- -------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Semi-Annual Report
February 29, 1996
(Unaudited)
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<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
INCOME FUND, INC. 212/830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Short Term Income Fund, Inc.
for the period September 1, 1995 through February 29, 1996.
The Fund's Money Market Portfolio had 50,604 shareholders and net assets of
$978,942,733 as of February 29, 1996. The Government Portfolio had 10,876
shareholders and net assets of $706,151,051 as of February 29, 1996.
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
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
Bankers' Acceptances (2.75%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 27,000,000 Trust Company Bank of Atlanta 03/29/96 5.58% $ 26,884,500
- ------------- -------------
27,000,000 Total Bankers' Acceptances 26,884,500
- ------------- -------------
<CAPTION>
Certificates of Deposit (2.04%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 20,000,000 Royal Bank of Canada 09/25/96 (a) 6.30% $ 19,997,727
- ------------- -------------
20,000,000 Total Certificates of Deposit 19,997,727
- ------------- -------------
<CAPTION>
Commercial Paper (32.47%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 25,000,000 Abbey National PLC 06/17/96 5.08% $ 24,625,000
5,000,000 American Brands 04/09/96 5.21 4,971,996
15,000,000 Australia New Zealand Bank 05/03/96 5.15 14,866,387
16,000,000 Banque International A Luxenbourg 04/02/96 5.29 15,925,476
40,000,000 Bear Stearns Corporation 04/12/96 5.42 39,750,333
30,000,000 Canadian Imperial Holding 03/11/96 5.50 29,954,583
23,800,000 Colonial Pipeline 03/21/96 5.24 23,731,112
30,000,000 Compagnie Bancaire 03/12/96 5.68 29,948,667
20,000,000 First Chicago Financial Corporation 03/18/96 5.25 19,950,606
10,044,000 First Chicago Financial Corporation 03/20/96 5.24 10,016,329
10,000,000 Island Finance Puerto Rico Incorporated 05/24/96 5.15 9,881,466
20,000,000 Morgan Stanley & Co., Incorporated 03/29/96 5.48 19,915,688
15,000,000 Sara Lee Corporation 03/28/96 5.42 14,939,813
20,000,000 Toyota Motor Credit 10/15/96 5.19 19,366,667
40,000,000 UBS Finance Department 03/01/96 5.45 40,000,000
- ------------- ------------
319,844,000 Total Commercial Paper 317,844,123
- ------------- ------------
<CAPTION>
LOC Commercial Paper (21.62%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 10,000,000 Banco Boavista
LOC Bayerische Vereinsbank, A.G. 08/27/96 5.07% $ 9,754,372
15,000,000 Banco Bradesco S.A. (Grand Cayman)
LOC Barclays Bank 06/04/96 5.11 14,800,500
15,000,000 Banco Nacional De Comerico Exterior
LOC Societe Generale 07/10/96 5.34 14,716,167
</TABLE>
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See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
LOC Commercial Paper (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 5,000,000 Banco Nacional De Comerico Exterior
LOC Societe Generale 07/12/96 5.38% $ 4,903,205
15,000,000 Banco Rio De La Plata
LOC Bayerische Vereinsbank, A.G. 08/27/96 5.05 14,633,796
5,000,000 Bancomer S.A.
LOC Bank of Montreal 07/11/96 5.58 4,901,000
40,000,000 Bancomer S.A.
LOC Bank of Montreal 08/13/96 5.65 39,006,333
20,000,000 Banco Mercantile Del Norte
LOC Bayerische Landesbank Girozentrale 08/09/96 5.43 19,530,417
11,000,000 Cafco
LOC Barclays Bank 04/10/96 5.26 10,936,078
20,000,000 Cafco
LOC Barclays Bank 04/15/96 5.27 19,869,250
15,000,000 Cemex, S.A.
LOC Credit Suisse 04/19/96 5.43 14,890,771
10,000,000 Cemex, S.A.
LOC Credit Suisse 04/26/96 5.25 9,919,111
5,000,000 China Ocean Shipping Corporation (COSCO)
LOC Credit Suisse 03/27/96 5.27 4,981,078
15,000,000 Queensland Alumina Limited
LOC Credit Suisse 04/23/96 5.43 14,881,854
14,000,000 SCI Systems Incorporated
LOC ABN AMRO Bank N.V. 03/15/96 5.26 13,971,526
- ------------- ------------
215,000,000 Total LOC Commercial Paper 211,695,458
- -------------- ------------
<CAPTION>
U.S. Government Agencies (4.20%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 21,150,000 Federal Home Loan Bank 02/07/97 (c)(d) 5.18% $ 21,146,903
20,000,000 Federal Home Loan Bank 11/18/97 (c)(d) 5.75 20,000,000
- ------------- ------------
41,150,000 Total U.S. Government Agencies 41,146,903
- ------------- ------------
<CAPTION>
U.S. Government Obligations (1.00%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
$ 10,000,000 U.S. Treasury Bills 08/22/96 4.82% $ 9,772,833
- ------------- ------------
10,000,000 Total U.S. Government Obligations 9,772,833
- ------------- ------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
Master Notes (7.25%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 36,000,000 Goldman Sachs 11/04/96 (a) 5.54% $ 36,000,000
35,000,000 Morgan (J.P.) Securities Incorporated 10/11/96 (b) 5.44 35,000,000
- ------------- ------------
71,000,000 Total Master Notes 71,000,000
- ------------- ------------
<CAPTION>
Medium Term Notes (7.78%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 25,000,000 Bank One (Columbus) 03/20/96 (e) 5.48% $ 25,000,000
35,000,000 Merrill Lynch 03/13/96 (f) 5.30 35,003,280
16,100,000 Province of Quebec 03/29/96 5.75 16,131,274
- ------------- ------------
76,100,000 Total Medium Term Notes 76,134,554
- ------------- ------------
<CAPTION>
Short Term Bank Notes (1.53%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 15,000,000 First Bank N.A. (Minneapolis) 03/06/96 5.24% $ 15,000,000
- ------------- ------------
15,000,000 Total Short Term Bank Notes 15,000,000
- ------------- ------------
<CAPTION>
Other Notes (5.62%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 15,000,000 City of New York
LOC Societe Generale 08/02/96 5.35% $ 15,000,000
5,875,000 City of New York Taxable Municipal, NY
(Fiscal 1996) - Series A-2
LOC Societe Generale 08/14/96 5.20 5,875,000
3,795,000 Fresno County, CA TRAN 06/28/96 5.95 3,794,238
25,000,000 State of Oregon Taxable Economic Development RB
(Georgia-Pacific Corp. 1995B) Series 169
LOC Commerzbank A.G. 03/13/96 5.85 25,000,000
5,300,000 Washington State Housing Finance Commisssion VRD
Mortgage RB (Wadering Creek Project)
LOC Bank of America 01/01/26 (g) 5.95 5,300,000
- ------------- ------------
54,970,000 Total Other Notes 54,969,238
- ------------- ------------
<CAPTION>
Repurchase Agreements, Overnight (8.99%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 88,000,000 Donaldson, Lufkin & Jenrette Securities Corporation
(Collateralized by $89,212,000 U.S. Treasury Notes,
5.6250% due 06/30/97 to 02/28/01) 03/01/96 5.38% $ 88,000,000
- ------------- ------------
88,000,000 Total Repurchase Agreements, Overnight 88,000,000
- ------------- ------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statments.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
Eurodollar Certificates of Deposit (2.04%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 20,000,000 Morgan Guaranty Trust Company, New York 08/19/96 5.00% $ 20,000,927
- ------------- ------------
20,000,000 Total Eurodollar Certificates of Deposit 20,000,927
- ------------- ------------
<CAPTION>
Yankee Certificates of Deposit (2.56%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 20,000,000 Banque Nationale de Paris 09/19/96 5.66% $ 20,002,123
5,000,000 Societe Generale 03/05/96 5.50 5,000,000
- ------------- ------------
25,000,000 Total Yankee Certificates of Deposit 25,002,123
- ------------- ------------
Total Investments (99.85%)(Cost $977,448,386+) 977,448,386
Cash and Other Assets Net of Liabilities (0.15%) 1,494,347
------------
Net Assets (100.00%) $978,942,733
============
Net asset value, offering and redemption price per share:
Class A shares 736,272,391 shares outstanding (Note 3) $ 1.00
============
Class B shares 244,839,998 shares outstanding (Note 3) $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
FOOTNOTES:
(a) The interest rate is adjusted daily based on federal funds rate +.10%
(b) The interest rate is adjusted monthly based on one month LIBOR
(c) The interest rate is adjusted daily based on prime rate - 2.50%
(d) Callable 05/01/96,08/01/96,11/01/96 at 100
(e) The rate is adjusted daily based on prime - 2.77%
(f) The rate is adjusted daily based on prime - 2.64%
(g) The rate is adjusted daily and is putable daily at 100
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
Repurchase Agreements, Overnight (50.55%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 75,000,000 CS First Boston (Collateralized by $46,899,000
U.S. Treasury Bonds, 13.250%, due 05/15/14) 03/01/96 5.30% $ 75,000,000
75,000,000 Goldman Sachs (Collateralized by $73,592,000
U.S. Treasury Notes, 6.125%, due 05/15/98 to 09/30/00) 03/01/96 5.35 75,000,000
207,000,000 Fuji Securities Inc. (Collateralized by $191,780,000
U.S. Treasury Notes, 4.375% to 7.625%, due 11/15/96 to 11/15/22) 03/01/96 5.40 207,000,000
- --------------- --------------
357,000,000 Total Repurchase Agreements, Overnight 357,000,000
- --------------- --------------
<CAPTION>
U.S. Government Agencies (3.93%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 1,033,729 Small Business Administration Variable Loan 09/25/09 (a) 6.92% $ 1,032,725
10,095,017 Small Business Administration Variable Loan 05/25/14 (a) 7.14 10,086,452
2,083,037 Small Business Administration Variable Loan 09/25/14 (a) 6.94 2,081,572
1,317,430 Small Business Administration Variable Loan 10/25/14 (a) 7.19 1,316,420
4,909,379 Small Business Administration Variable Loan 11/25/14 (a) 6.95 4,887,485
6,237,936 Small Business Administration Variable Loan 12/25/14 (a) 6.94 6,225,288
2,126,836 Small Business Administration Variable Loan 04/25/17 (a) 6.75 2,126,836
- --------------- --------------
27,803,364 Total U.S. Government Agencies 27,756,778
- --------------- --------------
<CAPTION>
U.S. Government Obligations (34.78%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 15,000,000 U.S. Treasury Bill 03/07/96 5.40% $ 14,986,750
25,000,000 U.S. Treasury Bill 03/14/96 5.44 24,952,153
25,000,000 U.S. Treasury Bill 04/04/96 5.43 24,874,389
20,000,000 U.S. Treasury Bill 04/18/96 5.45 19,858,667
15,000,000 U.S. Treasury Bill 05/02/96 5.33 14,865,150
20,000,000 U.S. Treasury Bill 05/09/96 5.46 19,796,067
10,000,000 U.S. Treasury Bill 07/11/96 4.99 9,821,433
40,000,000 U.S. Treasury Bill 08/08/96 4.85 39,157,778
20,000,000 U.S. Treasury Bill 08/22/96 4.97 19,515,941
25,000,000 U.S. Treasury Bill 10/17/96 5.22 24,192,764
15,000,000 U.S. Treasury Bill 11/14/96 5.05 14,478,625
20,000,000 U.S. Treasury Bill 02/06/97 5.10 19,076,600
- --------------- --------------
250,000,000 Total U.S. Government Obligations 245,576,317
- --------------- --------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- -------
<CAPTION>
U.S. Treasury Notes (10.62%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 15,000,000 U.S. Treasury Note 07/31/96 4.95% $ 15,059,832
25,000,000 U.S. Treasury Note 03/31/96 5.50 24,987,964
20,000,000 U.S. Treasury Note 04/30/96 5.43 19,997,584
15,000,000 U.S. Treasury Note 05/15/96 5.49 14,959,270
- --------------- ---------------
75,000,000 Total U.S. Treasury Notes 75,004,650
- --------------- ---------------
Total Investments (99.88%)(Cost 705,337,745+) 705,337,745
Cash and Other Assets, Net of Liabilities (0.12%) 813,306
---------------
Net Assets (100.00%) $ 706,151,051
===============
Net asset value, offering and redemption price per share:
Class A shares, 591,616,230 shares outstanding (Note 3) $ 1.00
===============
Class B shares, 114,534,821 shares outstanding (Note 3) $ 1.00
===============
+ Aggregate cost for federal income tax purposes is identical.
FOOTNOTES:
(a) This is a small business administration variable pool certificate. The
interest rate is adjusted periodically based upon the prime rate.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Money Market U.S. Government
Portfolio Portfolio
---------------- --------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest.............................................................. $ 26,145,251 $ 21,340,082
---------------- --------------
Expenses: (Note 2)
Investment management fee............................................. 1,347,841 966,199
Administration fee.................................................... 926,550 764,501
Distribution fee (Class A)............................................ 847,438 645,590
Custodian expenses.................................................... 46,523 55,716
Shareholder servicing and related shareholder expenses................ 921,649 255,011
Legal, compliance and filing fees..................................... 31,950 35,376
Audit and accounting.................................................. 48,011 46,569
Directors' fees ...................................................... 14,400 8,100
Miscellaneous......................................................... 7,446 5,622
---------------- --------------
Total expenses.................................................... 4,191,808 2,782,684
Less:
Fees waived (Note 2)........................................... ( 150,000) --
Expenses paid indirectly....................................... ( 7,949) ( 5,068)
---------------- -------------
Net expenses.............................................. 4,033,859 2,777,616
---------------- --------------
Net investment income..................................................... 22,111,392 18,562,466
---------------- --------------
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C> <C>
Net realized gain (loss) on investments................................... 60,160 --
---------------- --------------
Increase in net assets from operations.................................... $ 22,171,552 $ 18,562,466
================ ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Government Portfolio
----------------------------- ----------------------------
Six Months Six Months
Ended Year Ended Year
2/29/96 Ended 2/29/96 Ended
(Unaudited) 8/31/95 (Unaudited) 8/31/95
--------- ------- --------- -------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................. $ 22,111,392 $ 40,399,994 $ 18,562,466 $ 32,852,430
Net realized gain (loss) on investments 60,160 ( 11,438,610) -- 19,188
--------------- -------------- -------------- ---------------
Increase in net assets from operations. 22,171,552 28,961,384 18,562,466 32,871,618
Dividends to shareholders:
Net investment income
Class A.............................. ( 16,372,765) ( 28,998,644) ( 12,553,722) ( 20,587,273)
Class B.............................. ( 5,737,585) ( 11,207,955) ( 6,008,744) ( 12,265,157)
Net realized gain on investments
Class A.............................. -- -- -- ( 11,606)*
Class B.............................. -- -- -- ( 7,582)*
Capital share transactions (Note 3):
Class A.............................. 72,848,395 ( 13,625,381) 122,024,486 70,892,796
Class B.............................. 26,361,594 ( 203,707,058) ( 192,264,144) 226,602,774
Contribution of capital from
investment manager (Note 2)..... -- 9,488,117 -- --
-------------- -------------- -------------- ---------------
Total increasae (decrease)........... 99,271,191 ( 219,089,537) ( 70,239,658) 297,495,570
Net assets:
Beginning of period.................. 879,671,542 1,098,761,079 776,390,709 478,895,139
--------------- ------------- -------------- ---------------
End of period........................ $ 978,942,733 $ 879,671,542 $ 706,151,051 $ 776,390,709
=============== ============== ============== ===============
* Represents a Long Term Capital Gain distribution of $0.000024715 per share
declared to shareholders of record as of August 31, 1995 and paid on
September 15, 1995.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
1. Summary of Accounting Policies.
Short Term Income Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The Fund
is presently comprised of two Portfolios, Money Market Portfolio and U.S.
Government Portfolio, with each Portfolio having two classes of stock
authorized, Class A and Class B. The Class A shares of each Portfolio are
subject to a service fee pursuant to each Portfolio's Distribution and Service
Plan. The Class B shares are not subject to a service fee. In all other
respects, the Class A and Class B shares represent the same interest in the
income and assets of each respective Portfolio. The Fund's financial statements
are prepared in accordance with generally accepted accounting principles for
investment companies as follows.
a) Valuation of Securities -
Investments are valued at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any discount or premium is
amortized on a constant basis to the maturity of the instrument.
b) 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 taxable income to its shareholders. Therefore, no
provision for federal income tax is required.
c) Dividends and Distributions -
Dividends from investment income (including realized capital gains and
losses), determined on a class level, are declared daily and paid monthly.
With respect to the Money Market Portfolio, realized capital gains and
losses are excluded.
d) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
e) General -
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned. Realized gains and losses from securities
transactions are recorded on the identified cost basis. It is the Fund's
policy to take possession of securities as collateral under repurchase
agreements and to determine on a daily basis that the value of such
securities are sufficient to cover the value of the repurchase agreements.
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, L.P. (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
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
million. The Manager has agreed to reimburse the Fund for its net operating
expenses (exclusive of taxes, brokerage, interest and extraordinary expenses) to
the extent that such expenses, including the management fee, for any fiscal year
exceed 1% of the average daily net assets of each Portfolio for such fiscal
year. No such reimbursement was required for the period ended February 29, 1996.
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
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. Prior to December 1, 1995, the administration fee was .20%, .19% and
18%.
Pursuant to a Distribution and Service Plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors L.P. (the
Distributor) entered into a Distribution Agreement and a Shareholder Servicing
Agreement, only with respect to the Class A shares of each Portfolio. For its
services under the Shareholder Servicing Agreement, the Distributor receives
from each Portfolio with respect only to the Class A shares, a service fee equal
to .25% of 1% per annum of each Portfolio's average daily net assets.
For the period ended February 29, 1996 the Manager voluntarily waived investment
management fees of $150,000 on the Money Market Portfolio.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$9,000 per annum plus $1,250 per meeting attended.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $320,274 and $74,540 for
the Money Market Portfolio and the U.S. Government Portfolio, respectively, paid
to Reich & Tang Services L.P., an affiliate of the Manager as servicing agent
for the Fund. Included under the captions "Custodian expenses" and "Shareholder
servicing and related shareholder expenses" are expense offsets of $7,949 and
$5,068 for the Money Market Portfolio and the U.S. Government Portfolio,
respectively.
On November 4, 1994, in order to maintain the net asset value of the Money
Market Portfolio at $1.00, the Manager purchased U.S. Government Agency
Securities, from the Money Market Portfolio for $130,750,000 which was equal to
the Money Market Portfolio's amortized cost or carrying value on that date. The
securities had a fair value of $121,261,883 on this date. The excess over fair
value ($9,488,117) that was paid by the Manager has been classified by the Money
Market Portfolio as a realized loss in the Statement of Operations and a capital
contribution in the Statement of Changes in Net Assets.
3. Capital Stock.
At February 29, 1996, 10,000,000,000 shares of $.001 par value stock were
authorized and capital paid in for the Money Market Portfolio and the U.S.
Government Portfolio amounted to $981,112,389 and $706,151,051, respectively.
Transactions in capital stock, all at $1.00 per share, were as follows:
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
3. Capital Stock. (Continued)
Money Market Portfolio U.S. Government Portfolio
-------------------------------------- -------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
2/29/96 8/31/95 2/29/96 8/31/95
-------------- -------------- --------------- ---------------
Class A
<S> <C> <C> <C> <C>
Sold................................ 386,609,684 697,072,360 401,141,234 564,854,707
Issued on reinvestment of dividends. 15,113,477 25,911,372 12,155,527 19,605,821
Redeemed............................ ( 328,874,766) ( 736,609,113) ( 291,272,275) ( 513,567,732)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 72,848,395 ( 13,625,381) 122,024,486 70,892,796
============== ============== ============== ==============
<CAPTION>
Class B
<S> <C> <C> <C> <C>
Sold................................ 315,551,526 515,705,468 394,530,338 1,119,846,439
Issued on reinvestment of dividends. 5,671,691 11,057,107 5,478,436 10,643,618
Redeemed............................ ( 294,861,623) ( 730,469,633) ( 592,272,918) ( 903,887,283)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 26,361,594 ( 203,707,058) ( 192,264,144) 226,602,774
============== ============== ============== ==============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses of the Money Market Portfolio at
February 29, 1996 amounted to $2,364,093. At February 29, 1996 the Fund had tax
basis capital losses of $2,413,437 which may be carried forward to offset future
capital gains through August 31, 2002.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
5. Selected Financial Information.
<TABLE>
<CAPTION>
Money Market Portfolio
Year Ended August 31,
-------------------------------------------------------------
Six Months
Ended
2/29/96 1995 1994 1993
----------------- ----------------- ----------------- ------------------
Class A Class B Class A Class B Class A Class B Class A Class B**
------- ------- ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income.......... 0.024 0.025 0.047 0.050 0.029 0.031 0.027 0.021
Less distributions:
Dividends from net investment
income...................... 0.024 0.025 0.047 0.050 0.029 0.031 0.027 0.021
-------- -------- -------- -------- -------- ------- ------- --------
Net asset value, end of period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======= ======= ========
Total Return................... 4.92%* 5.18%* 4.82%++ 5.08%++ 2.93% 3.19% 2.69% 2.84%*
Ratios/Supplemental Data
Net assets, end of period (000) $734,689 $244,254 $661,795 $217,877 $676,756 $422,005 $706,074 $453,093
Ratios to average net assets:
Expenses.................... 0.96%*+ 0.71%*+ 0.88%+ 0.62%+ 0.91% 0.67% 0.91%+ 0.71%*
Net investment income....... 4.83%*+ 5.08%*+ 4.75%+ 4.90%+ 2.89% 3.13% 2.59%+ 2.75%*
<CAPTION>
Money Market Portfolio
Year Ended August 31,
----------------------
1992 1991
------- -------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations: -------- --------
Net investment income.......... 0.041 0.063
Less distributions:
Dividends from net investment
income...................... 0.041 0.063
-------- --------
Net asset value, end of period. $ 1.00 $ 1.00
======== ========
Total Return................... 4.13% 6.48%
Ratios/Supplemental Data
Net assets, end of period (000) $694,635 $676,604
Ratios to average net assets:
Expenses.................... 0.83% 0.81%
Net investment income....... 4.03% 6.34%
* Annualized
** Distribution of Class B shares commenced November 30, 1992.
+ Net of management and administration fees waived equivalent to 0.03%, 0.13%
and 0.01%. In addition, in 1993 shareholder servicing fees equivalent to
0.03% were waived only with respect to Class A.
++ Includes the effect of a capital contribution from the Manager. Without the
capital contribution, the total return would have been 3.42% for Class A
and 3.69% for Class B.
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
===============================================================================
5. Selected Financial Information. (Continued)
<TABLE>
<CAPTION>
U.S. Government Portfolio
Year Ended August 31,
----------------------------------------------------------
Six Months
Ended
2/29/96 1995 1994 1993
----------------- ---------------- ----------------- ------------------
Class A Class B Class A Class B Class A Class B Class A Class B**
------- ------- ------- ------- ------- ------- ------- ---------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income.......... 0.024 0.025 0.048 0.051 0.028 0.030 0.025 0.021
Less distributions:
Dividends from net investment
income...................... 0.024 0.025 0.048 0.051 0.028 0.030 0.025 0.021
------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======== ======== ======== ======== ======== ========
Total Return................... 4.97%* 5.23%* 4.93% 5.19% 2.79% 3.04% 2.56% 2.75%*
Ratios/Supplemental Data
Net assets, end of period (000) $591,616 $114,535 $469,592 $306,799 $398,699 $80,196 $429,164 $101,391
Ratios to average net assets:
Expenses.................... 0.82%* 0.57%* 0.80% 0.55% 0.85% 0.60% 0.85% 0.63%*
Net investment income....... 4.86%* 5.19%* 4.83% 5.20% 2.75% 2.98% 2.52% 2.68%*
<CAPTION>
U.S. Government Portfolio
Year Ended August 31,
-------------------------
1992 1991
------ ------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
------- --------
Income from investment operations:
Net investment income.......... 0.039 0.061
Less distributions:
Dividends from net investment
income...................... 0.039 0.061
------- -------
Net asset value, end of period. $ 1.00 $ 1.00
======= =======
Total Return................... 3.98% 6.25%
Ratios/Supplemental Data
Net assets, end of period (000) $579,526 $596,085
Ratios to average net assets:
Expenses.................... 0.77% 0.76%
Net investment income....... 3.92% 5.96%
* Annualized
** Distribution of Class B shares commenced November 30, 1992.
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
- -------------------------------------------------------------------------------
Short Term Income Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
Custodian Transfer Agent &
Dividend Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
- -------------------------------------------------------------------------------
