -------------------- ----------- -------------- --------------
<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............................... 0.006 0.037 0.013
Net realized and unrealized gain(loss) on investments (0.000) (0.000) 0.000
--------- --------- --------
Total from investment operations.................... 0.006 0.037 0.013
Less distributions from:
Dividends from net investment income................ (0.006) (0.037) (0.013)
Net realized gain on investments.................... -- -- (0.000)
--------- --------- --------
Total Distributions................................. (0.006) (0.037) (0.013)
--------- --------- --------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= ========
Total Return........................................... 0.63%(a) 3.73% 1.30%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 198,941 $ 159,269 $ 57,051
Ratios to average net assets:
Expenses (net of fees waived)....................... 1.00%(b) 1.00% 1.00%(b)
Net investment income............................... 1.24%(b) 3.38% 4.29%(b)
Management and administration fees waived........... 0.05%(b) 0.09% 0.16%(b)
Distribution fees waived............................ 0.13%(b) 0.13% 0.10%(b)
Transfer Agency Account fees waived................. -- -- 0.03%(b)
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended November 2, 2006 through
Advantage shares (Unaudited) March 31, 2008 March 31, 2007
- -------------------- ----------- -------------- --------------
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............................... 0.006 0.036 0.018
Net realized and unrealized gain(loss) on investments (0.000) (0.000) 0.000
--------- --------- --------
Total from investment operations.................... 0.006 0.036 0.018
Less distributions from:
Dividends from net investment income................ (0.006) (0.036) (0.018)
Net realized gain on investments.................... -- -- (0.000)
--------- --------- --------
Total Distributions................................. (0.006) (0.036) (0.018)
--------- --------- --------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= ========
Total Return........................................... 0.62%(a) 3.71% 1.77%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 1,101,952 $ 662,379 $ 193,827
Ratios to average net assets:
Expenses (net of fees waived)....................... 1.02%(b) 1.02% 1.02%(b)
Net investment income............................... 1.22%(b) 3.37% 4.26%(b)
Management and administration fees waived........... 0.05%(b) 0.09% 0.16%(b)
Distribution fees waived............................ 0.16%(b) 0.16% 0.16%(b)
<fn>
(a)Unannualized
(b)Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
EXPENSE CHART
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
As a shareholder of the Portfolio, you incur the following ongoing costs:
management fees and other Portfolio 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 Portfolio 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, 2008 through September 30, 2008.
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.
<table>
<caption>
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Actual $1,000.00 $1,011.20 $1.01 0.20%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,024.07 $1.01 0.20%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Service Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Institutional Service Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.00 $2.27 0.45%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,022.81 $2.28 0.45%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Short Term Income Shares Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Short Term Income Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,008.40 $3.83 0.76%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,021.26 $3.85 0.76%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Retail Class Shares Beginning Account Ending Account Value Expenses Paid Annualized
("Retail Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,007.20 $5.03 1.00%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.05 $5.06 1.00%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
EXPENSE CHART (CONTINUED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
- ---------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Advantage Municipal Liquidity Fund Beginning Account Ending Account Value Expenses Paid Annualized
("Advantage Shares") Value 04/01/08 09/30/08 During the Period* Expense Ratio
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,007.10 $5.13 1.02%
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,019.95 $5.16 1.02%
expenses)
- ---------------------------------------------------------------------------------------------------------------------------
<fn>
* Expenses are equal to the Fund's annualized expense ratios multiplied by the average account value over the period
(April 1, 2008 through September 30, 2008), multiplied by 183/365 (to reflect the most recent fiscal half-year).
</fn>
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Put Bonds (2) (2.33%)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
$ 1,515,000 Oakland County, MI EDC RB (Orchard - Maple Project) (3) (4)
LOC LaSalle National Bank, N.A. 11/15/08 2.95% $ 1,515,000
5,910,000 Three Rivers Solid Waste Authority, SC
Solid Waste Disposal Facilities COPs Series 2007A (4)
LOC US Bank, N.A. 10/01/08 2.75 5,910,000 A-1+
1,995,000 MERLOTs Series 2002 A 29 Relating to Washington State HFC
Single Family Program Refunding Bonds 2002 Series 3A-R (4)
Guaranteed by GNMA/ FNMA 02/11/09 1.50 1,995,000 VMIG-1
- ------------ ------------
9,420,000 Total Put Bonds 9,420,000
- ------------ ------------
Tax Exempt Commercial Paper (7.59%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 City of St. Louis, MO Airport RN
(Lambert - St. Louis International Airport) 2004 Program
LOC JPMorgan Chase Bank, N.A. 11/06/08 1.78% $ 1,000,000 P-1 A-1+
3,700,000 City of San Antonio, TX WaterSystem - Series A 11/06/08 1.58 3,700,000 P-1 A-1+
5,000,000 New Jersey EDA Exempt Facility RB (Keystone-1992 Project) (4)
LOC BNP Paribas 10/08/08 1.60 5,000,000 VMIG-1 A-1+
2,000,000 New Jersey EDA Exempt Facility RB (Keystone-1992 Project) (4)
LOC BNP Paribas 10/08/08 1.53 2,000,000 VMIG-1 A-1+
4,000,000 Oklahoma City, OK Water Utilities Trust - Series A
LOC State Street Bank & Trust Company 10/02/08 1.50 4,000,000 P-1 A-1+
5,000,000 Pendleton County, KY Municipal Multi-County Lease RB
(Kentucky Association of Counties Leasing Trust Program)
LOC JPMorgan Chase Bank, N.A. 12/04/08 1.65 5,000,000 P-1 A-1+
10,000,000 Washington D.C Metropolitan Area Transit Authority - Series A
LOC Wachovia Bank, N.A. 11/06/08 1.60 10,000,000 P-1 A-1+
- ------------ ------------
30,700,000 Total Tax-Exempt Commercial Paper 30,700,000
- ------------ ------------
Tax Exempt General Obligation Notes & Bonds (15.26%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,715,000 Clark County, OH BAN (3) 06/10/09 2.00% $ 1,717,901
2,455,000 Concord Metropolitan District, Douglas County, CO
GO Refunding & Improvement Bonds - Series 2004
LOC Wells Fargo Bank 12/01/08 3.50 2,455,000 A-1+
2,000,000 Cooperstown Central School District, Otsego County, NY BAN 07/31/09 2.05 2,011,373
1,099,400 Des Plaines Park District, IL (3) 12/15/08 2.50 1,100,952
9,800,000 D.C. Everest Area School District, WI TRAN 09/09/09 2.20 9,838,096 A-1
5,000,000 Elkhorn Area School District, WI TRAN (3) 08/21/09 2.15 5,015,204
1,500,000 Lake Mills Area School District , WI TRAN (3) 09/04/09 2.25 1,503,384
3,685,000 Lowell Area Schools, Counties of Kent and Ionia, MI
GO Refunding Bonds - Series 2008 (3) 05/01/09 2.60 3,714,276
1,240,000 Marion County, OH ( Legacy Crossing Improvement)
BAN - Series 2008(3) 04/29/09 1.80 1,243,148
7,200,000 Middleton-Cross Plains Area School District, WI TRAN (3) 09/18/09 2.50 7,216,896
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Tax Exempt General Obligation Notes & Bonds (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 2,815,000 Muskingum County, OH (Bartlett Run Sanitary Sewer Improvement)
BAN - Series 2008 (3) 01/15/09 2.93% $ 2,819,509
1,740,000 Plymonth Joint School District, WI TRAN (3) 09/30/09 2.40 1,750,151
1,750,000 School District of Bloomer, WI TRAN (3) 09/29/09 2.20 1,755,092
900,000 School District of Cadott Community, WI TRAN (3) 09/30/09 2.35 901,307
1,290,000 School District of Glenwood City, WI TRAN (3) 09/23/09 2.35 1,292,469
1,775,000 School District of New Lisbon, WI TRAN (3) 10/15/09 2.29 1,776,969
1,150,000 School District of Prentice, WI TRAN (3) 09/17/09 2.20 1,153,245
2,600,000 School District of Three Lakes, WI TRAN (3) 08/20/09 2.24 2,602,484
1,800,000 Valders Area School District, Manitowac County, WI TRAN (3) 09/25/09 2.80 1,803,437
10,000,000 Will & Kendall Counties, Plainfield, IL Community Consolidated
School District No. 202 10/01/08 1.50 10,000,000 SP-1+
- ------------ ------------
61,514,400 Total Tax Exempt General Obligation Notes & Bonds 61,670,893
- ------------ ------------
Variable Rate Demand Instruments (68.28%) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,000,000 Adams County, PA IDA IDRB (Say Plastic Inc. Project) - Series 2007A
LOC Wachovia Bank, N.A. 08/01/32 7.70% $ 2,000,000 P-1 A-1+
3,000,000 Alachua County, Florida IDRB (Oak Hall Private School, Inc. Project)
- Series 2007
LOC Suntrust Bank 07/01/31 7.95 3,000,000 VMIG-1
5,000,000 BB & T Municipal Trust Floater Certificates - Series 1009 Relating to
Custody Receipts, Series 2008-17, Yadkin County, NC
LOC Branch Banking And Trust Company 03/01/24 3.71 5,000,000 VMIG-1
2,000,000 BB & T Municipal Trust Floater Certificates - Series 2057 Relating to
Custody Receipts, Series 2008-15, Miami-Dade County, FL Miami
International Airport Aviation RB, Series 2007A (4)
LOC Branch Banking And Trust Company 10/01/37 4.70 2,000,000 VMIG-1
2,455,000 BB & T Municipal Trust Floater Certificates - Series 2006 Relating to
Puerto Rico Electric Power Authority, Power Revenue Refunding
Bonds - Series VV
LOC Branch Banking And Trust Company 07/01/32 4.14 2,455,000 VMIG-1
475,000 Beaver County, PA IDA PCRB
(First Energy Generation Corp.) - Series 2006B
LOC Royal Bank of Scotland, N.A. 12/01/41 8.25 475,000 VMIG-1 A-1+
4,000,000 Brevard County, FL IDRRB
(Pivotal Utility Holdings, Inc. Project) - Series 2005 (4)
LOC Wells Fargo Bank, N.A. 10/01/24 8.05 4,000,000 VMIG-1
1,050,000 Broward County, FL HFA
(Sailboat Bend Artist Lofts Project) - Series 2006 (4)
LOC Citibank, N.A. 04/15/38 9.00 1,050,000 A-1+
1,880,000 Calcasieu Parish Public Trust Authority Gulf Opportunity Zone RB
(Delta Equine Center LLC Project) - Series 2007 (3) (4)
LOC Branch Banking And Trust Company 01/01/32 8.25 1,880,000
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 2,500,000 Capital Trust Agency, FL Air Cargo RB
(Aero Miami FX, LLC Project), Series 2004A (4)
LOC JPMorgan Chase Bank, N.A. 08/01/34 8.20% $ 2,500,000 A-1+
9,115,000 Citigroup Global Markets ROCs Trust II-R Series 11208 Sabine
Neches, TX HFC Single Family Mortgage RB Series 2006 (4) 12/01/39 6.44 9,115,000 VMIG-1
2,315,000 Citigroup Global Markets ROCs Trust II-R Series 12211
(State of Florida, Full Faith and Credit, State Board of Education,
Public Education Capital Outlay Bonds, 2003 Series B) 06/01/33 8.27 2,315,000 A-1+
5,605,000 City of Chicago, IL MHRB (Sankofa House Project) - Series 2007B (4)
LOC Harris Trust 12/01/08 7.50 5,605,000 VMIG-1
400,000 City of Cohasset, MN RB
(Minnesota Power & Light Company Project) - Series 1997A
LOC LaSalle National Bank, N.A. 06/01/20 7.25 400,000 A-1+
1,285,000 City of Demopolis, AL Industrial Development Board Gulf Opportunity
Zone Bonds (Jackson Paper Company, Inc. Project)
LOC Compass Bank 08/01/22 8.60 1,285,000 P-1 A-1
5,135,000 City of Milwaukee, WI IDRB
(Midwest Express Airlines, Inc. Project) - Series 1998 (3) (4)
LOC US Bank, N.A. 08/01/30 8.77 5,135,000
1,790,000 Cleveland - Cuyahoga County, OH Port Authority Refunding RB
(CBT Project) - Series 2007
LOC Charter One Bank 06/01/31 8.66 1,790,000 P-1 A-1+
4,638,140 Clipper Tax Exempt Certificates Trust Series
- (Oklahoma Single Family Housing) 2004-3 (4) 02/01/10 7.91 4,638,140 VMIG-1
3,000,000 Colorado HFA Solid Waste Disposal RB
(Waste Management, Inc. Project) - Series 2003 (4)
LOC Wachovia Bank, N.A. 08/01/38 7.50 3,000,000 A-1+
2,000,000 County of Henry, OH Improvement RB, Series 2006
(Henry County Hospital, Inc Project)
LOC Key Bank, N.A 03/01/31 8.00 2,000,000 P-1 A-1
1,645,000 County of Prince William, VA IDA IDRB
(Mediatech, Inc. Project) - Series 2007 (4)
LOC Branch Banking And Trust Company 11/01/32 8.25 1,645,000 VMIG-1
4,400,000 Deutsche Bank SPEARs/ LIFERs Trust, Series DB-624
New Jersey Transportaion Trust Fund Authority, Transportaion
(System Bonds, 2006 Series C Capital Appreciation Bonds
LOC Dexia CLF 06/15/25 4.17 4,400,000 VMIG-1 A-1+
5,000,000 Deutsche Bank SPEARs/LIFERs Trust, Series DBE-150 Relating
to the IDA of the City of Chandler, AZ IDRB, Series 2007
(Intel Corporation Project) (3) (4)
LOC Deutsche Bank, A.G. 12/01/37 4.12 5,000,000
11,030,000 Development Authority of Columbus, GA MHRB
(Avalon apartments Projectst) - Series 2008 (4)
Gauarnteed by Federal National Mortgage Association 10/15/40 8.20 11,030,000 A-1+
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 6,000,000 Development Authority of Columbus, GA MHRB
(Lumpkin Park Apartments Project) - Series 2008 (4)
LOC Regions Bank 03/01/43 8.25% $ 6,000,000 A-1
3,000,000 Development Authority of Fulton County, GA RB
(Piedmont Healthcare Inc. Project) - Series 2007
LOC SunTrust Bank 06/01/37 7.90 3,000,000 VMIG-1
900,000 Development Authority of Gwinnett County, GA RB
(Greater Atlanta Christian School, Inc. Project) - Series 2002
LOC SunTrust Bank 05/01/22 7.90 900,000 VMIG-1
3,865,000 Douglas County, NE IDRB (Phillips Manufacturing Project) - Series 2002 (4)
LOC Wells Fargo Bank N.A 12/01/18 8.06 3,865,000 A-1+
2,890,000 Elkhart County, IN EDRB
(Reflex Industries, Inc. Project) - Series 2007 (4)
LOC Fifth Third Bank 12/01/27 8.48 2,890,000 P-1 A-1+
1,250,000 Florida Development Finance Corporation Enterprise Bond Program IDRB
(RMS Communications Group, Inc. Project) - Series 2003A2 (4)
LOC SunTrust Bank 06/01/23 8.25 1,250,000 P-1 A-1+
1,280,000 Florida Housing Finance Corporation MFMRRB
(Lighthouse Bay Apartments) 2002 Series N-1
Guaranteed by Federal Home Loan Mortgage Corporation 11/01/32 8.10 1,280,000 A-1+
10,000,000 Federal Home Loan Mortgage Corporation Class A
Multi-family Certificates, Series M015 (4)
Guaranteed by Federal Home Loan Mortgage Corporation 05/15/46 8.46 10,000,000 A-1+
1,000,000 Fulton County, KY Industrial Building RB
(The Burke-Parsons-Bowlby Corporation Project) - Series 2006 (4)
LOC Branch Banking And Trust Company 07/01/26 8.25 1,000,000 P-1 A-1+
1,225,000 Gainesville, FL IDRB (Heat-Pipe Technology, Inc. Project) - Series 1998 (4)
LOC Regions Bank 05/01/18 8.10 1,225,000 P-1 A-1
1,450,000 Health and Educational Facilities Board of the Metropolitan
Government of Nashville and Davidson County, TN MHRB
(Wedgewood Tower Project) - Series 2004 A (4)
LOC AmSouth Bank 06/01/34 8.33 1,450,000 P-1 A-1
7,400,000 Housing Authority of Cobb County, GA MHRB
(Highland Ridge Apartments Project) - Series 2008
Guaranteed by Federal Home Loan Mortgage Corporation 07/01/41 8.03 7,400,000 A-1+
7,650,000 Housing Authority of the City of Rome, GA MHRB
(Ashland Park Apartments Project) - Series 2002
LOC Regions Bank 07/01/34 8.30 7,650,000 A-1
4,500,000 Housing Finance Authority of Broward County, FL MHRB
(Palms of Deerfield Beach Apartments) - Series 2006 (4)
LOC Citibank, N.A. 08/15/38 8.25 4,500,000 A-1+
1,500,000 Illinois Development Finance Authority IDRB
(U.S. Acrylic, Inc. Project) - Series 2003
LOC Fifth Third Bank 08/01/33 8.48 1,500,000 P-1 A-1+
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 3,000,000 Illinois Development Finance Authority MHRB
(Butterfield Creek Associates Project) - Series 1999 (4)
LOC LaSalle National Bank, N.A. 04/01/39 8.16% $ 3,000,000 A-1
2,000,000 Illinois Finance Authority IDRB
(Chicago Gear-D.O. James Corporation Project) - Series 2007 (4)
LOC Fifth Third Bank 12/01/31 8.48 2,000,000 P-1 A-1+
2,625,000 Illinois Finance Authority RB
(Riverside Health System) - Series 2004
LOC JPMorgan Chase Bank, N.A. 11/15/29 8.20 2,625,000 VMIG-1 A-1+
3,700,000 Iowa Higher Education Loan Authority Private College Facility RB
(University of Dubuque Project) - Series 2007
LOC Northern Trust 04/01/35 6.25 3,700,000 A-1+
1,450,000 Iredell County, NC Industrial Facilities and Pollution Control
Financing Authority (Riley Technologies Project) - Series 2006 (3) (4)
LOC Branch Banking And Trust Company 11/01/31 8.25 1,450,000
2,230,000 Jefferson County, KY Industrial Building RB (R.C. TWAY Company,
Kentucky Manufacturing Company Project) - Series 1998 (4)
LOC JPMorgan Chase Bank, N.A. 06/01/18 10.00 2,230,000 P-1 A-1+
1,360,000 Jeffersontown, KY (Kentucky League of Cities
Funding Trust Lease Program RB) - Series 2000
LOC US Bank, N.A. 03/01/30 10.00 1,360,000 VMIG-1
5,355,000 JPMorgan Securities, Inc. Puttable Tax-Exempt Receipts Series 2054
(Relating to the City of Chicago MHRB (Drexel Preservation Project)
- Series 2007 (4)
Guaranteed by Federal Housing Authority/Government National
Mortgage Association 12/20/39 7.47 5,355,000 VMIG-1
2,400,000 La Porte County, IN EDRB(Universal Forest Products Indiana
Limited Partnership Project) - Series 2000 (4)
LOC Bank of America, N.A. 11/01/20 7.70 2,400,000 P-1 A-1+
600,000 Loudoun County, VA IDA RB
(Howard Hughes Medical Institute Issue) - Series 2003C 02/15/38 7.20 600,000 VMIG-1 A-1+
250,000 Manatee County, FL PCRB (Florida Power & Light Company
Project) - Series 1994 09/01/24 4.25 250,000 VMIG-1 A-1
406,000 Marion County, FL IDA MHRB
(Chambrel at Pinecastle Project) - Series 2002 (4)
Guaranteed by Federal National Mortgage Association 11/15/32 8.10 406,000 A-1+
2,000,000 Marion County, FL IDA IDRB
(Capris Furniture Industries, Inc. Project) - Series 2005
LOC SunTrust Bank 02/01/25 8.15 2,000,000 P-1 A-1+
7,000,000 Maryland Health and Higher Educational Facilities Authority RB
(University of Maryland Medical System Issue) - Series 2007A
LOC Wachovia Bank, N.A. 07/01/34 7.95 7,000,000 VMIG-1 A-1+
1,500,000 Michigan State Strategic Fund Limited Obligation RB
(The Envelope Printery Inc Project) - Series 2007 (4)
LOC Fifth Third Bank 03/01/27 8.48 1,500,000 P-1 A-1+
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 1,900,000 Michigan State Strategic Fund Limited Obligation RB
(Grand River Infrastructure, Inc. Project) - Series 2006 (4)
LOC Fifth Third Bank 06/01/14 8.48% $ 1,900,000 P-1 A-1+
920,000 Michigan State Strategic Fund Limited Obligation RB
(Ilmor Engineering, Inc. Project) - Series 2006 (4)
LOC Fifth Third Bank 03/01/36 8.48 920,000 P-1 A-1+
2,275,000 Michigan State Strategic Fund Limited Obligation RB
(Nuvar Properties LLC Project) - Series 2007 (4)
LOC Fifth Third Bank 04/01/37 8.48 2,275,000 P-1 A-1+
1,740,000 Michigan State Strategic Fund Limited Obligation RB
(Sintel, Inc. Project) - Series 2005 (4)
LOC Fifth Third Bank 10/01/30 8.48 1,740,000 P-1 A-1+
545,000 Mississippi Home Corporation Single Family Mortgage RB
Wachovia Merlots Trust Series 2000YYY (4)
Guaranteed by Government National Mortgage Association 12/01/31 4.61 545,000 VMIG-1
250,000 Montgomery, AL Industrial Development Board Pollution Control and
Solid Waste Disposal Revenue Refunding Bond
General Electric Company Project) - Series 2005 05/01/21 5.20 250,000 VMIG-1 A-1+
250,000 Municipal Gas Authority of Georgia, Gas RB - Series B 01/01/26 7.75 250,000 VMIG-1 A-1+
6,000,000 Nephi City, UT Multi-Mode IDRB
(Fibertek Insulation West Project), Series 2008 (4)
LOC Key Bank, N.A. 04/01/28 8.00 6,000,000 VMIG-1
3,500,000 Nevada Housing Division MHRB (Golden Apartment) - Series 2007 (4)
Guaranteed by Federal Home Loan Mortgage Corporation 10/01/37 8.20 3,500,000 A-1+
5,545,000 Nevada Housing Division Multi-Unit Housing RB
(Help Owens 2 Apartments) - Series 2007 (4)
LOC Citibank, N.A. 10/01/42 8.20 5,545,000 A-1+
2,165,000 Nevada Housing Division Multi-Unit Housing RB
(Maryland Villas Project) - Series 1997A (4)
LOC Federal Home Loan Bank 10/01/30 8.20 2,165,000 A-1+
1,500,000 New Jersey Health Care Facilities Financing Authority RB
(Saint Barnabas Health Care System Issue) - Series 2001A
LOC JPMorgan Chase Bank, N.A 07/01/31 7.81 1,500,000 VMIG-1 A-1+
5,000,000 North Carolina Capital Facilities Finance Authority Solid Waste
Disposal Revenue Refunding Bond (Duke Energy Carolina) (4)
LOC Wells Fargo Bank, N.A. 11/01/40 7.90 5,000,000 VMIG-1 A-1+
435,000 Ohio County, KY Industrial Building RB
(Ritatsu Manufacturing, Inc. Project) - Series 2005 (4)
LOC Fifth Third Bank 10/01/20 8.48 435,000 P-1 A-1+
1,500,000 Ohio Air Quality Development Authority, State of Ohio PCRB
(FirstEnergy Generation Corp. Project) - Series 2006A
LOC Key Bank, N.A. 12/01/23 10.00 1,500,000 VMIG-1 A-1
4,600,000 Ohio Water Development Authority, State of Ohio PCRB
(FirstEnergy Nuclear Generation Corp. Project) - Series 2008A (4)
LOC Bank of Nova Scotia 11/01/33 8.50 4,600,000 A-1+
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 1,000,000 Orange County, FL HFA MHRB
(Post Fountains at Lee Vista Project)- Series 1997E
Guaranteed by Federal National Mortgage Association 06/01/25 8.40% $ 1,000,000 A-1+
1,200,000 Orange County, FL HFA MHRB
(Windsor Pines Project) - Series 2000E (4)
LOC Bank of America, N.A. 03/01/35 9.00 1,200,000 VMIG-1
250,000 Orlando, FL Utilities Commission Water and Electric RB
- Series 2002B 10/01/22 7.89 250,000 VMIG-1 A-1+
2,000,000 Pennsylvania EDFA (National Railroad Passenger Corporation
Amtrak Project) - Series B of 2001 (4)
LOC JPMorgan Chase Bank, N.A. 11/01/41 8.05 2,000,000 VMIG-1 A-1+
2,500,000 Pennsylvania EDFA EDRB 2005 Series B-2
(Joseph R & Nancy L DelSignore Project) (4)
LOC PNC Bank, N.A. 08/01/30 8.35 2,500,000 P-1 A-1+
1,200,000 Pennsylvania EDFA EDRB 2005 Series B-3
(North America Communications, Inc. Project) (4)
LOC PNC Bank, N.A. 08/01/12 8.35 1,200,000 P-1 A-1+
1,975,000 Port Bellingham, WA IDC Environmental Facilities Industrial RB
(BP West Coast Products LLC Project) - Series 2003 (4) 03/01/38 4.55 1,975,000 VMIG-1 A-1+
3,500,000 Riesel, TX IDC Solid Waste Disposal RB
(Sandy Creek Energy Associates, LP Project) - Series 2007 (4)
LOC Credit Suisse 10/01/42 7.75 3,500,000 A-1+
1,800,000 Rockingham County , NC Industrial Facilites and PCFA IDRB
(Eden Custom Processing, LLC Project) Series 2004 (3) (4)
LOC Branch Banking And Trust Company 01/01/17 8.25 1,800,000
1,925,000 Rockingham County , NC Industrial Facilites and PCFA IDRB
(Whiteridge Plastics, LLC Project) - Series 2003 (3) (4)
LOC Branch Banking And Trust Company 03/01/15 8.25 1,925,000
980,000 Sampson County, NC Industrial Facilities and PCFA IRB
(DuBose Strapping, Inc. Project) Series 2001 (3) (4)
LOC JPMorgan Chase Bank, N.A 01/01/12 7.70 980,000
1,920,000 Sampson County, NC Industrial Facilities and PCFA IRB
(DuBose Strapping, Inc. Project) Series 2003 (3) (4)
LOC JPMorgan Chase Bank, N.A 01/01/14 7.70 1,920,000
1,000,000 Savannah, GA EDA Solid Waste Disposal RB (Republic
Services of Georgia Limited Partnership Project) - Series 2000(4)
LOC SunTrust Bank 06/01/30 8.05 1,000,000 VMIG-1
2,145,000 South Carolina Jobs EDA EDRB (4)
(DCS Diversified Coating Systems, Inc Project) - Series 2002
LOC Branch Banking And Trust Company 04/01/17 8.25 2,145,000 VMIG-1
500,000 State of Connecticut GO 1997 Series B 05/15/14 7.50 500,000 VMIG-1 A-1+
800,000 Suffolk, VA Redevelopment and Housing Authority MHRB
(Oak Springs Apartments, LLC Project) - Series 1999
Guaranteed by Federal Home Loan Mortgage Corporation 12/01/19 8.10 800,000 VMIG-1
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 965,000 Suffolk, VA Redevelopment and Housing Authority MHRB
(Pembroke Crossing Apartments, LLC Project) - Series 1998 (3)
LOC SunTrust Bank 09/01/19 8.15% $ 965,000
1,150,000 Town of Caledonia, WI IDRB (Caledonia Properties LLC/
Quick Cable Corpoation Project) - Series 1998 (4)
LOC Fifth Third Bank 12/01/18 8.48 1,150,000 P-1 A-1+
720,000 Town of Frisco City, AL Industrial Development Board IDRB (Standard
Furniture Manufacturing Company, Inc. Project) - Series 1999 (4)
LOC Royal Bank of Canada 11/01/09 8.07 720,000 A-1
1,165,000 Tulsa, OK Industrial Authority IDRB, Series 1998
(Indian Health Care Resource Center of Tulsa, Inc. Project)
LOC JPMorgan Chase Bank, N.A. 06/01/14 8.95 1,165,000 VMIG-1 A-1+
1,315,000 Tuscaloosa County, AL IDA IDRB
(Automotive Corridor, LLC Project) - Series 2001(3) (4)
LOC Regions Bank 10/01/21 8.60 1,315,000 P-1 A-1
695,000 Tuscaloosa County, AL IDA IDRB
(Automotive Corridor, LLC Expansion Project) - Series 2004 (4)
LOC Regions Bank 11/01/24 8.60 695,000
265,000 University of North Carolina at Chapel Hill RB - Series 2001 B 12/01/25 7.70 265,000 VMIG-1 A-1+
4,800,000 University of North Carolina at Chapel Hill Foundation, Inc.
COPs - Series 1989
LOC Bank of America, N.A. 10/01/09 7.70 4,800,000 VMIG-1
1,400,000 Upper Illinois River Valley Development Authority IDRB
(Advanced Flexible Composites, Inc. Project) Series 2003-A(3) (4)
LOC LaSalle National Bank, N.A. 06/01/25 8.33 1,400,000
4,230,000 Upper Illinois River Valley Development Authority IDRB
(Georgi Holdings, LLC Project) Series 2002(3) (4)
LOC U.S. Bank, N.A. 12/01/37 8.77 4,230,000
1,000,000 Vermont EDA IDRB (Smugglers' Notch Issue Series A) (4)
LOC Key Bank, N.A. 09/01/15 8.00 1,000,000 P-1 A-1
1,200,000 Village of Orland Park, IL IDRB (Panduit Corporation Project)-Series 1996(4)
LOC Fifth Third Bank 04/01/31 10.00 1,200,000 A-1+
4,450,000 Volusia County, FL IDA IDRB (Intellitech Project) - Series 2007A
LOC LaSalle National Bank, N.A. 10/01/37 7.50 4,450,000 A-1+
2,655,000 Washington State EDFA EDRB
(Summer Building LLC Project) - Series 2005F (4)
LOC Key Bank, N.A. 12/01/30 9.00 2,655,000 P-1 A-1
2,800,000 Washington State HFC MHRB -
(The Seasons Apartment Project) Series 2006 (4)
Collateralized by Federal National Mortgage Association 12/15/40 8.50 2,800,000 VMIG-1
760,000 Washington State HFC Single-Family Program Bonds 2006 Series 2A (4)
Guaranteed by Government National Mortgage Association/ Federal National
Mortgage Association/Federal National Mortgage Corporation 12/01/09 5.25 760,000 VMIG-1
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
Ratings (1)
------------------
Face Maturity Interest Value Standard
Amount Date Rate (Note 1) Moody's & Poor's
----- ---- ----- -------- ------- ---------
Variable Rate Demand Instruments (Continued) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
$ 2,000,000 West Des Moines, IA RB
(Woodgrain Millwork, Inc Project) - Series 1995 (4)
LOC Wells Fargo Bank, N.A. 04/01/10 8.25% $ 2,000,000 P-1 A-1+
5,000,000 West Virginia EDA Solid Waste Disposal Facilites RB (Appalachian
Power Company- Mountaineer Project) - Series 2008B (4)
LOC JPMorgan Chase Bank, N.A. 02/01/36 8.05 5,000,000 VMIG-1 A-1+
3,010,000 Will-Kankakee, IL Regional Development Authority IDRB
(Atlas Putty Products Co. Project) Series 2006A (4)
LOC Fifth Third Bank 08/01/36 8.48 3,010,000 P-1 A-1+
1,100,000 Wisconsin HEFA (Alverno College Project) Series 1997
LOC Allied Irish Bank 11/01/17 6.28 1,100,000 VMIG-1
1,000,000 Wisconsin HEFA RB (Indian Community
School of Milwaukee, Inc. Project) - Series 2006
LOC JPMorgan Chase Bank, N.A. 12/01/36 7.95 1,000,000 VMIG-1
- ------------ ------------
276,004,140 Total Variable Rate Demand Instruments 276,004,140
- ------------ ------------
Variable Rate Demand Instruments - Private Placements (5) (2.63%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,869,000 Anaheim, CA MHRB
(West Anaheim Royale Project) - Series 1985C
LOC Union Bank of California 12/01/15 3.00% $ 2,869,000 P-1 A-1
1,959,000 Anaheim, CA (West Anaheim Convalescent Home)
LOC Union Bank of California 12/01/15 3.00 1,959,000 P-1 A-1
2,848,000 Culver City, CA RDRB (Culver City Royale Project) - Series 1985
LOC Union Bank of California 12/01/15 3.00 2,848,000 P-1 A-1
1,500,000 Harford County, MD EDRB
(Harrigan Roller Company, Inc. Project) - Series 1984
LOC Dresdner Bank, A.G. 12/28/14 3.00 1,500,000 P-1 A-1
1,459,800 West Jordan, UT IDRB
(The Lynn Partnership Nursing Home Project) - Series 1985
LOC Bank of America, N.A. 07/01/15 3.25 1,459,800 P-1 A-1+
- ------------ ------------
10,635,800 Variable Rate Demand Instruments - Private Placements 10,635,800
- ------------ ------------
Total Investments (96.09%) (Cost $388,430,833+) 388,430,833
Cash and other assets, net of liabilities (3.91%) 15,824,484
------------
Net Assets (100.00%) $404,255,317
============
+ Aggregate cost for federal income tax purposes is identical.
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
FOOTNOTES:
1) Unless the securities are assigned their own ratings, the ratings are those
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. Ratings
are unaudited.
In addition, certain issuers may 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.
2) The maturity date indicated for the put bonds is the next put date.
3) Securities that are not rated which the Fund's adviser has determined to be
of comparable quality to those rated securities in which the fund invests.
4) Security subject to alternative minimum tax.
5) 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.
<table>
<caption>
KEY:
<s> <c> <c> <c> <c> <c>
AMT = Alternate Minimum Tax IDRRB = Industrial Development Refunding Revenue Bond
BAN = Bond Anticipation Note IRB = Industrial Revenue Bond
COPs = Certificates of Participation LIFERs = Long Inverse Floating Exempt Receipts
EDA = Economic Development Authority LOC = Letter of Credit
EDC = Economic Development Corporation MFMRRB = Multi- Family Mortgage Revenue Refunding Bond
EDFA = Economic Development Finance Authority MHRB = Multi-Family Housing Revenue Bond
EDRB = Economic Development Revenue Bond PCFA = Pollution Control Finance Authority
FSA = Financial Security Assurance PCRB = Pollution Control Revenue Bond
GO = General Obligation RDRB = Residential Development Revenue Bond
HEFA = Health and Education Facilities Authority RB = Revenue Bond
HFA = Housing Finance Authority RN = Revenue Note
HFC = Housing Finance Commission ROCs = Reset Option Certificates
IDA = Industrial Development Authority RRB = Resource Recover Bond
IDC = Industrial Development Corporation SPEARS = Short Puttable Exempt Receipts
IDRB = Industrial Development Revenue Bond TRAN = Tax and Revenue Anticipation Note
</table>
<table>
<caption>
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
- ------------------------------- --------------------------- ----------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------- --------------------------- ----------------------------
<s> <c> <c>
Less than 30 Days $ 315,544,940 81.24%
31 through 60 Days 16,215,000 4.17
61 through 90 Days 8,555,952 2.20
91 through 120 Days 2,819,509 0.73
121 through 180 Days -- --
Over 180 Days 45,295,432 11.66
- ------------------------------- --------------------------- ----------------------------
Total $388,430,833 100.00%
- ------------------------------- --------------------------- ----------------------------
</table>
The accompanying notes are an integral part of these financial statements.
<Page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
BREAKDOWN OF PORTFOLIO HOLDINGS BY STATE
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
- ------------------------- ----------------------------- ------------------------------
States Value % of Portfolio
- ------------------------- ----------------------------- ------------------------------
<s> <c> <c>
Alabama $ 4,265,000 1.10%
Arizona 5,000,000 1.29
California 7,676,000 1.98
Colorado 5,455,000 1.40
Connecticut 500,000 0.13
Florida 32,676,000 8.41
Georgia 37,230,000 9.59
Illinois 41,025,953 10.56
Indiana 5,290,000 1.36
Iowa 5,700,000 1.47
Kentucky 10,025,000 2.58
Louisiana 1,880,000 0.48
Maryland 8,500,000 2.19
Michigan 13,564,276 3.49
Minnesota 400,000 0.10
Mississippi 545,000 0.14
Missouri 1,000,000 0.26
Nebraska 3,865,000 1.00
Nevada 11,210,000 2.89
New Jersey 12,900,000 3.32
New York 2,011,373 0.52
North Carolina 23,140,000 5.96
Ohio 15,670,557 4.03
Oklahoma 9,803,140 2.52
Pennsylvania 8,175,000 2.10
Puerto Rico 2,455,000 0.63
South Carolina 8,055,000 2.07
Tennessee 1,450,000 0.37
Texas 16,315,000 4.20
Utah 7,459,800 1.92
Vermont 1,000,000 0.26
Virginia 4,010,000 1.03
Washington 20,185,000 5.20
West Virginia 5,000,000 1.29
Wisconsin 44,993,734 11.58
Other Territories 10,000,000 2.58
- ------------------------- ----------------------------- ------------------------------
Total $ 388,430,833 100.00%
- ------------------------- ----------------------------- ------------------------------
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<table>
<caption>
ASSETS
<s> <c>
Investments in securities, at amortized cost (Note 1)............................. $ 388,430,833
Cash.............................................................................. 10,822,667
Due from Transfer Agent (Note 2).................................................. 90,088
Receivable for securities sold.................................................... 3,900,000
Accrued interest receivable....................................................... 1,699,937
Prepaid expenses.................................................................. 3,809
Other assets...................................................................... 38,316
------------------
Total assets............................................................... 404,985,650
------------------
LIABILITIES
Payable to affiliates (Note 2).................................................... 118,769
Accrued expenses.................................................................. 106,321
Dividends payable................................................................. 505,243
------------------
Total liabilities.......................................................... 730,333
------------------
Net assets........................................................................ $ 404,255,317
==================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 5)........................... $ 404,188,917
Accumulated net realized gains.................................................... 11,145
Accumulated undistributed net investment income .................................. 55,255
------------------
Net assets........................................................................ $ 404,255,317
==================
</table>
<table>
<caption>
Net asset value, per share (Note 5):
Class Name Net Assets Shares Outstanding Net Asset Value
<s> <c> <c> <c>
Institutional Shares........................ $3,956,611 3,958,151 $1.00
Institutional Service Shares................ $298,074 298,190 $1.00
Short Term Income Shares.................... $75,276,260 75,305,557 $1.00
Retail Shares............................... $136,625,484 136,678,657 $1.00
Advantage Shares............................ $188,098,888 188,172,094 $1.00
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED)
================================================================================
<Table>
<Caption>
INVESTMENT INCOME
<s> <c>
Income:
Interest........................................................................ $ 5,596,422
------------------
Expenses: (Note 2)
Investment management fee....................................................... 279,961
Administration fee.............................................................. 116,651
Shareholder servicing fee (Institutional Service Shares)........................ 162
Shareholder servicing fee (Short Term Income Shares)............................ 112,776
Shareholder servicing fee (Retail Shares)....................................... 214,056
Shareholder servicing fee (Advantage Shares).................................... 251,356
Distribution fee (Short Term Income Shares)..................................... 202,998
Distribution fee (Retail Shares)................................................ 556,546
Distribution fee (Advantage Shares)............................................. 754,068
Custodian expenses.............................................................. 9,438
Shareholder servicing and related shareholder expenses+......................... 77,204
Legal, compliance and filing fees............................................... 153,185
Audit and accounting............................................................ 71,313
Trustees' fees and expenses..................................................... 19,595
Other........................................................................... 3,878
------------------
Total expenses.................................................................. 2,823,187
Less: Fees waived ........................................................ (593,840)
Expense offsets (Note 4)........................................... (410)
------------------
Net expenses.................................................................... 2,228,937
------------------
Net investment income........................................................... 3,367,485
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments.................................................... -0-
------------------
Increase in net assets from operations.............................................. $ 3,367,485
==================
<fn>
+ Includes class specific transfer agency expenses of $392, $22, $22,555, and $42,811 for the Institutional,
Institutional Service, Short Term Income, and Retail Shares, respectively.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<table>
<caption>
Six Months Ended
September 30, 2008 Year Ended
(Unaudited) March 31, 2008
--------- --------------
INCREASE (DECREASE) IN NET ASSETS
<s> <c> <c>
Operations:
Net investment income......................................... $ 3,367,485 $ 10,839,398
Net realized gain on investments.............................. -0- 34,502
--------------- ----------------
Increase in net assets from operations............................ 3,367,485 10,873,900
Dividends to shareholders from net investment income *:
Institutional Shares ......................................... (43,717) (47,801)
Institutional Service Shares ................................. (1,379) (377)
Short Term Income Shares ..................................... (741,215) (3,142,101)
Retail Shares................................................. (1,181,689) (3,506,790)
Advantage Shares.............................................. (1,399,485) (4,142,329)
--------------- ----------------
Total dividends to shareholders.......................... (3,367,485) (10,839,398)
--------------- ----------------
Capital share transactions (Note 5):
Institutional Shares.......................................... 100,920 3,847,231
Institutional Service Shares.................................. 187,869 100,321
Short Term Income Shares...................................... (17,956,899) (5,174,033)
Retail Shares................................................. (34,285,471) 73,422,037
Advantage Shares.............................................. (33,761,631) 85,387,834
Net asset value of shares issued in connection with merger of Cortland
Municipal into Retail Shares.................................. -0- 6,256,528
Net asset value of shares issued in connection with merger of Daily Tax
Free Class A into Retail Shares............................... -0- 28,913,828
Net asset value of shares issued in connection with merger of Daily Tax
Free Class B into Short Term Income Shares.................... -0- 40,438,840
Net asset value of shares issued in connection with merger of Daily Tax
Free Thornburg Shares into Retail Shares...................... -0- 20,445,665
--------------- ----------------
Total capital share transactions........................ (85,715,212) 253,638,251
--------------- ----------------
Total increase ............................................... (85,715,212) 253,672,753
Net assets:
Beginning of period........................................... 489,970,529 236,297,776
--------------- ----------------
End of period....... ......................................... $ 404,255,317 $ 489,970,529
=============== ================
Undistributed net investment income............................... $ 55,255 $ 55,255
=============== ================
<fn>
* Designated as exempt-interest dividends for income tax purposes.
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
================================================================================
<table>
<caption>
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended October 30, 2006 through
Institutional shares (Unaudited) March 31, 2008 March 31, 2007
- -------------------- ---------- -------------- --------------
<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.............................. 0.011 0.033 0.006
Net realized and unrealized gain(loss) on investments -- 0.000 --
--------- --------- ---------
Total from investment operations................... 0.011 0.033 0.006
Less distributions from:
Dividends from net investment income............... (0.011) (0.033) (0.006)
Net realized gain on investments................... -- (0.000) --
--------- --------- ---------
Total Distributions................................ (0.011) (0.033) (0.006)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 1.12%(a) 3.35% 0.60%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 3,956 $ 3,856 $ 10
Ratios to average net assets:
Expenses (net of fees waived) (b).................. 0.20%(c) 0.20% 0.20%(c)
Net investment income.............................. 2.23%(c) 2.87% 3.44%(c)
Management and administration fees waived.......... 0.11%(c) 0.13% 0.16%(c)
Expense offsets.................................... 0.00%(c) 0.00% --
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended March 19, 2007 through
Institutional Service shares (Unaudited) March 31, 2008 March 31, 2007
- ---------------------------- ---------- -------------- --------------
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.............................. 0.010 0.030 0.001
Net realized and unrealized gain(loss) on investments -- 0.000 --
--------- --------- ---------
Total from investment operations................... 0.010 0.030 0.001
Less distributions from:
Dividends from net investment income............... (0.010) (0.030) (0.001)
Net realized gain on investments................... -- (0.000) --
--------- --------- ---------
Total Distributions................................ (0.010) (0.030) (0.001)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 1.00%(a) 3.09% 0.12%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 298 $ 110 $ 10
Ratios to average net assets:
Expenses (net of fees waived) (b).................. 0.45%(c) 0.45% 0.42%(c)
Net investment income.............................. 2.12%(c) 2.81% 3.25%(c)
Management and administration fees waived.......... 0.11%(c) 0.13% 0.16%(c)
Transfer Agency Account fees waived................ 0.01%(c) 0.01% --
Expense offsets.................................... 0.00%(c) 0.00% --
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
MUNICIPAL PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
================================================================================
<table>
<caption>
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended February 20, 2007 through
Short Term Income shares (Unaudited) March 31, 2008 March 31, 2007
- ------------------------ --------- -------------- --------------
<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.............................. 0.008 0.027 0.003
Net realized and unrealized gain(loss) on investments -- 0.000 --
--------- --------- ---------
Total from investment operations................... 0.008 0.027 0.003
Less distributions from:
Dividends from net investment income............... (0.008) (0.027) (0.003)
Net realized gain on investments................... -- (0.000) --
--------- --------- ---------
Total Distributions................................ (0.008) (0.027) (0.003)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 0.84%(a) 2.78% 0.29%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 75,276 $ 93,233 $ 57,915
Ratios to average net assets:
Expenses (net of fees waived) (b).................. 0.76%(c) 0.76% 0.76%(c)
Net investment income.............................. 1.64%(c) 2.74% 2.89%(c)
Management and administration fees waived.......... 0.11%(c) 0.13% 0.16%(c)
Distribution fees waived........................... 0.17%(c) 0.17% 0.17%(c)
Expense offsets.................................... 0.00%(c) 0.00% --
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended December 8, 2006 through
Retail shares (Unaudited) March 31, 2008 March 31, 2007
- ------------- --------- -------------- --------------
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.............................. 0.007 0.025 0.008
Net realized and unrealized gain(loss) on investments -- 0.000 --
--------- --------- ---------
Total from investment operations................... 0.007 0.025 0.008
Less distributions from:
Dividends from net investment income............... (0.007) (0.025) (0.008)
Net realized gain on investments................... -- (0.000) --
--------- --------- ---------
Total Distributions................................ (0.007) (0.025) (0.008)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 0.72%(a) 2.54% 0.84%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 136,626 $ 170,909 $ 41,817
Ratios to average net assets:
Expenses (net of fees waived) (b).................. 1.00%(c) 1.00% 1.00%(c)
Net investment income.............................. 1.38%(c) 2.38% 2.65%(c)
Management and administration fees waived.......... 0.11%(c) 0.13% 0.16%(c)
Distribution fees waived........................... 0.13%(c) 0.13% 0.10%(c)
Transfer Agency Account fees waived................ -- -- 0.03%(c)
Expense offsets.................................... 0.00%(c) 0.00% --
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
- --------------------------------------------------------------------------------
================================================================================
<table>
<caption>
Six Months Ended Commencement of Operations
September 30, 2008 Year Ended November 2, 2006 through
Advantage shares (Unaudited) March 31, 2008 March 31, 2007
- ---------------- --------- -------------- --------------
<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.............................. 0.007 0.025 0.011
Net realized and unrealized gain(loss) on investments -- 0.000 --
--------- --------- ---------
Total from investment operations................... 0.007 0.025 0.011
Less distributions from:
Dividends from net investment income............... (0.007) (0.025) (0.011)
Net realized gain on investments................... -- (0.000) --
--------- --------- ---------
Total Distributions................................ (0.007) (0.025) (0.011)
--------- --------- ---------
Net asset value, end of period......................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return........................................... 0.71%(a) 2.52% 1.09%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)...................... $ 188,099 $ 221,862 $ 136,546
Ratios to average net assets:
Expenses (net of fees waived) (b).................. 1.02%(c) 1.02% 1.02%(c)
Net investment income.............................. 1.39%(c) 2.41% 2.65%(c)
Management and administration fees waived.......... 0.11%(c) 0.13% 0.16%(c)
Distribution fees waived........................... 0.16%(c) 0.16% 0.16%(c)
Expenseoffsets..................................... 0.00%(c) 0.00% --
<fn>
(a) Unannualized
(b) Includes expense offsets, if applicable.
(c) Annualized
</fn>
</table>
The accompanying notes are an integral part of these financial statements.
<page>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE 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 "1940 Act").
The Fund is comprised of four managed portfolios of money market instruments:
the Money Market Portfolio, the U.S. Treasury Portfolio, the U.S. Government
Portfolio and the Municipal Portfolio (each referred to as "Portfolio"). The
investment objective of the Money Market, U.S. Treasury and U.S. Government
Portfolios is to seek as high a level of current income to the extent consistent
with the preservation of capital and the maintenance of liquidity. The
investment objective of the Municipal Portfolio is to seek as high a level of
tax-exempt current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. Each portfolio has five core classes
of stock authorized: Institutional, Institutional Service, Investor, Short Term
Income, and Retail shares. In addition to the core classes the Money Market
Portfolio includes the Pinnacle, Advantage and Xpress shares, the U.S. Treasury
Portfolio includes the Pinnacle shares, the U.S. Government and Municipal
Portfolios include the Advantage shares. Each Portfolio may allocate among its
classes certain expenses, to the extent allowable to specific classes, including
shareholder servicing fees, distribution fees, transfer agent fees, government
registration fees, certain printing and postage costs, and administrative and
legal expenses. For the period ended September 30, 2008 and the year ended March
31, 2008 class specific expenses of the Fund were limited to shareholder
servicing fees, distribution 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. Commencement of operations for each of the share classes began as
follows:
<table>
<caption>
Money Market U.S. Treasury U.S. Government Municipal
Share classes Portfolio Portfolio Portfolio Portfolio
------------- --------- --------- --------- ---------
<s> <c> <c> <c> <c>
Institutional shares............ May 13, 1994 November 18, 1996 October 30, 2006 October 30, 2006
Institutional Service shares.... April 3, 1995 November 29, 1995 March 19, 2007 March 19, 2007
Investor shares................. November 28, 2006 February 21, 2007 Not Active ("N/A") N/A
Short Term Income shares........ February 12, 2007 November 2, 2006 N/A February 20, 2007
Retail shares................... November 28, 2006 December 12, 2006 December 12, 2006 December 8, 2006
Pinnacle shares................. July 29, 1999 July 29, 1999 Not Offered ("N/O") N/O
Advantage shares................ November 1, 2006 N/O November 2, 2006 November 2, 2006
Xpress shares................... June 20, 2007 N/O N/O N/O
</table>
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 recorded on the basis of amortized cost, which approximates
value as permitted by Rule 2a-7 under the 1940 Act. Under this 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) Securities Transactions and Investment Income -
Securities transactions are recorded on a trade date basis. Interest income,
adjusted for accretion of discount and amortization of premium, is recorded on
the accrual basis from settlement date. Realized gains and losses on sales are
computed on the basis of specific identification of the securities sold.
c) Repurchase Agreements -
The Money Market, U.S. Treasury and U.S. Government Portfolios may enter into
repurchase agreements. Eligible securities for collateral are securities
consistent with the Fund's investment objectives and may consist of U.S.
Government Securities and/or U.S. Government Sponsored Agency Securities. 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 of a repurchase
agreement fails to repurchase the security in accordance with the terms of the
agreement, the Funds might incur expenses in enforcing their rights, and could
experience losses, including a decline in the value of the collateral and loss
of income.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies (Continued)
d) 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 substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required in the financial
statements.
The Fund has adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 requires Management
to determine whether a tax position of the Fund is more likely than not to be
sustained upon examination by the applicable taxing authority, including
resolution of any related appeals or litigation processes, based on the
technical merits of the position. The tax benefit to be recognized is measured
as the largest amount of benefit that is greater than fifty percent likely of
being realized upon ultimate settlement which could result in the Fund recording
a tax liability that would reduce net assets.
e) 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.
f) Accounting 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.
g) Representations and Indemnifications -
In the normal course of business the Fund enters into contracts that contain a
variety of representations and warranties which provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.
h) Other Risks -
Investments in obligations issued by agencies and instrumentalities of the U.S.
Government may vary in the level of support they receive from the government.
The government may choose not to provide financial support to government
sponsored agencies or instrumentalities if it is not legally obligated to do so.
In this case, if the issuer defaulted, the underlying fund holding securities of
such issuer might not be able to recover its investment from the U.S.
Government.
The effect on performance from investing in securities issued or guaranteed by
companies in the banking and financial services industries will depend to a
greater extent on the overall condition of those industries. Financial services
companies are highly dependent on the supply of short-term financing. The value
of securities of issuers in the banking and financial services industry can be
sensitive to changes in government regulation and interest rates and to economic
downturns in the United States and abroad.
The value of, payment of interest on, repayment of principal for and the ability
to sell a municipal security may be affected by constitutional amendments,
legislative enactments, executive orders, administrative regulations, voter
initiatives and the economics of the regions in which the issuers are located.
Since, many municipal securities are issued to finance similar projects,
especially those relating to education, health care, transportation and
utilities, conditions in those sectors can affect the overall municipal
securities market and a Fund's investment in municipal securities.
There is some risk that a portion or all of the interest received from certain
tax-free municipal securities could become taxable as a result of determinations
by the Internal Revenue Service.
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.
<page>
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
Pursuant to a Sub-Accounting Agreement, Reich & Tang Services, Inc., (the "TA"),
an affiliate of the Manager, performs or sub-contracts or employs others to
perform certain sub-accounting services for the Advantage and Xpress
shareholders. For its services under the Sub-Accounting Agreement, the TA
receives from the Fund a fee up to 0.10% per annum of the average daily net
assets of the Advantage shares and Xpress shares.
The Fund and Reich & Tang Distributors, Inc. (the "Distributor"), an affiliate
of the Manager, have entered into a Shareholder Servicing Agreement and a
Distribution Agreement. For its services under the Shareholder Servicing and
Distribution Agreements, the Distributor receives from each Portfolio a fee,
accrued daily and paid monthly, at an annual rate of each Class's average daily
net assets as follows:
<table>
<caption>
Shareholder Servicing Fees Distribution Fees
-------------------------- -----------------
<s> <c> <c>
Institutional Shares..................................... -0- -0-
Institutional Service Shares............................. .25% -0-
Investor Shares.......................................... .25% .20%
Short Term Income Shares................................. .25% .45%
Retail Shares............................................ .25% .65%
Pinnacle Shares.......................................... -0- -0-
Advantage Shares......................................... .25% .75%
Xpress Shares............................................ .25% .75%
</table>
As of September 30, 2008, the amounts Payable to affiliates included in the
Statement of Assets and Liabilities are broken down as follows:
<table>
<caption>
Money Market U.S. Treasury U.S. Government Municipal
Fee Type/ Affiliate Portfolio Portfolio Portfolio Portfolio
------------------- ---------- --------- --------- ---------
<s> <c> <c> <c> <c>
Investment management fees/Manager....................... $543,799 $136,554 $113,549 $23,671
Administration fees/Manager.............................. -0- 34,138 -0- -0-
Shareholder servicing fees/Distributor................... 307,371 45,977 85,335 28,050
Distribution fees/Distributor............................ 609,681 22,539 198,048 56,865
Sub-Accounting Fees/TA................................... 4,469 -0- -0- -0-
Transfer agency fees/TA.................................. 92,866 33,970 6,634 10,183
---------- --------- -------- --------
Total.................................................... $1,558,186 $273,178 $403,566 $118,769
========== ========= ======== ========
</table>
<table>
<caption>
For the period ended September 30, 2008, the following fees were voluntarily
waived by the Manager, Distributor and TA:
Money Market U.S. Treasury U.S. Government Municipal
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<s> <c> <c> <c> <c>
Investment management fees............................... $-0- $-0- $-0- $128,316
Administration fees...................................... 1,541,891 138,593 261,613 116,650
Shareholder servicing fees - Institutional Service shares 20,760 -0- -0- -0-
Distribution fees - Investor shares...................... 62,287 68,641 N/A N/A
Distribution fees - Short Term Income shares............. 14,037 34,227 N/A 76,688
Distribution fees - Retail shares........................ 1,012,601 12,641 95,692 111,309
Distribution fees - Advantage shares..................... 2,212,979 N/A 719,125 160,868
Transfer agency fees - Institutional shares.............. 27,310 -0- 1 -0-
Transfer agency fees - Institutional Service shares...... -0- -0- -0- 9
Transfer agency fees - Pinnacle shares................... 9,146 -0- N/A N/A
---------- --------- -------- --------
Total.................................................... $4,901,011 $254,102 $1,076,431 $593,840
========== ========= ======== ========
</table>
The Manager, Distributor and TA have no right to recoup prior fee waivers.
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
Directors of the Fund not affiliated with the Manager are paid a fee that is
allocated among multiple funds, as defined below. Each Independent Director
receives an annual retainer of $60,000 and a fee of $3,000 for each Board of
Directors meeting attended. Each Independent Director also receives a fee up to
$1,500 at the discretion of the Lead Director for telephonic Board meetings and
committee meetings that are not held on the same day as a Board Meeting. In
addition, the Lead Independent Director receives an additional annual fee of
$13,800, payable quarterly and the Audit Committee Chairman and Compliance
Oversight Committee Chairman will each receive an additional annual fee of
$9,200, payable quarterly. Each Independent Director will also be reimbursed for
all out-of-pocket expenses relating to attendance at such meetings. The fees
noted above are to be allocated at the discretion of the Manager among the Fund,
the California Daily Tax Free Income Fund, Inc., the Connecticut Daily Tax Free
Income Fund, Inc., the Florida Daily Municipal Income Fund, and the New Jersey
Daily Municipal Income Fund, Inc.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees pursuant to the Transfer Agency
Agreement between the TA and the Portfolios. The TA, an affiliate of the
Manager, as transfer agent and dividend agent, receives a fee of $17.40 per
account per year or a minimum of (i) 0.05% of the monthly average net assets of
the Investor, Short Term Income, and Retail Shares of the Fund or (ii) 0.02% of
the monthly average net assets of the Institutional Service, Institutional and
Pinnacle shares of the Fund. The Advantage and Xpress shares do not participate
in the Transfer Agency Agreement. For the period ended September 30, 2008 these
fees after waivers amounted to:
<table>
<caption>
Money Market U.S. Treasury U.S. Government Municipal
Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- ---------
Amount % Amount % Amount % Amount %
------ - ------ - ------- - ------ -
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Institutional shares................. $37,854 0.01% $53,699 0.02% $0 $391 0.02%
Institutional Service shares......... 41,323 0.02% 29,350 0.02% 23 0.02% 5 *
Investor shares...................... 77,649 0.05% 66,951 0.05% N/A N/A
Short Term Income shares............. 91,190 * 45,929 0.05% N/A 22,510 0.05%
Retail shares........................ 360,635 0.05% 4,475 0.05% 36,710 0.05% 42,674 0.05%
Pinnacle shares...................... 8,471 0.01% 8,252 0.02% N/O N/O
-------- -------- -------- -------
Total............................. $617,122 $208,656 $ 36,733 $65,580
======== ======== ======== =======
<fn>
* Per account
</fn>
</table>
The Portfolios maintain a cash balance with the TA to facilitate the timely
processing of redemptions resulting from checks written by the underlying
investors in the Fund on a daily basis. Interest earned on the cash balance is
retained by the TA to offset the costs incurred by the TA in providing check
writing and ACH capabilities to the Portfolio's shareholders. On September 30,
2008 these cash balances were:
<table>
Money Market U.S. Treasury U.S. Government Municipal
Portfolio Portfolio Portfolio Portfolio
---------- ---------- ---------- ---------
<s> <c> <c> <c>
$1,140,710 $ 317,966 $ 281,213 $90,088
========== ========= ========== =========
</table>
The Delafield Fund, Inc., an affiliate invests its excess cash under the Rule
12d-1 of the 1940 Act into the Daily Income Fund - Money Market Portfolio -
Institutional Class Shares. For the period ended September 30, 2008, The
Delafield Fund has invested an average of $109,245,732 and as of September 30,
2008, has an investment of $119,096,000. Natixis Global Asset Management, LP
("NGAM LP"), the parent company of the Manager, invests a portion of its excess
cash balances in Daily Income Fund - Money Market Portfolio - Institutional
shares. For the period ended September 30, 2008, NGAM LP has invested an average
of $378,860,782 and as of September 30, 2008 has an investment of $151,118,391.
Also, on a daily basis, the Manager, Distributor, TA and affiliated investment
entities invest their excess cash in Daily Income Fund which is considered an
immaterial amount.
As of September 30, 2008, certain Trustees and Officers entities had investments
in the Funds representing less than 1% of each Fund.
<page>
- --------------------------------------------------------------------------------
================================================================================
3. Securities Transactions with Affiliated Funds
The Portfolios are permitted to purchase or sell securities from or to certain
other Reich & Tang Funds under specified conditions outlined in procedures
adopted by the Board of Trustees of the Fund. The procedures have been designed
to ensure that any purchase or sale of securities of the Fund from or to another
fund or portfolio that is or could be considered an affiliate by virtue of
having a common investment advisor (or affiliated investment advisors), common
Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act.
Further, as defined under the procedures, each transaction is effected at the
current market price. For the period ended September 30, 2008, the Portfolios
engaged in purchases and sales with affiliates, none of which resulted in any
gains or losses, which amounted to:
<table>
<caption>
Money Market U.S. Treasury U.S. Government Municipal
Transaction Type Portfolio Portfolio Portfolio Portfolio
---------------- ---------- ---------- ---------- ---------
<s> <c> <c> <c> <c>
Purchases................................... $270,000,000 $-0- $-0- $141,905,000
Sales....................................... -0- -0- -0- 152,375,000
Gains/(losses).............................. -0- -0- -0- -0-
</table>
4. Compensating Balance Arrangement and Other Transactions
The Portfolios are permitted to temporarily overdraft or leave balances in their
accounts with The Bank of New York Mellon (the "Bank"). To compensate the Bank
for such activity the Portfolios may, in the case of the Municipal Portfolio,
leave funds or overdraft funds as a compensating balance in the account so the
Bank or the Funds can be compensated for use of funds based upon the agreed upon
formula. At the end of each quarter the Portfolio will be charged for average
overdrafts or receive an earnings credit for average positive balances computed
at the agreed upon rate on the last day of the period.
For the Money Market, U.S. Treasury and U.S. Government Portfolios the Bank or
the Funds will be compensated by accumulating the daily overdraft charges and/or
earnings credits throughout the month, respectively.
Earnings credit will be offset against the Fund's safekeeping fees which are
included as part of the custodian expenses.
For the period ended September 30, 2008, expense offsets for each Portfolio was
as follows:
<table>
<caption>
Money Market U.S. Treasury U.S. Government Municipal
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<s> <c> <c> <c> <c>
Custodian expenses $11,351 $ 1,717 $-0- $410
========= ======== ==== ====
</table>
5. Transactions in Shares of Beneficial Interest
At September 30, 2008, an unlimited number of shares of beneficial interest
($0.001 par value) were authorized. Transactions were as follows:
<table>
<caption>
Money Market Portfolio Six Months Ended Year Ended
September 30, 2008 March 31, 2008
(Unaudited) --------------
-----------
<s> <c> <c> <c> <c>
Institutional Shares Net Assets Shares Net Assets Shares
- -------------------- --------------- --------------- ---------------- --------------
Sold...................................... $15,981,022,883 15,981,022,883 $14,990,645,052 14,990,645,052
Issued on reinvestment of dividends....... 9,290,954 9,290,954 29,569,001 29,569,001
Redeemed.................................. (16,305,093,749) (16,305,093,749) (14,908,254,816) (14,908,254,816)
--------------- -------------- --------------- --------------
Net increase (decrease)................... $ (314,779,912) (314,779,912) $ 111,959,237 111,959,237
=============== ============== =============== ==============
Institutional Service Shares Net Assets Shares Net Assets Shares
- ---------------------------- --------------- --------------- ---------------- --------------
Sold...................................... $ 1,892,062,810 1,892,062,810 $1,810,227,955 1,810,227,955
Issued on reinvestment of dividends....... 5,328,588 5,328,588 12,054,054 12,054,054
Redeemed.................................. (1,922,688,192) (1,922,688,192) (1,829,537,807) (1,829,537,807)
--------------- -------------- --------------- --------------
Net increase (decrease)................... $ (25,296,794) (25,296,794) $ (7,255,798) (7,255,798)
=============== ============== =============== ==============
Investor Shares Net Assets Shares Net Assets Shares
- ---------------------------- --------------- --------------- ---------------- --------------
Sold...................................... $ 635,035,994 635,035,994 $ 895,721,451 895,721,451
Issued on reinvestment of dividends....... 3,711,114 3,711,114 9,881,325 9,881,325
Redeemed.................................. (658,169,585) (658,169,585) (878,345,327) (878,345,327)
Shares issued with merger................. -0- -0- 137,343,403 137,343,403
--------------- -------------- --------------- --------------
Net increase (decrease)................... $ (19,422,477) (19,422,477) $ 164,600,852 164,600,852
=============== ============== =============== ==============
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
5. Transactions in Shares of Beneficial Interest (Continued)
<table>
<caption>
Money Market Portfolio Six Months Ended
September 30, 2008 Year Ended
(Unaudited) March 31, 2008
---------- ---------------
Short Term Income Shares Net Assets Shares Net Assets Shares
- ------------------------ --------------- -------------- -------------- --------------
<s> <c> <c> <c> <c>
Sold...................................... $ 735,392,221 735,392,221 $1,927,769,280 1,927,769,280
Issued on reinvestment of dividends....... 2,785,585 2,785,585 8,493,927 8,493,927
Redeemed.................................. (805,188,507) (805,188,507) (1,736,593,469) (1,736,593,469)
Shares issued with merger................. -0- -0- 40,741,544 40,741,544
--------------- -------------- -------------- -------------
Net increase (decrease)................... $ (67,010,701) (67,010,701) $ 240,411,282 240,411,282
=============== ============== ============== =============
Retail Shares Net Assets Shares Net Assets Shares
- ------------- --------------- -------------- -------------- -------------
Sold...................................... $ 1,811,273,527 1,811,273,527 $4,656,278,890 4,656,278,890
Issued on reinvestment of dividends....... 14,756,022 14,756,022 52,018,793 52,018,793
Redeemed.................................. (1,895,575,430) (1,895,575,430) (4,203,101,571) (4,203,101,571)
Shares issued with merger................. -0- -0- 36,753,053 36,756,343
--------------- -------------- -------------- -------------
Net increase (decrease).................. $ (69,545,881) (69,545,881) $ 541,949,165 541,952,455
=============== ============== ============== =============
Pinnacle Shares Net Assets Shares Net Assets Shares
- --------------- --------------- -------------- -------------- -------------
Sold...................................... $ 152,977,006 152,977,006 $ 206,875,371 206,875,371
Issued on reinvestment of dividends....... 2,497,293 2,497,293 8,159,098 8,159,098
Redeemed.................................. (142,969,426) (142,969,426) (207,849,882) (207,849,882)
--------------- -------------- -------------- -------------
Net increase (decrease)................... $ 12,504,873 12,504,873 $ 7,184,587 7,184,587
=============== ============== ============== =============
Advantage Shares Net Assets Shares Net Assets Shares
- ---------------- --------------- -------------- -------------- -------------
Sold...................................... $ 770,015,274 770,015,274 $4,908,390,896 4,908,390,896
Issued on reinvestment of dividends....... 26,489,829 26,489,829 135,201,857 135,201,857
Redeemed.................................. (2,289,478,533) (2,289,478,533) (4,705,503,694) (4,705,503,694)
--------------- -------------- -------------- -------------
Net increase (decrease)................... $(1,492,973,430) (1,492,973,430) $ 338,089,059 338,089,059
=============== ============== ============== =============
</table>
<table>
<caption>
Commencement of Operation
June 20, 2007 through
March 31, 2008
--------------
Xpress Shares Net Assets Shares Net Assets Shares
- ------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ 242,279,462 242,279,462 $2,717,706,062 2,717,706,062
Issued on reinvestment of dividends....... 2,449,196 2,449,196 31,077,996 31,077,996
Redeemed.................................. (237,391,530) (237,391,530) (2,476,571,187) (2,476,571,187)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 7,337,128 7,337,128 $ 272,212,871 272,212,871
=============== ============== ============== ==============
</table>
<table>
<caption>
U.S. Treasury Portfolio Six Months Ended
September 30, 2008 Year Ended
(Unaudited) March 31, 2008
Institutional Shares Net Assets Shares Net Assets Shares
- -------------------- --------------- ------------- -------------- --------------
<s> <c> <c> <c> <c>
Sold...................................... $ 2,184,310,589 2,184,310,589 $4,536,481,973 4,536,481,973
Issued on reinvestment of dividends....... 4,531,656 4,531,656 27,132,074 27,132,074
Redeemed.................................. (2,085,681,619) (2,085,681,619) (4,609,122,550) (4,609,122,550)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 103,160,626 103,160,626 $ (45,508,503) (45,508,503)
=============== ============== ============== ==============
</table>
<page>
- --------------------------------------------------------------------------------
================================================================================
5. Transactions in Shares of Beneficial Interest (Continued)
<table>
<caption>
Six Months Ended
U.S. Treasury Portfolio September 30, 2008 Year Ended
(Unaudited) March 31, 2008
----------- ---------------
Institutional Service Shares Net Assets Shares Net Assets Shares
- --------------------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ 732,017,644 732,017,644 $1,379,265,207 1,379,265,207
Issued on reinvestment of dividends....... 1,610,791 1,610,791 9,245,471 9,245,471
Redeemed.................................. (820,149,942) (820,149,942) (1,306,263,009) (1,306,263,009)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (86,521,507) (82,521,507) $ 82,247,669 82,247,669
=============== ============== ============== ==============
Investor Shares Net Assets Shares Net Assets Shares
- --------------- --------------- -------------- -------------- -------------
Sold...................................... $ 669,981,425 669,981,425 $ 915,435,582 915,435,582
Issued on reinvestment of dividends....... 1,721,042 1,721,042 7,365,733 7,365,733
Redeemed.................................. (675,952,497) (675,952,497) (840,690,743) (840,690,743)
Shares issued with merger................. -0- -0- 53,257,284 53,257,284
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (4,250,030) (4,250,030) $ 135,367,856 135,367,856
=============== ============== ============== ==============
Short Term Income Shares Net Assets Shares Net Assets Shares
- ------------------------ --------------- -------------- -------------- -------------
Sold...................................... $ 367,538,666 367,538,666 $ 825,189,251 825,189,251
Issued on reinvestment of dividends....... 927,576 927,576 4,502,404 4,502,404
Redeemed.................................. (368,639,302) (368,639,302) (693,274,372) (693,274,372)
Shares issued with merger................. -0- -0- 15,759,403 15,759,403
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (173,060) (173,060) $ 152,176,686 152,176,686
=============== ============== ============== ==============
Retail Shares Net Assets Shares Net Assets Shares
- -------------- --------------- -------------- -------------- -------------
Sold...................................... $ 124,019,023 124,019,023 $ 71,335,591 71,335,591
Issued on reinvestment of dividends....... 83,274 83,274 58,708 58,708
Redeemed.................................. (128,402,087) (128,402,087) (50,789,515) (50,789,515)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (4,299,790) (4,299,790) $ 20,604,784 20,604,784
=============== ============== ============== ==============
Pinnacle Shares Net Assets Shares Net Assets Shares
- --------------- --------------- -------------- -------------- -------------
Sold...................................... $ 66,480,138 66,480,138 $ 98,444,058 98,444,058
Issued on reinvestment of dividends....... 691,435 691,435 2,191,008 2,191,008
Redeemed.................................. (38,495,369) (38,495,369) (69,631,426) (69,631,426)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 28,676,204 28,676,204 $ 31,003,640 31,003,640
=============== ============== ============== ==============
</table>
<table>
<caption>
U.S. Government Portfolio
Six Months Ended Year Ended
September 30, 2008 March 31, 2008
------------------ --------------
Institutional Shares (a) Net Assets Shares Net Assets Shares
- ----------------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ -0- -0- $ 10,429 10,429
Issued on reinvestment of dividends....... 105 105 473 473
Redeemed.................................. (-0-) (-0-) (10,429) (10,429)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 105 105 $ 473 473
=============== ============== ============== ==============
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
5. Transactions in Shares of Beneficial Interest (Continued)
<table>
<caption>
U.S. Government Portfolio
Six Months Ended Year Ended
September 30, 2008 March 31, 2008
------------------ ---------------
Institutional Service Shares Net Assets Shares Net Assets Shares
- ---------------------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ 1,316,249 1,316,249 $ 3,610,769 3,610,769
Issued on reinvestment of dividends....... 2,922 2,922 9,972 9,972
Redeemed.................................. (1,481,798) (1,481,798) (3,295,012) (3,295,012)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (162,627) (162,627) $ 325,729 325,729
=============== ============== ============== ==============
Retail Shares Net Assets Shares Net Assets Shares
- ------------- --------------- -------------- -------------- -------------
Sold...................................... $ 658,877,651 658,877,651 $ 960,561,944 960,561,944
Issued on reinvestment of dividends....... 922,643 922,643 3,731,782 3,731,782
Redeemed.................................. (620,128,769) (620,128,769) (918,089,313) (918,089,313)
Shares issued with merger................. -0- -0- 56,013,618 56,026,352
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 39,671,525 39,671,525 $ 102,218,031 102,230,765
=============== ============== ============== ==============
Advantage Shares Net Assets Shares Net Assets Shares
- --------------- --------------- -------------- -------------- -------------
Sold...................................... $ 997,648,078 997,648,078 $1,006,741,134 1,006,741,134
Issued on reinvestment of dividends....... 5,346,527 5,346,527 11,591,409 11,591,409
Redeemed.................................. (563,407,630) (563,407,630) (549,727,342) (549,727,342)
--------------- -------------- -------------- --------------
Net increase (decreases) ................. $ 439,586,975 439,586,975 $ 468,605,201 468,605,201
=============== ============== ============== ==============
</table>
<table>
<caption>
Municipal Portfolio
Six Months Ended Year Ended
September 30, 2008 March 31, 2008
------------------ ---------------
Institutional Shares Net Assets Shares Net Assets Shares
- -------------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ 164,442 164,442 $ 10,521,314 10,521,314
Issued on reinvestment of dividends....... 39,170 39,170 44,000 44,000
Redeemed.................................. (102,692) (102,692) (6,718,083) (6,718,083)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 100,920 100,920 $ 3,847,231 3,847,231
=============== ============== ============== ==============
Institutional Service Shares (a) Net Assets Shares Net Assets Shares
- ------------------------------- --------------- -------------- -------------- -------------
Sold...................................... $ 198,165 198,165 $ 110,288 110,288
Issued on reinvestment of dividends....... 1,042 1,042 321 321
Redeemed.................................. (11,338) (11,338) (10,288) (10,288)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ 187,869 187,869 $ 100,321 100,321
=============== ============== ============== ==============
Short Term Income Shares Net Assets Shares Net Assets Shares
- ------------------------ --------------- -------------- -------------- -------------
Sold...................................... $ 252,152,272 252,152,272 $1,121,360,019 1,121,360,019
Issued on reinvestment of dividends....... 619,202 619,202 2,765,057 2,765,057
Redeemed.................................. (270,728,373) (270,728,373) (1,129,299,109) (1,129,299,109)
Shares issued with merger................. -0- -0- 40,438,840 40,521,480
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (17,956,899) (17,956,899) $ 35,264,807 35,347,447
=============== ============== ============== ==============
</table>
<page>
- --------------------------------------------------------------------------------
================================================================================
5. Transactions in Shares of Beneficial Interest (Continued)
<table>
<caption>
Municipal Portfolio
Six Months Ended Year Ended
September 30, 2008 March 31, 2008
------------------ ---------------
Retail Shares Net Assets Shares Net Assets Shares
- ------------- --------------- -------------- -------------- -------------
<s> <c> <c> <c> <c>
Sold...................................... $ 388,723,993 388,723,993 $ 917,892,821 917,892,821
Issued on reinvestment of dividends....... 1,013,052 1,013,052 3,335,826 3,335,826
Redeemed.................................. (424,022,516) (424,022,516) (847,806,610) (847,806,610)
Shares issued with merger................. -0- -0- 55,616,021 55,725,216
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (34,285,471) (34,285,471) $ 129,038,058 129,147,253
=============== ============== ============== ==============
Advantage Shares Net Assets Shares Net Assets Shares
- ---------------- --------------- -------------- -------------- -------------
Sold...................................... $ 235,623,317 235,623,317 $ 697,837,046 697,837,046
Issued on reinvestment of dividends....... 1,167,223 1,167,223 4,230,809 4,230,809
Redeemed.................................. (270,552,171) (270,552,172) (616,680,021) (616,680,021)
--------------- -------------- -------------- --------------
Net increase (decrease)................... $ (33,761,631) (33,761,631) $ 85,387,834 85,387,834
=============== ============== ============== ==============
<fn>
(a)On March 19, 2007 Reich & Tang Asset Management, LLC invested $10,000 in the Institutional class of the U.S.
Government Portfolio and the Institutional Service class the Municipal Portfolio. The amounts are equivalent to
less than 1% of total net assets of each Portfolio.
</fn>
</table>
6. Tax Information
The amount and character of income and gains to be distributed are determined in
accordance with U.S. income tax regulations, which may differ from generally
accepted accounting principles. Reclassifications are made to each Portfolio's
capital accounts to reflect income and gains available for distribution (or
available capital loss carryforwards) under U.S. income tax regulations. The tax
character of distributions paid during the year and the tax components of net
assets will be reported at the Fund's fiscal year end.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may effect the amount
of capital loss carryforward available for the Portfolios to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the result of future
transactions.
At March 31, 2008, the Fund had capital loss carryforward available for Federal
income tax purposes as follows:
<table>
<caption>
Capital Loss Expiration of
Remaining Carryforwards
<s> <c>
Money Market Portfolio $ 233 2016
U.S. Treasury Portfolio -0- N/A
U.S. Government Portfolio 12,734 2014
54,070 2016
-------
Total U.S. Government Portfolio 66,804
Municipal Portfolio 1,309 2010
2,234 2014
6,958 2015
-------
Total Municipal Portfolio 10,501
</table>
<page>
- --------------------------------------------------------------------------------
DAILY INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
7. Fair Valuation Measurements
The Fund adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157") on April 1,
2008. FAS 157 defines fair value as the price that the Fund would receive to
sell an asset or pay to transfer a liability in an orderly transaction between
market participants at the measurement date. FAS 157 establishes a framework for
measuring fair value and three level hierarchy for fair value measurements based
on the transparency of inputs to the valuation of an asset or liability. Inputs
may be observable or unobservable and refer broadly to the assumptions that
market participants would use in pricing the asset or liability. Observable
inputs reflect the assumptions market participants would use in pricing the
asset or liability based on market data obtained from sources independent of the
Fund. Unobservable inputs reflect the Fund's own assumptions about the
assumptions that market participants would use in pricing the assets or
liability developed based on the best information available in the
circumstances. The Fund's investment in its entirety is assigned a level based
upon the inputs which are significant to the overall valuation. Various inputs
may be used to determine the value of the fund's investments. These inputs are
summarized in three broad levels:
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 - significant unobservable inputs (including the fund's own assumptions
used to determine the fair value of investments).
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following table summarizes the inputs used to value the Money Market
Portfolio's net assets as of September 30, 2008:
<table>
<caption>
Valuation Inputs Money Market Portfolio U.S. Treasury Portfolio U.S. Government Portfolio Municipal Portfolio
- ---------------- ---------------------- ----------------------- ------------------------- -------------------
<s> <c> <c> <c> <c>
Level 1 - Quoted Prices $ -0- $ -0- $ -0- $ -0-
Level 2 - Other Significant
Observable Inputs 4,987,107,616 1,413,679,866 1,266,757,282 388,430,833
Level 3 - Significant
Unobservable Inputs -0- -0- -0- -0-
----------------- ------------------ ------------------ -----------------
Total $ 4,987,107,616 $ 1,413,679,866 $ 1,266,757,282 $ 388,430,833
================= ================== ================== =================
</table>
8. Subsequent Event
On October 2, 2008, the Board of Trustees of the Fund approved the participation
by the Fund in the U.S. Treasury Department's Temporary Guarantee Program for
Money Market Funds through December 18, 2008 (the "Program"). Under the Program,
if the Fund's market value per share drops below $0.995 on any day while the
Program is in effect, shareholders of record on that date who also held shares
in the Fund on September 19, 2008 may be eligible to receive a payment from the
Treasury upon liquidation of the Fund, provided the Fund is liquidated soon
after the day on which the Fund's market value per share drops below $0.995. The
Program requires the Fund to pay the U.S. Department of Treasury a fee equal to
0.01% based on the number of shares outstanding as of September 19, 2008. This
expense will be borne by the Fund without regard to any expense limitation
currently in effect for the Fund.
Effective October 3, 2008, the Board approved a 0.05% increase in the voluntary
agreement of the Manager and Distributor to cap the Fund's total operating
expenses for certain classes. As a result, going forward, the annualized expense
ratio for such classes will be approximately 0.05% higher than the amount shown
in the Expense Charts and Financial Highlight Tables.
<page>
- --------------------------------------------------------------------------------
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.
<page>
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
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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 Mellon
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 9/08S
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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: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
Item 8: PURCHASES OF EQUITY SECURITIES 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/ Christine Manna
Christine Manna, Secretary
Date: December 4, 2008
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/ Michael P. Lydon
Michael P. Lydon, President
Date: December 4, 2008
By (Signature and Title)*/s/ Joseph Jerkovich
Joseph Jerkovich, Treasurer and Assistant Secretary
Date: December 4, 2008
* Print the name and title of each signing officer under his or her signature.