As filed with the Securities and Exchange Commission on November 2, 2005
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: August 31
Date of reporting period: August 31, 2005
ITEM 1: REPORT TO STOCKHOLDERS
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SHORT TERM 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. (212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the annual report of Short Term Income Fund, Inc. (the
"Fund") for the year ended August 31, 2005.
The Fund's Money Market Portfolio had 13,742 shareholders and net assets of
$863,577,486 as of August 31, 2005. The Government Portfolio had 4,013
shareholders and net assets of $471,753,798 as of August 31, 2005.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
/s/signature
Steven W. Duff
President
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SHORT TERM INCOME FUND, INC.
EXPENSE CHART
FOR THE SIX MONTHS ENDED AUGUST 31, 2005
(UNAUDITED)
================================================================================
As a shareholder of the Fund, you incur the following ongoing costs: management
fees and other Fund expenses. You may also incur distribution and/or service
(12b-1) fees. This example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2005 through August 31, 2005.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees that you may incur in other
mutual funds. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
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================================================================================
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Money Market Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Beginning Account Value Ending Account Value Expenses Paid During the
Class A 3/01/05 8/31/05 Period*
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Actual $1,000.00 $1,010.80 $4.76
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.47 $4.79
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Class B Beginning Account Value Ending Account Value Expenses Paid During the
3/1/05 8/31/05 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,012.20 $3.35
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,021.88 $3.36
expenses)
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First Southwest Shares Beginning Account Value Ending Account Value Expenses Paid During the
3/1/05 8/31/05 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.30 $5.32
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Hypothetical (5% return before $1,000.00 $1,019.91 $5.35
expenses)
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U.S. Government Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Beginning Account Value Ending Account Value Expenses Paid During the
Class A 3/01/05 8/31/05 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.80 $4.41
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.82 $4.43
expenses)
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- ----------------------------------------------------------------------------------------------------------------------
Class B Beginning Account Value Ending Account Value Expenses Paid During the
3/1/05 8/31/05 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,012.20 $3.04
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,022.18 $3.06
expenses)
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<FN>
* Expenses are equal to the Fund's annualized expense ratios of 0.94%, 0.66%,
and 1.05%, for the Money Market Portfolio Class A, Class B, and First
Southwest shares, respectively and 0.87%, 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, 2005 through August 31,
2005), multiplied by 184/365 (to reflect the most recent fiscal half-year).
</FN>
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================================================================================
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 2005
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Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Asset Backed Commercial Paper (20.27%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 10,000,000 Charta LLC
Insured by AMBAC Indemnity Corp. 09/08/05 3.46% $ 9,993,311
30,000,000 Charta LLC
Insured by AMBAC Indemnity Corp. 10/18/05 3.68 29,856,650
15,000,000 Greyhawk Funding 09/26/05 3.56 14,963,021
35,461,000 Lexington Parker Capital 10/18/05 3.55 35,298,037
35,000,000 Lockhart Funding LLC 09/07/05 3.48 34,979,758
20,000,000 Market Street Funding 09/20/05 3.52 19,962,950
30,000,000 Windmill Funding Corporation 09/07/05 3.46 29,982,750
- ------------- -------------
175,461,000 Total Asset Backed Commercial Paper 175,036,477
- ------------- -------------
Floating Rate Securities (9.84%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Bank of America (a) 12/15/05 3.57% $ 30,000,000
15,000,000 General Electric Capital Corporation Extendible
Monthly Securities (b) 09/15/06 3.68 15,000,000
15,000,000 Harris Trust & Savings Bank 02/02/06 3.56 15,000,793
10,000,000 Merrill Lynch Extendible Monthly Securities 09/15/06 3.60 10,000,000
15,000,000 Mt. Vernon Phenol Plant Partnership with J.P. Morgan Chase
Guaranteed by General Electric Company 05/19/06 3.61 15,000,000
- -------------- -------------
85,000,000 Total Floating Rate Securities 85,000,793
- -------------- -------------
Foreign Commercial Paper (15.58%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 40,000,000 ANZ National International Ltd 09/19/05 3.45% $ 39,931,500
20,000,000 Depfa Bank PLC 10/11/05 3.49 19,923,111
15,000,000 Depfa Bank PLC 10/17/05 3.56 14,932,341
30,000,000 Northern Rock PLC 10/12/05 3.50 29,881,442
10,000,000 Northern Rock PLC 09/26/05 3.59 9,975,139
20,000,000 Societe Generale North America 10/13/05 3.50 19,917,867
- ------------- -------------
135,000,000 Total Foreign Commercial Paper 134,561,400
- ------------- -------------
Letter of Credit Commercial Paper (3.69%)
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$ 32,000,000 Dean Health System, Inc
LOC Marshall & Ilsley 10/03/05 3.60% $ 31,898,169
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32,000,000 Total Letter of Credit Commercial Paper 31,898,169
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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)
------ ---- ----- ------
Loan Participation (3.48%)
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$ 30,000,000 Equitable Life Assurance Society with J.P. Morgan Chase 03/21/06 3.63% $ 30,000,000
- ------------- -------------
30,000,000 Total Loan Participation 30,000,000
- ------------- -------------
Other Notes (4.47%)
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$ 10,320,000 Bergen County, NJ Improvement Authority City Project Notes
(Overpeck Project) - Series 2004 09/22/05 2.50% $ 10,319,116
3,280,000 Glendale, WI Taxable BAN - Series 2004B 09/21/05 2.50 3,280,000
25,000,000 Winston-Salem, NC COPS 09/06/05 3.53 25,000,000
- -------------- -------------
38,600,000 Total Other Notes 38,599,116
- -------------- -------------
Repurchase Agreement (4.17%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 36,000,000 Bank of America, purchased 08/31/05, repurchase proceeds at
maturity $36,003,550 (Collateralized by $37,754,577, GNMA,
5.000% to 6.000%, due 08/20/33 to 07/15/35, value $36,556,580) 09/01/05 3.55% $ 36,000,000
- ------------- -------------
36,000,000 Total Repurchase Agreement 36,000,000
- ------------- -------------
Variable Rate Demand Instruments (c) (23.44%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 2,395,000 Ali Industries, Inc. Project
LOC National City Bank, Northwest 07/01/10 3.66% $ 2,395,000
5,500,000 Allegheny County, PA (Union Electric Steel Corporation)
LOC PNC Bank, N.A. 11/01/27 3.64 5,500,000
2,250,000 Alta Mira LLC
LOC Marshall & Ilsley 11/01/34 3.74 2,250,000
1,780,000 ARS Development Project
LOC National City Bank, Northwest 09/01/21 3.71 1,780,000
1,215,000 B & V Land Company, LLC
LOC First Michigan Bank 09/01/27 3.74 1,215,000
5,100,000 Baldwin County Sewer Service, LLC
LOC Amsouth Bank, N.A. 05/01/25 3.77 5,100,000
1,520,000 Bank of Kentucky Building
LOC Firstar Bank 12/01/19 3.69 1,520,000
3,100,000 Bollman Capital, LLC - Series 1996A
LOC First of American Michigan National Bank 12/15/26 3.66 3,100,000
1,000,000 Bookstore Notes
LOC Marshall & Ilsley 10/01/44 3.64 1,000,000
620,000 Burgess & Niple Limited
LOC National City Bank, Northwest 09/01/14 3.66 620,000
890,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project)
LOC US Bank, N.A. 09/01/08 3.71 890,000
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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
SCHEDULE OF INVESTMENTS (CONTINUED)
AUGUST 31, 2005
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 521,000 Capital One Funding Corporation Floating Rate Option Notes -
Series 1997D
LOC Bank One 07/02/18 3.59% $ 521,000
5,000,000 City of Marion, IN EDRB - Series 2005A
LOC Key Bank, N.A. 02/01/35 3.69 5,000,000
1,190,000 Community Limited Care
LOC Fifth Third Bank 12/01/12 3.71 1,190,000
5,104,000 County of Genessee, MI GO - Series 2005 03/01/08 3.64 5,104,000
1,375,000 Crownover Lumber Company
LOC Fifth Third Bank 09/01/08 3.79 1,375,000
300,000 Derby Fabricating LLC
LOC Fifth Third Bank 06/01/24 3.64 300,000
3,350,000 Dickenson Press, Inc. - Series 1997
LOC First Michigan Bank 01/01/27 3.74 3,350,000
700,000 Dormont Manufacturing Company, Inc.
LOC PNC Bank, N.A. 03/01/08 3.56 700,000
2,825,000 Frank J. Catanzaro Sons and Daughters
LOC Firstar Bank 01/01/15 3.64 2,825,000
1,400,000 Gesmundo & Associates, Inc.
LOC National City Bank, Northwest 08/15/27 3.61 1,400,000
1,110,000 Graves Lumber, Inc. Project
Guaranteed by Federal Home Loan Bank 11/01/10 3.71 1,110,000
1,239,000 HCS & DJS Leasing
LOC Fifth Third Bank 06/01/34 3.64 1,239,000
2,500,000 Holland-Sheltair Aviation Funding
LOC Mellon Bank, N.A. 05/01/35 3.65 2,500,000
3,765,000 Hunter's Square, Inc. Project - Series 1998
LOC National City Bank of Michigan/Illinois 10/01/16 3.66 3,765,000
1,200,000 ILH LLC - Series 2004
LOC Fifth Third Bank 07/01/34 3.64 1,200,000
1,175,000 Labelle Capital Funding - Series A
LOC National City Bank, Northwest 09/01/26 3.69 1,175,000
1,150,000 LAM Funding, LLC
LOC National City Bank, Northwest 12/15/27 3.61 1,150,000
8,700,000 Lexington Financial Health Care RB - Series 2001
LOC LaSalle National Bank 02/01/26 3.70 8,700,000
890,000 Lincoln Parkway LLC
LOC Fifth Third Bank 06/01/44 3.64 890,000
1,630,000 LKWP Investments, LLC
LOC First Michigan Bank 03/01/27 3.74 1,630,000
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The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 735,000 Machining Center
LOC Comerica Bank 10/01/27 3.74% $ 735,000
800,000 Madison, WI Community Development Authority RDA
(Block 90 Project)
LOC US Bank, N.A. 10/01/08 3.74 800,000
3,470,000 Maryland Health & Higher Educational Facilities Authority
(Glen Meadows Retirement Community)
LOC First Union National Bank 07/01/29 3.70 3,470,000
400,000 Maximum Principle Amount Limited Partnership
(Riverview Medical Office Building)
LOC National City Bank 11/01/17 3.66 400,000
1,135,000 Miami Valley Realty Associates
LOC Key Bank, N.A. 06/01/12 3.71 1,135,000
3,020,000 Mobile Airport
LOC Regions Bank 10/01/24 3.60 3,020,000
13,855,000 Mobile, AL Springhill Medical Clinic Board RB
(Springhill Medical Complex)
LOC Amsouth Bank, N.A. 06/01/20 3.68 13,855,000
930,000 Mount Carmel East Professional Office Building - Series 1994
LOC National City Bank, Northwest 01/01/14 3.66 930,000
1,210,000 Mount Carmel Partnership Project
LOC National City Bank, Northwest 08/01/14 3.66 1,210,000
3,245,000 Mount Ontario Holdings LLC
LOC Firstar Bank 04/01/21 3.61 3,245,000
5,000,000 New Jersey EDA Thermal Energy Facilities RB
(Marina Energy)
LOC First Union National Bank 09/01/21 3.56 5,000,000
4,600,000 New York State HFA (Kew Gardens Hills) - Series 2003B
Collateralized by Federal National Mortgage Association 05/15/36 3.55 4,600,000
7,600,000 Newport, KY Industrial Building RB
(Aquarium Holdings Project)
LOC Fifth Third Bank 12/01/08 3.64 7,600,000
2,940,000 Ohio State Water Development Authority RB
(Independence Excavating, Inc.)
LOC National City Bank, Northwest 12/01/09 3.66 2,940,000
3,185,000 Ordeal Properties LLC
LOC Key Bank, N.A. 10/01/12 3.69 3,185,000
1,600,000 Pennsylvania EDFA Taxable Development RB
(West 914 Incorporation Project) - Series 1991A
LOC PNC Bank, N.A. 05/01/21 3.64 1,600,000
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The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
AUGUST 31, 2005
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 10,500,000 PRD Financial LLC
LOC National City Bank, Northwest 04/01/27 3.61% $ 10,500,000
4,000,000 Prevea Clinic, Inc.,
LOC Wells Fargo Bank, N.A. 12/01/34 3.59 4,000,000
5,000,000 Rochester, NY Institute of Technology - Series 2004 11/01/21 3.66 5,000,000
1,800,000 Sacramento County Housing Authority
(Hidden Oaks Apartments) - Series 1999
Guaranteed by Federal National Mortgage Association 05/15/29 3.61 1,800,000
10,000,000 Sea Island Company & Sea Island Coastal
Properties LLC - Series 2003B
LOC Columbus Bank & Trust Company 04/01/23 3.69 10,000,000
425,000 SGS Tool Company - Series 1996
LOC Huntington National Bank 06/01/06 3.76 425,000
2,855,000 Shelburne Realty & Troy Realty
LOC National City Bank, Northwest 04/01/17 3.66 2,855,000
1,600,000 Soaring Eagle Partners LP
LOC PNC Bank, N.A. 10/01/12 3.67 1,600,000
13,055,000 Southwestern Group, Limited Project
LOC Firstar Bank 07/01/21 3.64 13,055,000
5,810,000 St. Johns County IDA
LOC Allied Irish Bank 08/01/34 3.69 5,810,000
3,040,000 St. Ann's Medical Office Building Limited Partnership
LOC National City Bank of Michigan/Illinois 11/01/19 3.66 3,040,000
6,544,000 Stonegate Partners I, LLC
(Stonegate Partners Project) - Series 2002
LOC US Bank, N.A. 06/01/34 3.66 6,544,000
4,615,000 Tom Richards, Inc. (Team Land, LLC/Team Industries)
Guaranteed by Federal Home Loan Bank 12/01/16 3.66 4,615,000
3,000,000 Tri-Park Villas Notes
LOC Marshall & Ilsley 10/01/44 3.64 3,000,000
1,400,000 UAI Technologies, Inc. - Series 1998
LOC First Union National Bank 05/01/18 3.66 1,400,000
1,020,000 Valley City Linen Co.
LOC First Michigan Bank 02/01/27 3.74 1,020,000
3,525,000 Washington State HFC MHRB
(The Vintage at Richland Project) - Series 2004B
Guaranteed by Federal National Mortgage Association 01/15/38 3.60 3,525,000
- ------------ ------------
202,408,000 Total Variable Rate Demand Instruments 202,408,000
- ------------ ------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Yankee Certificates of Deposit (14.94%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 40,000,000 BNP Paribas 09/09/05 3.31% $ 39,999,997
20,000,000 Calyon 10/17/05 3.62 20,000,127
29,000,000 HSBC Bank PLC 09/27/05 3.60 28,999,993
40,000,000 Svenska Handelsbanken 10/12/05 3.61 40,000,210
- ------------ ------------
129,000,000 Total Yankee Certificates of Deposit 129,000,327
- ------------ ------------
Total Investments (99.88%) (cost $862,504,282+) 862,504,282
Cash and Other Assets, Net of Liabilities (0.12%) 1,073,204
------------
Net Assets (100.00%) $863,577,486
============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
FOOTNOTES:
(a) The interest rate changes daily based upon Prime minus 2.935%.
(b) The interest rate changes monthly based upon one month LIBOR plus 0.10%.
(c) Unless otherwise noted securities payable on demand at par including
accrued interest (with seven days notice). Interest is adjusted weekly.
KEY:
BAN = Bond Anticipation Note HFC = Housing Finance Commission
COPS = Certificates of Participation IDA = Industrial Development Authority
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
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY
AUGUST 31, 2005
================================================================================
- ------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------------------------------------------------
Less than 31 Days $ 605,795,535 70.24%
31 through 60 Days 241,707,954 28.02
61 through 90 Days 15,000,793 1.74
91 through 120 Days -- 0.00
121 through 180 Days -- 0.00
Over 180 Days -- 0.00
- ------------------------------------------------------------------------------
Total $ 862,504,282 100.00%
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 2005
================================================================================
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements (59.56%)
- -----------------------------------------------------------------------------------------------------------------------------------
$115,000,000 Annaly Mortgage Management, Inc., purchased 08/31/05,
repurchase proceeds at maturity $115,011,404 (Collateralized by
$275,663,409 GNMA, 3.500% to 6.000%,
due 01/20/26 to 10/20/33, value $117,300,000) 09/01/05 3.57% $115,000,000
112,000,000 Bank of America, purchased 08/31/05,
repurchase proceeds at maturity $112,011,044 (Collateralized by
$566,327,713, GNMA, 0.000% to 11.160%,
due 06/16/21 to 08/16/42, value $114,240,000) 09/01/05 3.55 112,000,000
20,000,000 Bear, Stearns & Co., purchased 08/31/05,
repurchase proceeds at maturity $20,001,983 (Collateralized by
$56,476,696, GNMA, 5.500% to 9.500%,
due 06/15/07 to 07/15/35, value $20,401,361) 09/01/05 3.57 20,000,000
20,000,000 J.P. Morgan Securities, Inc., purchased 08/31/05,
repurchase proceeds at maturity $20,001,983 (Collateralized by
$19,540,000, GNMA, 5.610%,
due 12/15/46, value $20,401,966) 09/01/05 3.57 20,000,000
14,000,000 UBS Paine Webber, purchased 08/31/05,
repurchase proceeds at maturity $14,001,384 (Collateralized by
$70,283,175, GNMA, 4.125% to 11.500%,
due 06/20/14 to 08/20/35, value $14,283,855) 09/01/05 3.56 14,000,000
- ------------ ------------
281,000,000 Total Repurchase Agreements 281,000,000
- ------------ ------------
U.S. Government Obligations (40.36%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 95,000,000 U.S. Treasury Bill 09/01/05 3.25% $ 95,000,000
35,000,000 U.S. Treasury Bill 10/13/05 3.11 34,875,050
20,000,000 U.S. Treasury Bill 11/03/05 3.14 19,891,850
14,000,000 U.S. Treasury Note, 1.625% 02/28/06 3.02 13,905,105
27,000,000 U.S. Treasury Note, 1.625% 02/28/06 3.75 26,717,573
- ------------ ------------
191,000,000 Total U.S. Government Obligations 190,389,578
- ------------ ------------
Total Investments (99.92%) (cost $471,389,578+) 471,389,578
Cash and Other Assets, Net of Liabilities (0.08%) 364,220
------------
Net Assets (100.00%) $471,753,798
============
<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, 2005
================================================================================
- ------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------------------------------------------------
Less than 31 Days $ 376,000,000 79.76%
31 through 60 Days 34,875,050 7.40
61 through 90 Days 19,891,850 4.22
91 through 120 Days -- 0.00
121 through 180 Days -- 0.00
Over 180 Days 40,622,678 8.62
- ------------------------------------------------------------------------------
Total $ 471,389,578 100.00%
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
================================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- --------------------
ASSETS
Investments in securities, at amortized cost (Note 1)........ $ 862,504,282 $ 190,389,578
Repurchase agreements........................................ 36,000,000 281,000,000
Cash ........................................................ 411,309 1,075,220
Accrued interest receivable.................................. 1,827,416 29,640
Prepaid expenses............................................. 35,742 20,891
Other receivables............................................ 1,296 277
--------------------- --------------------
Total assets.......................................... 864,780,045 472,515,606
--------------------- --------------------
LIABILITIES
Payable to affiliates*....................................... 415,778 212,702
Accrued expenses............................................. 71,559 116,839
Dividends payable............................................ 715,222 432,267
--------------------- --------------------
Total liabilities..................................... 1,202,559 761,808
--------------------- --------------------
Net assets.................................................. $ 863,577,486 $ 471,753,798
===================== ====================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 3)...... $ 863,578,601 $ 471,753,798
Accumulated net realized loss................................ (1,115) -0-
--------------------- --------------------
Net assets................................................... $ 863,577,486 $ 471,753,798
===================== ====================
Net asset value, per share:
Money Market Portfolio:
Class A shares, ($347,579,162 applicable to 347,579,543 shares outstanding) (Note 3) $ 1.00
===========
Class B shares, ($399,087,374 applicable to 399,087,968 shares outstanding) (Note 3) $ 1.00
===========
First Southwest shares, ($116,910,950 applicable to 116,911,090 shares outstanding) (Note 3) $ 1.00
===========
U.S. Government Portfolio:
Class A shares, ($238,364,411 applicable to 238,364,411 shares outstanding) (Note 3) $ 1.00
===========
Class B shares, ($233,389,387 applicable to 233,389,387 shares outstanding) (Note 3) $ 1.00
===========
<FN>
* Includes fees payable to Reich & Tang Asset Management, LLC, Reich & Tang
Distributors, Inc. and Reich & Tang Services, Inc.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2005
================================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- --------------------
INVESTMENT INCOME
Income:
Interest..................................................... $ 25,596,064 $ 12,871,739
--------------------- --------------------
Expenses: (Note 2)
Investment management fee.................................... 2,983,165 1,364,403
Administration fee........................................... 2,106,124 1,093,598
Distribution fee (First Southwest shares).................... 337,208 -0-
Shareholder servicing fee (Class A).......................... 941,276 661,831
Shareholder servicing fee (First Southwest shares)........... 337,208 -0-
Custodian expenses........................................... 50,546 26,402
Shareholder servicing and related shareholder expenses+...... 692,966 381,570
Legal, compliance and filing fees............................ 590,348 163,803
Audit and accounting......................................... 178,566 97,366
Directors' fees.............................................. 33,446 17,195
Miscellaneous................................................ 62,534 23,085
--------------------- --------------------
Total expenses........................................... 8,313,387 3,829,253
Less: Fees waived (First Southwest shares).............. (80,930) -0-
Expenses paid indirectly.......................... (7,964) (6,933)
--------------------- --------------------
Net expenses............................................. 8,224,493 3,822,320
--------------------- --------------------
Net investment income........................................... 17,371,571 9,049,419
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................... (1,115) 75
--------------------- --------------------
Increase in net assets from operations.......................... $ 17,370,456 $ 9,049,494
===================== ====================
<FN>
+ Includes class specific transfer agency expenses of $307,581 and $245,761
for the Money Market Portfolio Class A and Class B shares, respectively and
$207,564 and $140,816 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, 2005 AND 2004
================================================================================
Money Market Portfolio U.S. Government Portfolio
----------------------------------- ---------------------------------
2005 2004 2005 2004
--------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income..................... $ 17,371,571 $ 5,430,370 $ 9,049,419 $ 2,265,150
Net realized gain (loss) on investments (1,115) 7,026 75 67
--------------- --------------- --------------- ---------------
Increase in net assets from operations.... 17,370,456 5,437,396 9,049,494 2,265,217
Dividends to shareholders from net investment income:
Class A................................... (6,178,819) (1,199,269) (4,301,759) (645,262)
Class B................................... (9,138,174) (3,975,573) (4,747,660) (1,619,888)
First Southwest shares.................... (2,054,578) (255,528) -0- -0-
Distributions to shareholders from realized gain on investments:
Class A................................... -0- (2,070) (36) (30)
Class B................................... -0- (4,281) (39) (37)
First Southwest shares.................... -0- (675) -0- -0-
Capital share transactions (Note 3):
Class A................................... (23,070,586) (19,067,760) (12,269,538) 13,703,051
Class B................................... (215,703,492) (244,152,247) (57,122,700) (40,617,535)
First Southwest shares.................... (25,472,772) 11,955,042 -0- -0-
--------------- --------------- --------------- ---------------
Total increase (decrease)................. (264,247,965) (251,264,965) (69,392,238) (26,914,484)
Net assets:
Beginning of year......................... 1,127,825,451 1,379,090,416 541,146,036 568,060,520
---------------- --------------- --------------- --------------
End of year............................... $ 863,577,486 $ 1,127,825,451 $ 471,753,798 $ 541,146,036
================ =============== =============== ==============
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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.
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, 2005, the following fees were voluntarily waived
by the Distributor:
Money Market Portfolio
----------------------
Distribution fees - First Southwest shares $ 80,930
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 (there are five scheduled
Board meetings each year). In addition, the Audit Committee Chairman receives an
aggregate payment of $1,000 per quarter allocated among the funds of the Reich &
Tang Complex on whose Audit Committee he serves. Effective January 1, 2005,
Directors who are unaffiliated with the Manager will receive from the Fund
$6,000 per annum, plus a fee of $850 for each Board of Directors meeting
attended, and each member of the Audit Committee will receive an aggregate
payment of $750 per Audit Committee meeting attended allocated among the funds
of the Reich & Tang Complex.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $440,422 and $260,391 for the
Money Market Portfolio and the U.S. Government Portfolio, respectively paid to
Reich & Tang Services, Inc., ("the Transfer Agent), an affiliate of the Manager
as servicing agent for the Fund. Pursuant to the Transfer Agency Agreement, the
Transfer Agent receives a fee of $17.40 per account per year or a minimum of
0.05% of the monthly average net assets of the Class A and B shares of the Fund.
For the year ended August 31, 2005 these fees amounted to an annual rate of
0.05% of the monthly average net assets of the Class A and B shares of the Fund.
For the year ended August 31, 2005, the breakdown of expenses paid indirectly by
the Fund were as follows:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Custodian expenses $ 7,255 $ 6,421
Shareholder servicing and related shareholder expenses 709 512
------- -------
Total $ 7,964 $ 6,933
======= =======
3. Capital Stock
At August 31, 2005, 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 Year Year Year
Ended Ended Ended Ended
August 31, 2005 August 31, 2004 August 31, 2005 August 31, 2004
---------------- --------------- --------------- ---------------
Class A shares
Sold.................................. 1,917,167,808 2,328,520,418 1,119,590,779 962,368,959
Issued on reinvestment of dividends... 5,492,425 1,045,824 3,547,909 462,674
Redeemed.............................. (1,945,730,819) (2,348,634,002) (1,135,408,226) (949,128,582)
--------------- --------------- --------------- ---------------
Net increase (decrease)............... (23,070,586) (19,067,760) (12,269,538) 13,703,051
=============== =============== =============== ===============
Class B shares
Sold.................................. 1,355,103,467 1,429,873,658 1,028,993,585 1,360,820,813
Issued on reinvestment of dividends... 8,895,965 3,934,774 4,448,814 1,577,147
Redeemed.............................. (1,579,702,924) (1,677,960,679) (1,090,565,099) (1,403,015,495)
--------------- --------------- --------------- ---------------
Net increase (decrease)............... (215,703,492) (244,152,247) (57,122,700) (40,617,535)
=============== =============== =============== ===============
First Southwest shares
Sold.................................. 142,993,781 146,074,128
Issued on reinvestment of dividends... 2,062,226 248,103
Redeemed.............................. (170,528,779) (134,367,189)
--------------- ---------------
Net increase (decrease)............... (25,472,772) 11,955,042
=============== ===============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
4. Tax Information
The tax character of all dividends and distributions paid during the years ended
August 31, 2005 and 2004 were as follows:
Money Market Portfolio U.S. Government Portfolio
------------------------------- -------------------------------
2005 2004 2005 2004
------------ ----------- ----------- -----------
Ordinary income....................... $ 17,371,571 $ 5,436,524 $ 9,049,494 $ 2,265,217
Long-term capital gains............... -0- 872 -0- -0-
The Money market Portfolio has a post-October loss deferral of $199, which will
reverse on September 1, 2005.
At August 31, 2005, the Fund had no distributable earnings.
5. Financial Highlights
Money Market Portfolio
Class A shares Year Ended August 31,
- -------------- ----------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------
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...................... 0.017 0.003 0.006 0.014 0.045
Net realized and unrealized gain (loss)
on investments............................... 0.000 0.000 -- 0.000 0.000
-------- -------- -------- -------- --------
Total from investment operations................. 0.017 0.003 0.006 0.014 0.045
Less distributions from:
Dividends from net investment income....... (0.017) (0.003) (0.006) (0.014) (0.045)
Net realized gains on investments............ ( -- ) (0.000) ( -- ) (0.000) (0.000)
-------- -------- -------- -------- --------
Total distributions.............................. (0.017) (0.003) (0.006) (0.014) (0.045)
-------- -------- -------- -------- --------
Net asset value, end of year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return..................................... 1.66% 0.33% 0.63% 1.44% 4.59%
Ratios/Supplemental Data
Net assets, end of year (000's).................. $347,579 $370,650 $389,718 $322,381 $675,289
Ratios to average net assets:
Expenses (net of fees waived) (a).............. 0.94% 0.87% 0.87% 0.97% 1.01%
Net investment income.......................... 1.64% 0.32% 0.61% 1.56% 4.55%
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)
================================================================================
5. Financial Highlights (Continued)
Money Market Portfolio
Class B shares Year Ended August 31,
- -------------- ------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------
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...................... 0.019 0.006 0.009 0.018 0.049
Net realized and unrealized gain (loss)
on investments............................... 0.000 0.000 -- 0.000 0.000
-------- -------- -------- -------- --------
Total from investment operations................. 0.019 0.006 0.009 0.018 0.049
Less distributions from:
Dividends from net investment income....... (0.019) (0.006) (0.009) (0.018) (0.049)
Net realized gains on investments............ ( -- ) (0.000) ( -- ) (0.000) 0.000
-------- -------- -------- -------- --------
Total distributions.............................. (0.019) (0.006) (0.009) (0.018) (0.049)
-------- -------- -------- -------- --------
Net asset value, end of year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return..................................... 1.95% 0.58% 0.92% 1.80% 5.01%
Ratios/Supplemental Data
Net assets, end of year (000's).................. $399,087 $614,791 $858,944 $838,064 $811,173
Ratios to average net assets:
Expenses (net of fees waived) (a).............. 0.66% 0.62% 0.58% 0.61% 0.61%
Net investment income.......................... 1.86% 0.57% 0.92% 1.78% 4.71%
Expenses paid indirectly....................... 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Includes expenses paid indirectly
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Financial Highlights (Continued)
Money Market Portfolio
-----------------------------------------------------------
August 5, 2002
First Southwest shares Year Ended August 31, (Commencement of
- ---------------------- ------------------------------------ Offering) to
2005 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 $ 1.00
-------- -------- -------- --------
Income from investment operations:
Net investment income.................... 0.015 0.002 0.005 0.001
Net realized and unrealized gain (loss)
on investments............................. 0.000 0.000 -- 0.000
-------- -------- -------- --------
Total from investment operations............... 0.015 0.002 0.005 0.001
Less distributions from:
Dividends from net investment income..... (0.015) (0.002) (0.005) (0.001)
Net realized gains on investments.......... -- (0.000) ( -- ) (0.000)
-------- -------- -------- --------
Total distributions............................ (0.015) (0.002) (0.005) (0.001)
-------- -------- -------- --------
Net asset value, end of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return................................... 1.56% 0.19% 0.50% 0.07%(a)
Ratios/Supplemental Data
Net assets, end of year (000's)................ $116,911 $142,384 $130,429 $127,082
Ratios to average net assets:
Expenses (net of fees waived) (b)............ 1.05% 1.01% 0.99% 0.99%(c)
Net investment income........................ 1.52% 0.19% 0.51% 0.93%(c)
Distribution fees waived..................... 0.06% 0.06% 0.06% 0.06%(c)
Expenses paid indirectly..................... 0.00% 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)
================================================================================
5. Financial Highlights (Continued)
U.S. Government Portfolio
Class A shares Year Ended August 31,
- -------------- ------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------
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...................... 0.016 0.003 0.006 0.014 0.044
Net realized and unrealized gain (loss)
on investments............................... 0.000 0.000 0.000 -- 0.000
-------- -------- -------- -------- --------
Total from investment operations................. 0.016 0.003 0.006 0.014 0.044
Less distributions from:
Dividends from net investment income....... (0.016) (0.003) (0.006) (0.014) (0.044)
Net realized gains on investments............ (0.000) (0.000) (0.000) (0.000) (0.000)
-------- -------- -------- -------- --------
Total distributions.............................. (0.016) (0.003) (0.006) (0.014) (0.044)
-------- -------- -------- -------- --------
Net asset value, end of year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return..................................... 1.64% 0.28% 0.64% 1.39% 4.54%
Ratios/Supplemental Data
Net assets, end of year (000's).................. $238,365 $250,634 $236,931 $241,906 $484,681
Ratios to average net assets:
Expenses (a)................................... 0.87% 0.84% 0.79% 0.89% 0.93%
Net investment income.......................... 1.62% 0.28% 0.64% 1.46% 4.42%
Expenses paid indirectly....................... 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a)Includes expenses paid indirectly.
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Financial Highlights (Continued)
U.S. Government Portfolio
Class B shares Year Ended August 31,
- -------------- ------------------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------
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...................... 0.019 0.005 0.008 0.017 0.048
Net realized and unrealized gain (loss)
on investments............................... 0.000 0.000 0.000 -- 0.000
-------- -------- -------- -------- --------
Total from investment operations................. 0.019 0.005 0.008 0.017 0.048
Less distributions from:
Dividends from net investment income....... (0.019) (0.005) (0.008) (0.017) (0.048)
Net realized gains on investments............ (0.000) (0.000) (0.000) ( -- ) (0.000)
-------- -------- -------- -------- --------
Total distributions.............................. (0.019) (0.005) (0.008) (0.017) (0.048)
-------- -------- -------- -------- --------
Net asset value, end of year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return..................................... 1.91% 0.53% 0.84% 1.69% 4.91%
Ratios/Supplemental Data
Net assets, end of year (000's).................. $233,389 $290,512 $331,130 $400,833 $216,573
Ratios to average net assets:
Expenses (a)................................... 0.60% 0.60% 0.59% 0.58% 0.58%
Net investment income.......................... 1.85% 0.52% 0.84% 1.61% 4.77%
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 Trustees and Shareholders of
Short Term Income Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, 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, 2005, the results of each of
their operations for the year then ended, the changes in each of 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, 2005 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
October 20, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
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.
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT
On July 21, 2005, the Board of Directors approved the continuance of the
Investment Management Contract. In determining whether to approve the
continuance of the Investment Management Contract, the Directors considered the
following information:
1) The nature, extent and quality of services provided by the Manager.
The Directors reviewed in detail the nature and extent of the services provided
by the Manager under the terms of the Fund's Investment Management Contract and
the quality of those services over the past year. The Directors noted that the
services include managing the investment and reinvestment of the Fund's assets;
the provision of reports to the Board regarding changes in portfolios holdings,
important developments affecting the entities whose securities are included in
the Fund's portfolios, and the money market industry and the economy in general;
and the compensation of all officers, directors and employees of the Fund who
are officers of the Manager or its affiliates. The Board also observed that the
Manager provides various administrative services to the Fund pursuant to the
terms of a separate Administrative Services Contract and considered the nature,
extent and quality of services provided under that agreement as well. The
Directors evaluated these factors based on their direct experience with the
Manager and in consultation with counsel to the independent Directors and Fund
counsel. The Directors concluded that the nature and extent of the services
provided under the Investment Management Contract were reasonable and
appropriate in relation to the management fee, that the level of services
provided by the Manager had not diminished over the past year and that the
quality of services continues to be high. The Directors reviewed the personnel
responsible for providing advisory services to the Fund and concluded, based on
their experience and interaction with the Manager, that (i) the Manager was able
to retain quality portfolio managers and other personnel; (ii) the Manager
exhibited a high level of diligence and attention to detail in carrying out its
advisory responsibilities under the Investment Management Contract; (iii) the
Manager was responsive to requests of the Directors; and (iv) the Manager had
kept the Directors apprised of developments relating to the Fund and the
industry in general. The Directors also focused on the Manager's reputation and
long-standing relationship with the Fund and, in particular, the experience of
the Manager in advising money market funds. The Directors also noted the high
quality of services provided by the Manager under the Administrative Services
Contract.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION
(UNAUDITED)
================================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT (continued)
2) The performance of the Fund and the Manager.
The Directors reviewed the investment performance of the Fund's Money Market
Portfolio and U.S. Government Portfolio (the "Portfolios"), both on an absolute
basis and as compared to various peer group categories for the one-, three- and
five-year periods ended May 31, 2005. The peer group categories included: (i) an
asset-based peer group of First Tier retail money market funds for the Money
Market Portfolio (i.e., other First Tier retail funds that are similar in asset
size to the Money Market Portfolio) and treasury and repurchase agreement retail
money market funds for the U.S. Government Portfolio (i.e., other treasury and
repurchase agreement retail funds that are similar in asset size to the U.S.
Government Portfolio); (ii) a competitors class peer group for certain classes
of the Portfolios, representing other First Tier retail funds that are
considered to be competitors of the Money Market Portfolio with similar
distribution channels and other treasury and repurchase agreement funds that are
considered to be competitors of the U.S. Government Portfolio with similar
distribution channels (the "competitors peer groups"); and (iii) other funds
with similar investment policies to the respective Portfolios that are advised
or sub-advised by the Manager (these peer groups are collectively referred to as
the "Peer Groups"). The Manager advised the Board that it does not advise or
sub-advise any other types of accounts, such as institutional and pension
accounts, with similar investment policies to the respective Portfolios. The
Directors used each Portfolio's performance against its respective Peer Groups
to provide objective comparative benchmarks against which they could assess the
Fund's performance. The Directors considered those comparisons as helpful in
their assessment as to whether the Manager was obtaining for the Fund's
shareholders the performance that was available in the marketplace given each
Portfolio's investment objectives, strategies, limitations and restrictions. In
particular, the Board noted that the gross performance of each Portfolio against
all of its respective Peer Groups was satisfactory.
In connection with its assessment of the performance of the Manager, the
Directors considered the Manager's financial condition and whether it has the
resources necessary to continue to carry out its obligations under the
Investment Management Contract. The Directors took into account, in this regard,
the payments made by the Manager from its own resources to securities brokers,
banks and financial institutions or other industry professionals or
organizations whose customers are shareholders of the Fund ("Participating
Organizations") in connection with distribution assistance and shareholder
servicing provided by the Participating Organizations. The Directors concluded
that the Manager had the financial resources necessary to continue to perform
its obligations under the Investment Management Contract and to continue to
provide the high quality services that it had provided to the Fund to date.
3) The cost of the advisory services and the profits to the Manager and its
affiliates from the relationship with the Fund.
In connection with the Director's consideration of the level of the management
fees, the Directors considered a number of factors. The Directors compared the
level of the management fee for each Portfolio against the advisory fees charged
to the funds in the respective Peer Groups and each Portfolio's combined
management-administrative fees against fees covering both advisory and
administrative services charged to the funds in the respective Peer Groups. The
Directors also considered comparative total fund expenses of the Portfolios and
the respective Peer Groups. The Directors used this combined fee information and
total expense data as a guide to help assess the reasonableness of each
Portfolio's management fee, although they acknowledged that it was difficult to
make precise comparisons with other funds since the exact nature of services
provided under the Peer Group fund agreements is often not apparent. The
Directors also viewed the Peer Group fee information as a whole as useful in
assessing whether the Manager was providing services at a cost that was
competitive with other, similar funds. In assessing this information, the
Directors considered both the comparative contract rates as well as the level of
the management fees after waivers and/or reimbursements. The Board noted that
the contract rates of each Portfolio's combined fees (management and
administrative) were reasonable when compared to the combined fees of the
respective Peer Groups.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT (continued)
The Board further observed that the total expense ratio of each class of each
Portfolio was satisfactory when compared to the expense ratio of the funds in
each Portfolio's competitors' peer group. The Directors also noted that the
Manager did not advise or sub-advise any other types of accounts, such as
institutional or pension accounts, with similar investment policies to the
Portfolios'. The Directors concluded that the level of each Portfolio's
management fee was reasonable in light of these factors.
The Directors also considered the profitability to the Manager and its
affiliates arising out of their relationships with the Fund. In this regard the
Directors reviewed profitability data relating to the Manager and its affiliates
for the year ended December 31, 2004. The Directors considered revenues received
by the Manager under the Investment Management Contract and Administrative
Services Contract as well as revenues received by the Manager's affiliates under
the 12b-1 Plans and related agreements, Transfer Agency Agreement and revenues
derived from Reich & Tang's cash management business (e.g. checking and debit
card services that are offered by Reich & Tang to Fund shareholders through
certain Participating Organizations). The Directors concluded that the
profitability of the Fund to the Manager and its affiliates was not excessive.
4) The extent to which economies of scale will be realized as the Fund
grows and whether fee levels reflect those economies of scale.
With respect to the Directors' consideration of economies of scale, the
Directors discussed with the Manager whether economies of scale would be
realized by it in its management of the Portfolios at higher asset levels. The
Directors also discussed with the Manager whether certain of the Manager's costs
would increase if asset levels rise and observed that as assets rise, the
Manager and its affiliates may be required to pay increased fees to
Participating Organizations. The Directors also reviewed the Peer Group data to
assess whether the Peer Group funds had advisory or administrative fee
breakpoints and, if so, at what asset levels. The Directors concluded that they
were unable to assess at this time whether economies of scale would be realized
if a Portfolio were to experience significant asset growth in the future,
however, they noted that the current fee structure did contain breakpoints which
would decrease the rate of the management fees at higher asset levels. In the
event there were significant asset growth in the future, the Directors
determined to reassess whether the management fees appropriately took into
account any economies of scale that had been realized as a result of that
growth.
5) Other Factors.
In addition to the above factors, the Directors acknowledged the importance of
the ability of the Manager's affiliate, the distributor, to market the Fund
through its distribution networks, including its customer service and
administration system with banks and bank customers.
Based on a consideration of all these factors in their totality, the Directors,
including all of the disinterested Directors, determined that each Portfolio's
management fee was fair and reasonable with respect to the quality of services
that the Manager provides and in light of the other factors described above that
the Directors deemed relevant. The Directors based their decision on evaluations
of all these factors as a whole and did not consider any one factor as
all-important or controlling. The disinterested Directors were also assisted by
the advice of independent counsel in making this determination.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
================================================================================
Directors and Officers Information
August 31, 2005(1)
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Name, Address(2), Position(s) Term of Office Principal Occupation(s) Number of Other
and Age Held with and Lenth of During Past Portfolios in Directorships
Fund Time Served (3) 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 N/A
Age 74 Administration in the Graduate School of eleven
School of Management, Rutgers portfolios
University with which he has
been associated with sinc 1966
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Robert Straniere, Director Since 1983 Owner, Straniere Law Firm since 1980, Director/Trustee WPG Funds
Esq., Age 64 NYS Assemblyman from 1981 to 2004 and of eleven Group
counsel at Fisher, Fisher & Berger portfolios
since 1995.
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Dr. Yung Wong, Director Since 1980 Managing Director of Abacus Associates, Director/Trustee N/A
Age 66 an investment firm, since 1996 of eleven
portfolios
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Directors and Officers Information
August 31, 2005(1)
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Name, Address(2), Position(s) Term of Office Principal Occupation(s) Number of Other
and Age Held with and Lenth of During Past Portfolios in Directorships
Fund Time Served (3) 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 51 and Asset Management, LLC ("RTAM, LLC"), a and/or Officer of
Director(4) 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 eight
other funds in the Reich & Tang Fund
Complex, Director of Pax World Money
Market Fund, Inc., Principal Executive
Officer of Delafield Fund, Inc. and
President and Chief Executive Officer
of Tax Exempt Proceeds Fund, Inc.
Mr. Duff also serves as a Director of
Reich & Tang Services, Inc. and Reich
& Tang Distributors, Inc.
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Richard De Sanctis, Vice Since 2005 Executive Vice President and CFO of N/A N/A
Age 48 President RTAM LLC. Associated with RTAM, LLC
since 1990. Mr. De Sanctis is Vice
Treasurer 1994 to 2004 President of ten other funds in the
and Reich & Tang Fund Complex, Vice
Assistant President and Assistant Secretary of
Secretary Cortland Turst, Inc. and serves as
Executive Vice President and Chief
Financial Officer of Reich & Tang
Services, Inc. and Reich & Tang
Distributors, Inc. Prior to December
2004, Mr. De Sanctis was Treasurer and
Assistant Secretary of eleven funds in
the Reich & Tang Fund Complex and Vice
President, Treasurer and Assistant
Secretary of Cortland Trust, Inc.
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
================================================================================
Directors and Officers Information
August 31, 2005(1)
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Name, Address(2), Position(s) Term of Office Principal Occupation(s) Number of Other
and Age Held with and Lenth of During Past Portfolios in Directorships
Fund Time Served (3) 5 Years Fund Complex held by
Overseen by Director Director
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Directors/Officers (Continued):
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Molly Flewharty, Vice Since 1995 Senior Vice President of RTAM, LLC. N/A N/A
Age 54 President Associated with RTAM, LLC since 1977.
Ms. Flewharty is also Vice President of
eleven other funds in the Reich & Tang
Fund Complex. Ms. Flewharty also serves
as Senior Vice President of Reich &
Tang Distributors, Inc.
- --------------------- ----------- -------------- --------------------------------------- --------------------- -------------
Rosanne Holtzer, Chief Since 2004 Senior Vice President, Compliance N/A N/A
Age 41 Compliance Officer and Assistant Secretary of
Officer RTAM, LLC. Associated with RTAM, LLC
since 1986. Ms. Holtzer is also Chief
Secretary Since 2001 Compliance Officer, Secretary and
Assistant Treasurer of eleven other
Assistant Since 1995 funds in the Reich & Tang Complex.
Treasurer Ms. Holtzer also serves as Senior Vice
President, Assistant Secretary &
Compliance Officer of Reich & Tang
Distributors, Inc. and Senior Vice
President, Assistant Secretary & Cheif
Compliance Officer of Reich & Tang
Services, Inc.
- --------------------- ----------- -------------- --------------------------------------- --------------------- -------------
Michael Lydon, Vice Since 2005 Executive Vice President and Chief N/A N/A
Age 42 President Operations Officer of RTAM, LLC.
Associated with RTAM, LLC since
January 2005. Mr. Lydon was Vice
President at Automatic Data Processing
from July 2000 to December 2004. Prior
to July 2000, Mr. Lydon was Executive
Vice President and Chief Information
Officer of RTAM, LLC. Mr. Lydon is
also Vice President of eleven other
funds in the Reich & Tang Fund Complex.
Mr. Lydon also serves as Executive Vice
President and Chief Operations Officer
for Reich & Tang Distributors, Inc. and
Reich & Tang Services, Inc.
- --------------------- ----------- -------------- --------------------------------------- --------------------- -------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Directors and Officers Information
August 31, 2005(1)
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Name, Address(2), Position(s) Term of Office Principal Occupation(s) Number of Other
and Age Held with and Lenth of During Past Portfolios in Directorships
Fund Time Served (3) 5 Years Fund Complex held by
Overseen by Director Director
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Directors/Officers (Continued):
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Dana E. Messina, Vice Since 1995 Executive Vice President of RTAM, LLC. N/A N/A
Age 48 President Associated with RTAM, LLC since 1980.
Ms. Messina is also Vice President of
eight other funds in the Reich & Tang
Fund Complex. Ms. Messina also serves
as Executive Vice President of Reich &
Tang Distributors, Inc.
- -------------------- ----------- --------------- --------------------------------------- --------------------- -------------
Anthony Pace Treasurer Since 2004 Vice President of RTAM, LLC since N/A N/A
Age 39 and September 2004. Mr. Pace was a
Assistant Director of a Client Service Group at
Secretary GlobeOp Financial Services, Inc. from
May 2002 to August 2004 and Controller/
Director of Mutual Fund Administration
for Smith Barney Funds Management LLC
and Salomon Brothers Asset Management
Inc. from 1998 to May 2002. Mr. Pace
also Treasurer and Assistant Secretary
of eleven 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
(800) 433-1918.
(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>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
STIF8/05A
SHORT TERM
INCOME
FUND, INC.
Annual Report
August 31, 2005
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 8/31/2005 FYE 8/31/2004
4(a) Audit Fees $53,800 $52,200
4(b) Audit Related Fees $ 0 $ 0
4(c) Tax Fees $ 6,930 $ 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) $6,930 and $45,000, 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, 2005. $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.
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 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) 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 2, 2005
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 2, 2005
By (Signature and Title)* /s/ Anthony Pace
----------------
Anthony Pace, Treasurer
Date: November 2, 2005
* Print the name and title of each signing officer under his or her signature.