SHORT TERM INCOME FUND INC
NSAR-B, 1997-10-23
Previous: CASH EQUIVALENT FUND, DEFS14A, 1997-10-23
Next: HOST MARRIOTT CORP/MD, 8-K/A, 1997-10-23



<PAGE>
000 B000000 08/31/97
000 C000000 0000312669
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 SHORT TERM INCOME FUND, INC.
001 B000000 811-2950
001 C000000 2128305200
002 A000000 600 FIFTH AVENUE
002 B000000 NEW YORK
002 C000000 NY
002 D010000 10020
002 D020000 2302
003  000000 N
004  000000 N
005  000000 N
006  000000 N
007 A000000 Y
007 B000000  2
007 C010100  1
007 C020100 MONEY MARKET PORTFOLIO
007 C030100 N
007 C010200  2
007 C020200 U.S. GOVERNMENT PORTFOLIO
007 C030200 N
007 C010300  3
007 C010400  4
007 C010500  5
007 C010600  6
007 C010700  7
007 C010800  8
007 C010900  9
007 C011000 10
008 A00AA01 REICH & TANG ASSET MANAGEMENT L.P.
008 B00AA01 A
008 C00AA01 801-47230
008 D01AA01 NEW YORK
008 D02AA01 NY
008 D03AA01 10020
008 D04AA01 2302
011 A00AA01 REICH & TANG DISTRIBUTORS L.P.
011 B00AA01 8-43429
011 C01AA01 NEW YORK
011 C02AA01 NY
011 C03AA01 10020
011 C04AA01 2302
012 A00AA01 REICH & TANG SERVICES L.P.
<PAGE> 
012 B00AA01 84-2007000
012 C01AA01 NEW YORK
012 C02AA01 NY
012 C03AA01 10020
012 C04AA01 2302
013 A00AA01 MCGLADREY & PULLEN LLP
013 B01AA01 NEW YORK
013 B02AA01 NY
013 B03AA01 10017
015 A00AA01 INVESTORS FIDUCIARY TRUST COMPANY
015 B00AA01 C
015 C01AA01 KANSAS CITY
015 C02AA01 MO
015 C03AA01 64105
015 E01AA01 X
018  00AA00 Y
019 A00AA00 Y
019 B00AA00   19
019 C00AA00 REICHTANGI
020 C000001      0
020 C000002      0
020 C000003      0
020 C000004      0
020 C000005      0
020 C000006      0
020 C000007      0
020 C000008      0
020 C000009      0
020 C000010      0
021  000000        0
022 A000001 FUJI SECURITIES INC.
022 B000001 36-2880742
022 C000001  39226181
022 D000001         0
022 A000002 DONALDSON, LUFKIN & JENRETTE SECURITIES CORP.
022 B000002 13-2741729
022 C000002        30
022 D000002         0
022 A000003 GOLDMAN, SACHS & CO.
022 B000003 13-5108880
022 C000003  25571277
022 D000003      4880
022 A000004 CANADIAN IMPERIAL BANK OF COMMERCE
022 B000004 13-1942440
022 C000004  25434447
022 D000004         0
022 A000005 MORGAN (J.P.) SECURITIES INC.
022 B000005 13-3224016
022 C000005   9372884
022 D000005     49903
022 A000006 CS FIRST BOSTON CORPORATION
<PAGE>
022 B000006 13-5659485
022 C000006   6389856
022 D000006      9996
022 A000007 BANK OF AMERICA NT & SA
022 B000007 94-1687665
022 C000007   1453182
022 D000007    252893
022 A000008 CHASE SECURITIE, INC.
022 B000008 13-3112953
022 C000008    580317
022 D000008     20000
022 A000009 JANNEY MONTGOMERY SCOTT, INC.
022 B000009 23-0731260
022 C000009    280187
022 D000009         0
022 A000010 MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
022 B000010 13-5674085
022 C000010    259173
022 D000010         0
023 C000000  143091333
023 D000000     349533
024  00AA00 N
026 A000000 N
026 B000000 N
026 C000000 N
026 D000000 N
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027  000000 Y
029  00AA00 N
030 A00AA00      0
030 B00AA00  0.00
030 C00AA00  0.00
031 A00AA00      0
031 B00AA00      0
032  00AA00      0
033  00AA00      0
034  00AA00 N
035  00AA00      0
036 B00AA00      0
037  00AA00 N
038  00AA00      0
039  00AA00 N
040  00AA00 Y
041  00AA00 Y
055 A00AA00 N
055 B00AA00 N
056  00AA00 Y
<PAGE>
057  00AA00 N
058 A00AA00 N
059  00AA00 Y
060 A00AA00 Y
060 B00AA00 Y
061  00AA00     1000
066 A00AA00 N
067  00AA00 N
068 A00AA00 N
068 B00AA00 N
069  00AA00 N
077 A000000 Y
077 B000000 N
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078  000000 N
080 A00AA00 ST. PAUL FIRE & MARINE INSURANCE COMPANY
080 C00AA00     2259
081 A00AA00 Y
081 B00AA00  17
082 A00AA00 N
082 B00AA00        0
083 A00AA00 N
083 B00AA00        0
084 A00AA00 N
084 B00AA00        0
085 A00AA00 N
085 B00AA00 N
025 D000101       0
025 D000102       0
025 D000103       0
025 D000104       0
025 D000105       0
025 D000106       0
025 D000107       0
025 D000108       0
<PAGE>
028 A010100     67391
028 A020100      3375
028 A030100         0
028 A040100    120844
028 B010100    151267
028 B020100      3699
028 B030100         0
028 B040100    181898
028 C010100    106895
028 C020100      3611
028 C030100         0
028 C040100    136694
028 D010100    116914
028 D020100      3685
028 D030100         0
028 D040100    128348
028 E010100    176469
028 E020100      3513
028 E030100         0
028 E040100    121448
028 F010100    178784
028 F020100      4119
028 F030100         0
028 F040100    148454
028 G010100    797720
028 G020100     22002
028 G030100         0
028 G040100    837686
028 H000100         0
042 A000100   0
042 B000100   0
042 C000100 100
042 D000100   0
042 E000100   0
042 F000100   0
042 G000100   0
042 H000100   0
043  000100   1940
044  000100   2268
045  000100 Y
046  000100 N
047  000100 Y
048  000100  0.000
048 A010100   750000
048 A020100 0.300
048 B010100   750000
048 B020100 0.290
048 C010100   250000
048 C020100 0.280
048 D010100        0
048 D020100 0.270
<PAGE>
048 E010100        0
048 E020100 0.000
048 F010100        0
048 F020100 0.000
048 G010100        0
048 G020100 0.000
048 H010100        0
048 H020100 0.000
048 I010100        0
048 I020100 0.000
048 J010100        0
048 J020100 0.000
048 K010100        0
048 K020100 0.000
049  000100 N
050  000100 N
051  000100 N
052  000100 N
053 A000100 N
054 A000100 Y
054 B000100 N
054 C000100 N
054 D000100 N
054 E000100 N
054 F000100 N
054 G000100 N
054 H000100 Y
054 I000100 N
054 J000100 Y
054 K000100 N
054 L000100 N
054 M000100 Y
054 N000100 N
054 O000100 N
062 A000100 Y
062 B000100   0.0
062 C000100   1.0
062 D000100   4.5
062 E000100   0.0
062 F000100   5.6
062 G000100   3.2
062 H000100   2.3
062 I000100  45.8
062 J000100   0.0
062 K000100   0.0
062 L000100  37.6
062 M000100   0.0
062 N000100   0.0
062 O000100   0.0
062 P000100   0.0
062 Q000100   0.0
<PAGE>
062 R000100   0.0
063 A000100  55
063 B000100  0.0
064 A000100 Y
064 B000100 N
070 A010100 Y
070 A020100 Y
070 B010100 N
070 B020100 N
070 C010100 N
070 C020100 N
070 D010100 N
070 D020100 N
070 E010100 N
070 E020100 N
070 F010100 N
070 F020100 N
070 G010100 N
070 G020100 N
070 H010100 N
070 H020100 N
070 I010100 N
070 I020100 N
070 J010100 N
070 J020100 N
070 K010100 N
070 K020100 N
070 L010100 Y
070 L020100 N
070 M010100 N
070 M020100 N
070 N010100 N
070 N020100 N
070 O010100 Y
070 O020100 N
070 P010100 N
070 P020100 N
070 Q010100 N
070 Q020100 N
070 R010100 N
070 R020100 N
071 A000100         0
071 B000100         0
071 C000100         0
071 D000100    0
072 A000100 12
072 B000100    56886
072 C000100        0
072 D000100        0
072 E000100        0
072 F000100     3041
<PAGE>
072 G000100     2150
072 H000100        0
072 I000100     1613
072 J000100       92
072 K000100      213
072 L000100       42
072 M000100       29
072 N000100       52
072 O000100        1
072 P000100        0
072 Q000100       67
072 R000100       21
072 S000100       20
072 T000100     1940
072 U000100        0
072 V000100        0
072 W000100       24
072 X000100     9305
072 Y000100       51
072 Z000100    47632
072AA000100       52
072BB000100        0
072CC010100        0
072CC020100        0
072DD010100    35479
072DD020100    12153
072EE000100        0
073 A010100   0.0455
073 A020100   0.0488
073 B000100   0.0000
073 C000100   0.0000
074 A000100     1634
074 B000100    48000
074 C000100  1034500
074 D000100        0
074 E000100        0
074 F000100        0
074 G000100        0
074 H000100        0
074 I000100        0
074 J000100        0
074 K000100        0
074 L000100     2343
074 M000100        0
074 N000100  1086477
074 O000100    15000
074 P000100      650
074 Q000100        0
074 R010100     2387
074 R020100        0
074 R030100        0
<PAGE>
074 R040100        0
074 S000100        0
074 T000100  1068440
074 U010100   802536
074 U020100   267951
074 V010100     1.00
074 V020100     1.00
074 W000100   0.9981
074 X000100    78213
074 Y000100        0
075 A000100  1026637
075 B000100        0
076  000100     0.00
028 A010200    107767
028 A020200      2586
028 A030200         0
028 A040200     99716
028 B010200    110855
028 B020200      2910
028 B030200         0
028 B040200    105922
028 C010200     71611
028 C020200      2874
028 C030200         0
028 C040200    135433
028 D010200     67886
028 D020200      2857
028 D030200         0
028 D040200     60526
028 E010200    129081
028 E020200      2863
028 E030200         0
028 E040200     94597
028 F010200    144656
028 F020200      3353
028 F030200         0
028 F040200    135494
028 G010200    631856
028 G020200     17443
028 G030200         0
028 G040200    631688
028 H000200         0
042 A000200   0
042 B000200   0
042 C000200 100
042 D000200   0
042 E000200   0
042 F000200   0
042 G000200   0
042 H000200   0
043  000200   1606
<PAGE>
044  000200   1454
045  000200 Y
046  000200 N
047  000200 Y
048  000200  0.000
048 A010200   250000
048 A020200 0.275
048 B010200        0
048 B020200 0.250
048 C010200        0
048 C020200 0.000
048 D010200        0
048 D020200 0.000
048 E010200        0
048 E020200 0.000
048 F010200        0
048 F020200 0.000
048 G010200        0
048 G020200 0.000
048 H010200        0
048 H020200 0.000
048 I010200        0
048 I020200 0.000
048 J010200        0
048 J020200 0.000
048 K010200        0
048 K020200 0.000
049  000200 N
050  000200 N
051  000200 N
052  000200 N
053 A000200 N
054 A000200 Y
054 B000200 N
054 C000200 N
054 D000200 N
054 E000200 N
054 F000200 N
054 G000200 N
054 H000200 Y
054 I000200 N
054 J000200 Y
054 K000200 N
054 L000200 N
054 M000200 Y
054 N000200 N
054 O000200 N
062 A000200 Y
062 B000200   0.0
062 C000200  20.5
062 D000200  75.4
<PAGE>
062 E000200   0.0
062 F000200   0.0
062 G000200   0.0
062 H000200   0.0
062 I000200   0.0
062 J000200   0.0
062 K000200   0.0
062 L000200   4.1
062 M000200   0.0
062 N000200   0.0
062 O000200   0.0
062 P000200   0.0
062 Q000200   0.0
062 R000200   0.0
063 A000200  37
063 B000200  0.0
064 A000200 Y
064 B000200 N
070 A010200 Y
070 A020200 Y
070 B010200 N
070 B020200 N
070 C010200 N
070 C020200 N
070 D010200 N
070 D020200 N
070 E010200 N
070 E020200 N
070 F010200 N
070 F020200 N
070 G010200 N
070 G020200 N
070 H010200 N
070 H020200 N
070 I010200 N
070 I020200 N
070 J010200 N
070 J020200 N
070 K010200 N
070 K020200 N
070 L010200 Y
070 L020200 N
070 M010200 N
070 M020200 N
070 N010200 N
070 N020200 N
070 O010200 Y
070 O020200 N
070 P010200 N
070 P020200 N
070 Q010200 N
<PAGE>
070 Q020200 N
070 R010200 N
070 R020200 N
071 A000200         0
071 B000200         0
071 C000200         0
071 D000200    0
072 A000200 12
072 B000200    41300
072 C000200        0
072 D000200        0
072 E000200        0
072 F000200     1968
072 G000200     1601
072 H000200        0
072 I000200      506
072 J000200       54
072 K000200       35
072 L000200        8
072 M000200       16
072 N000200       18
072 O000200        1
072 P000200        0
072 Q000200       46
072 R000200       15
072 S000200       14
072 T000200     1606
072 U000200        0
072 V000200        0
072 W000200       14
072 X000200     5902
072 Y000200       16
072 Z000200    35414
072AA000200      187
072BB000200        0
072CC010200        0
072CC020200        0
072DD010200    29587
072DD020200     5827
072EE000200      187
073 A010200   0.0459
073 A020200   0.0485
073 B000200   0.0003
073 C000200   0.0000
074 A000200      866
074 B000200   607000
074 C000200   164648
074 D000200        0
074 E000200        0
074 F000200        0
074 G000200        0
<PAGE>
074 H000200        0
074 I000200        0
074 J000200        0
074 K000200        0
074 L000200    34226
074 M000200        0
074 N000200   806740
074 O000200        0
074 P000200      492
074 Q000200        0
074 R010200     1700
074 R020200        0
074 R030200        0
074 R040200        0
074 S000200        0
074 T000200   804548
074 U010200   735581
074 U020200    68967
074 V010200     1.00
074 V020200     1.00
074 W000200   1.0000
074 X000200    12820
074 Y000200        0
075 A000200   764363
075 B000200        0
076  000200     0.00
SIGNATURE   BERNADETTE N. FINN
TITLE       SECRETARY
 

<TABLE> <S> <C>

<ARTICLE>           6
<LEGEND>            The  schedule   contains   summary   financial   information
                    extracted  from  the  financial  statements  and  supporting
                    schedules  as of the end of the most  current  period and is
                    qualified in its  entirety by  reference  to such  financial
                    statements.
</LEGEND>
<CIK>               0000312669
<NAME>              Short Term Income Fund, Inc.
<SERIES>
<NUMBER>            1
<NAME>              Money Market Portfolio
       
<S>                               <C>    
<FISCAL-YEAR-END>             AUG-31-1997
<PERIOD-START>                SEP-01-1996
<PERIOD-END>                  AUG-31-1997
<PERIOD-TYPE>                 YEAR
<INVESTMENTS-AT-COST>         1082499930
<INVESTMENTS-AT-VALUE>        1082499930
<RECEIVABLES>                 2343147
<ASSETS-OTHER>                0
<OTHER-ITEMS-ASSETS>          1634468
<TOTAL-ASSETS>                1086477545
<PAYABLE-FOR-SECURITIES>      15000000
<SENIOR-LONG-TERM-DEBT>       0
<OTHER-ITEMS-LIABILITIES>     3037431
<TOTAL-LIABILITIES>           18037431
<SENIOR-EQUITY>               0
<PAID-IN-CAPITAL-COMMON>      1070487643
<SHARES-COMMON-STOCK>         1070487643
<SHARES-COMMON-PRIOR>         978003968
<ACCUMULATED-NII-CURRENT>     (183622)
<OVERDISTRIBUTION-NII>        0
<ACCUMULATED-NET-GAINS>       (2231151)
<OVERDISTRIBUTION-GAINS>      0
<ACCUM-APPREC-OR-DEPREC>      0
<NET-ASSETS>                  1068440114
<DIVIDEND-INCOME>             0
<INTEREST-INCOME>             56885759
<OTHER-INCOME>                0
<EXPENSES-NET>                9253948
<NET-INVESTMENT-INCOME>       47631811
<REALIZED-GAINS-CURRENT>      52064
<APPREC-INCREASE-CURRENT>     0
<NET-CHANGE-FROM-OPS>         47683875
<EQUALIZATION>                0
<DISTRIBUTIONS-OF-INCOME>     47631811
<DISTRIBUTIONS-OF-GAINS>      0
<DISTRIBUTIONS-OTHER>         0
<NUMBER-OF-SHARES-SOLD>       1556751298
<NUMBER-OF-SHARES-REDEEMED>   1508097433
<SHARES-REINVESTED>           43829810
<NET-CHANGE-IN-ASSETS>        92535739
<ACCUMULATED-NII-PRIOR>       (194437)
<ACCUMULATED-GAINS-PRIOR>     (2294030)
<OVERDISTRIB-NII-PRIOR>       0
<OVERDIST-NET-GAINS-PRIOR>    0
<GROSS-ADVISORY-FEES>         3041228
<INTEREST-EXPENSE>            0
<GROSS-EXPENSE>               9304968
<AVERAGE-NET-ASSETS>          1026636766
<PER-SHARE-NAV-BEGIN>         1.00
<PER-SHARE-NII>               .05
<PER-SHARE-GAIN-APPREC>       0
<PER-SHARE-DIVIDEND>          .05
<PER-SHARE-DISTRIBUTIONS>     0
<RETURNS-OF-CAPITAL>          0
<PER-SHARE-NAV-END>           1.00
<EXPENSE-RATIO>               .99
<AVG-DEBT-OUTSTANDING>        0
<AVG-DEBT-PER-SHARE>          0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE>           6
<LEGEND>            The  schedule   contains   summary   financial   information
                    extracted  from  the  financial  statements  and  supporting
                    schedules  as of the end of the most  current  period and is
                    qualified in its  entirety by  reference  to such  financial
                    statements.
</LEGEND>
<CIK>               0000312669
<NAME>              Short Term Income Fund, Inc.
<SERIES>
<NUMBER>            2
<NAME>              U.S. Government Portfolio
       
<S>                               <C>    
<FISCAL-YEAR-END>             AUG-31-1997
<PERIOD-START>                SEP-01-1996
<PERIOD-END>                  AUG-31-1997
<PERIOD-TYPE>                 YEAR
<INVESTMENTS-AT-COST>         771647908
<INVESTMENTS-AT-VALUE>        771647908
<RECEIVABLES>                 34225584
<ASSETS-OTHER>                0
<OTHER-ITEMS-ASSETS>          866413
<TOTAL-ASSETS>                806739905
<PAYABLE-FOR-SECURITIES>      0
<SENIOR-LONG-TERM-DEBT>       0
<OTHER-ITEMS-LIABILITIES>     2192307
<TOTAL-LIABILITIES>           2192307
<SENIOR-EQUITY>               0
<PAID-IN-CAPITAL-COMMON>      804547598
<SHARES-COMMON-STOCK>         804547598
<SHARES-COMMON-PRIOR>         792789311
<ACCUMULATED-NII-CURRENT>     0
<OVERDISTRIBUTION-NII>        0
<ACCUMULATED-NET-GAINS>       0
<OVERDISTRIBUTION-GAINS>      0
<ACCUM-APPREC-OR-DEPREC>      0
<NET-ASSETS>                  804547598
<DIVIDEND-INCOME>             0
<INTEREST-INCOME>             41299929
<OTHER-INCOME>                0
<EXPENSES-NET>                5885968
<NET-INVESTMENT-INCOME>       35413961
<REALIZED-GAINS-CURRENT>      187048
<APPREC-INCREASE-CURRENT>     0
<NET-CHANGE-FROM-OPS>         35601009
<EQUALIZATION>                0
<DISTRIBUTIONS-OF-INCOME>     35413961
<DISTRIBUTIONS-OF-GAINS>      187048
<DISTRIBUTIONS-OTHER>         0
<NUMBER-OF-SHARES-SOLD>       1095638059
<NUMBER-OF-SHARES-REDEEMED>   1118222350
<SHARES-REINVESTED>           34342578
<NET-CHANGE-IN-ASSETS>        11758287
<ACCUMULATED-NII-PRIOR>       0
<ACCUMULATED-GAINS-PRIOR>     0
<OVERDISTRIB-NII-PRIOR>       0
<OVERDIST-NET-GAINS-PRIOR>    0
<GROSS-ADVISORY-FEES>         1968002
<INTEREST-EXPENSE>            0
<GROSS-EXPENSE>               5901562
<AVERAGE-NET-ASSETS>          764363409
<PER-SHARE-NAV-BEGIN>         1.00
<PER-SHARE-NII>               .05
<PER-SHARE-GAIN-APPREC>       0
<PER-SHARE-DIVIDEND>          .05
<PER-SHARE-DISTRIBUTIONS>     0
<RETURNS-OF-CAPITAL>          0
<PER-SHARE-NAV-END>           1.00
<EXPENSE-RATIO>               .81
<AVG-DEBT-OUTSTANDING>        0
<AVG-DEBT-PER-SHARE>          0
        

</TABLE>



                           McGLADREY & PULLEN, L.L.P.
                   Certified Public Accountants & Consultants


The Board of Directors and Shareholders
Short Term Income Fund, Inc.


In planning and  performing  our audit of the financial  statements of the Money
Market Porfolio and the U.S. Government Portfolio of Short Term Income Fund, Inc
for the year  ended  August  31,  1997,  we  considered  its  internal  control,
including  controls  over  safeguarding  securities,  in order to determine  our
auditing  procedures  for the purpose of expressing our opinion on the financial
statements  and to comply with the  requirements  of Form N-SAR,  not to provide
assurance on internal control.

The management of Short Term Income Fund, Inc. is responsible  for  establishing
and maintaining internal control. In fulfilling this  responsibility,  estimates
and  judgments by  management  are required to assess the expected  benefits and
related  costs of controls.  Generally,  controls  that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes  that are fairly  presented  in  conformity  with  generally  acccepted
accounting  principles.  Those controls  include  safeguarding of assets against
unauthorized acquisition, use, or disposition.

Because of inherent  limitations in internal  control,  errors or irregularities
may  occur  and not be  detected.  Also,  projection  of any  evaluation  of the
internal  conttrol  to future  periods is subject to the risk that it may become
inadequate  because of changes in  conditions or that the  effectiveness  of the
design and operation may deteriorate.

Our consideration of internal control would not necessarily disclose all matters
in the  internal  control  structure  that might be  material  weaknesses  under
standards established by the American Institute of Certified Public Accountants.
A material  weakness  is a  condition  in which the design or  operation  of the
specific  internal  control  component does not reduce to a relatively low level
the risk that  errors or  irregularities  in amounts  that would be  material in
relation to the financial statements being audited may occur and not be detected
within a timely  period by employees in the normal  course of  performing  their
assigned  functions.  However,  we noted no matters involving internal control ,
including controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of August 31, 1997.

This report is intended solely for the information and use of management and the
Securities and Exchange Commission.


                                               McGladrey & Pullen, LLP


New York, New York
September 30, 1997

<PAGE>
To the Board of Directors of
  Institutional Daily Income Fund
  Florida Daily Municipal Income Fund
  Short  Term Income Fund, Inc.

We have examined the accompanying description of the operations and the specific
control  objectives,  and the procedures that achieve those  objectives,  of the
Funds  referenced  to above (the  "Funds")  related to those  portions  of their
system for calculating the net asset value and dividends and distributions which
are unique to the  allocation of income and expenses to the multiple  classes of
shares of the Funds as of March 31, 1997. Our examination included procedures to
obtain  reasonable  assurance  about  whether (1) the  accompanying  description
presents fairly,  in all material  respects,  the aspects of the Funds' policies
and procedures  that may be relevant to the Funds' internal  control  structure,
(2) the control  structure  policies and procedures  included in the description
were  suitably  designed  to achieve  the control  objectives  specified  in the
description, if those policies and procedures were complied with satisfactorily,
and (3) such  policies and  procedures  had been placed in operation as of March
31, 1997. The control  objectives  were specified by the Funds.  Our examination
was performed in accordance with standards established by the American Institute
of Certified  Public  Accountants  and included  those  procedures we considered
necessary in the  circumstances  to obtain a reasonable  basis for rendering our
opinion.

In our opinion,  the accompanying  description of the aforementioned  operations
presents fairly,  in all material  respects,  the relevant aspects of the Funds'
policies  and  procedures  that have  been  placed in  operation.  Also,  in our
opinion,  the policies and procedures,  as described,  are suitably  designed to
provide  reasonable  assurance that the specified  control  objectives  would be
achieved  if  the  described   policies  and   procedures   were  complied  with
satisfactorily.

In addition to the  procedures we considered  necessary to render our opinion as
expressed in the previous  paragraph,  we applied tests to specific policies and
procedures listed in Exhibit B, to obtain evidence about their  effectiveness in
meeting the control objectives,  described in Exhibit B, during the period ended
March 31, 1997. The specific  policies and  procedures  and the nature,  timing,
extent,  and the results of the tests are listed in Exhibit B. This  information
has been  provided to the  Securities  and Exchange  Commission to be taken into
consideration, when evaluating the Funds' compliance with the original exemptive
ruling request. In our opinion, the policies and procedures that were tested, as
described in Exhibit B, were operating with sufficient  effectiveness to provide
reasonable,  but not absolute assurance that the control objectives specified in
Exhibit B were achieved during the year ended March 31, 1997.

<PAGE>

The  description of policies and procedures at the Funds is as of March 31, 1997
and any  projection  of such  information  to the  future is subject to the risk
that,  because of change,  the  description  may no longer portray the system in
existence.  The potential  effectiveness of specific  policies and procedures at
the  Funds is  subject  to  inherent  limitations  and,  accordingly,  errors or
irregularities may occur and not be detected. Furthermore, the projection of any
conclusions,  based on our  findings,  to future  periods is subject to the risk
that changes may alter the validity of such conclusions.

This report is intended solely for use by the management of Institutional  Daily
Income Fund,  Florida Daily  Municipal  Income Fund, and Short Term Income Fund,
Inc. and the Securities and Exchange Commission.

                                             McGladrey & Pullen, LLP


New York, New York
April 25, 1997
<PAGE>


                                    EXHIBIT A

                                  DUAL PRICING
             NET ASSET VALUE AND DIVIDEND/DISTRIBUTION DETERMINATION


The Funds  intend to  implement  a plan which  would allow any Fund to issue two
separate classes of shares.  Under the plan, Class A shares will be subject to a
12b-1 fee while Class B shares  would not.  Since two  classes of shares  exist,
separate Net Asset Value ("NAV") and dividends/distributions  must be calculated
for each class of shares.

The Funds are required to maintain  records  that account for income,  expenses,
dividends and distributions for each share class. The procedures for calculating
NAV and dividends/  distributions depend upon the type of Fund. For Money Funds,
investment  income,  unrealized  and realized  gains or losses will be allocated
daily to each share class based on the percentage of  outstanding  shares at the
end of each day. These balances, as well as share activity,  will be accumulated
by share class. For Non-Money Funds, investment income,  unrealized and realized
gains or  losses  will be  allocated  daily  to each  share  class  based on its
relative  percentage of net assets at the beginning of the day after  reflecting
the current day's sale and redemption activity ("adjusted net assets").

Daily expenses of the Fund will be allocated to each share class  depending upon
the nature of the expense item. For Money Funds,  investment management fees and
operating  expenses,  which are attributable to both classes,  will be allocated
daily to each share class based on the percentage of  outstanding  shares at the
end of the day. For Non-Money  Funds,  investment  management fees and operating
expenses,  which are  attributable  to both classes,  will be allocated daily to
each share class based on adjusted net assets.  For all Funds,  certain expenses
that have a greater cost for one class versus the other will be  calculated  and
charged  to  the  appropriate  class  prior  to  determining  the  daily  NAV or
dividends/distributions.

Prior to  determining  the day's NAV or  dividends/distributions,  the following
expense items will be calculated as indicated:

     (a) Investment management fee:

     The current day's  accrual will be  calculated  and allocated to each class
     based on its  percentage of  outstanding  shares at the end of each day for
     Money  Funds or based on its  relative  adjusted  net assets for  Non-Money
     Funds.  The effective rate used will be based on the combined net assets of
     both classes of shares (i.e., total net assets of the Fund).

     (b) Shareholder servicing and administration fee:

     The current day's accrual will be calculated  and charged to the applicable
     class based on its effective rate.


<PAGE>


     (c) Other expenses:

     The daily accrual will be calculated  from the current  expense  budget for
     the entire Fund and will be allocated to each class based on its percentage
     of  outstanding  shares at the end of each day for Money  Funds or based on
     its relative adjusted net assets for Non-Money Funds.

In designing  accounting  procedures  and controls  regarding the  allocation of
income,  expenses and  dividends/distributions  for these classes of shares, the
following objectives have been identified:

    o   To ascertain  that the direct  expenses  charged to each class of shares
        are  correctly  recorded  in  the  Fund's  accounting  records  and  are
        correctly allocated to each share class.

    o   To ascertain  that income,  other  operating  expenses,  unrealized  and
        realized  gains or losses are  allocated  properly  to each share  class
        based on the appropriate percentage of each class (i.e., relative shares
        outstanding for Money Funds;  relative adjusted net assets for Non-Money
        Funds).

    o   To ascertain that the NAV and dividend/distribution rates for each class
        of shares reflects the proper allocation of income,  operating expenses,
        unrealized  and  realized  gains or losses as well as the full amount of
        direct expenses charged to each class of shares.

Set forth  below are the  additional  procedures  which will be  implemented  to
satisfy  the  objectives   described  above  for  the  calculation  of  NAV  and
dividends/distributions. These procedures presume that the normal procedures and
controls  remain in effect for all other daily fund  accounting.  The procedures
are described for the Funds based upon their respective dividend policies:

I.   Dividends are declared daily and distributed daily or monthly. Net realized
     gains on security transactions are distributed at least annually.


              The dividend rate for net investment  income will be determined by
              dividing the daily net  investment  income for each share class by
              the outstanding shares for each class on that date.


              The distribution rate for net realized gains will be determined at
              a Fund level using the Fund's undistributed net realized gains and
              dividing by the Fund's total shares  outstanding  as of the record
              date.   The  rates  so  calculated   will  be  multiplied  by  the
              outstanding  shares  of each  class to  determine  the  amount  of
              distribution applicable to each class.


<PAGE>


II.  Dividends from net investment  income are declared at least  annually.  Net
     realized gains on security transactions are distributed at least annually.

              The dividend rate for net investment  income will be determined by
              dividing  the  accumulated  net  investment  income for each share
              class by the outstanding shares for each class on the record date.


              The distribution rate for net realized gains will be determined at
              a Fund level using the Fund's undistributed net realized gains and
              dividing by the Fund's total shares  outstanding  as of the record
              date.   The  rates  so  calculated   will  be  multiplied  by  the
              outstanding  shares  of each  class to  determine  the  amount  of
              distribution applicable to each class.


Daily,  the fund accountant will prepare a "Net Asset  Rollforward" to determine
the NAV by class.  The allocated  expenses,  calculated  expenses by classes and
calculated  dividends  per share will be reviewed  and verified by a manager for
accuracy and agreed to the appropriate underlying accounting records,  including
the trial balance and transfer agency records.  After completion of review,  the
manager will sign off on the "Net Asset Rollforward."


<PAGE>


                                    EXHIBIT B

                         DESCRIPTION OF TESTS PERFORMED

The following information pertains to tests of operating effectiveness performed
by McGladrey & Pullen,  LLP.  Tests were  performed  only of those  policies and
procedures specifically  identified.  All tests performed were performed without
exception.

Testing of the operating  effectiveness  of identified  policies and  procedures
were  performed  during the year ended March 31,  1997.  The nature,  timing and
extent of tests  performed along with the specific  control  objective they were
designed to achieve follow.

                      SYSTEM OF CALCULATING NET ASSET VALUE
                         AND DIVIDENDS AND DISTRIBUTIONS
                    UNIQUE TO THE MULTIPLE CLASSES OF SHARES

<TABLE>
<CAPTION>
          Control Objective                                Test Performed

<S>                                                <C>
The direct expenses charged to each class of       Determined that distribution fees and 
shares are correctly recorded in the Fund's        other class specific expenses were allocated
accounting records and are correctly               to the respective class of shares.
allocated to each share class.

Income, other operating expenses,                  Agreed opening net assets and shares
unrealized and realized gains or losses are        outstanding to daily price makeup sheet.
allocated  properly to each share class based
on the appropriate percentage of each class
(i.e. relative shares outstanding).                Agreed share subscription and redemption
                                                   activity for each class of share to transfer agent
                                                   records.

                                                   Recalculated the allocation of income and
                                                   expenses between classes based on shares
                                                   outstanding of each class.

                                                   Traced and agreed the allocation percentage
                                                   utilized on the net asset rollforward to the
                                                   calculation in the previous procedure.

                                                   Recalculated daily expenses accruals for
                                                   selected expense categories.

                                                   Agreed ending net assets for each class and in
                                                   total to the monthly schedule of average net
                                                   assets.

<PAGE>


          Control Objective                                Tests Performed

<C>                                                <C>
The NAV and distribution/dividend rates            Totaled net investment income for each class of
for each class of shares reflects the proper       share and compared to daily price makeup
allocation of income, operating expenses,          sheet.
and realized gains or losses as well as the
full amount of direct expenses charged to          Recalculated dividend factors and agreed them 
each class of shares.                              to dividend factor sheets.

                                                   Recalculated the NAV by dividing net assets by
                                                   outstanding shares for each share class.

                                                   Agreed total net assets to the fund level trial
                                                   balance.
</TABLE>


The above testing  procedures were performed in detail for four days selected at
random during the period.



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission