As filed with the Securities and Exchange Commission on May 4, 200
Investment Company Act File Number 811-295
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: February 28, 2006
ITEM 1: REPORT TO STOCKHOLDERS
- --------------------------------------------------------------------------------
SHORT TERM 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. (212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Short Term Income Fund, Inc.
(the "Fund") for the period September 1, 2005 through February 28, 2006.
The Fund's Money Market Portfolio had 13,990 shareholders and net assets of
$852,428,643 as of February 28, 2006. The Government Portfolio had 3,708
shareholders and net assets of $461,293,020 as of February 28, 2006.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
/s/ Steven W. Duff
Steven W. Duff
President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
EXPENSE CHART
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
As a shareholder of the Fund, you incur the following ongoing costs: management
fees and other Fund expenses. You may also incur distribution and/or service
(12b-1) fees. This example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period September 1, 2005 through February 28,
2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees that you may incur in other
mutual funds. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
- ----------------------------------------------------------------------------------------------------------------------
Money Market Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Class A Beginning Account Value Ending Account Value Expenses Paid During the
9/1/05 2/28/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,016.00 $4.70
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.13 $4.71
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Class B Beginning Account Value Ending Account Value Expenses Paid During the
9/1/05 2/28/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,017.40 $3.30
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,021.52 $3.31
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
- ----------------------------------------------------------------------------------------------------------------------
Money Market Portfolio
- ----------------------------------------------------------------------------------------------------------------------
First Southwest Shares Beginning Account Value Ending Account Value Expenses Paid During the
9/1/05 2/28/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,015.40 $5.25
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,019.59 $5.26
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
U.S. Government Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Class A Beginning Account Value Ending Account Value Expenses Paid During the
9/1/05 2/28/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,015.70 $4.35
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,020.48 $4.36
expenses)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Class B Beginning Account Value Ending Account Value Expenses Paid During the
9/1/05 2/28/06 Period*
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,017.10 $3.00
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before $1,000.00 $1,021.82 $3.01
expenses)
- ----------------------------------------------------------------------------------------------------------------------
<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 (September 1, 2005 through February
28, 2006), multiplied by 181/365 (to reflect the most recent fiscal
half-year).
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Asset Backed Commercial Paper (19.93%)
- --------------------------------------------------------------------------------------------------------------------------
$ 20,000,000 Charta LLC 05/02/06 4.69% $ 19,839,833
15,000,000 Fountain Square Commercial Funding Corp. 06/23/06 4.66 14,782,925
10,000,000 Govco Incorporated 04/18/06 4.54 9,940,133
30,000,000 Govco Incorporated 05/11/06 4.69 29,725,467
20,000,000 Greyhawk Funding, LLC 03/20/06 4.53 19,952,395
10,000,000 Lexington Parker Capital Company, LLC 04/06/06 4.49 9,955,600
20,000,000 Lexington Parker Capital Company, LLC 05/10/06 4.72 19,818,389
4,000,000 Lockhart Funding, LLC 03/23/06 4.52 3,989,024
22,000,000 Lockhart Funding, LLC 03/23/06 4.53 21,939,500
20,000,000 Windmill Funding Corporation 04/04/06 4.57 19,914,056
- -------------- -------------
171,000,000 Total Asset Backed Commercial Paper 169,857,322
- -------------- -------------
Commercial Paper (5.26%)
- --------------------------------------------------------------------------------------------------------------------------
$ 10,000,000 Bear Sterns Companies Inc. 04/04/06 4.57% $ 9,957,217
20,000,000 UBS AG 03/01/06 4.55 20,000,000
15,000,000 Westpac Banking Corporation 05/08/06 4.67 14,869,100
- -------------- -------------
45,000,000 Total Commercial Paper 44,826,317
- -------------- -------------
Domestic Certificates of Deposit (5.28%)
- --------------------------------------------------------------------------------------------------------------------------
$ 25,000,000 Wells Fargo Bank, N.A. 03/06/06 4.40% $ 25,000,000
20,000,000 Wilmington Trust Company 04/17/06 4.60 20,000,129
- -------------- -------------
45,000,000 Total Domestic Certificates of Deposit 45,000,129
- -------------- -------------
Eurodollar Certificates of Deposit (3.52%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Societe Generale 02/02/07 4.90% $ 30,002,683
- -------------- -------------
30,000,000 Total Eurodollar Certificates of Deposit 30,002,683
- -------------- -------------
Floating Rate Securities (6.45%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Bank of America Federal Funds Floater (b) 12/15/06 4.56% $ 30,000,000
15,000,000 General Electric Capital Corporation Extendible
Monthly Securities (c) 03/17/07 4.67 15,000,000
10,000,000 Merrill Lynch & Co, Inc. Extendible Monthly Securities (d) 03/15/07 4.55 10,000,000
- -------------- -------------
55,000,000 Total Floating Rate Securities 55,000,000
- -------------- -------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Foreign Commercial Paper (2.82%)
- --------------------------------------------------------------------------------------------------------------------------
$ 24,100,000 Alliance & Leicester PLC 03/15/06 4.47% $ 24,058,481
- -------------- -------------
24,100,000 Total Foreign Commercial Paper 24,058,481
- -------------- -------------
Letter of Credit Commercial Paper (6.42%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Dean Health System, Inc.
LOC M & I Marshall & Ilsley Bank 03/16/06 4.54% $ 29,943,500
25,000,000 ICICI Bank Ltd.
LOC Fortis Bank S.A. / N.V. 05/15/06 4.70 24,757,812
- -------------- -------------
55,000,000 Total Letter of Credit Commercial Paper 54,701,312
- -------------- -------------
Loan Participations (5.28%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 AXA Equitable Life Insurance Company with
J.P. Morgan Chase (e) 03/21/06 4.59% $ 30,000,000
15,000,000 Mt. Vernon Phenol Plant Partnership with J.P. Morgan Chase
Guaranteed by General Electric Company 05/19/06 4.50 15,000,000
- -------------- -------------
45,000,000 Total Loan Participations 45,000,000
- -------------- -------------
Other Notes (2.93%)
- --------------------------------------------------------------------------------------------------------------------------
$ 25,000,000 Winston-Salem, NC COPS - Series 1992 03/06/06 4.54% $ 25,000,000
- -------------- -------------
25,000,000 Total Other Notes 25,000,000
- -------------- -------------
Repurchase Agreement (7.63%)
- --------------------------------------------------------------------------------------------------------------------------
$ 65,000,000 Bank of America, purchased 02/28/06, repurchase proceeds at
maturity $65,008,215 (Collateralized by $162,366,366, GNMA,
1.720% to 6.000%, due 05/16/30 to 02/20/36, value $66,001,290) 03/01/06 4.55% $ 65,000,000
- -------------- -------------
65,000,000 Total Repurchase Agreement 65,000,000
- -------------- -------------
U.S. Government Agency Medium Term Notes (3.52%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Federal Home Loan Mortgage Corporation 02/09/07 4.76% $ 30,000,000
- -------------- -------------
30,000,000 Total U.S. Government Agency Medium Term Notes 30,000,000
- -------------- -------------
Variable Rate Demand Instruments (f) (23.29%)
- --------------------------------------------------------------------------------------------------------------------------
$ 2,185,000 Ali Industries, Inc. Project
LOC National City Bank 07/01/10 4.62% $ 2,185,000
5,500,000 Allegheny County, PA IDA (Union Electric Steel Corporation)
LOC PNC Bank, N.A. 11/01/27 4.57 5,500,000
2,250,000 Alta Mira LLC, - Series 2004
LOC M & I Marshall & Ilsley Bank 11/01/34 4.67 2,250,000
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Variable Rate Demand Instruments (f) (Continued)
- --------------------------------------------------------------------------------------------------------------------------
$ 1,730,000 ARS Development Project, - Series 2001
LOC National City Bank 09/01/21 4.67% $ 1,730,000
1,180,000 B & V Land Company, LLC
LOC Huntington National Bank 09/01/27 4.67 1,180,000
5,875,000 Baldwin County Sewer Service, LLC - Series 2005
LOC Amsouth Bank 05/01/25 4.66 5,875,000
1,405,000 Bank of Kentucky Building, LLC - Series 1999
LOC US Bank, N.A. 12/01/19 4.62 1,405,000
2,940,000 Bollman Capital, LLC - Series 1996A
LOC First of America Bank 12/15/26 4.62 2,940,000
1,000,000 Bookstore Notes, - Series 2004 - A
LOC M & I Marshall & Ilsley Bank 10/01/44 4.57 1,000,000
620,000 Burgess & Niple Limited, - Series 1999
LOC National City Bank 09/01/14 4.62 620,000
760,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project)
LOC US Bank, N.A. 09/01/08 4.71 760,000
521,000 Capital One Funding Corporation
Floating Rate Option Notes - Series 1997D
LOC JPMorgan Chase Bank, N.A. 07/02/18 4.58 521,000
5,000,000 City of Marion, IN EDRB
(Dolgencorp, Inc. Project) - Series 2005A
LOC KeyBank, N.A. 02/01/35 4.62 5,000,000
1,070,000 Community Limited Care Dialysis Center, - Series 1997
LOC Fifth Third Bank 12/01/12 4.64 1,070,000
2,699,000 County of Genessee, MI GO - Series 2005 03/01/08 4.57 2,699,000
755,000 Crownover Lumber Company - Series 1997A
LOC Fifth Third Bank 09/01/08 4.72 755,000
465,000 Crownover Lumber Company - Series 1997B
LOC Fifth Third Bank 09/01/08 4.72 465,000
300,000 Derby Fabricating LLC
LOC Fifth Third Bank 06/01/24 4.57 300,000
2,670,000 Dickenson Press, Inc. - Series 1997
LOC Huntington National Bank 01/01/27 4.67 2,670,000
4,985,245 Federal Home Loan Mortgage Corporation
Class A Certificates, - Series M006 10/15/45 4.57 4,985,245
2,490,000 Frank J. Catanzaro Sons and Daughters, Inc. - Series 2000
LOC US Bank, N.A. 01/01/15 4.57 2,490,000
1,400,000 Gesmundo & Associates, Inc.
LOC National City Bank 08/15/27 4.57 1,400,000
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Variable Rate Demand Instruments (f) (Continued)
- --------------------------------------------------------------------------------------------------------------------------
$ 1,020,000 Graves Lumber Co. Project - Series 2000
LOC Federal Home Loan Bank of Cincinnati 11/01/10 4.67% $ 1,020,000
1,206,000 HCS & DJS Leasing - Series 2004
LOC Fifth Third Bank 06/01/34 4.57 1,206,000
2,500,000 Holland - Sheltair Aviation Funding, LLC - Series 2005 - B4
LOC Mellon Bank, N.A. 05/01/35 4.57 2,500,000
3,685,000 Hunter's Square, Inc. Project - Series 1998
LOC National City Bank of Michigan/Illinois 10/01/16 4.62 3,685,000
300,000 LAM Funding, LLC - Series A
LOC National City Bank 12/15/27 4.57 300,000
8,200,000 Lexington Financial Services, LLC Health Care RB - Series 2001
LOC LaSalle Bank, N.A. 02/01/26 4.59 8,200,000
890,000 Lincoln Parkway LLC
LOC Fifth Third Bank 06/01/44 4.57 890,000
1,630,000 LKWP Investments, LLC - Series 1997
LOC Huntington National Bank 03/01/27 4.67 1,630,000
640,000 Machining Center Inc. - Series 1997
LOC Comerica Bank 10/01/27 4.67 640,000
620,000 Madison, WI Community Development Authority EDA
(Block 90 Parking Ramp Project)
LOC US Bank, N.A. 10/01/08 4.67 620,000
3,470,000 Maryland Health & Higher Educational Facilities Authority
(Glen Meadows Retirement Community) - Series 1999B
LOC Wachovia Bank, N.A. 07/01/29 4.57 3,470,000
1,135,000 Miami Valley Realty Associates - Series 1997
LOC KeyBank, N.A. 06/01/12 4.64 1,135,000
3,500,000 Mississippi Business Finance Corporation
(Attala Steel Industries, LLC Project) - Series 2005
LOC Federal Home Loan Bank of Dallas 07/01/20 4.59 3,500,000
3,020,000 Mobile Airport Authority RB - Series 1999
LOC Regions Bank 10/01/24 4.57 3,020,000
13,855,000 Mobile, AL Springhill Medical Clinic Board RB
(Springhill Medical Complex)
LOC Amsouth Bank 06/01/20 4.59 13,855,000
925,000 Mount Carmel East Professional Office Building - Series 1994A
LOC National City Bank 01/01/14 4.62 925,000
1,175,000 Mount Carmel Partnership Project - Series 1994
LOC National City Bank 08/01/14 4.62 1,175,000
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Variable Rate Demand Instruments (f) (Continued)
- --------------------------------------------------------------------------------------------------------------------------
$ 3,245,000 Mount Ontario Holdings LLC - Series 2001
LOC US Bank, N.A. 04/01/21 4.60% $ 3,245,000
5,000,000 New Jersey EDA Thermal Energy Facilities RB
(Marina Energy) - Series 2001B
LOC Wachovia Bank, N.A. 09/01/21 4.56 5,000,000
4,600,000 New York State HFA (Kew Gardens Hills) - Series 2003B
Collateralized by Federal National Mortgage Association 05/15/36 4.54 4,600,000
7,000,000 Newport, KY Industrial Building RB
(Aquarium Holdings of Northern Kentucky, LLC Project)
LOC Fifth Third Bank 12/01/08 4.57 7,000,000
2,655,000 Ohio State Water Development Authority RB
(Independence Excavating, Inc.)
LOC National City Bank 12/01/09 4.62 2,655,000
3,100,000 Ordeal Properties LLC - Series 1997
LOC KeyBank, N.A. 10/01/12 4.62 3,100,000
1,600,000 Pennsylvania EDFA Taxable Development RB
(West 914 Incorporation Project) - Series 1991 A1
LOC PNC Bank, N.A. 05/01/21 4.57 1,600,000
10,500,000 PRD Financial LLC - Series 1997
LOC National City Bank 04/01/27 4.57 10,500,000
4,000,000 Prevea Clinic, Inc., - Series 2004 - A
LOC Wells Fargo Bank, N.A. 12/01/34 4.52 4,000,000
400,000 Riverview Medical Office Buildings Limited Partnership -
Series 1997
LOC National City Bank of Michigan/Illinois 11/01/17 4.62 400,000
4,800,000 Rochester Institute of Technology, NY RB - Series 2004A 11/01/21 4.67 4,800,000
1,625,000 Sacramento County Housing Authority, CA
(Hidden Oaks Apartments) - Series 1999 Issue C-T
Collateralized by Federal National Mortgage Association 05/15/29 4.63 1,625,000
10,000,000 Sea Island Company & Sea Island Coastal
Properties LLC - Series 2003B
LOC Columbus Bank & Trust Company 04/01/23 4.61 10,000,000
215,000 SGS Tool Company - Series 1996
LOC Huntington National Bank 06/01/06 4.72 215,000
2,855,000 Shelburne Realty & Troy Realty - Series 1996
LOC National City Bank 04/01/17 4.62 2,855,000
13,055,000 Southwestern Group Limited Project - Series 2001
LOC US Bank, N.A. 07/01/21 4.57 13,055,000
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Variable Rate Demand Instruments (f) (Continued)
- --------------------------------------------------------------------------------------------------------------------------
$ 5,810,000 St. Johns County IDA RB
(Presbyterian Retirement Communities Project) - Series 2004B
LOC Allied Irish Banks, PLC 08/01/34 4.57% $ 5,810,000
2,975,000 St. Ann's Medical Office Building
Limited Partnership - Series 1998
LOC National City Bank of Michigan/Illinois 11/01/19 4.62 2,975,000
6,304,000 Stonegate Partners I, LLC
(Stonegate Partners Project) - Series 2002
LOC US Bank, N.A. 06/01/34 4.62 6,304,000
4,475,000 Tom Richards, Inc. (Team Land, LLC/Team Industries)
LOC Federal Home Loan Bank of Cincinnati 12/01/16 4.62 4,475,000
3,000,000 Tri-Park Villas Notes - Series 2004 - A
LOC M & I Marshall & Ilsley Bank 10/01/44 4.57 3,000,000
1,400,000 UAI Technologies, Inc. - Series 1998
LOC Wachovia Bank, N.A. 05/01/18 4.67 1,400,000
865,000 Valley City Linen Co. - Series 1997
LOC Huntington National Bank 02/01/27 4.67 865,000
3,525,000 Washington State HFC MHRB
(The Vintage at Richland Project) - Series 2004B
Guaranteed by Federal National Mortgage Association 01/15/38 4.59 3,525,000
- -------------- -------------
198,575,245 Total Variable Rate Demand Instruments 198,575,245
- -------------- -------------
Yankee Certificates of Deposit (7.04%)
- --------------------------------------------------------------------------------------------------------------------------
$ 30,000,000 Calyon 03/20/06 4.43% $ 30,000,000
30,000,000 Natexis Banques Populaires S.A. 05/10/06 4.53 30,000,000
- -------------- -------------
60,000,000 Total Yankee Certificates of Deposit 60,000,000
- -------------- -------------
Total Investments (99.37%) (cost $847,021,489+) 847,021,489
Cash and Other Assets, Net of Liabilities (0.63%) 5,407,154
-------------
Net Assets (100.00%) $ 852,428,643
=============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
FOOTNOTES:
(a) The interest rate shown reflects the security's current coupon, unless
yield is available.
(b) The interest rate changes daily based upon Federal Funds Target plus 0.06%.
(c) The interest rate changes monthly based upon one month LIBOR plus 0.10%.
(d) The interest rate changes monthly based upon one month LIBOR minus 0.02%.
(e) The interest rate changes monthly based upon one month LIBOR plus 0.02%.
(f) Unless otherwise noted securities payable on demand at par including
accrued interest (with one or seven days notice). Interest is adjusted
weekly.
KEY:
COPS = Certificates of Participation HFA = Housing Finance Authority
EDA = Economic Development Authority HFC = Housing Finance Commission
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
GO = General Obligation RB = Revenue Bond
- --------------------------------------------------------------------------------
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
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
- ------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------------------------------------------------
Less than 31 Days $ 593,458,144 70.06%
31 through 60 Days 69,767,135 8.24
61 through 90 Days 109,010,602 12.87
91 through 120 Days 14,782,925 1.75
121 through 180 Days -- 0.00
Over 180 Days 60,002,683 7.08
- ------------------------------------------------------------------------------
Total $ 847,021,489 100.00%
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Face Maturity Current Value
Amount Date Coupon(a) (Note 1)
------ ---- -------- ------
Repurchase Agreements (56.58%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 110,000,000 Annaly Mortgage Management, Inc., purchased 02/28/06,
repurchase proceeds at maturity $110,013,964 (Collateralized by
$257,573,182 GNMA, 4.000% to 5.000%,
due 05/17/31 to 10/20/34, value $112,200,000) 03/01/06 4.57% $ 110,000,000
21,000,000 Bank of America, purchased 02/28/06,
repurchase proceeds at maturity $21,002,654 (Collateralized by
$93,855,442, GNMA, 3.963% to 5.000%,
due 06/16/26 to 05/16/30, value $21,420,000) 03/01/06 4.55 21,000,000
15,000,000 Bear, Stearns & Co., purchased 02/28/06,
repurchase proceeds at maturity $15,001,896 (Collateralized by
$58,549,027, GNMA, 3.750% to 7.500%,
due 03/15/14 to 05/20/34, value $15,302,965) 03/01/06 4.55 15,000,000
115,000,000 UBS AG, purchased 02/28/06, repurchase
proceeds at maturity $115,014,535 (Collateralized by
$510,227,265, GNMA, 4.000% to 11.500%,
due 09/15/06 to 06/15/42, value $117,300,244) 03/01/06 4.55 115,000,000
- -------------- -------------
261,000,000 Total Repurchase Agreements 261,000,000
- -------------- -------------
U.S. Government Obligations (43.49%)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 95,000,000 U.S. Treasury Bill 03/02/06 4.25% $ 94,988,785
35,000,000 U.S. Treasury Note, 7.000% 07/15/06 4.45 35,317,061
30,000,000 U.S. Treasury Note, 7.000% 07/15/06 4.58 30,255,787
40,000,000 U.S. Treasury Note, 4.625% 05/15/06 4.18 40,035,893
- -------------- -------------
200,000,000 Total U.S. Government Obligations 200,597,526
- -------------- -------------
Total Investments (100.07%) (cost $461,597,526+) 461,597,526
Liabilities in excess of Cash and Other Assets (-0.07%) (304,506)
-------------
Net Assets (100.00%) $ 461,293,020
=============
<FN>
+ Aggregate cost for federal income tax purposes is identical.
</FN>
FOOTNOTES:
(a) The interest rate shown reflects the security's current coupon, unless
yield is available.
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
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
- ------------------------------------------------------------------------------
Securities Maturing in Value % of Portfolio
- ------------------------------------------------------------------------------
Less than 31 Days $ 355,988,785 77.12%
31 through 60 Days -- 0.00
61 through 90 Days 40,035,893 8.67
91 through 120 Days -- 0.00
121 through 180 Days 65,572,848 14.21
Over 180 Days -- 0.00
- ------------------------------------------------------------------------------
Total $ 461,597,526 100.00%
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- ---------------------
ASSETS
Investments in securities, at amortized cost (Note 1)........ $ 782,021,489 $ 200,597,526
Repurchase agreements (Note 1)............................... 65,000,000 261,000,000
Cash ........................................................ 4,531,859 -0-
Accrued interest receivable.................................. 2,076,595 1,140,369
Prepaid expenses............................................. 20,414 28,444
--------------------- --------------------
Total assets........................................... 853,650,357 462,766,339
--------------------- --------------------
LIABILITIES
Payable to affiliates*....................................... 373,093 191,599
Accrued expenses............................................. 50,762 64,148
Due to custodian............................................. -0- 740,007
Dividends payable............................................ 797,859 477,565
--------------------- --------------------
Total liabilities..................................... 1,221,714 1,473,319
--------------------- --------------------
Net assets.................................................. $ 852,428,643 $ 461,293,020
===================== ====================
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock.............. $ 852,429,758 $ 461,293,020
Accumulated net realized loss............................... (1,115) -0-
--------------------- --------------------
Net assets.................................................. $ 852,428,643 $ 461,293,020
===================== ====================
Net asset value, per share (Note 3):
Money Market Portfolio:
Class A shares, ($375,720,443 applicable to 375,720,934 shares outstanding) $ 1.00
============
Class B shares, ($350,664,174 applicable to 350,664,633 shares outstanding) $ 1.00
============
First Southwest shares, ($126,044,026 applicable to 126,044,191 shares outstanding) $ 1.00
============
U.S. Government Portfolio:
Class A shares, ($232,465,629 applicable to 232,465,629 shares outstanding) $ 1.00
============
Class B shares, ($228,827,391 applicable to 228,827,391 shares outstanding) $ 1.00
============
<FN>
* Includes fees payable to Reich & Tang Asset Management, LLC, Reich & Tang
Distributors, Inc. and Reich & Tang Services, Inc.
</FN>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED)
================================================================================
Money Market U.S. Government
Portfolio Portfolio
--------------------- --------------------
INVESTMENT INCOME
Income:
Interest..................................................... $ 17,998,322 $ 9,361,961
--------------------- --------------------
Expenses: (Note 2)
Investment management fee.................................... 1,298,406 613,166
Administration fee........................................... 913,293 489,025
Distribution fee (First Southwest shares).................... 163,269 -0-
Shareholder servicing fee (Class A).......................... 477,454 302,174
Shareholder servicing fee (First Southwest shares)........... 163,269 -0-
Custodian expenses........................................... 20,240 11,967
Shareholder servicing and related shareholder expenses+...... 288,223 168,137
Legal, compliance and filing fees............................ 235,049 53,779
Audit and accounting......................................... 81,521 57,677
Directors' fees.............................................. 29,517 16,266
Miscellaneous................................................ 29,023 12,692
--------------------- --------------------
Total expenses........................................... 3,699,264 1,724,883
Less: Fees waived (First Southwest shares).............. (39,185) -0-
Expenses paid indirectly.......................... (364) (6,957)
--------------------- --------------------
Net expenses............................................. 3,659,715 1,717,926
--------------------- --------------------
Net investment income........................................... 14,338,607 7,644,035
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments......................... -0- 2,751
--------------------- --------------------
Increase in net assets from operations.......................... $ 14,338,607 $ 7,646,786
===================== ====================
<FN>
+ Includes class specific transfer agency expenses of $152,771 and $89,304
for the Money Market Portfolio Class A and Class B shares, respectively and
$96,687 and $61,598 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
================================================================================
Money Market Portfolio U.S. Government Portfolio
----------------------------------- ----------------------------------
Six Months Ended Year Six Months Ended Year
February 28, 2006 Ended February 28, 2006 Ended
(Unaudited) August 31, 2005 (Unaudited) August 31, 2005
---------------- ---------------- ----------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.................. $ 14,338,607 $ 17,371,571 $ 7,644,035 $ 9,049,419
Net realized gain (loss) on investments -0- (1,115) 2,751 75
---------------- --------------- --------------- ---------------
Increase in net assets from operations. 14,338,607 17,370,456 7,646,786 9,049,494
Dividends to shareholders from net investment income:
Class A................................ (6,122,326) (6,178,819) (3,804,499) (4,301,759)
Class B................................ (6,189,110) (9,138,174) (3,839,536) (4,747,660)
First Southwest shares................. (2,027,171) (2,054,578) -0- -0-
---------------- ---------------- --------------- ---------------
Total dividend to shareholders...... (14,338,607) (17,371,571) (7,644,035) (9,049,419)
Distributions to shareholders from realized gain on investments:
Class A................................ -0- -0- (1,410) (36)
Class B................................ -0- -0- (1,341) (39)
First Southwest shares................. -0- -0- -0- -0-
---------------- ---------------- --------------- ---------------
Total distributions to shareholders. -0- -0- (2,751) (75)
Capital share transactions (Note 3):
Class A................................ 28,141,391 (23,070,586) (5,898,782) (12,269,538)
Class B................................ (48,423,335) (215,703,492) (4,561,996) (57,122,700)
First Southwest shares................. 9,133,101 (25,472,772) -0- -0-
---------------- ---------------- --------------- --------------
Total capital share transactions.... (11,148,843) (264,246,850) (10,460,778) (69,392,238)
---------------- ---------------- --------------- --------------
Total increase (decrease)........... (11,148,843) (264,247,965) (10,460,778) (69,392,238)
Net assets:
Beginning of period.................... 863,577,486 1,127,825,451 471,753,798 541,146,036
---------------- ---------------- --------------- --------------
End of period.......................... $ 852,428,643 $ 863,577,486 $ 461,293,020 $ 471,753,798
================ ================ =============== ==============
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
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies
Short Term Income Fund, Inc. 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. 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, 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies (Continued)
e) Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
f) General -
Securities transactions are recorded on a trade date basis. Interest income
including accretion of discount and amortization of premium is accrued as
earned. Realized gains and losses from securities transactions are recorded
on the identified cost basis.
2. Investment Management Fees and Other Transactions with Affiliates
Under the 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 period ended February 28, 2006, the following fees were voluntarily
waived by the Distributor:
Money Market Portfolio
----------------------
Distribution fees - First Southwest shares $ 39,185
The Distributor has no right to recoup prior fee waivers.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$8,000 per annum plus $1,450 per meeting attended (there are five scheduled
Board Meetings each year) 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. 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, 2006, the Lead Independent Director will receive an additional annual fee of
$8,000 and the Deputy Lead Director will receive an additional annual fee of
$4,000, both fees paid quarterly and allocated among the funds of the Reich &
Tang Complex.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $190,185 and $117,399 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 period ended February 28, 2006, 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 period ended February 28, 2006, the breakdown of expenses paid
indirectly by the Fund were as follows:
Money Market Portfolio U.S. Government Portfolio
---------------------- -------------------------
Custodian expenses $ -0- $ 6,784
Shareholder servicing and related shareholder expenses 364 173
------- --------
Total $ 364 $ 6,957
======= ========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
3. Capital Stock
At February 28, 2006, 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
------------------------------------ -----------------------------------
Six Months Ended Year Six Months Ended Year
February 28, 2006 Ended February 28, 2006 Ended
(Unaudited) August 31, 2005 (Unaudited) August 31, 2005
----------------- ---------------- ----------------- ----------------
Class A shares
- --------------
Sold.................................. 943,795,626 1,917,167,808 646,075,725 1,119,590,779
Issued on reinvestment of dividends... 5,465,811 5,492,425 3,387,713 3,547,909
Redeemed.............................. (921,120,046) (1,945,730,819) (655,362,220) (1,135,408,226)
----------------- ---------------- ----------------- ----------------
Net increase (decrease)............... 28,141,391 (23,070,586) (5,898,782) (12,269,538)
================= ================ ================= ================
Class B shares
- --------------
Sold.................................. 594,471,705 1,355,103,467 433,456,635 1,028,993,585
Issued on reinvestment of dividends... 6,202,516 8,895,965 3,538,612 4,448,814
Redeemed.............................. (649,097,556) (1,579,702,924) (441,557,243) (1,090,565,099)
----------------- ---------------- ----------------- ----------------
Net increase (decrease)............... (48,423,335) (215,703,492) (4,561,996) (57,122,700)
================= ================ ================= ================
First Southwest shares
- ----------------------
Sold.................................. 112,358,216 142,993,781
Issued on reinvestment of dividends... 2,027,207 2,062,226
Redeemed.............................. (105,252,322) (170,528,779)
----------------- ----------------
Net increase (decrease)............... 9,133,101 (25,472,772)
================= ================
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 Six Months Ended Year Ended August 31,
- -------------- February 28, 2006 --------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
--------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................ 0.016 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 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations....... 0.016 0.017 0.003 0.006 0.014 0.045
Less distributions from:
Dividends from net investment income. (0.016) (0.017) (0.003) (0.006) (0.014) (0.045)
Net realized gains on investments.... ( -- ) ( -- ) (0.000) ( -- ) (0.000) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total distributions.................... (0.016) (0.017) (0.003) (0.006) (0.014) (0.045)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return............................ 1.60%(a) 1.66% 0.33% 0.63% 1.44% 4.59%
Ratios/Supplemental Data
Net assets, end of period (000's)....... $ 375,721 $ 347,579 $ 370,650 $ 389,718 $ 322,381 $ 675,289
Ratios to average net assets:
Expenses (net of fees waived)(b)..... 0.94%(c) 0.94% 0.87% 0.87% 0.97% 1.01%
Net investment income................ 3.21%(c) 1.64% 0.32% 0.61% 1.56% 4.55%
Expenses paid indirectly............. 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
5. Financial Highlights (Continued)
Money Market Portfolio
Class B shares Six Months Ended Year Ended August 31,
- -------------- February 28, 2006 --------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
--------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................ 0.017 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 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations....... 0.017 0.019 0.006 0.009 0.018 0.049
Less distributions from:
Dividends from net investment income. (0.017) (0.019) (0.006) (0.009) (0.018) (0.049)
Net realized gains on investments.... ( -- ) ( -- ) (0.000) ( -- ) (0.000) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total distributions.................... (0.017) (0.019) (0.006) (0.009) (0.018) (0.049)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return............................ 1.74%(a) 1.95% 0.58% 0.92% 1.80% 5.01%
Ratios/Supplemental Data
Net assets, end of period (000's)....... $ 350,664 $ 399,087 $ 614,791 $ 858,944 $ 838,064 $ 811,173
Ratios to average net assets:
Expenses (net of fees waived)(b)..... 0.66%(c) 0.66% 0.62% 0.58% 0.61% 0.61%
Net investment income................ 3.47%(c) 1.86% 0.57% 0.92% 1.78% 4.71%
Expenses paid indirectly............. 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Financial Highlights (Continued)
Money Market Portfolio
-----------------------------------------------------------------------
August 5, 2002
First Southwest shares Six Months Ended Year Ended August 31, (Commencement of
- ---------------------- February 28, 2006 ------------------------------------ Offering) to
(Unaudited) 2005 2004 2003 August 31, 2002
--------- ---------- ---------- ---------- ---------------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------
Income from investment operations:
Net investment income................ 0.015 0.015 0.002 0.005 0.001
Net realized and unrealized gain (loss)
on investments....................... -- 0.000 0.000 0.000 0.000
--------- ---------- ---------- ---------- ---------
Total from investment operations....... 0.015 0.015 0.002 0.005 0.001
Less distributions from:
Dividends from net investment income (0.015) (0.015) (0.002) (0.005) (0.001)
Net realized gains on investments.... ( -- ) ( -- ) (0.000) ( -- ) (0.000)
--------- ---------- ---------- ---------- ---------
Total distributions.................... (0.015) (0.015) (0.002) (0.005) (0.001)
--------- ---------- ---------- ---------- ---------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== =========
Total Return............................ 1.54%(a) 1.56% 0.19% 0.50% 0.07%(a)
Ratios/Supplemental Data
Net assets, end of period (000's)....... $ 126,044 $ 116,911 $ 142,384 $ 130,429 $ 127,082
Ratios to average net assets:
Expenses (net of fees waived)(b)..... 1.05%(c) 1.05% 1.01% 0.99% 0.99%(c)
Net investment income................ 3.10%(c) 1.52% 0.19% 0.51% 0.93%(c)
Distribution fees waived............. 0.06%(c) 0.06% 0.06% 0.06% 0.06%(c)
Expenses paid indirectly............. 0.00%(c) 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)
(UNAUDITED)
================================================================================
5. Financial Highlights (Continued)
U.S. Government Portfolio
Class A shares Six Months Ended Year Ended August 31,
- -------------- February 28, 2006 --------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
--------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................ 0.016 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 -- 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations....... 0.016 0.016 0.003 0.006 0.014 0.044
Less distributions from:
Dividends from net investment income. (0.016) (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) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total distributions.................... (0.016) (0.016) (0.003) (0.006) (0.014) (0.044)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return............................ 1.57%(a) 1.64% 0.28% 0.64% 1.39% 4.54%
Ratios/Supplemental Data
Net assets, end of period (000's)....... $ 232,466 $ 238,365 $ 250,634 $ 236,931 $ 241,906 $ 484,681
Ratios to average net assets:
Expenses (net of fees waived)(b)..... 0.87%(c) 0.87% 0.84% 0.79% 0.89% 0.93%
Net investment income................ 3.15%(c) 1.62% 0.28% 0.64% 1.46% 4.42%
Expenses paid indirectly............. 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Financial Highlights (Continued)
U.S. Government Portfolio
Class B shares Six Months Ended Year Ended August 31,
- -------------- February 28, 2006 --------------------------------------------------------------
(Unaudited) 2005 2004 2003 2002 2001
--------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................ 0.017 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 -- 0.000
--------- ---------- ---------- ---------- ---------- ----------
Total from investment operations....... 0.017 0.019 0.005 0.008 0.017 0.048
Less distributions from:
Dividends from net investment income. (0.017) (0.019) (0.005) (0.008) (0.017) (0.048)
Net realized gains on investments.... (0.000) (0.000) (0.000) (0.000) ( -- ) (0.000)
--------- ---------- ---------- ---------- ---------- ----------
Total distributions.................... (0.017) (0.019) (0.005) (0.008) (0.017) (0.048)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ========== ==========
Total Return............................ 1.71%(a) 1.91% 0.53% 0.84% 1.69% 4.91%
Ratios/Supplemental Data
Net assets, end of period (000's)....... $ 228,827 $ 233,389 $ 290,512 $ 331,130 $ 400,833 $ 216,573
Ratios to average net assets:
Expenses (net of fees waived) (b).... 0.60%(c) 0.60% 0.60% 0.59% 0.58% 0.58%
Net investment income................ 3.43%(c) 1.85% 0.52% 0.84% 1.61% 4.77%
Expenses paid indirectly............. 0.00%(c) 0.00% 0.00% 0.00% 0.00% 0.00%
<FN>
(a) Not annualized
(b) Includes expenses paid indirectly
(c) Annualized
</FN>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
2 Hanson Place, 7th Floor,
Brooklyn, New York 11217
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
STIF2/06S
- --------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Semi-Annual Report
February 28, 2006
(Unaudited)
- --------------------------------------------------------------------------------
ITEM 2: CODE OF ETHICS
Not Applicable.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT
Not Applicable.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not Applicable.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6: SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers is included under
Item 1.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors that were implemented
after the registrant last provided disclosure in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A, or this Item 9.
ITEM 10: CONTROLS AND PROCEDURES
(a) The registrant's Principal Executive Officer and Principal Financial
Officer have evaluated the design and operation of the registrant's
disclosure controls and procedures within 90 days of this filing and
have concluded that the registrant's disclosure controls and procedures
were effective in ensuring that information required to be disclosed by
the registrant in this Form N-CSR was recorded, processed, summarized
and reported on a timely basis.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the second fiscal quarter of
the period covered by this report that have materially affected, or are
reasonably likely to affect, the registrant's internal controls over
financial reporting.
ITEM 11: EXHIBITS
(a)(1) Not Applicable.
(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: May 4, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/Steven W. Duff
Steven W. Duff, President
Date: May 4, 2006
By (Signature and Title)* /s/Anthony Pace
Anthony Pace, Treasurer
Date: May 4, 2006
* Print the name and title of each signing officer under his or her signature.