As filed with the Securities and Exchange Commission on November 8, 2007
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)
CHRISTINE MANNA
C/O REICH & TANG ASSET MANAGEMENT, LLC
600 FIFTH AVENUE
NEW YORK, NEW YORK 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-830-5200
Date of fiscal year end: August 31
Date of reporting period: August 31, 2007
ITEM 1: REPORT TO STOCKHOLDERS
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600 FIFTH AVENUE, NEW YORK, NY 10020
(212) 830-5200
SHORT TERM
INCOME FUND, INC.
===============================================================================
Dear Shareholder:
We are pleased to present the annual report of Short Term Income Fund, Inc. (the
"Fund") for the year ended August 31, 2007.
The Fund's Money Market Portfolio had 1,615 shareholders and net assets of
$181,039,549 as of August 31, 2007. The Government Portfolio had 299
shareholders and net assets of $73,176,874 as of August 31, 2007.
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.
EXPENSE CHART
FOR THE SIX MONTHS ENDED AUGUST 31, 2007
(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, 2007 through August 31, 2007.
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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Money Market Portfolio
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Class A Beginning Account Ending Account Value Expenses Paid Annualized
Value 3/1/07 8/31/07 During the Period Expense Ratio (a)
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Actual $1,000.00 $1,022.50 $4.84 0.95%
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Hypothetical (5% return before $1,000.00 $1,020.42 $4.84 0.95%
expenses)
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Class B Beginning Account Ending Account Value Expenses Paid Annualized
Value 3/1/07 8/31/07 During the Period Expense Ratio (a)
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Actual $1,000.00 $1,023.90 $3.57 0.70%
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Hypothetical (5% return before $1,000.00 $1,021.68 $3.57 0.70%
expenses)
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===============================================================================
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U.S. Government Portfolio
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Class A Beginning Account Ending Account Value Expenses Paid Annualized
Value 3/1/07 8/31/07 During the Period Expense Ratio (a)
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Actual $1,000.00 $1,022.10 $4.59 0.90%
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Hypothetical (5% return before $1,000.00 $1,020.67 $4.58 0.90%
expenses)
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Class B Beginning Account Ending Account Value Expenses Paid Annualized
Value 3/1/07 8/31/07 During the Period Expense Ratio (a)
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Actual $1,000.00 $1,023.50 $3.21 0.63%
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Hypothetical (5% return before $1,000.00 $1,022.03 $3.21 0.63%
expenses)
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(a) Expenses are equal to the Fund's annualized expense ratios multiplied by the
average account value over the period (March 1, 2007 through August 31, 2007),
multiplied by 184/365 (to reflect the most recent fiscal half-year).
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SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 2007
===============================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
- ---------- ---- ---------- ------
Asset Backed Commercial Paper (24.17%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 7,000,000 Chesham Finance Limited 09/04/07 6.00% $ 6,996,500
15,000,000 Greyhawk Funding, LLC 09/17/07 6.07 14,959,667
15,000,000 Lexington Parker Capital Company, LLC 11/07/07 5.94 14,836,548
7,000,000 Old Slip Funding Corporation 09/27/07 6.24 6,968,453
- -------------- -------------
44,000,000 Total Asset Backed Commercial Paper 43,761,168
- -------------- -------------
Domestic Certificate of Deposit (8.29%)
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$ 15,000,000 Citibank, N.A. 09/06/07 5.32% $ 15,000,000
- -------------- -------------
15,000,000 Total Domestic Certificate of Deposit 15,000,000
- -------------- -------------
Repurchase Agreement (12.15%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 22,000,000 Bank of America, purchased on 08/31/07, repurchase proceeds at
maturity $22,012,711 (Collateralized by $185,120,782, GNMA,
0.000% to 6.500%, due 01/16/23 to 08/16/42, value $22,440,000) 09/04/07 5.20% $ 22,000,000
- -------------- -------------
22,000,000 Total Repurchase Agreement 22,000,000
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Time Deposit (3.31%)
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$ 6,000,000 National Bank of Canada 09/04/07 5.33% $ 6,000,000
- -------------- -------------
6,000,000 Total Time Deposit 6,000,000
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Variable Rate Demand Instruments (b) (40.19%)
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$ 5,500,000 Allegheny County, PA IDA (Union Electric Steel Corporation)
LOC PNC Bank, N.A. 11/01/27 5.63% $ 5,500,000
2,250,000 Alta Mira LLC, - Series 2004
LOC M & I Marshall & Ilsley Bank 11/01/34 5.68 2,250,000
25,000 ARS Development Ltd. Project - Series 2001
LOC National City Bank 09/01/21 5.76 25,000
950,000 B & V Land Company, LLC
LOC Huntington National Bank 09/01/27 5.68 950,000
5,599,000 Baldwin County Sewer Service, LLC - Series 2005
LOC Amsouth Bank, N.A. 05/01/25 5.62 5,599,000
1,285,000 Bank of Kentucky Building, LLC - Series 1999
LOC US Bank, N.A. 12/01/19 5.78 1,285,000
80,000 Burgess & Niple Limited, - Series 1999
LOC National City Bank 09/01/14 5.71 80,000
380,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project)
LOC US Bank, N.A. 09/01/08 5.81 380,000
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The accompanying notes are an integral part of these financial statements.
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===============================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
- ---------- ---- ---------- ------
Variable Rate Demand Instruments (b) (Continued)
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$ 419,000 Capital One Funding Corporation
Floating Rate Option Notes - Series 1997D
LOC JPMorgan Chase Bank, N.A. 07/02/18 5.60% $ 419,000
5,000,000 City of Marion, IN EDRB
(Dolgencorp, Inc. Project) - Series 2005A
LOC KeyBank, N.A. 02/01/35 5.65 5,000,000
940,000 Community Limited Care Dialysis Center - Series 1997
LOC Fifth Third Bank 12/01/12 5.80 940,000
495,000 Crownover Lumber Company - Series 1997A
LOC Fifth Third Bank 09/01/08 5.88 495,000
230,000 Crownover Lumber Company - Series 1997B
LOC Fifth Third Bank 09/01/08 5.88 230,000
300,000 Derby Fabricating LLC
LOC Fifth Third Bank 06/01/24 5.64 300,000
1,860,000 Dickinson Press, Inc. - Series 1997
LOC Huntington National Bank 01/01/27 5.68 1,860,000
4,797,278 Federal Home Loan Mortgage Corporation
Class A Certificates - Series M006 10/15/45 5.57 4,797,278
735,000 Graves Lumber Co. Project - Series 2000
LOC Federal Home Loan Bank of Cincinnati 11/01/10 5.81 735,000
1,101,500 HCS & DJS Leasing - Series 2004
LOC Fifth Third Bank 06/01/34 5.64 1,101,500
2,300,000 Holland - Sheltair Aviation Funding, LLC - Series 2005 - B4
LOC Mellon Bank, N.A. 05/01/35 5.61 2,300,000
7,725,000 Lexington Financial Services, LLC Health Care RB - Series 2001
LOC LaSalle Bank, N.A. 02/01/26 5.61 7,725,000
300,000 LKWP Investments, LLC - Series 1997
LOC Huntington National Bank 03/01/27 5.68 300,000
480,000 Machining Center Inc. - Series 1997
LOC Comerica Bank 10/01/27 5.68 480,000
425,000 Madison, WI Community Development Authority
(Block 90 Parking Ramp Project)
LOC US Bank, N.A. 10/01/08 5.68 425,000
3,375,000 Maryland Health & Higher Educational Facilities Authority
(Glen Meadows Retirement Community) - Series 1999B
LOC Wachovia Bank, N.A. 07/01/29 5.65 3,375,000
855,000 Miami Valley Realty Associates - Series 1997
LOC Key Bank, N.A. 06/01/12 5.80 855,000
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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, 2007
===============================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
- ---------- ---- ---------- ------
Variable Rate Demand Instruments (b) (Continued)
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$ 90,000 Mobile Airport Authority RB - Series 1999
LOC Regions Bank 10/01/24 5.60% $ 90,000
3,010,000 Mount Ontario Holdings LLC - Series 2001
LOC US Bank, N.A. 04/01/21 5.55 3,010,000
5,400,000 Newport, KY Industrial Building RB
(Aquarium Holdings of Northern Kentucky, LLC Project)
LOC Fifth Third Bank 12/01/08 5.64 5,400,000
1,000,000 North Coast Quarry, Ltd.
LOC Fifth Third Bank 07/01/31 5.64 1,000,000
160,000 Ohio State Water Development Authority RB
(Independence Excavating, Inc. Project)
LOC National City Bank 12/01/09 5.76 160,000
2,325,000 Ordeal Properties LLC - Series 1997
LOC Key Bank, N.A. 10/01/12 5.65 2,325,000
1,300,000 Pennsylvania EDFA
(West 914 Incorporation Project) - Series 1991 A1
LOC PNC Bank, N.A. 05/01/21 5.63 1,300,000
4,600,000 Rochester Institute of Technology, NY RB - Series 2004A 11/01/21 5.80 4,600,000
75,000 St. Ann's Medical Office Building II
Limited Partnership - Series 1998
LOC National City Bank 11/01/19 5.71 75,000
4,025,000 Tom Richards, Inc. (Process Technology Project) - Series 2001
LOC Federal Home Loan Bank of Cincinnati 12/01/16 5.71 4,025,000
1,300,000 UAI Technologies, Inc. - Series 1998
LOC Wachovia Bank, N.A. 05/01/18 5.83 1,300,000
695,000 Valley City Linen Co. - Series 1997
LOC Huntington National Bank 02/01/27 5.68 695,000
1,375,000 Washington State HFC MHRB
(The Vintage at Richland Senior Living Project) - Series 2004B
Guaranteed by Federal National Mortgage Association 01/15/38 5.52 1,375,000
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72,761,779 Total Variable Rate Demand Instruments 72,761,778
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Yankee Certificate of Deposit (11.05%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Royal Bank of Canada 11/09/07 5.40% $ 20,000,000
- -------------- -------------
20,000,000 Total Yankee Certificate of Deposit 20,000,000
- -------------- -------------
Total Investments (99.16%) (cost $179,522,946+) 179,522,946
Cash and other assets, net of liabilities (0.84%) 1,516,603
-------------
Net Assets (100.00%) $ 181,039,549
=============
+ Aggregate cost for federal income tax purposes is identical.
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The accompanying notes are an integral part of these financial statements.
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===============================================================================
FOOTNOTES:
(a) The interest rate shown reflects the security's current coupon, unless
yield is available.
(b) Securities payable on demand at par including accrued interest (usually
with seven days' notice) and, where indicated, are unconditionally secured
as to principal and interest by a bank letter of credit. The interest rates
are adjustable and are based on bank prime rates or other interest rate
adjustment indices. The rate shown is the rate in effect at the date of
this statement.
KEY:
EDFA = Economic Development Finance Authority IDA = Industrial Development Authority
EDRB = Economic Development Revenue Bond LOC = Letter of Credit
GNMA = Government National Mortgage Association MHRB = Multi-Family Housing Revenue Bond
HFC = Housing Finance Commission RB = Revenue Bond
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY:
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Securities Maturing in Value % of Portfolio
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Less than 31 Days $144,686,398 80.59%
31 through 60 Days -- --
61 through 90 Days 34,836,548 19.41
91 through 120 Days -- --
121 through 180 Days -- --
Over 180 Days -- --
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Total $179,522,946 100.00%
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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
SCHEDULE OF INVESTMENTS
AUGUST 31, 2007
===============================================================================
Face Maturity Current Value
Amount Date Coupon (a) (Note 1)
- ---------- ---- ---------- ------
Repurchase Agreements (45.10%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 16,500,000 UBS Securities, LLC, purchased on 08/31/07,
repurchase proceeds at maturity $16,509,533 (Collateralized by
$90,744,982, GNMA, 4.500% to 12.500%,
due 10/15/07 to 06/15/37, value $16,831,821) 09/04/07 5.20% $ 16,500,000
16,500,000 Bank of America, purchased on 08/31/07,
repurchase proceeds at maturity $16,509,533 (Collateralized by
$129,595,196, GNMA, 0.000% to 5.870%,
due 04/16/28 to 08/16/44, value $16,830,000) 09/04/07 5.20 16,500,000
- -------------- -------------
33,000,000 Total Repurchase Agreements 33,000,000
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U.S. Government Obligations (54.42%)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 25,000,000 U.S. Treasury Bill 09/17/07 4.53% $ 24,950,555
15,000,000 U.S. Treasury Note, 3.75% 05/15/08 4.98 14,873,343
- -------------- -------------
40,000,000 Total U.S. Government Obligations 39,823,898
- -------------- -------------
Total Investments (99.52%) (cost $72,823,898+) 72,823,898
Cash and other assets, net of liabilities (0.48%) 352,976
-------------
Net Assets (100.00%) $ 73,176,874
=============
+ Aggregate cost for federal income tax purposes is identical.
FOOTNOTES:
(a) The interest rate shown reflects the security's current yield; coupon rate
for Treasury Securities is shown within the description.
KEY:
GNMA = Government National Mortgage Association
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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
BREAKDOWN OF PORTFOLIO HOLDINGS BY MATURITY
AUGUST 31, 2007
===============================================================================
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Securities Maturing in Value % of Portfolio
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- ------------------------------------------------------------------------------
Less than 31 Days $ 57,950,555 79.58%
31 through 60 Days -- --
61 through 90 Days -- --
91 through 120 Days -- --
121 through 180 Days -- --
Over 180 Days 14,873,343 20.42
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Total $ 72,823,898 100.00%
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2007
===============================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- --------------------
ASSETS
Investments in securities, at amortized cost (Note 1)........ $ 157,522,946 $ 39,823,898
Repurchase agreements (Note 1)............................... 22,000,000 33,000,000
Cash ........................................................ 678,882 423,580
Accrued interest receivable.................................. 1,426,897 171,377
Other Receivables............................................ -0- 42
--------------------- --------------------
Total assets...................................... 181,628,725 73,418,897
--------------------- --------------------
LIABILITIES
Payable to affiliates*....................................... 122,222 50,280
Accrued expenses............................................. 145,430 91,861
Dividends payable............................................ 321,500 99,882
Other payable................................................ 24 -0-
--------------------- --------------------
Total liabilities................................. 589,176 242,023
--------------------- --------------------
Net assets.................................................. $ 181,039,549 $ 73,176,874
===================== ====================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 3)...... $ 181,039,549 $ 73,176,874
--------------------- --------------------
Net assets................................................... $ 181,039,549 $ 73,176,874
===================== ====================
Net asset value, per share (Note 3):
Money Market Portfolio:
Class Name Net Assets Shares Outstanding Net Asset Value
Class A Shares.............................. $ 46,943,550 46,943,550 $1.00
Class B Shares.............................. $134,095,999 134,095,999 $1.00
US Government Portfolio:
Class Name Net Assets Shares Outstanding Net Asset Value
Class A Shares.............................. $ 14,379,922 14,379,922 $1.00
Class B Shares.............................. $ 58,796,952 58,796,952 $1.00
* Includes fees payable to Reich & Tang Asset Management, LLC, Reich & Tang
Distributors, Inc. and Reich & Tang Services, Inc.
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2007
===============================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- ---------------------
INVESTMENT INCOME
Income:
Interest..................................................... $ 37,963,963 $ 16,977,485
--------------------- --------------------
Expenses: (Note 2)
Investment management fee.................................... 2,128,501 866,971
Administration fee........................................... 1,489,951 675,756
Distribution fee (First Southwest shares).................... 397,175 -0-
Shareholder servicing fee (Class A).......................... 809,298 425,805
Shareholder servicing fee (First Southwest shares)........... 397,175 -0-
Custodian expenses........................................... 43,771 27,786
Shareholder servicing and related shareholder expenses+...... 496,873 227,380
Legal, compliance and filing fees............................ 492,509 110,286
Audit and accounting......................................... 153,794 125,039
Directors' fees.............................................. 42,732 24,282
Miscellaneous................................................ 34,350 20,943
--------------------- --------------------
Total expenses........................................... 6,486,129 2,504,248
Less: Fees waived ...................................... (181,062) (4,472)
Expenses paid indirectly.......................... (8,154) (10,613)
--------------------- --------------------
Net expenses............................................. 6,296,913 2,489,163
--------------------- --------------------
Net investment income........................................... 31,667,050 14,488,322
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................... 7,896 -0-
--------------------- --------------------
Increase in net assets from operations.......................... $ 31,674,946 $ 14,488,322
===================== ====================
+ Includes class specific transfer agency expenses of $238,449 and $135,657
for the Money Market Portfolio Class A and Class B shares, respectively and
$119,966 and $69,673 for the U.S. Government Portfolio Class A and Class B
shares, respectively.
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The accompanying notes are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED AUGUST 31, 2007 AND 2006
===============================================================================
Money Market Portfolio U.S. Government Portfolio
----------------------------------- ----------------------------------
2007 2006 2007 2006
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.................. $ 31,667,050 $ 32,288,892 $ 14,488,322 $ 16,642,255
Net realized gain (loss) on investments 7,896 -0- -0- 2,751
---------------- ---------------- --------------- ---------------
Increase in net assets from operations. 31,674,946 32,288,892 14,488,322 16,645,006
Dividends to shareholders from
net investment income:
Class A................................ (14,264,357) (14,316,769) (7,454,436) (8,027,122)
Class B................................ (10,581,710) (13,256,967) (7,033,886) (8,615,133)
First Southwest shares................. (6,820,983) (4,715,156) -0- -0-
---------------- ---------------- --------------- ---------------
Total dividend to shareholders...... (31,667,050) (32,288,892) (14,488,322) (16,642,255)
---------------- ---------------- --------------- ---------------
Distributions to shareholders from
realized gain on investments:
Class A................................ (2,998) -0- -0- (1,410)
Class B................................ (1,717) -0- -0- (1,341)
First Southwest shares................. (2,066) -0- -0- -0-
---------------- ---------------- ---------------- ---------------
Total distributions to shareholders. (6,781) -0- -0- (2,751)
---------------- ---------------- ---------------- ---------------
Capital share transactions (Note 3):
Class A................................ (352,161,591) 51,525,598 (189,952,261) (34,032,228)
Class B................................ (180,365,178) (84,626,791) (162,954,419) (11,638,016)
First Southwest shares................. (133,806,999) 16,895,909 -0- -0-
---------------- ---------------- ---------------- ---------------
Total capital share transactions.... (666,333,768) (16,205,284) (352,906,680) (45,670,244)
---------------- ---------------- ---------------- ---------------
Total increase (decrease)........... (666,332,653) (16,205,284) (352,906,680) (45,670,244)
Net assets:
Beginning of year...................... 847,372,202 863,577,486 426,083,554 471,753,798
---------------- ---------------- --------------- ---------------
End of year............................ $ 181,039,549 $ 847,372,202 $ 73,176,874 $ 426,083,554
================ ================ =============== ===============
Undistributed net investment income........ $ -0- $ -0- $ -0- $ -0-
================ ================ =============== ===============
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These financial statements are an integral part of these financial statements.
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SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies
Short Term Income Fund, Inc. (the "Fund") is a 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. On June 7, 2007, the Board of Directors of the Fund
approved the merger of the Fund into Daily Income Fund, an affiliated fund also
managed by Reich & Tang Asset Management, LLC, on or about November 12, 2007.
This merger is subject to the approval of the Shareholders of record of August
24, 2007. The Money Market Portfolio has three classes of stock authorized,
Class A, Class B and First Southwest Prime Income Fund (the "First Southwest
shares"). Distribution of First Southwest shares commenced on August 5, 2002 and
fully liquidated on August 18, 2007. 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. The Fund's financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America for investment companies as follows:
a) Valuation of Securities -
Investments are valued at amortized cost,which approximates market value. Under
this valuation method,a portfolio instrument is valued at cost and any discount
or premium is amortized on a constant basis to the maturity of the instrument.
If fluctuating interest rates cause the market value of the Fund's portfolio to
deviate more than 1/2 of 1% from the value determined on the basis of amortized
cost, the Board of Directors will consider whether any action should be
initiated. The maturity of variable rate demand instruments is deemed to be the
longer of the period required before the Fund is entitled to receive payment
of the principal amount or the period remaining until the next interest rate
adjustment.
b) Repurchase Agreements -
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the fair value of which exceeds the principal amount of the
repurchase transaction, including accrued interest, at all times. If the seller
defaults, and the fair market value of the collateral declines, realization of
the collateral by the Fund may be delayed or limited.
c) Federal Income Taxes -
It is the policy of each Portfolio to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its 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. Net realized
long-term capital gains, if any, are distributed at least annually and in no
event later than 60 days after the end of the Fund's fiscal year.
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- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
1. Summary of Accounting Policies (Continued)
e) Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of increases
and decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
f) General -
Securities transactions are recorded on a trade date basis. Interest income
including accretion of discount and amortization of premium is accrued as
earned. Realized gains and losses from securities transactions are recorded on
the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates
Under the 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, 2007, the following fees were voluntarily waived
by the Manager and Distributor:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Administration Fee $ 47,657 $ -0-
Shareholder Servicing Fee - Class A $ 13,310 $ 2,435
Distribution fees - First Southwest shares $ 108,295 $ -0-
Transfer Agency Fees - Class A $ 6,282 $ 2,037
Transfer Agency Fees - Class B $ 5,518 $ -0-
The Manager and Distributor have no right to recoup prior fee waivers.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
Prior to January 1, 2007, fees were paid to Directors who were unaffiliated with
the Manager on the basis of $8,000 per annum plus $1,450 per meeting attended
(there were five scheduled Board Meetings each year). In addition, the Audit
Committee Chairman received an aggregate payment of $1,000 per quarter allocated
among the funds of the Reich & Tang complex on whose audit committee he served
and each member of the Audit Committee received an aggregate payment of $750 per
Audit Committee meeting attended allocated among the funds of the Reich & Tang
Complex. The Lead Independent Director received an additional annual fee of
$8,000 and the Deputy Lead Director received an additional annual fee of $4,000,
both fees were paid quarterly and allocated among the funds of the Reich & Tang
Complex. Effective January 1, 2007, the Directors of the Fund not affiliated
with the Manager are paid a fee that is to be allocated among multiple funds, as
defined below. Each Independent Director receives an annual retainer of $50,000
and a fee of $3,000 for each Board of Directors meeting attended. Each
Independent Director also receives a fee of up to $1,500 at the discretion of
the Lead Director for telephonic Board meetings and committee meetings that are
not held on the same day as board meeting. In addition, the Lead Independent
Director receives an additional $12,000, payable quarterly and the Audit
Committee Chairman receives an additional annual fee of $8,000, payable
quarterly. Each Independent Director will also be reimbursed for all
out-of-pocket expenses relating to attendance at such meetings. The fees noted
above are to be allocated at the discretion of the Manager among the Fund, the
California Daily Tax Free Income Fund, Inc., the Connecticut Daily Tax Free
Income Fund, Inc., the Daily Income Fund, the Daily Tax Free Income Fund, Inc.,
the Florida Daily Municipal Income Fund and the New Jersey Daily Municipal
Income Fund, Inc.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $302,001 and $159,372 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 each portfolio. Pursuant to the Transfer Agency
Agreement, the Transfer Agent receives a fee of $17.40 per account per year or a
minimum of 0.05% of the monthly average net assets of the Class A and B shares
of each portfolio. For the year ended August 31, 2007, these fees amounted to an
annual rate of 0.05% of the monthly average net assets of the Class A and B
shares of each portfolio.
For the year ended August 31, 2007, the breakdown of expenses paid indirectly by
the Fund were as follows:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Custodian expenses $ 8,154 $ 10,613
======= ========
3. Capital Stock
At August 31, 2007, 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, 2007 August 31, 2006 August 31, 2007 August 31, 2006
---------------- --------------- --------------- ---------------
Class A shares
- ----------------
Sold.................................. 1,909,999,158 2,026,096,416 904,577,154 1,143,651,308
Issued on reinvestment of dividends... 13,535,362 12,881,685 7,320,294 7,219,159
Redeemed.............................. (2,275,696,111) (1,987,452,503) (1,101,849,709) (1,184,902,695)
--------------- -------------- --------------- ---------------
Net increase (decrease)............... (352,161,591) 51,525,598 (189,952,261) (34,032,228)
=============== ============== =============== ===============
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
3. Capital Stock (Continued)
Money Market Portfolio U.S. Government Portfolio
----------------------------------- -----------------------------------
Year Year Year Year
Ended Ended Ended Ended
August 31, 2007 August 31, 2006 August 31, 2007 August 31, 2006
--------------- --------------- --------------- ---------------
Class B shares
- --------------
Sold.................................. 1,090,949,182 1,161,030,721 880,823,993 886,491,976
Issued on reinvestment of dividends... 10,940,740 13,139,388 7,318,639 8,078,598
Redeemed.............................. (1,282,255,100) (1,258,796,900) (1,051,097,051) (906,208,590)
-------------- -------------- -------------- ------------
Net increase (decrease)............... (180,365,178) (84,626,791) (162,954,419) (11,638,016)
============== ============== ============== ============
Period Ended
August 17, 2007
---------------
First Southwest shares
- ----------------------
Sold.................................. 265,287,709 215,384,221
Issued on reinvestment of dividends... 6,822,911 4,715,497
Redeemed.............................. (405,917,619) (203,203,809)
------------ ------------
Net increase (decrease)............... (133,806,999) 16,895,909
============ ============
4. Tax Information
The tax character of all dividends and distributions paid during the years ended
August 31, 2007 and 2006 were as follows:
Money Market Portfolio U.S. Government Portfolio
-------------------------------- --------------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Ordinary income....................... $31,673,831 $32,288,892 $14,488,322 $16,645,006
Long-term capital gains............... -0- -0- -0- -0-
At August 31, 2007, the Money Market Portfolio and the U.S. Government Portfolio
had no distributable earnings and capital loss carry forwards. The Money Market
Portfolio had utilized $1,115 of capital loss carry forwards.
The Fund adopted Financial Accounting Standards Board ("FASB") Interpretation
No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109 ("FIN 48"). FIN 48 requires the Management to determine
whether a tax position of the Fund is more likely than not to be sustained upon
examination by the applicable taxing authority, including resolution of any
related appeals or litigation processes, based on the technical merits of the
position. The tax benefit to be recognized is measured as the largest amount of
benefit that is greater than fifty percent likely of being realized upon
ultimate settlement which could result in the Fund recording a tax liability
that would reduce net assets. FIN 48 must be applied to all existing tax
positions upon initial adoption and the cumulative effect, if any, is to be
reported as an adjustment to net assets.
Based on its analysis, the Management has determined that the adoption of FIN 48
did not have an impact to the Fund's financial statements upon adoption.
However, the Management's conclusions regarding FIN 48 may be subject to review
and adjustment at a later date based on factors including, but not limited to,
further implementation guidance expected from the FASB, and on-going analyses of
tax laws, regulations and interpretations thereof.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
5. Financial Highlights
Money Market Portfolio
Year Ended August 31,
------------------------------------------------------------------
Class A shares 2007 2006 2005 2004 2003
- -------------- ---------- ---------- ---------- ---------- ----------
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.................... 0.044 0.037 0.017 0.003 0.006
Net realized and unrealized gain (loss)
on investments......................... 0.000 -- 0.000 0.000 --
---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.044 0.037 0.017 0.003 0.006
Less distributions:
Dividends from net investment income..... (0.044) (0.037) (0.017) (0.003) (0.006)
Net realized gains on investments........ (0.000) -- -- (0.000) --
---------- ---------- ---------- ---------- ----------
Total distributions...................... (0.044) (0.037) (0.017) (0.003) (0.006)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return................................ 4.50% 3.72% 1.66% 0.33% 0.63%
Ratios/Supplemental Data
Net assets, end of year (000's)............. $ 46,944 $ 399,104 $ 347,579 $ 370,650 $ 389,718
Ratios to average net assets:
Expenses, net of fees waived (a)......... 0.95% 0.94% 0.94% 0.87% 0.87%
Net investment income.................... 4.41% 3.67% 1.64% 0.32% 0.61%
Administration fees waived............... 0.01% -- -- -- --
Shareholder servicing fees waived........ 0.00% -- -- -- --
Expenses paid indirectly................. 0.00% -- 0.00% 0.00% 0.00%
Transfer Agency fees waived.............. 0.00% -- -- -- --
(a) Includes expenses paid indirectly if applicable
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
5. Financial Highlights (Continued)
Money Market Portfolio
Year Ended August 31,
------------------------------------------------------------------
Class B shares 2007 2006 2005 2004 2003
- -------------- ---------- ---------- ---------- ---------- ----------
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.................... 0.047 0.039 0.019 0.006 0.009
Net realized and unrealized gain (loss)
on investments......................... 0.000 -- 0.000 0.000 --
---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.047 0.039 0.019 0.006 0.009
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income..... (0.047) (0.039) (0.019) (0.006) (0.009)
Net realized gains on investments........ (0.000) ( -- ) (0.000) (0.000) --
---------- ---------- ---------- ---------- ----------
Total distributions...................... (0.047) (0.039) (0.019) (0.006) (0.009)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return................................ 4.77% 4.00% 1.95% 0.58% 0.92%
Ratios/Supplemental Data
Net assets, end of year (000's)............. $ 134,096 $ 314,461 $ 399,087 $ 614,791 $ 858,944
Ratios to average net assets:
Expenses, net of fees waived (a)......... 0.69% 0.67% 0.66% 0.62% 0.97%
Net investment income.................... 4.66% 3.89% 1.86% 0.57% 0.73%
Administration fees waived............... 0.01% -- -- -- --
Expenses paid indirectly................. 0.00% -- 0.00% 0.00% 0.00%
Transfer Agency fees waived.............. 0.00% -- -- -- --
(a) Includes expenses paid indirectly
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
5. Financial Highlights (Continued)
U.S Government Portfolio
Year Ended August 31,
------------------------------------------------------------------
Class A shares 2007 2006 2005 2004 2003
- -------------- ---------- ---------- ---------- ---------- ----------
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.................... 0.044 0.036 0.016 0.003 0.006
Net realized and unrealized gain (loss)
on investments......................... -- 0.000 0.000 0.000 0.000
---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.044 0.036 0.016 0.003 0.006
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income..... (0.044) (0.036) (0.016) (0.003) (0.006)
Net realized gains on investments........ -- (0.000) (0.000) (0.000) (0.000)
---------- ---------- ---------- ---------- ----------
Total distributions...................... (0.044) (0.036) (0.016) (0.003) (0.006)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return................................ 4.45% 3.65% 1.64% 0.28% 0.64%
Ratios/Supplemental Data
Net assets, end of year (000's)............. $ 14,380 $ 204,332 $ 238,365 $ 250,634 $ 236,931
Ratios to average net assets:
Expenses, net of fees waived (a)......... 0.90% 0.88% 0.87% 0.84% 0.79%
Net investment income.................... 4.38% 3.55% 1.62% 0.28% 0.64%
Shareholder Servicing fees waived........ 0.00% -- -- -- --
Expenses paid indirectly................. 0.00% 0.00% 0.00% 0.00% 0.00%
Transfer Agency fees waived.............. 0.00% -- -- -- --
(a) Includes expenses paid indirectly if applicable
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
5. Financial Highlights (Continued)
U.S Government Portfolio
Year Ended August 31,
------------------------------------------------------------------
Class B shares 2007 2006 2005 2004 2003
- -------------- ---------- ---------- ---------- ---------- ----------
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.................... 0.046 0.039 0.019 0.005 0.008
Net realized and unrealized gain (loss)
on investments......................... -- 0.000 0.000 0.000 0.000
---------- ---------- ---------- ---------- ----------
Total from investment operations......... 0.046 0.039 0.019 0.005 0.008
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income..... (0.046) (0.039) (0.019) (0.005) (0.008)
Net realized gains on investments........ -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions...................... (0.046) (0.039) (0.019) (0.005) (0.008)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return................................ 4.73% 3.94% 1.91% 0.53% 0.84%
Ratios/Supplemental Data
Net assets, end of year (000's)............. $ 58,797 $ 221,752 $ 233,389 $ 290,512 $ 331,130
Ratios to average net assets:
Expenses, net of fees waived (a)......... 0.63% 0.61% 0.60% 0.60% 0.59%
Net investment income.................... 4.64% 3.86% 1.85% 0.52% 0.84%
Expenses paid indirectly................. 0.00% 0.00% 0.00% 0.00% 0.00%
(a) Includes expenses paid indirectly if applicable
6. New Accounting Pronouncements
In September 2006, FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements ("SFAS157"). SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 applies to reporting periods beginning after
November 15, 2007. Management is currently evaluating the impact the adoption of
SFAS 157 will have on the Fund's financial statements.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 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 Money Market Portfolio and U.S.
Government Portfolio (constituting Short Term Income Fund, Inc., hereafter
referred to as the "Fund") at August 31, 2007, 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
October 29, 2007
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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.
QUALIFIED INTEREST INCOME
For the fiscal year ended August 31, 2007, the Funds' designate the following
percentages of ordinary distributions paid during the fiscal year that are from
qualified interest income to foreign shareholders:
Qualified Interest Income
-------------------------
Short Term Income Fund - Money Market Portfolio 65%
Short Term Income Fund - U.S. Government Portfolio 100%
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT
On June 7, 2007, the Board of Directors approved the continuance of the
Investment Management Contract. Specifically, with regards to the approval of
the continuance of the Investment Management Contract, the Board had considered
the following factors:
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 portfolio holdings,
important developments affecting the entities whose securities are included in
the Fund's portfolios, the money market industry and the economy in general; and
the payment of 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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT (continued)
1) The nature, extent and quality of services provided by the Manager.
(continued)
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.
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, both on an absolute basis and on a
gross basis, as compared to various Lipper peer group categories ("Performance
Peer Groups") for the one-month, one-, three-, five- and ten-year periods ended
March 31, 2007. The Performance Peer Groups for the Money Market Portfolio were
comprised of: (i) the Money Market Portfolio's Class A shares and fourteen other
retail no-load money market funds, as classified by Lipper, (ii) the Money
Market Portfolio's Class A shares and seven other retail money market funds that
are considered by the Manager to be competitors of the Fund with similar
distribution channels, (iii) a sub-advised competitor group of the Money Market
Portfolio's Class A shares and any other similar money market products managed
or sub-advised by the Manager, and (iv) the Money Market Portfolio and all other
retail money market funds in the Lipper universe regardless of asset size or
primary channel of distribution. The Performance Peer Groups for the U.S.
Government Portfolio were comprised of: (i) the U.S. Government Portfolio's
Class A shares and twelve other U.S. Treasury retail no-load money market funds,
as classified by Lipper, (ii) the U.S. Government Portfolio's Class A shares,
one other U.S. Treasury retail money market fund, and one institutional U.S.
Treasury money market fund that are considered by the Manager to be competitors
of the Fund with similar distribution channels, (iii) a sub-advised competitor
group of the U.S. Government Portfolio's Class A shares and any other similar
U.S. Treasury money market or institutional products managed or sub-advised by
the Manager, and (iv) the U.S. Government Portfolio and all other retail U.S.
Treasury money market funds in the Lipper universe regardless of asset size or
primary channel of distribution. The Manager advised the Board that, other than
the sub-advised competitor groups, it does not advise or subadvise other funds
with similar investment policies to the Money Market Portfolio's or U.S.
Government Portfolio's (together, the "Portfolios") or other types of accounts,
such as institutional and pension accounts, with similar investment policies to
the Portfolios'. The Directors used the Portfolios' performance against their
respective Performance Peer Groups to provide objective comparative benchmarks
against which they could assess their performance. The Directors considered
those comparisons as helpful in their assessment as to whether the Manager was
obtaining for the Portfolios' shareholders the performance that was available in
the marketplace given their investment objectives, strategies, limitations and
restrictions. In particular, the Board noted that the gross performance of the
Money Market Portfolio and U.S. Government Portfolio against their respective
Performance Peer Groups was satisfactory and that (i) the Money Market
Portfolio's ranking against the Lipper performance universe (which includes all
funds in the expense universe regardless of asset-size or primary channel of
distribution) was in the 2nd quintile for the one-moth and three-year periods,
the 3rd quintile for the one-year and ten-year periods, and the 4th quintile for
the five-year period, and (ii) the U.S. Government Portfolio's ranking against
the Lipper performance universe was in the 1st quintile for the one-moth,
three-year and ten-year periods, the 2nd quintile for the one-year period, and
the 4th quintile for the five-year period (the 1st quintile is the highest
quintile). At the same time, the Board considered that the difference between
the best and worst performing funds in the Performance Peer Groups for all time
periods was small.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
ADDITIONAL INFORMATION (CONTINUED)
(UNAUDITED)
===============================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT (continued)
2) The performance of the Fund and the Manager. (continued)
In connection with its assessment of the overall 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 Portfolios ("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 Directors' consideration of the level of the management
fee, the Directors considered a number of factors. The Directors compared the
level of the management fees for the Portfolios and the level of the combined
management-administrative fees against comparative Lipper expense peer groups
("Expense Peer Groups"). The Expense Peer Groups for the Money Market Portfolio
consist of: (i) the Money Market Portfolio's Class A shares and fourteen other
retail no-load money market funds, as classified by Lipper, (ii) the Money
Market Portfolio's Class A shares and seven other retail money market funds that
are considered by the Manager to be competitors of the Fund with similar
distribution channels, (iii) a sub-advised competitor group of the Money Market
Portfolio's Class A shares and any other similar money market products managed
or sub-advised by the Manager, and (iv) the Money Market Portfolio's Class A
shares, fourteen other retail no-load money market funds, as classified by
Lipper, and all other retail no-load money market funds, excluding outliers; and
for the U.S. Government Portfolio: (i) the U.S. Government Portfolio's Class A
shares and twelve other U.S. Treasury retail no-load money market funds, as
classified by Lipper, (ii) the U.S. Government Portfolio's Class A shares, one
other U.S. Treasury retail money market fund, and one institutional U.S.
Treasury money market fund that are considered by the Manager to be competitors
of the Fund with similar distribution channels, (iii) a sub-advised competitor
group of the U.S. Government Portfolio's Class A shares and any other similar
U.S. Treasury money market or institutional products managed or sub-advised by
the Manager, and (iv) the U.S. Government Portfolio's Class A shares, twelve
other U.S. Treasury retail no-load money market funds, as classified by Lipper,
and all other retail U.S. Treasury money market funds, excluding outliers. The
Directors also considered comparative total fund expenses of the Portfolios and
the Expense 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 Expense Peer Groups fund agreements is often not apparent.
The Directors also viewed the Expense Peer Groups 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. The Board noted that the contract
rates of each Portfolio's management fee and combined fees (management and
administrative) were generally reasonable when compared to the range, of that of
the Expense Peer Groups. 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 Directors also noted that, other than
as reflected in the Sub-advised peer group, the Manager did not advise or
sub-advise any other registered investment companies or other types of accounts,
such as institutional or pension accounts, with similar investment policies to
the Portfolios. With respect to the sub-advised peer group, the Directors
considered the significant differences in the nature of the responsibilities of
the Manager with respect to sub-advised accounts as well as the lower level of
services provided by the Manager to sub-advised accounts. The Directors
concluded that the level of the management fee was reasonable in light of these
factors.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
INFORMATION ABOUT THE INVESTMENT MANAGEMENT CONTRACT (continued)
3) The cost of the advisory services and the profits to the Manager and its
affiliates from the relationship with the Fund. (continued)
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, 2006. 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.
The Directors considered economies of scale issues, noting the proposal on the
agenda to reorganize the Portfolios into certain portfolios of the Daily Income
Fund. 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, if
the proposed reorganization is not approved. 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 Expense Peer Group data to assess whether the Expense 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 the Fund were to experience
significant asset growth. In the event there was significant asset growth in the
future, the Directors determined to reassess whether the management fee
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 the Fund'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, 2007(1)
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- --------------------- Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address(2), Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served(3) 5 Years Fund Complex held by
Overseen by Director
Director
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
Disinterested Directors:
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
Edward A. Kuczmarski, Director Since 2006 Certified Public Accountant and Director/Trustee Trustee of
Age 57 Partner of Hays and Company LLP of fourteen the Empire
since 1980. portfolios Builder Tax
Free Bond
Fund and
Director of
ISI Funds
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
Dr. W. Giles Mellon, Director Since 1980 Professor Emeritus of Business Director/Trustee N/A
Age 76 Administration in the Graduate of thirteen
School of Management, Rutgers portfolios
University with which he has been
associated with since 1966.
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
Robert Straniere, Director Since 1983 Owner, Straniere Law Firm since Director/Trustee Director of
Esq., Age 66 1980, NYS Assemblyman from 1981 to of thirteen Sparx Japan
2004 Partner, Hantor-Davidoff law portfolios Funds
firm since May, 2006. Partner,
Gotham Global Group since June,
2005. President, NYC Hot Dog Co.,
since November, 2005. Partner,
Gotham Strategies since May 2005.
Counsel at Fisher & Fisher from 1995
to 2006.
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
Dr. Yung Wong, Director Since 1980 Managing Director of Abacus Director/Trustee N/A
Age 68 Associates, an investment firm, of thirteen
since 1996. portfolios
- ---------------------- --------------- --------------- -------------------------------------- ----------------- ---------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
Directors and Officers Information (continued)
August 31, 2007(1)
- ------------------- ------------- ---------------- ---------------------------------------- ----------------- ------------
- ------------------ Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address(2), Held with and Length of During Past Portfolios in Directorships
and Age 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 53 and Asset Management, LLC ("RTAM, LLC"), a and/or Officer
Director(4) registered Investment Advisor and of eighteen
President of the Mutual Funds Division portfolios
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 Chief N/A N/A
Age 50 President Financial Officer of RTAM LLC.
1994 to 2004 Associated with RTAM, LLC since 1990.
Treasurer Mr. De Sanctis is Vice President of
and ten other funds in the Reich & Tang
Assistant Fund Complex, Vice President and
Secretary Assistant Secretary of Cortland Trust,
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 (continued)
August 31, 2007(1)
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
- ------------------ Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address(2), Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served(3) 5 Years Fund Complex held by
Overseen by Director
Director
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
- -------------------------------------- ------------ --------------- ----------------- ---------------- -------------------
Interested Directors/Officers (Continued):
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
Michael Lydon, Vice Since 2005 Executive Vice President and Chief N/A N/A
Age 44 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.
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
Christine Manna, Secretary Since 2007 Vice president of the Manager. Ms. N/A N/A
Age 37 Manna is also Secretary of eleven
other funds in the Reich & Tang
Complex. Ms. Manna has been associated
with the Manager and its predecessors
since June 1995. Ms. Manna is also a
Vice President of Reich & Tang
Services, Inc. and Reich & Tang
Distributors, Inc.
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
Dana E. Messina, Vice Since 1995 Executive Vice President of RTAM, N/A N/A
Age 50 President LLC. 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.
- ------------------- ------------- ---------------- --------------------------------------- ------------------ ------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
Directors and Officers Information (continued)
August 31, 2007(1)
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
- ------------------ Position(s) Term of Office Principal Occupation(s) Number of Other
Name, Address(2), Held with and Length of During Past Portfolios in Directorships
and Age Fund Time Served(3) 5 Years Fund Complex held by
Overseen by Director
Director
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
- -------------------------------------- ------------ --------------- ----------------- ---------------- -------------------
Interested Directors/Officers (Continued):
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
Anthony Pace, Treasurer Since 2004 Vice President of RTAM, LLC since N/A N/A
Age 42 and September 2004. Mr. Pace was a
Assistant Director of a Client Service Group
Secretary at 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 is also
Treasurer and Assistant Secretary of
eleven other funds in the Reich &
Tang Fund Complex.
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
Robert Rickard, Vice Since 2007 Senior Vice President of the N/A N/A
Age 38 President Manager. Associated with the Manager
since December 1991. Mr. Rickard is
also Vice President of eleven other
funds in the Reich & Tang Fund
Complex.
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
Michael Zuckerman, Chief 2007 Consultant to RTAM, LLC since 2006. N/A N/A
Age 42 Compliance Director and Counsel, BlackRock,
Officer Inc. November 2005 to April 2006.
Associate, Dechert LLP July 2004 to
November 2005 and April 1999 to
April 2001. Deputy General Counsel,
Millennium Partners, L.P. March 2003
to July 2004. Vice President Allianz
Dresdner Asset Management, LLC April
2001 to December 2002.
- ------------------- ------------- ---------------- -------------------------------------- ------------------- ------------
(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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHORT TERM
- ------------------------------------------------------ INCOME
This report is submitted for the general information FUND, INC.
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
2 Hanson Place, 7th Floor,
Brooklyn, New York 11217
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc. Annual Report
600 Fifth Avenue August 31, 2007
New York, New York 10020
Distributor
Reich & Tang Distributor, Inc.
600 Fifth Avenue
New York, New York 10020
STIF8/07A
- -------------------------------------------------------------------------------
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 there is an audit
committee financial expert serving on its audit committee, Edward A. Kuczmarski,
who is "independent," as defined in the instructions to this Item.
FYE 8/31/2007 FYE 8/31/2006
4(a) Audit Fees $ 70,000 $ 64,600
4(b) Audit Related Fees $ 0 $ 0
4(c) Tax Fees $ 7,500 $ 7,500
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) $7,500 and $54,560, 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, 2007. $7,500 and $49,500, 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, 2006.
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/Christine Manna
Christine Manna, Secretary
Date: November 6, 2007
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 8, 2007
By (Signature and Title)* /s/Anthony Pace
Anthony Pace, Treasurer
Date: November 8, 2007
* Print the name and title of each signing officer under his or her signature.