As filed with the Securities and Exchange Commission on November 2, 2004
Investment Company Act file number 811-2950
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Short Term Income Fund, Inc.
(Exact name of registrant as specified in charter)
600 Fifth Avenue
New York, NY 10020
(Address of principal executive offices) (Zip code)
Rosanne Holtzer
c/o Reich & Tang Asset Management, LLC
600 Fifth Avenue
New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-830-5200
Date of fiscal year end: 08/31
-----
Date of reporting period: 08/31/2004
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Item 1: Report to Stockholders
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SHORT TERM 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. (212) 830-5200
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Dear Shareholder:
We are pleased to present the annual report of Short Term Income Fund, Inc. (the
"Fund") for the year ended August 31, 2004.
The Fund's Money Market Portfolio had 11,546 shareholders and net assets of
$1,127,825,451 as of August 31, 2004. The Government Portfolio had 4,208
shareholders and net assets of $541,146,036 as of August 31, 2004.
Effective May 1, 2004, the Fund's portfolio holdings will be available
periodically on our website at http://www.money-funds.com/portfolioholdings or
toll free at (800) 433-1918. The posting of the schedule of portfolio holdings
will be delayed at least 5 days after the date of the schedule. The Fund may
terminate or modify this policy at any time without further notice to
shareholders.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
/s/Steven W. Duff
Steven W. Duff
President
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SHORT TERM INCOME FUND, INC.
ABOUT YOUR FUND'S EXPENSES
(UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. All mutual funds have operating expenses. As a shareholder of the
fund, you incur ongoing costs, which include costs for portfolio management,
administrative services, and shareholder reports (like this one), among others.
Operating expenses, which are deducted from a fund's gross income, directly
reduce the investment return of the fund.
A fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based
on an investment of $1,000 made at the beginning of the period March 1, 2004
through August 31, 2004 and held for the entire period.
The table below illustrates your fund's costs in two ways:
Actual fund return. This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from the
fund's actual return, and the third column shows the dollar amount that would
have been paid by an investor who started with $1,000 in the fund. You may use
the information here, together with the amount you invested, to estimate the
expenses that you paid over the period.
To do so, 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
given for your fund under the heading "Expenses Paid During Period."
Hypothetical 5% return. This section is intended to help you compare your fund's
costs with those of other mutual funds. It assumes that the fund had a return of
5% per year before expenses, but that the expense ratio is unchanged. In this
case-because the return used is not the fund's actual return-the results do not
apply to your investment. The example is useful in making comparisons because
the Securities and Exchange Commission requires all mutual funds to calculate
expenses based on a 5% return. You can assess your fund's costs by comparing
this hypothetical example with the hypothetical examples that appear in
shareholder reports of other funds.
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Actual Fund Return Beginning Account Ending Account Value Expenses Paid During the Period*
Value 3/1/04 8/31/04
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Money Market Portfolio
Class A $1,000.00 $1,001.80 $4.48
Class B 1,000.00 1,003.10 3.17
First Southwest Shares 1,000.00 1,001.10 5.13
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U.S. Government Portfolio
Class A $1,000.00 $1,001.60 $4.28
Class B 1,000.00 1,002.80 3.00
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Hypothetical 5% Return Beginning Account Ending Account Value
Value 3/1/04 8/31/04 Expenses Paid During the Period*
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Money Market Portfolio
Class A $1,000.00 $1,020.66 $4.52
Class B 1,000.00 1,021.97 3.20
First Southwest Shares 1,000.00 1,020.01 5.18
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U.S. Government Portfolio
Class A $1,000.00 $1,020.86 $4.32
Class B 1,000.00 1,022.15 3.02
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Note that the expenses in the table are meant to highlight and help you compare
ongoing costs only and do not reflect any transactional costs or account
maintenance fees. Your fund does not charge transaction fees, such as purchase
or redemption fees, nor does it carry a "Sales Load". The calculations assume no
shares were bought or sold during the period. Your actual costs may have been
higher or lower, depending on the amount of your investment and the timing of
any purchases or redemptions.
You can find more information about the fund's expenses, including annual
expense ratios for the past five years in the Notes to Financial Statement
section of this report. For additional information on operating expenses and
other shareholder costs, please refer to the appropriate fund prospectus.
* Expenses are equal to the Fund's annualized expense ratios of 0.89%, 0.63%,
and 1.02%, for the Money Market Portfolio Class A, Class B, and First Southwest
shares, respectively and 0.85%, and 0.60% for the U.S. Government Portfolio
Class A and Class B shares, respectively, multiplied by the average account
value over the period (March 1, 2004 through August 31, 2004), multiplied by
184/366 (to reflect the most recent fiscal half-year).
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SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2004
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Asset Backed Commercial Paper (11.95%)
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$ 10,000,000 Apreco Inc. 10/15/04 1.60% $ 9,980,567
10,000,000 ASAP Funding Limited 09/14/04 1.48 9,994,656
10,000,000 ASAP Funding Limited 09/22/04 1.53 9,991,075
25,000,000 Clipper Receivables Corporation 09/01/04 1.58 25,000,000
10,000,000 FCAR Owner Trust 09/15/04 1.29 9,995,022
25,000,000 Fountain Square Commercial Funding 11/23/04 1.68 24,903,743
10,000,000 Greyhawk Funding 11/24/04 1.50 9,965,233
35,000,000 Lockhart Funding L.L.C. 10/14/04 1.59 34,933,947
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135,000,000 Total Asset Backed Commercial Paper 134,764,243
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Commercial Paper (5.32%)
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$ 30,000,000 Lexington Parker Capital 09/01/04 1.10% $ 30,000,000
30,000,000 Societe Generale North America 09/02/04 1.10 29,999,092
- -------------- -------------
60,000,000 Total Commercial Paper 59,999,092
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Domestic Certificate Of Deposit (1.77%)
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$ 20,000,000 Harris Trust & Savings Bank 12/20/04 1.66% $ 20,000,000
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20,000,000 Total Domestic Certificate Of Deposit 20,000,000
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Floating Rate Securities (10.20%)
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$ 30,000,000 Bank of America (a) 01/28/05 1.55% $ 30,000,000
30,000,000 Equitable Life Assurance Society With JP Morgan Chase (b) 03/21/05 1.63 30,000,000
15,000,000 General Electric Capital Corporation
Extendible Monthly Securities (c) 09/16/05 1.68 15,000,000
20,000,000 Mt. Vernon Phenol Plant Partnership with JP Morgan Chase (b)
Guaranteed by General Electric Company 05/19/05 1.62 20,000,000
20,000,000 Royal Bank of Canada (d) 09/13/04 1.07 19,999,822
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115,000,000 Total Floating Rate Securities 114,999,822
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Foreign Commercial Paper (28.46%)
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$ 20,000,000 Alliance & Leicester PLC 10/15/04 1.53% $ 19,962,845
20,000,000 Alliance & Leicester PLC 11/29/04 1.72 19,915,450
15,000,000 Alliance & Leicester PLC 12/29/04 1.13 14,944,467
30,000,000 Banco Bilbao Vizcaya Argentaria S.A. 09/23/04 1.60 29,970,667
25,000,000 Banco Bilbao Vizcaya Argentaria S.A. 09/30/04 1.57 24,968,583
25,000,000 Danske Corporation 11/19/04 1.16 24,936,910
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The accompanying notes are an integral part of these financial statements.
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Foreign Commercial Paper (Continued)
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$ 25,000,000 Depfa Bank PLC 10/08/04 1.51% $ 24,961,458
25,000,000 Depfa Bank PLC 10/08/04 1.52 24,961,201
20,000,000 DNB Norbank 09/21/04 1.50 19,983,333
16,600,000 HBOS Treasury Services 09/10/04 1.26 16,594,813
25,000,000 HBOS Treasury Services 11/16/04 1.65 24,913,444
15,000,000 HBOS Treasury Services 11/18/04 1.66 14,946,375
15,000,000 Northern Rock PLC 09/15/04 1.42 14,991,746
20,000,000 Societe Generale North America 09/01/04 1.41 20,000,000
25,000,000 Yorkshire Building Society 10/07/04 1.53 24,962,000
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321,600,000 Total Foreign Commercial Paper 321,013,292
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Letter Of Credit Commercial Paper (12.27%)
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$ 20,000,000 Banco Bradesco S.A.
LOC Calyon 12/14/04 1.92% $ 19,891,955
20,000,000 Banco Continental de Panama S.A.
LOC Calyon 12/06/04 1.63 19,913,600
22,465,000 Banco Rio de La Plata S.A.
LOC Banco Santander 06/17/05 2.32 22,053,816
40,000,000 Dean Health System Inc.
LOC Marshall & Ilsley 09/09/04 1.43 39,987,289
36,500,000 Vermont EDA - Series A
LOC First Union National Bank 10/05/04 1.55 36,500,000
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138,965,000 Total Letter Of Credit Commercial Paper 138,346,660
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Other Note (1.77%)
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$ 20,000,000 Winston-Salem, NC COPS 12/10/04 1.70% $ 20,000,000
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20,000,000 Total Other Note 20,000,000
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Repurchase Agreement (2.75%)
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$ 31,000,000 Bank of America, purchased on 08/31/04, 1.55%,
due 09/01/04, repurchase proceeds at maturity $31,001,335
(Collateralized by $31,343,188, GNMA, 5.000%,
due 06/16/31, value $31,620,001) 09/01/04 1.55% $ 31,000,000
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31,000,000 Total Repurchase Agreement 31,000,000
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U.S. Government Agency Discount Note (0.89%)
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$ 10,000,000 Federal Home Loan Mortgage Corporation 11/04/04 1.41% $ 9,975,289
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10,000,000 Total U.S. Government Agency Discount Note 9,975,289
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2004
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
U.S. Government Agency Medium Term Notes (2.39%)
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$ 7,000,000 Federal Home Loan Bank 06/08/05 2.02% $ 7,000,000
20,000,000 Federal Home Loan Bank 07/15/05 2.50 20,000,000
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27,000,000 Total U.S. Government Agency Medium Term Notes 27,000,000
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Variable Rate Demand Instruments (17.43%)
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$ 3,080,000 Ali Industries Inc. Project (e)
LOC National City Bank, Northwest 07/01/10 1.66% $ 3,080,000
5,500,000 Allegheny County, PA (Union Electric Steel Corporation) (e)
LOC PNC Bank, N.A. 11/01/27 1.63 5,500,000
1,880,000 ARS Development Project (e)
LOC National City Bank, Northwest 09/01/21 1.66 1,880,000
1,290,000 B & V Land Company, L.L.C. (e)
LOC First Michigan Bank 09/01/27 1.70 1,290,000
1,630,000 Bank of Kentucky Building (e)
LOC Firstar Bank 12/01/19 1.68 1,630,000
3,250,000 Bollman Capital, L.L.C. - Series 1996A (e)
LOC First of American Michigan National Bank 12/15/26 1.66 3,250,000
620,000 Burgess & Niple Limited (e)
LOC National City Bank, Northwest 09/01/14 1.66 620,000
1,150,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project) (e)
LOC US Bank, N.A. 09/01/08 1.71 1,150,000
622,000 Capital One Funding Corporation Floating Rate
Option Notes - Series 1997D (e)
LOC Bank One 07/02/18 1.64 622,000
10,000,000 Columbus, GA Development Authority (Foundry Project) (e)
LOC Bank of Nova Scotia 12/01/19 1.63 10,000,000
1,305,000 Community Limited Care (e)
LOC Fifth Third Bank 12/01/12 1.70 1,305,000
1,670,000 Crownover Lumber Company (e)
LOC Fifth Third Bank 09/01/08 1.78 1,670,000
2,000,000 Derby Fabricating L.L.C. (e)
LOC Fifth Third Bank 06/01/24 1.63 2,000,000
4,030,000 Dickenson Press, Inc. - Series 1997 (e)
LOC First Michigan Bank 01/01/27 1.70 4,030,000
900,000 Dormont Manufacturing Company, Inc. (e)
LOC PNC Bank, N.A. 03/01/08 1.60 900,000
8,700,000 DP Fox Capital, L.L.C. (e)
LOC Michigan National Bank 09/01/29 1.65 8,700,000
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The accompanying notes are an integral part of these financial statements.
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (Continued)
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$ 1,326,000 Erie Funding I - Series 1989 (e)
Guaranteed by Federal Home Loan Bank 11/01/16 1.66% $ 1,326,000
3,030,000 Frank J. Catanzaro Sons and Daughters (e)
LOC Firstar Bank 01/01/15 1.63 3,030,000
1,450,000 Gesmundo & Associates, Inc. (e)
LOC National City Bank, Northwest 08/15/27 1.63 1,450,000
1,275,000 Graves Lumber, Inc. Project (e)
Guaranteed By Federal Home Loan Bank 11/01/10 1.66 1,275,000
1,305,000 HCS & DJS Leasing (e)
LOC Fifth Third Bank 06/01/34 1.63 1,305,000
3,925,000 Hunter's Square, Inc. Project - Series 1998 (e)
LOC National City Bank Of Michigan/Illinois 10/01/16 1.66 3,925,000
360,000 Jake Sweeney Automotive, Inc. (e)
LOC Firstar Bank 04/01/10 1.63 360,000
1,335,000 KBL Capital Fund, Inc. (e)
LOC Old Kent Bank & Trust Co. 07/01/15 1.60 1,335,000
1,340,000 Labelle Capital Funding - Series A (e)
LOC National City Bank, Northwest 09/01/26 1.65 1,340,000
1,200,000 Lam Funding, L.L.C. (e)
LOC National City Bank, Northwest 12/15/27 1.63 1,200,000
8,835,000 Lexington Financial Health Care RB - Series 2001 (e)
LOC LaSalle National Bank 02/01/26 1.70 8,835,000
1,000,000 Lincoln Parkway L.L.C. (e)
LOC Fifth Third Bank 06/01/44 1.63 1,000,000
2,670,000 LKWP Investments, L.L.C. (e)
LOC First Michigan Bank 03/01/27 1.70 2,670,000
865,000 Machining Center (e)
LOC Comerica Bank 10/01/27 1.70 865,000
975,000 Madison, WI Community Development Authority RDA
(Block 90 Project) (e)
LOC US Bank, N.A. 10/01/08 1.70 975,000
3,575,000 Maryland Health & Higher Educational Facilities Authority
(Glen Meadows Retirement Community) (e)
LOC First Union National Bank 07/01/29 1.60 3,575,000
400,000 Maximum Principle Amount Limited Partnership
(Riverview Medical Office Building) (e)
LOC National City Bank 11/01/17 1.66 400,000
1,265,000 Miami Valley Realty Associates (e)
LOC Key Bank, N.A. 06/01/12 1.70 1,265,000
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2004
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (Continued)
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$ 3,175,000 Mobile Airport (e)
LOC Regions Bank 10/01/24 1.60% $ 3,175,000
14,290,000 Mobile, Al Springhill Medical Clinic Board RB
(Springhill Medical Complex) (e)
LOC Amsouth Bank, N.A. 06/01/20 1.65 14,290,000
940,000 Mount Carmel East Professional Office Building - Series 1994 (e)
LOC National City Bank, Northwest 01/01/14 1.66 940,000
1,275,000 Mount Carmel Partnership Project (e)
LOC National City Bank, Northwest 08/01/14 1.66 1,275,000
3,335,000 Mount Ontario Holdings L.L.C. (f)
LOC Firstar Bank 04/01/21 1.62 3,335,000
430,000 Mubea, Inc. Project (e)
LOC Fifth Third Bank 12/01/04 1.65 430,000
5,000,000 New Jersey EDA Thermal Energy Facilities RB (Marina Energy) (e)
LOC First Union National Bank 09/01/21 1.57 5,000,000
4,600,000 New York State HFA (Kew Gardens Hills) - Series 2003B (e)
Collateralized by Federal National Mortgage Association 05/15/36 1.55 4,600,000
8,000,000 Newport, KY Industrial Building RB (Aquarium Holdings Project) (e)
LOC Fifth Third Bank 12/01/08 1.63 8,000,000
3,480,000 Ohio State Water Development Authority RB
(Independence Excavating, Inc.) (e)
LOC National City Bank, Northwest 12/01/09 1.66 3,480,000
3,500,000 Ordeal Properties L.L.C. (e)
LOC Key Bank, N.A. 10/01/12 1.65 3,500,000
1,800,000 Pennsylvania EDFA Taxable Development RB
(West 914 Incorporation Project) - Series 1991A (e)
LOC PNC Bank, N.A. 05/01/21 1.63 1,800,000
10,900,000 PRD Financial L.L.C. (e)
LOC National City Bank, Northwest 04/01/27 1.63 10,900,000
2,025,000 Sacramento County Housing Authority
(Hidden Oaks Apartments) - Series 1999 (e)
Guaranteed By Federal National Mortgage Association 05/15/29 1.63 2,025,000
10,000,000 Sea Island Company & Sea Island Coastal
Properties L.L.C. - Series 2003B (e)
LOC Columbus Bank & Trust Company 04/01/23 1.69 10,000,000
825,000 SGS Tool Company - Series 1996 (e)
LOC Huntington National Bank 06/01/06 1.69 825,000
3,020,000 Shelburne Realty & Troy Realty (e)
LOC National City Bank, Northwest 04/01/17 1.66 3,020,000
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The accompanying notes are an integral part of these financial statements.
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (Continued)
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$ 1,800,000 Soaring Eagle Partners L.P. (e)
LOC PNC Bank, N.A. 10/01/12 1.63% $ 1,800,000
13,580,000 Southwestern Group, Limited Project (e)
LOC Firstar Bank 07/01/21 1.63 13,580,000
3,165,000 St. Ann's Medical Office Building Limited Partnership (e)
LOC National City Bank Of Michigan/Illinois 11/01/19 1.66 3,165,000
6,690,000 Stonegate Partners I, L.L.C.
(Stonegate Partners Project) - Series 2002 (e)
LOC US Bank, N.A. 06/01/34 1.66 6,690,000
4,885,000 Tom Richards, Inc. (Team Land, L.L.C./Team Industries) (e)
Guaranteed by Federal Home Loan Bank 12/01/16 1.66 4,885,000
1,400,000 UAI Technologies, Inc. - Series 1998 (e)
LOC First Union National Bank 05/01/18 1.70 1,400,000
1,160,000 Valley City Linen Co. (e)
LOC First Michigan Bank 02/01/27 1.70 1,160,000
3,525,000 Washington State HFC MHRB
(The Vintage at Richland Project) - Series 2004B (e)
Guaranteed by Federal National Mortgage Association 01/15/38 1.60 3,525,000
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196,558,000 Total Variable Rate Demand Instruments 196,558,000
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Yankee Certificates Of Deposit (4.43%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 15,000,000 Credit Agricole Indosuez 09/29/04 1.09% $ 15,000,520
35,000,000 Toronto Dominion 09/30/04 1.08 35,001,257
- -------------- -------------
50,000,000 Total Yankee Certificates Of Deposit 50,001,777
- -------------- -------------
Total Investments (99.63%) (cost $1,123,658,175+) 1,123,658,175
Cash and other assets, net of liabilities (0.37%) 4,167,276
-------------
Net Assets (100.00%) $1,127,825,451
==============
Net Asset Value, offering and redemption price per share:
Class A shares, 370,650,129 shares outstanding (Note 3) $ 1.00
==============
Class B shares, 614,791,460 shares outstanding (Note 3) $ 1.00
==============
First Southwest shares, 142,383,862 shares outstanding (Note 3) $ 1.00
==============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2004
================================================================================
FOOTNOTES:
(a) The interest rate changes daily based upon Prime minus 2.95%.
(b) Loan participation agreements with the interest rate adjusted monthly based
on one month LIBOR plus 0.02%.
(c) The interest rate is adjusted monthly based on one month LIBOR plus 0.08%.
(d) The interest rate is adjusted monthly based on one month LIBOR minus 0.05%.
(e) Securities payable on demand at par including accrued interest (with seven
days notice). Interest is adjusted weekly.
(f) Securities payable on demand at par including accrued interest (with
one-day notice). Interest is adjusted daily.
KEY:
COPS = Certificates of Participation HFC = Housing Finance Commission
EDA = Economic Development Authority LOC = Letter of Credit
EDFA = Economic Development Finance Authority MHRB = Multi - Family Housing Revenue Bond
GNMA = Government National Mortgage Association RB = Revenue Bond
HFA = Housing Finance Authority RDA = Revenue Development Authority
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY
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Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------
Less than 31 Days $ 674,035,875 59.99%
31 through 60 Days 176,262,018 15.69
61 through 90 Days 129,556,444 11.53
91 through 120 Days 94,750,022 8.43
121 through 180 Days - - 0.00
Over 180 Days 49,053,816 4.36
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Total $ 1,123,658,175 100.00%
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2004
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements (57.29%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 125,000,000 Bank of America, purchased on 08/31/04, 1.55%,
due 09/01/04, repurchase proceeds at maturity $125,005,382
(Collateralized by $240,775,921, GNMA, 0.000% to 6.000%,
due 06/20/19 to 08/20/34, value $127,500,001) 09/01/04 1.55% $ 125,000,000
25,000,000 Bear, Stearns & Co., purchased on 08/31/04, 1.55%,
due 09/01/04, repurchase proceeds at maturity
$25,001,076 (Collateralized by $46,357,456, GNMA, 4.625%
to 8.500%, due 09/15/08 to 07/15/34, value $25,500,719) 09/01/04 1.55 25,000,000
135,000,000 JP Morgan Securities, Inc., purchased on 08/31/04, 1.55%,
due 09/01/04, repurchase proceeds at maturity
$135,005,813 (Collateralized by $145,063,630, GNMA, 5.000%
to 5.500%, due 05/15/33 to 08/15/34, value $137,700,732) 09/01/04 1.55 135,000,000
25,000,000 UBS Paine Webber, purchased on 08/31/04, 1.56%,
due 09/01/04, repurchase proceeds at maturity $25,001,083
(Collateralized by $35,288,777, GNMA, 3.000% to 4.500%,
due 02/20/32 to 04/20/34, value $25,500,349) 09/01/04 1.56 25,000,000
- -------------- -------------
310,000,000 Total Repurchase Agreements 310,000,000
- -------------- -------------
U.S. Government Obligations (42.41%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 80,000,000 U.S. Treasury Bill 09/02/04 1.32% $ 79,997,067
5,000,000 U.S. Treasury Bill 09/02/04 1.25 4,999,826
15,000,000 U.S. Treasury Bill 10/07/04 1.09 14,983,725
50,000,000 U.S. Treasury Bill 10/07/04 1.26 49,937,000
20,000,000 U.S. Treasury Note, 5.875% 11/15/04 1.45 20,184,807
10,000,000 U.S. Treasury Note, 5.875% 11/15/04 1.36 10,091,180
21,000,000 U.S. Treasury Note, 5.875% 11/15/04 1.45 21,187,920
10,000,000 U.S. Treasury Note, 5.875% 11/15/04 1.10 10,096,590
18,000,000 U.S. Treasury Note, 1.625% 03/31/05 1.29 18,034,866
- -------------- -------------
229,000,000 Total U.S. Government Obligations 229,512,981
- -------------- -------------
Total Investments (99.70%) (cost $539,512,981+) 539,512,981
Cash and other assets, net of liabilities (0.30%) 1,633,055
-------------
Net Assets (100.00%) $ 541,146,036
=============
Net Asset Value, offering and redemption price per share:
Class A shares, 250,633,949 shares outstanding (Note 3) $ 1.00
=============
Class B shares, 290,512,087 shares outstanding (Note 3) $ 1.00
=============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
KEY:
GNMA = Government National Mortgage Association
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY
AUGUST 31, 2004
================================================================================
- --------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- --------------------------------------------------------------------------------
Less than 31 Days $ 394,996,893 73.22%
31 through 60 Days 64,920,725 12.03
61 through 90 Days 61,560,497 11.41
91 through 120 Days -- 0.00
121 through 180 Days -- 0.00
Over 180 Days 18,034,866 3.34
- --------------------------------------------------------------------------------
Total $ 539,512,981 100.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED AUGUST 31, 2004
================================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- --------------------
INVESTMENT INCOME
Income:
Interest..................................................... $ 14,313,639 $ 6,081,836
--------------------- --------------------
Expenses: (Note 2)
Investment management fee.................................... 3,533,931 1,422,573
Administration fee........................................... 2,519,198 1,142,462
Distribution fee (First Southwest shares).................... 343,591 -0-
Shareholder servicing fee (Class A).......................... 922,578 581,430
Shareholder servicing fee (First Southwest shares)........... 343,591 -0-
Custodian expenses........................................... 44,061 29,871
Shareholder servicing and related shareholder expenses+...... 656,248 347,440
Legal, compliance and filing fees............................ 400,233 146,358
Audit and accounting......................................... 125,640 106,356
Directors' fees.............................................. 33,241 16,491
Miscellaneous................................................ 50,563 27,534
--------------------- --------------------
Total expenses........................................... 8,972,875 3,820,515
Less: Fees waived (First Southwest shares).............. ( 82,462) -0-
Expenses paid indirectly.......................... ( 7,144) ( 3,829)
--------------------- --------------------
Net expenses............................................. 8,883,269 3,816,686
--------------------- --------------------
Net investment income........................................... 5,430,370 2,265,150
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments................................ 7,026 67
--------------------- --------------------
Increase in net assets from operations.......................... $ 5,437,396 $ 2,265,217
===================== ====================
<FN>
+ Includes class specific transfer agency expenses of $188,781 and $332,980
for the Money Market Portfolio Class A and Class B shares, respectively and
$126,197 and $171,301 for the U.S. Government Portfolio Class A and Class B
shares, respectively.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED AUGUST 31, 2004 AND 2003
================================================================================
Money Market Portfolio U.S. Government Portfolio
------------------------------------ -------------------------------
2004 2003 2004 2003
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.................. $ 5,430,370 $ 10,626,111 $ 2,265,150 $ 4,588,675
Net realized gain on investments....... 7,026 -0- 67 1,011
------------- -------------- ------------- -------------
Increase in net assets from operations. 5,437,396 10,626,111 2,265,217 4,589,686
Dividends to shareholders from net investment income:
Class A............................. ( 1,199,269) ( 2,163,819) ( 645,262) ( 1,449,885)
Class B............................. ( 3,975,573) ( 7,839,415) ( 1,619,888) ( 3,138,790)
First Southwest shares.............. ( 255,528) ( 622,877) -0- -0-
Distributions to shareholders from realized gain on investments:
Class A............................. ( 2,070) -0- ( 30) ( 371)
Class B............................. ( 4,281) -0- ( 37) ( 640)
First Southwest shares.............. ( 675) -0- -0- -0-
Capital share transactions (Note 3):
Class A............................. ( 19,067,760) 67,336,435 13,703,051 ( 4,974,883)
Class B............................. ( 244,152,247) 20,879,982 ( 40,617,535) ( 69,703,473)
First Southwest shares.............. 11,955,042 3,347,364 -0- -0-
-------------- -------------- ------------- -------------
Total (decrease) increase........... ( 251,264,965) 91,563,781 ( 26,914,484) ( 74,678,356)
Net assets:
Beginning of year................... 1,379,090,416 1,287,526,635 568,060,520 642,738,876
-------------- -------------- ------------- -------------
End of year......................... $1,127,825,451 $1,379,090,416 $ 541,146,036 $ 568,060,520
============== ============== ============= =============
Undistributed net investment income........ $ -0- $ -0- $ -0- $ -0-
============== ============== ============= =============
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Summary of Accounting Policies
Short Term Income Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The Fund
is presently comprised of two portfolios, Money Market Portfolio and U.S.
Government Portfolio. The Money Market Portfolio has three classes of stock
authorized, Class A, Class B and First Southwest Prime Income Fund ("the First
Southwest shares"). The U.S. Government Portfolio has two classes of stock
authorized, Class A and Class B. The Class A shares of each Portfolio, and the
First Southwest shares of the Money Market Portfolio are subject to a service
fee pursuant to each Portfolio's Distribution and Service Plan. The First
Southwest shares are subject to an additional fee pursuant to a Distribution
Agreement. The Class B shares are not subject to a service fee. Additionally,
the Portfolio may allocate among its classes certain expenses, to the extent
allowable to specific classes, including transfer agent fees, government
registration fees, certain printing and postage costs, and administrative and
legal expenses. Class specific expenses of the Fund were limited to shareholder
servicing fees and transfer agent expenses. Income, expenses (other than
expenses attributable to a specific class), and realized and unrealized gains
and losses on investments are allocated to each class of shares based on its
relative net assets. In all other respects, the share classes of each portfolio
represent the same interest in the income and assets of their respective
portfolios. Distribution of First Southwest shares commenced on August 5, 2002.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America for investment
companies as follows:
a) Valuation of Securities -
Investments are valued at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any discount or premium is
amortized on a constant basis to the maturity of the instrument. The
maturity of variable rate demand instruments is deemed to be the longer of
the period required before the Fund is entitled to receive payment of the
principal amount or the period remaining until the next interest rate
adjustment.
b) Repurchase Agreements -
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the
seller defaults, and the fair market value of the collateral declines,
realization of the collateral by the Fund may be delayed or limited.
c) Federal Income Taxes -
It is the policy of each Portfolio to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its tax exempt and taxable income to its shareholders.
Therefore, no provision for federal income tax is required.
d) Dividends and Distributions -
Dividends from investment income (including realized capital gains and
losses), determined on a class level, are declared daily and paid monthly.
e) Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
1. Summary of Accounting Policies (Continued)
f) General -
Securities transactions are recorded on a trade date basis. Interest income
including accretion of discount and amortization of premium is accrued as
earned. Realized gains and losses from securities transactions are recorded
on the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates
Under the Management Contract, the Money Market Portfolio pays a management fee
to Reich & Tang Asset Management, LLC (the "Manager") at the annual rate of .30%
of the Portfolio's average daily net assets not in excess of $750 million, plus
..29% of such assets in excess of $750 million but not in excess of $1 billion,
plus .28% of such assets in excess of $1 billion but not in excess of $1.5
billion, plus .27% of such assets in excess of $1.5 billion. The U.S. Government
Portfolio pays a management fee to the Manager equal to .275% of the Portfolio's
average daily net assets not in excess of $250 million, plus .25% of such assets
in excess of $250 million.
The Manager has agreed to reimburse the Fund for its net operating expenses
(exclusive of taxes, brokerage, interest and extraordinary expenses) to the
extent that such expenses, including the management fee, for any fiscal year
exceed 1% of the average daily net assets of each Portfolio for such fiscal
year. No such reimbursement was required for the year ended August 31, 2004.
Pursuant to an Administrative Services Agreement, each Portfolio pays to the
Manager an annual fee of .21% of each Portfolio's average daily net assets not
in excess of $1.25 billion, plus .20% of such assets in excess of $1.25 billion
but not in excess of $1.5 billion, plus .19% of such assets in excess of $1.5
billion.
Pursuant to a Distribution and Service Plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors, Inc.
(the "Distributor"), an affiliate of the Manager, have entered into a
Distribution Agreement and a Shareholder Servicing Agreement, only with respect
to the Class A shares of each Portfolio and the First Southwest shares of the
Money Market Portfolio. For its services under the Shareholder Servicing
Agreement, the Distributor receives from each Portfolio a service fee equal to
..25% per annum of each Portfolio's average daily net assets with respect only to
the Class A shares and the First Southwest shares of the Money Market Portfolio.
In addition, the Distributor receives .25% per annum in Distribution fees of the
First Southwest shares' average daily net assets.
For the year ended August 31, 2004, the following fees were voluntarily waived
by the Distributor:
Money Market Portfolio
----------------------
Distribution fees - First Southwest shares $ 82,462
The Distributor has no right to recoup prior fee waivers.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$8,000 per annum plus $1,250 per meeting attended.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $531,133 and $272,042
for the Money Market Portfolio and the U.S. Government Portfolio, respectively,
paid to Reich &Tang Services, Inc., an affiliate of the Manager, as shareholder
servicing agent for the Fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
For the year ended August 31, 2004, the breakdown of expenses paid indirectly
by the Fund were as follows:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Custodian expenses $ 6,106 $ 3,133
Shareholder servicing and related shareholder expenses 1,038 696
------- --------
Total $ 7,144 $ 3,829
======= ========
3. Capital Stock
At August 31, 2004, 10,000,000,000 shares of $.001 par value stock were
authorized. Transactions in capital stock, all at $1.00 per share, were as
follows:
Money Market Portfolio U.S. Government Portfolio
---------------------------------- -----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, 2004 August 31, 2003 August 31, 2004 August 31, 2003
--------------- --------------- --------------- ---------------
Class A shares
- --------------
Sold.................................. 2,328,520,418 1,245,427,516 962,368,959 621,576,820
Issued on reinvestment of dividends... 1,045,824 1,998,024 462,674 920,924
Redeemed.............................. ( 2,348,634,002) ( 1,180,089,105) ( 949,128,582) ( 627,472,627)
-------------- -------------- -------------- --------------
Net (decrease) increase............... ( 19,067,760) 67,336,435 13,703,051 ( 4,974,883)
============== ============== ============== ==============
Class B shares
- --------------
Sold.................................. 1,429,873,658 1,452,559,431 1,360,820,813 1,169,678,184
Issued on reinvestment of dividends... 3,934,774 8,065,444 1,577,147 3,283,872
Redeemed.............................. ( 1,677,960,679) ( 1,439,744,893) ( 1,403,015,495) ( 1,242,665,529)
-------------- -------------- -------------- --------------
Net (decrease) increase............... ( 244,152,247) 20,879,982 ( 40,617,535) ( 69,703,473)
============== ============== ============== ==============
First Southwest shares
- ----------------------
Sold.................................. 146,074,128 145,272,898
Issued on reinvestment of dividends... 248,103 616,905
Redeemed.............................. ( 134,367,189) ( 142,542,439)
-------------- --------------
Net increase.......................... 11,955,042 3,347,364
============== ==============
As of August 31, 2004, the breakdown of net assets by share class were as follows:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Class A............................... $ 370,650,129 $ 250,633,949
Class B............................... 614,791,460 290,512,087
First Southwest....................... 142,383,862 --
--------------- ---------------
Total.............................. $ 1,127,825,451 $ 541,146,036
=============== ===============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
4. Liabilities
At August 31, 2004, the Fund had the following liabilities:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Fees payable to Affiliates*........... $ 370,744 $ 237,313
Dividends payable..................... 293,385 161,865
Accrued other payables................ -0- 97,924
------------- --------------
Total liabilities.................. $ 664,129 $ 497,102
============= ==============
<FN>
* Includes fees payable to Reich & Tang Asset Management, LLC, Reich & Tang Distributors,
Inc. and Reich & Tang Services, Inc.
</FN>
5. Tax Information
The tax character of all dividends and distributions paid during the years ended
August 31, 2004 and 2003 were as follows:
Money Market Portfolio U.S. Government Portfolio
------------------------ -------------------------
2004 2003 2004 2003
---------- ----------- --------- ----------
Ordinary income....................... $5,436,524 $10,626,111 $2,265,217 $4,589,686
Long-term capital gains............... 872 -0- -0- -0-
At August 31, 2004, the Fund had no distributable earnings.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights
Money Market Portfolio
Class A shares Year Ended August 31,
- -------------- ---------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- --------- ---------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- ---------- -------- --------
Income from investment operations:
Net investment income............... 0.003 0.006 0.014 0.045 0.050
Net realized and unrealized gain (loss)
on investments...................... 0.000 -- 0.000 0.000 0.000
-------- --------- ---------- -------- --------
Total from investment operations........ 0.003 0.006 0.014 0.045 0.050
Less distributions from:
Dividends from net investment income ( 0.003) ( 0.006) ( 0.014) ( 0.045) ( 0.050)
Net realized gains on investments... ( 0.000) ( -- ) ( 0.000) ( 0.000) ( 0.000)
-------- --------- ---------- -------- --------
Total Distributions..................... ( 0.003) ( 0.006) ( 0.014) ( 0.045) ( 0.050)
-------- --------- ---------- -------- --------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ========== ======== ========
Total Return............................ 0.33% 0.63% 1.44% 4.59% 5.16%
Ratios/Supplemental Data
Net assets, end of year (000's)......... $370,650 $ 389,718 $ 322,381 $675,289 $940,199
Ratios to average net assets:
Expenses (net of fees waived)(a)...... 0.87% 0.87% 0.97% 1.01% 0.99%
Net investment income................. 0.32% 0.61% 1.56% 4.55% 5.02%
Management and administration fees waived 0.00% 0.00% 0.00% 0.00% 0.01%
Expenses paid indirectly.............. 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Includes expenses paid indirectly
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. Financial Highlights (Continued)
Money Market Portfolio
Class B shares Year Ended August 31,
- -------------- ---------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- --------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- --------- -------- --------
Income from investment operations:
Net investment income............... 0.006 0.009 0.018 0.049 0.054
Net realized and unrealized gain (loss)
on investments...................... 0.000 -- 0.000 0.000 0.000
-------- -------- --------- -------- --------
Total from investment operations........ 0.006 0.009 0.018 0.049 0.054
Less distributions from:
Dividends from net investment income ( 0.006) ( 0.009) ( 0.018) ( 0.049) ( 0.054)
Net realized gains on investments... ( 0.000) ( -- ) ( 0.000) ( 0.000) ( 0.000)
-------- -------- --------- -------- --------
Total Distributions..................... ( 0.006) ( 0.009) ( 0.018) ( 0.049) ( 0.054)
-------- -------- --------- -------- --------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
Total Return............................ 0.58% 0.92% 1.80% 5.01% 5.58%
Ratios/Supplemental Data
Net assets, end of year (000's)......... $614,791 $858,944 $ 838,064 $811,173 $351,335
Ratios to average net assets:
Expenses (net of fees waived)(a)...... 0.62% 0.58% 0.61% 0.61% 0.60%
Net investment income................. 0.57% 0.92% 1.78% 4.71% 5.58%
Management and administration fees waived 0.00% 0.00% 0.00% 0.00% 0.01%
Expenses paid indirectly.............. 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Includes expenses paid indirectly
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights (Continued)
Money Market Portfolio
---------------------------------------------------------------
First Southwest shares Year Ended August 31, August 5, 2002
- ---------------------- ------------------------------------- (Commencement of Offering) to
2004 2003 August 31, 2002
------------- -------------- ---------------
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...... $ 1.00 $ 1.00 $ 1.00
------------- -------------- ---------------
Income from investment operations:
Net investment income............... 0.002 0.005 0.001
Net realized and unrealized gain (loss)
on investments...................... 0.000 -- 0.000
------------- ------------- ---------------
Total from investment operations........ 0.002 0.005 0.001
Less distributions from:
Dividends from net investment income ( 0.002 ) ( 0.005 ) ( 0.001 )
Net realized gains on investments... ( 0.000 ) ( -- ) ( 0.000 )
------------- -------------- ---------------
Total Distributions..................... ( 0.002 ) ( 0.005 ) ( 0.001 )
------------- -------------- ---------------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00
============= ============== ===============
Total Return............................ 0.19% 0.50% 0.07%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)......... $ 142,384 $ 130,429 $ 127,082
Ratios to average net assets:
Expenses (net of fees waived)(b)...... 1.01% 0.99% 0.99%(c)
Net investment income................. 0.19% 0.51% 0.93%(c)
Management and administration fees waived 0.00% 0.00% 0.00%(c)
Distribution fees waived.............. 0.06% 0.06% 0.06%(c)
Expenses paid indirectly.............. 0.00% 0.00% 0.00%(c)
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. Financial Highlights (Continued)
U.S. Government Portfolio
Class A shares Year Ended August 31,
- -------------- ---------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- --------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- --------- ------- --------
Income from investment operations:
Net investment income............... 0.003 0.006 0.014 0.044 0.048
Net realized and unrealized gain (loss)
on investments...................... 0.000 0.000 -- 0.000 --
-------- -------- --------- -------- --------
Total from investment operations........ 0.003 0.006 0.014 0.044 0.048
Less distributions from:
Dividends from net investment income ( 0.003) ( 0.006) ( 0.014) ( 0.044) ( 0.048)
Net realized gains on investments... ( 0.000) ( 0.000) ( -- ) ( 0.000) ( --)
-------- -------- --------- -------- --------
Total Distributions..................... ( 0.003) ( 0.006) ( 0.014) ( 0.044) ( 0.048)
-------- -------- --------- -------- --------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
Total Return............................ 0.28% 0.64% 1.39% 4.54% 4.95%
Ratios/Supplemental Data
Net assets, end of year (000's)......... $250,634 $236,931 $ 241,906 $484,681 $491,022
Ratios to average net assets:
Expenses (a).......................... 0.84% 0.79% 0.89% 0.93% 0.94%
Net investment income................. 0.28% 0.64% 1.46% 4.42% 4.77%
Expenses paid indirectly.............. 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Includes expenses paid indirectly
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Financial Highlights (Continued)
U.S. Government Portfolio
Class B shares Year Ended August 31,
- -------------- ---------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- --------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- --------- -------- --------
Income from investment operations:
Net investment income............... 0.005 0.008 0.017 0.048 0.052
Net realized and unrealized gain (loss)
on investments...................... 0.000 0.000 -- 0.000 --
-------- -------- --------- -------- --------
Total from investment operations........ 0.005 0.008 0.017 0.048 0.052
Less distributions from:
Dividends from net investment income ( 0.005) ( 0.008) ( 0.017) ( 0.048) ( 0.052)
Net realized gains on investments... ( 0.000) ( 0.000) ( --) ( 0.000) ( --)
-------- -------- --------- -------- --------
Total Distributions..................... ( 0.005) ( 0.008) ( 0.017) ( 0.048) ( 0.052)
-------- -------- --------- -------- --------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
Total Return............................ 0.53% 0.84% 1.69% 4.91% 5.32%
Ratios/Supplemental Data
Net assets, end of year (000's)......... $290,512 $331,130 $ 400,833 $216,573 $135,862
Ratios to average net assets:
Expenses (a).......................... 0.60% 0.59% 0.58% 0.58% 0.58%
Net investment income................. 0.52% 0.84% 1.61% 4.77% 5.23%
Expenses paid indirectly.............. 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Includes expenses paid indirectly
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Board of Directors and Shareholders of
Short Term Income Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Money Market Portfolio and the U.S. Government Portfolio (constituting the
Short Term Income Fund, Inc., hereafter referred to as the "Fund") at August 31,
2004, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers
New York, New York
October 21, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION
(UNAUDITED)
================================================================================
ADDITIONAL INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund will be 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 beginning with its first quarter ending on November
30, 2004. Once filed, the Fund's Form N-Q will be 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
================================================================================
Directors and Officers Information
August 31, 20041
- -------------------------- ---------------- -------------- ---------------------------------- -------------------- ------------
Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address2, Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served3 5 Years Fund Complex held by
Overseen by Director
Director
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Disinterested Directors:
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Dr. W. Giles Mellon, Director Since 1980 Professor Emeritus of Business Director/Trustee of N/A
Age 73 Administration in the Graduate eleven portfolios
School of Management, Rutgers
University with which he has
been associated with since 1966.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Robert Straniere, Esq., Director Since 1983 Owner, Straniere Law Firm since Director/Trustee of WPG Funds
Age 63 1980, NYS Assemblyman since 1981 eleven portfolios Group
and counsel at Fisher, Fisher &
Berger since 1995.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Dr. Yung Wong, Director Since 1980 Managing Director of Abacus Director/Trustee of N/A
Age 65 Associates, an investment firm, eleven portfolios
since 1996.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
<FN>
1 The Statement of Additional Information includes additional information
about Short Term Income Fund, Inc. (the "Fund") directors/officers and is
available, without charge, upon request by calling the Fund's transfer
agent at (212) 830-5200.
2 The address for each of the above directors/officers of the Fund is Reich &
Tang Asset Management, LLC, 600 Fifth Avenue, New York, NY 10020.
3 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's Articles of Incorporation, as amended, and Amended and Restated
By-Laws. Each officer will hold office for an indefinite term until the
date he or she resigns or retires or until his\her successor is elected and
qualifies.
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Directors and Officers Information (continued)
August 31, 20041
- -------------------------- ---------------- -------------- ------------------------------------ ---------------- ------------
Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address2, Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served3 5 Years Fund Complex held by
Overseen by Director
Director
- -------------------------- ---------------- -------------- ------------------------------------- ---------------- ------------
Interested Directors/Officers:
- -------------------------- ---------------- -------------- ------------------------------------- ---------------- ------------
Steven W. Duff, President Since 1994 Manager and President of Reich & Tang Director/Trustee None
Age 50 and Asset Management, LLC ("RTAM, LLC"), and/or Officer of
Director4 a registered Investment Advisor and sixteen portfolios
President of the Mutual Funds
Division of RTAM, LLC. Associated
with RTAM, LLC since 1994. Mr. Duff
is also President and
Director/Trustee of nine other funds
in the Reich & Tang Fund Complex,
Director of Pax World Money Market
Funds, Inc. and President and Chief
Executive Officer of Tax Exempt
Proceeds Funds, Inc. Mr. Duff also
serves as a Director of Reich & Tang
Services, Inc. and Reich & Tang
Distributors, Inc.
- -------------------------- ---------------- ------------- ------------------------------------- ----------------- ------------
Richard De Sanctis, Treasurer and Since 1994 Executive Vice President, CFO of N/A N/A
Age 48 Assistant RTAM, LLC. Associated with RTAM, LLC
Secretary since 1990. Mr. De Sanctis is also
Treasurer and Assistant Secretary of
ten other funds in the Reich & Tang
Fund Complex, and the Vice President,
Treasurer and Assistant Secretary of
Cortland Trust, In. Mr. De Sanctis
also serves as Executive Vice
President and Chief Financial Officer
of Reich & Tang Services, Inc. and
Reich & Tang Distributors, Inc.
- -------------------------- ---------------- ------------- ------------------------------------- ----------------- ------------
<FN>
1 The Statement of Additional Information includes additional information
about Short Term Income Fund, Inc. (the "Fund") directors/officers and is
available, without charge, upon request by calling the Fund's transfer
agent at (212) 830-5200.
2 The address for each of the above directors/officers of the Fund is Reich &
Tang Asset Management, LLC, 600 Fifth Avenue, New York, NY 10020.
3 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's Articles of Incorporation, as amended, and Amended and Restated
By-Laws. Each officer will hold office for an indefinite term until the
date he or she resigns or retires or until his\her successor is elected and
qualifies.
4 Steven W. Duff is deemed an interested person of the Fund due to his
affiliation with Reich & Tang Asset Management, LLC, the Fund's investment
advisor.
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
================================================================================
Directors and Officers Information (continued)
August 31, 20041
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address2, Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served3 5 Years Fund Complex held by
Overseen by Director
Director
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Interested Directors/Officers (Continued):
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Molly Flewharty, Vice Since 1995 Senior Vice President of RTAM, N/A N/A
Age 53 President LLC. Associated with RTAM, LLC
since 1977. Ms. Flewharty is also
Vice President of eleven other
funds in the Reich & Tang Fund
Complex.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Rosanne Holtzer, Secretary Since 1998 Senior Vice President of RTAM, N/A N/A
Age 40 and LLC. Associated with RTAM, LLC
Assistant since 1986. Ms. Holtzer is also
Treasurer Secretary and Assistant Treasurer
of eleven other funds in the Reich
& Tang Fund Complex. Ms. Holtzer
also serves as Vice President of
Reich & Tang Distributor, Inc.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
Dana E. Messina, Vice Since 1995 Executive Vice President of RTAM, N/A N/A
Age 47 President LLC. Associated with RTAM, LLC
since 1980. Ms. Messina is also
Vice President of eight other funds
in the Reich & Tang Fund Complex.
- -------------------------- ---------------- -------------- --------------------------------- -------------------- ------------
<FN>
1 The Statement of Additional Information includes additional information
about Short Term Income Fund, Inc. (the "Fund") directors/officers and is
available, without charge, upon request by calling the Fund's transfer
agent at (212) 830-5200.
2 The address for each of the above directors/officers of the Fund is Reich &
Tang Asset Management, LLC, 600 Fifth Avenue, New York, NY 10020.
3 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's Articles of Incorporation, as amended, and Amended and Restated
By-Laws. Each officer will hold office for an indefinite term until the
date he or she resigns or retires or until his\her successor is elected and
qualifies.
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------
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.
- ------------------------------------------------------
Short Term Income Fund, Inc.
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
101 Barclay Street, 13th Floor
New York, New York 10286
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
STIF8/04A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Annual Report
August 31, 2004
- --------------------------------------------------------------------------------
Item 2: Code of Ethics
The registrant has adopted a Code of Ethics applicable to its Principal
Executive and Senior Financial Officers.
Item 3: Audit Committee Financial Expert
The registrant's Board of Directors has determined that it does not have an
audit committee financial expert serving on its audit committee. The Board
believes that the collective experience of the audit committee members,
including their long-standing service as audit committee members, is sufficient
to effectively carry out the role and obligations of the audit committee. In
making its determination, the Board considered, among other things, the nature
of investment company financials, and the fact that the audit committee is able
to consult with the registrant's independent accountants and to seek outside
advice, as it deems appropriate.
Item 4: Principal Accountant Fees and Services
FYE 08/31/2004 FYE 08/31/2003
4(a) Audit Fees $52,200 $49,800
-------------- --------------
4(b) Audit Related Fees $0 $0
-------------- --------------
4(c) Tax Fees $6,000 $6,000
-------------- --------------
4(d) All Other Fees $0 $0
-------------- --------------
4(e)(1) The audit committee has adopted pre-approval policies and procedures
whereby the audit committee has pre-approved the provision of certain enumerated
tax services to the registrant by the registrant's principal accountant to the
extent the fee is less than $5,000 per occurrence.
4(e)(2) None.
4(f) Not applicable.
4(g) $3,000 and $20,000, respectively, were the amount of non-audit fees that
were billed by the registrant's accountant for services rendered to (i) the
registrant, and (ii) the registrant's investment adviser and any control person
of the adviser that provides ongoing services to the registrant for the fiscal
year ended August 31, 2004. $3,000 and $17,600, respectively, were the amount of
non-audit fees that were billed by the registrant's accountant for services
rendered to (i) the registrant, and (ii) the registrant's investment adviser and
any control person of the adviser that provides ongoing services to the
registrant for the fiscal year ended August 31, 2003.
4(h) The registrant's audit committee has considered whether its principal
accountant's provision of non-audit services that were rendered to the
registrant's investment adviser, and any control persons of the investment
adviser that provides ongoing services to the registrant, that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is
compatible with maintaining the principal accountant's independence.
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 registrant's second fiscal
year that have materially affected, or are reasonably likely to affect,
the registrant's internal controls over financial reporting.
Item 11: Exhibits
(a)(1) Code of Ethics.
(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) Short Term Income Fund, Inc.
By (Signature and Title)*/s/Rosanne Holtzer
Rosanne Holtzer, Secretary
Date November 1, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)*/s/Steven W. Duff
Steven W. Duff, President
Date November 1, 2004
By (Signature and Title)*/s/Richard DeSanctis
Richard DeSanctis, Treasurer
Date November 1, 2004
* Print the name and title of each signing officer under his or her signature.