<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, 1996 through February 28, 1997.
The Fund's Money Market Portfolio had 74,347 shareholders and net assets of
$1,086,404,206 as of February 28, 1997. The Government Portfolio had 13,464
shareholders and net assets of $786,936,676 as of February 28, 1997.
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 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Bankers' Acceptances (4.13%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 Dai-Ichi Kangyo Bank, Ltd. 03/13/97 5.34% $ 4,992,611
40,058,372 Trust Company of Georgia 03/27/97 5.47 39,914,161
------------ ------------
45,058,372 Total Bankers' Acceptances 44,906,772
------------ ------------
<CAPTION>
Certificates of Deposit (2.30%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 Union Bank of California 07/22/97 5.56% $ 25,000,000
------------ ------------
25,000,000 Total Certificates of Deposit 25,000,000
------------ ------------
<CAPTION>
Commercial Paper (25.71%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 ABN-AMRO Canadian Schedule B 03/10/97 5.40% $ 14,984,396
10,000,000 Abbey National PLC 03/10/97 5.82 9,989,014
25,000,000 Banque Internationale a Luxembourg (North America) 04/21/97 5.42 24,817,951
25,000,000 Banque Internationale a Luxembourg (North America) 04/08/97 5.36 24,867,250
40,000,000 Bear Stearns Companies, Inc. 03/07/97 5.40 39,976,311
20,000,000 Compagnie Bancaire CP 04/21/97 5.32 19,856,539
20,000,000 Compagnie Bancaire 04/24/97 5.43 19,845,156
15,000,000 Cregem North America, Inc. 06/26/97 5.43 14,744,604
30,000,000 Cregem North America, Inc. 07/18/97 5.41 29,394,917
25,000,000 Island Finance Puerto Rico 03/20/97 5.46 24,936,958
12,000,000 Island Finance Puerto Rico 03/20/97 5.47 11,969,400
9,000,000 Island Finance Puerto Rico 03/20/97 5.51 8,976,880
15,000,000 Merrill Lynch CP 04/16/97 5.42 14,901,917
20,000,000 UBS Finance, Delaware 03/03/97 5.37 20,000,000
------------ ------------
281,000,000 Total Commercial Paper 279,261,293
------------ ------------
<CAPTION>
LOC Commercial Paper (23.41%)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 Banco Bradesco
LOC Barclays Bank 04/18/97 5.50% $ 4,965,819
20,000,000 Banco Mercantile del Norte
LOC Bayerische Vereinsbank, A.G. 08/08/97 5.42 19,535,656
20,000,000 Banco Rio de La Plata
LOC Bayerische Vereinsbank, A.G. 10/30/97 5.62 19,277,000
15,000,000 COFCO
LOC Credit Suisse 05/23/97 5.35 14,821,800
10,000,000 Cemex CP
LOC Credit Suisse 08/12/97 5.47 9,760,600
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
LOC Commercial Paper (Continued)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 45,000,000 Dean Health System Inc.
LOC Rabobank Nederland 04/25/97 5.42% $ 44,643,867
10,000,000 Garanti Funding Corporation
LOC Bayerische Vereinsbank, A.G. 05/08/97 5.41 9,902,100
10,000,000 Guangdong Enterprise Limited
LOC Credit Suisse 05/19/97 5.47 9,886,211
20,000,000 Louis Dreyfus Corporation - Series B
LOC Credit Agricole USA, Inc. 04/14/97 5.30 19,877,267
15,000,000 Minmetals Capitals & Securities, Incorporated
LOC Credit Suisse 05/28/97 5.45 14,810,083
10,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank 05/08/97 5.45 9,902,833
10,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank 08/15/97 5.50 9,758,000
20,000,000 Petroleo Brasileiro S.A.
LOC Barclays Bank 04/03/97 5.41 19,908,722
10,000,000 U.S. Prime Properties
LOC ABN AMRO Bank N.V. 06/13/97 5.47 9,849,267
37,500,000 Unibanco-Uniao de Bancos Brasileiros S.A.
LOC Westdeutsche Landesbank Girozentrale 03/18/97 5.50 37,415,157
----------- ------------
257,500,000 Total Letter of Credit Commercial Paper 254,314,382
----------- ------------
<CAPTION>
U.S. Government Agencies (2.30%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Federal Farm Credit Bank (a) 06/26/97 5.18% $ 14,998,354
10,000,000 Federal National Mortgage Association 04/04/97 5.36 9,999,406
------------ -------------
25,000,000 Total U.S. Government Agencies 24,997,760
------------ -------------
<CAPTION>
Master Notes (15.19%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 35,000,000 Donaldson, Lufkin & Jenrette, Inc. (b) 02/06/98 5.49% $ 35,000,000
40,000,000 Goldman Sachs (c) 08/01/97 5.54 40,000,000
45,000,000 J.P. Morgan Securities Inc. (Master Note Purchase Agreement) (d) 07/08/97 5.44 45,000,000
45,000,000 Williamette Industries Incorporated (e) 07/18/97 5.47 45,000,000
------------ -------------
165,000,000 Total Master Notes 165,000,000
------------ -------------
<CAPTION>
Other Notes (11.33%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,360,000 Carriage Inn of Cadiz, Inc. - Series 1996 (f)
LOC Key Bank, N.A. 10/01/17 5.54% $ 2,360,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,820,000 Carriage Inn Retirement Community of Dayton, Inc. - Series 1996 (f)
LOC Key Bank, N.A. 10/01/16 5.54% $ 2,820,000
5,500,000 City & County of Denver (f)
LOC Canadian Imperial Bank of Commerce 05/01/11 5.50 5,500,000
3,325,000 Greensboro, NC Public Improvement - Series C (f) 04/01/14 5.35 3,325,000
20,000,000 Marsh & McLennan Companies Loan Participation (g) 02/24/98 5.45 20,000,000
1,000,000 Mt. Carmel East Professional Office Building (f) 01/01/14 5.50 1,000,000
6,900,000 New Orleans Aviation Board
Taxable Refunding Bonds - Series 1993A (f)
MBIA Insured 08/01/11 5.53 6,900,000
25,000,000 New York City General Obligation Bonds
FGIC Insured 05/23/97 5.52 25,000,000
2,700,000 Pennsylvania EDFA
(West 914 Incorporation Project) RB - Series 1991A (f)
LOC PNC Bank 05/01/21 5.35 2,700,000
8,800,000 Southwest Atlantic Properties LLC Taxable - Series 1996 (f)
LOC Columbus Bank & Trust Company 09/01/26 5.50 8,800,000
25,000,000 State of Oregon Taxable Economic Development RB (f)
(Georgia Pacific Corp.) Series 1995 B
LOC Commerzbank A.G. 05/09/97 5.55 25,000,000
1,625,000 The Industrial Development Board of the City of Pelham IDRB
(Pelham Industrial Enterprises, LLC Fifth Project) (f)
LOC Columbus Bank & Trust Company 09/01/06 5.63 1,625,000
11,000,000 Wichita, Kansas Taxable General Obligation
Renewal & Improvement Temporary Notes 08/28/97 5.62 11,002,582
7,000,000 Winston - Salem, NC COP - CP 03/04/97 5.44 7,000,000
------------ ------------
123,030,000 Total Other Notes 123,032,582
------------ ------------
<CAPTION>
Repurchase Agreements, Overnight (1.75%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 19,000,000 Donaldson, Lufkin & Jenrette (Collateralized by $19,437,000
FMAC FMDN, due 3/19/97) 03/03/97 5.38% $ 19,000,000
------------ ------------
19,000,000 Total Repurchase Agreements, Overnight 19,000,000
------------ ------------
<CAPTION>
Eurodollar Certificates of Deposit (1.84%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 Commerzbank 03/26/97 5.58% $ 20,000,249
------------ ------------
20,000,000 Total Eurodollar Certificates of Deposit 20,000,249
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Yankee Certificates of Deposit (11.87%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 National Westminster 05/01/97 5.45% $ 19,999,681
15,000,000 Societe Generale Yankee CD 07/23/97 5.53 15,000,000
20,000,000 Societe Generale Yankee CD 08/11/97 5.42 20,005,454
15,000,000 Bank of Tokyo - Mitsubishi 04/16/97 5.59 15,000,346
15,000,000 Bank of Tokyo - Mitsubishi 05/05/97 5.54 15,000,259
7,000,000 Fuji Bank, Ltd. 03/21/97 5.36 7,000,683
7,000,000 Fuji Bank, Ltd. 03/28/97 5.45 7,000,233
30,000,000 Sumitomo Bank 03/07/97 5.50 30,000,066
------------ --------------
129,000,000 Total Yankee Certificates of Deposit 129,006,722
------------ --------------
Total Investments (99.83%) (Cost $1,084,519,760+) 1,084,519,760
Cash and Other Assets, Net of Liabilities (0.17%) 1,884,446
--------------
Net Assets (100.00%) $1,086,404,206
==============
Class A Shares, 807,098,288 shares outstanding (Note 3) $ 1.00
==============
Class B Shares, 281,353,544 shares outstanding (Note 3) $ 1.00
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
FOOTNOTES:
(a) The interest rate is adjusted weekly based on 6 month T-Bill bond equivalent
yield +.05%.
(b) The interest rate is adjusted monthly based on 1 month LIBOR +.05% (30 day
put).
(c) The interest rate is adjusted daily based on opening Federal Funds rate
+.10% (daily put).
(d) The interest rate is adjusted monthly based on 1 month LIBOR (daily put).
(e) The interest rate is adjusted monthly based on 1 month LIBOR +.05% (7 day
put).
(f) Securities payable on demand at par including accrued interest (with 7 days
notice). Interest is adjusted weekly.
(g) The interest rate is adjusted monthly based on 1 month LIBOR +.07%.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements, Overnight (67.73%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 30,000,000 CS First Boston (Collateralized by $30,713,000,
U.S. Treasury Notes, 5.000% to 6.500%, due 02/19/99 to 8/31/01) 03/03/97 5.35% $ 30,000,000
173,000,000 Fuji Bank (Collateralized by $166,971,000,
U.S. Treasury Note, 7.500% to 10.750%, due 02/15/05 to 08/15/05
U.S. Treasury Bonds, 6.250% to 7.500%, due 11/15/16 to 08/15/23) 03/03/97 5.35 173,000,000
130,000,000 Canadian Imperial Bank of Commerce (Collateralized by $129,523,000,
U.S. Treasury Notes, 4.750% to 9.125%, due 05/31/97 to 02/15/07
U.S. Treasury Bonds, 6.000% to 9.125%, due 05/15/18 to 02/15/27) 03/03/97 5.38 130,000,000
50,000,000 Donaldson, Lufkin & Jenrette (Collateralized by $100,820,000,
U.S. Treasury Bond, 10.750%, due 08/15/05
U.S. Treasury Strips, due 02/15/00 to 05/15/14
Resolution Funding Corporation, due 07/15/00 to 10/15/26) 03/03/97 5.38 50,000,000
110,000,000 Goldman Sachs (Collateralized by $209,327,367,
GNMA 3.125% to 12.000%, due 01/01/00 to 09/15/30) 03/03/97 5.42 110,000,000
40,000,000 Goldman Sachs (Collateralized by $56,434,039,
GNMA 6.000% to 10.000%,due 12/15/05 to 01/15/27) 03/05/97 5.30 40,000,000
------------ ------------
533,000,000 Total Repurchase Agreements, Overnight 533,000,000
------------ ------------
<CAPTION>
U.S. Government Obligations (33.03%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 35,000,000 U.S. Treasury Bill 03/06/97 5.47% $ 34,984,475
10,000,000 U.S. Treasury Bill 03/05/98 5.67 9,457,792
10,000,000 U.S. Treasury Note 03/31/97 5.41 10,007,183
20,000,000 U.S. Treasury Note 04/30/97 5.23 20,045,323
10,000,000 U.S. Treasury Note 05/15/97 5.25 10,020,967
10,000,000 U.S. Treasury Note 05/31/97 5.31 10,014,833
20,000,000 U.S. Treasury Note 06/30/97 5.26 20,038,357
35,000,000 U.S. Treasury Note 07/31/97 5.26 35,068,649
30,000,000 U.S. Treasury Note 08/15/97 5.25 30,147,319
30,000,000 U.S. Treasury Note 08/31/97 5.27 30,074,389
30,000,000 U.S Treasury Note 09/30/97 5.41 30,032,730
10,000,000 U.S. Treasury Note 10/31/97 5.38 10,008,465
10,000,000 U.S. Treasury Note 11/30/97 5.37 10,035,417
------------ ------------
260,000,000 Total U.S. Government Obligations 259,935,899
------------ ------------
Total Investments (100.76%)(Cost $792,935,899+) 792,935,899
Liabilities in Excess of Cash and Other Assets (-0.76%) ( 5,999,223)
------------
Net Assets (100.00%) 786,936,676
============
Class A shares, 664,242,827 shares outstanding (Note 3) $ 1.00
============
Class B shares, 122,693,849 shares outstanding (Note 3) $ 1.00
============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Money Market U.S. Government
Portfolio Portfolio
---------------- -------------------
INVESTMENT INCOME
<S> <C> <C>
Income:
Interest.............................................................. $ 27,882,273 $ 19,689,755
-------------- ---------------
Expenses: (Note 2)
Investment management fee............................................. 1,511,817 951,171
Administration fee.................................................... 1,068,777 772,950
Distribution fee (Class A)............................................ 972,744 767,894
Custodian expenses.................................................... 51,468 22,546
Shareholder servicing and related shareholder expenses................ 907,647 236,974
Legal, compliance and filing fees..................................... 41,066 13,653
Audit and accounting.................................................. 43,099 23,628
Directors' fees ...................................................... 13,507 7,507
Miscellaneous......................................................... 12,567 5,677
-------------- ---------------
Total expenses.................................................... 4,622,692 2,802,000
Less:
Expenses paid indirectly....................................... ( 30,598) ( 9,744)
------------- --------------
Net expenses.............................................. 4,592,094 2,792,256
-------------- ---------------
Net investment income..................................................... 23,290,179 16,897,499
-------------- ---------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments................................... 51,967 187,048
-------------- ---------------
Increase in net assets from operations.................................... $ 23,342,146 $ 17,084,547
============== ===============
</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
2/28/97 Ended 2/28/97 Ended
(Unaudited) 8/31/96 (Unaudited) 8/31/96
--------- ------- --------- -------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................. $ 23,290,179 $ 44,540,143 $ 16,897,499 $ 36,157,464
Net realized gain (loss) on investments 51,967 130,223 187,048 160,896
-------------- -------------- -------------- --------------
Increase in net assets from operations. 23,342,146 44,670,366 17,084,547 36,318,360
Dividends to shareholders:
Net investment income
Class A.............................. ( 17,501,769) ( 33,451,731) ( 13,974,242) ( 27,085,557)
Class B.............................. ( 5,788,410) ( 11,087,370) ( 2,923,257) ( 9,071,907)
Net realized gain on investments
Class A.............................. -- -- ( 154,608)** ( 133,784)*
Class B.............................. -- -- ( 32,440)** ( 27,112)*
Capital share transactions (Note 3):
Class A.............................. 49,475,221 94,199,071 ( 2,377,323) 197,028,406
Class B.............................. 60,972,643 1,902,497 ( 3,475,312) ( 180,629,804)
-------------- ------------- -------------- --------------
Total increase (decrease)............ 110,499,831 96,232,833 ( 5,852,635) 16,398,602
Net assets:
Beginning of period.................. 975,904,375 879,671,542 792,789,311 776,390,709
-------------- ------------- -------------- --------------
End of period........................ $1,086,404,206 $ 975,904,375 $ 786,936,676 $ 792,789,311
============== ============= ============== ==============
</TABLE>
* Represents a Long Term Capital Gain distribution of $0.000202949 per
share declared to shareholders of record as of August 30, 1996 and paid on
September 15, 1996.
** Represents a Long Term Capital Gain distribution of .000262202 per share
declared to shareholders of record as of October 22, 1996 and paid on
November 15,1996.
- --------------------------------------------------------------------------------
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. 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 distribution
fees and minor transfer agent expenses. 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 -
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 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 28, 1997.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
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 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% per annum of each Portfolio's average daily net assets.
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 $452,544 and $185,758
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
$30,598 and $9,744 for the Money Market Portfolio and the U.S. Government
Portfolio, respectively.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
3. Capital Stock.
At February 28, 1997, 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 $1,088,451,832 and $786,936,676, respectively.
Transactions in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Government Portfolio
--------------------------------------- -------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
2/28/97 8/31/96 2/28/97 8/31/96
------------ ------------- ------------- -------------
Class A
<S> <C> <C> <C> <C>
Sold................................ 385,690,240 750,205,484 267,535,860 784,780,227
Issued on reinvestment of dividends. 16,145,470 29,962,057 14,172,765 26,088,090
Redeemed............................ ( 352,360,489) ( 685,968,470) ( 284,085,948) ( 613,839,911)
------------- ------------- ------------- -------------
Net increase (decrease)............. 49,475,221 94,199,071 ( 2,377,323) 197,028,406
------------- ------------- ------------- -------------
Class B
Sold................................ 373,340,792 635,780,156 196,245,674 752,064,206
Issued on reinvestment of dividends. 5,682,933 10,765,783 2,727,032 8,117,333
Redeemed............................ ( 318,051,082) ( 644,643,442) ( 202,448,018) ( 940,811,343)
------------- ------------- ------------- -------------
Net increase (decrease)............. 60,972,643 1,902,497 ( 3,475,312) ( 180,629,804)
============= ============= ============= =============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses of the Money Market Portfolio at
February 28, 1997 amounted to $2,242,063. At February 28, 1997 the Fund had tax
basis capital losses of $2,283,215 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
CLASS A Year Ended August 31,
- ------- ------------------------------------------------------------
Six Months Ended
February 28, 1997 1996 1995 1994 1993 1992
----------------- -------- -------- -------- -------- --------
<S> <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
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income....................... 0.022 0.047 0.047 0.029 0.027 0.041
Less distributions:
Dividends from net investment income........ ( 0.022) ( 0.047) ( 0.047) ( 0.029) ( 0.027) ( 0.041)
-------- -------- -------- -------- -------- --------
Net asset value, end of period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
Total Return.................................. 4.58%* 4.71% 4.82%(d) 2.93% 2.69% 4.13%
Ratios/Supplemental Data
Net assets, end of period (000) $ 805,609 $ 756,094 $ 661,795 $ 676,756 $ 706,074 $ 694,635
Ratios to average net assets:
Expenses...................................... 0.99%*(c) 0.98%(b)(c) 0.88%(b) 0.91% 0.91%(b) 0.83%
Net investment income......................... 4.50%* 4.63%(b) 4.75%(b) 2.89% 2.59%(b) 4.03%
<CAPTION>
Money Market Portfolio
CLASS B(a) Year Ended August 31,
- ------- -----------------------------------------------
Six Months Ended
February 28, 1997 1996 1995 1994 1993
----------------- --------- --------- --------- ---------
<S> <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
---------- --------- -------- --------- ---------
Income from investment operations:
Net investment income........................ 0.024 0.049 0.050 0.031 0.021
Less distributions:
Dividends from net investment income......... ( 0.024) ( 0.049) ( 0.050) ( 0.031) ( 0.021)
--------- -------- -------- -------- --------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========= ========= =========
Total Return................................... 4.93%* 5.00% 5.08%(d) 3.19% 2.84%*
Ratios/Supplemental Data
Net assets, end of period (000)................ $ 280,795 $ 219,810 $ 217,877 $ 422,005 $ 453,093
Ratios to average net assets:
Expenses...................................... 0.66%*(c) 0.70%(b)(c) 0.62%(b) 0.67% 0.71%*
Net investment income......................... 4.83%* 4.91%(b) 4.90%(b) 3.13% 2.75%*
</TABLE>
* Annualized
(a) Distribution of Class B shares commenced November 30, 1992.
(b) Net of management and administration fees waived equivalent to 0.02%,
0.13% and 0.01%. In addition, in 1993 shareholder servicing fees equivalent
to 0.03% were waived only with respect to Class A.
(c) Includes expenses paid indirectly equivalent to 0.01% and .01% of average
net assets.
(d) 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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
5. Selected Financial Information. (Continued)
<TABLE>
<CAPTION>
U.S Government Portfolio
CLASS A Year Ended August 31,
- ------- ---------------------------------------------------------------
Six Months Ended
February 28, 1997 1996 1995 1994 1993 1992
----------------- -------- ---------- ---------- ---------- ---------
<S> <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
---------- --------- ---------- ----------- ---------- ---------
Income from investment operations:
Net investment income....................... 0.023 0.047 0.048 0.028 0.025 0.039
Less distributions:
Dividends from net investment income........ ( 0.023) ( 0.047) ( 0.048) ( 0.028) ( 0.025) ( 0.039)
-------- -------- -------- -------- -------- --------
Net asset value, end of period. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return................................ 4.70%* 4.81% 4.93% 2.79% 2.56% 3.98%
Ratios/Supplemental Data
Net assets, end of period (000) $ 664,243 $ 666,620 $ 469,592 $ 398,699 $ 429,164 $ 579,526
Ratios to average net assets:
Expenses.................................... 0.80%* 0.81% 0.80% 0.85% 0.85% 0.77%
Net investment income....................... 4.55%* 4.68% 4.83% 2.75% 2.52% 3.92%
<CAPTION>
U.S. Government Portfolio
CLASS B(a) Year Ended August 31,
- ------- -----------------------------------------------
Six Months Ended
February 28, 1997 1996 1995 1994 1993
----------------- -------- -------- --------- ----------
<S> <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
---------- ---------- --------- --------- ----------
Income from investment operations:
Net investment income.............................. 0.024 0.050 0.051 0.030 0.021
Less distributions:
Dividends from net investment income............... ( 0.024) ( 0.050) ( 0.051) ( 0.030) ( 0.021)
-------- -------- -------- -------- --------
Net asset value, end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return......................................... 4.96%* 5.07% 5.19% 3.04% 2.75%*
Ratios/Supplemental Data
Net assets, end of period (000)...................... $ 122,694 $ 126,169 $ 306,799 $ 80,196 $ 101,391
Ratios to average net assets:
Expenses........................................... 0.55%* 0.56% 0.55% 0.60% 0.63%*
Net investment income.............................. 4.80%* 5.04% 5.20% 2.98% 2.68%*
</TABLE>
* Annualized
(a) Distribution of Class B shares commenced November 30, 1992.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Semi-Annual Report
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- -----------------------------------------------------
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
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang
600 Fifth Avenue
New York, New York 10020
- --------------------------------------------------------------------------------
<PAGE>
