As filed with the Securities and Exchange Commission on December 29, 1999.
Securities Act File No. 2-65315
Investment Company File No. 811-2950
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 36 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 194O [X]
Amendment No. 36 [X]
SHORT TERM INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue, New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5200
Bernadette N. Finn
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and address of agent for service)
Copy to: MICHAEL R. ROSELLA, ESQ.
Battle Fowler LLP
75 East 55th Street
New York, N.Y. 10022
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on December 31, 999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
SHORT TERM 600 FIFTH AVENUE
INCOME FUND, INC. NEW YORK, N.Y. 10020
Class A Shares; Class B Shares (212) 830-5220
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PROSPECTUS
January 1, 2000
A money market fund whose investment objective is to seek as high a level of
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Fund pursues this objective through two separate
portfolios: the Money Market Portfolio and the U.S. Government Portfolio.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
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TABLE OF CONTENTS
<S> <C> <C> <C>
2 Risk/Return Summary: Investments, Risks, 8 Management, Organization and Capital Structure
and Performance 8 Shareholder Information
5 Fee Table 16 Tax Consequences
6 Investment Objectives, Principal Investment 16 Distribution Arrangements
Strategies and Related Risks 18 Financial Highlights
</TABLE>
<PAGE>
I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS, AND PERFORMANCE
Investment Objective
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The objective of the Fund's portfolios is to seek as high a level of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. There is no assurance that the Fund will achieve its
investment objective.
Principal Investment Strategies
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The Fund intends to achieve its investment objective through two separate
portfolios. The Fund is a money market fund which invests in high quality,
short-term debt instruments. The Fund seeks to maintain investment portfolios
with a dollar-weighted average maturity of 90 days or less, to value its
investment portfolios at amortized cost and maintain a net asset value of $1.00
per share.
Money Market Portfolio
The Money Market Portfolio of the Fund seeks to achieve the Fund's
objective by investing in: (i) United States Government Securities; (ii)
securities issued by foreign governments and other foreign issuers; (iii) bank
obligations; (iv) commercial paper and certain debt obligations; and (v)
repurchase agreements.
The U.S. Government Portfolio
The U.S. Government Portfolio of the Fund seeks to achieve the Fund's
objective by investing in obligations issued or guaranteed by the
United States Government, including repurchase agreements covering these types
of obligations.
Principal Risks
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o Although the Fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Fund.
o The value of the Fund's shares and the securities held by the Fund can each
decline in value.
o The amount of income the Fund generates will vary with changes in
prevailing interest rates.
o An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other governmental agency.
o The U.S. Government Portfolio's investment policy of investing in
obligations issued or guaranteed by the United States Government, while
minimizing risk of loss, may produce a lower yield than a policy of
investing in other types of instruments. The yield and total return of the
U.S. Government Portfolio is likely to be lower than that of the Money
Market Portfolio.
o The Money Market Portfolio may contain securities issued by foreign
governments and other foreign issuers. As a result, debt obligations of
foreign issuers may be subject to additional investment risks compared to
an investment in debt obligations of domestic issuers. Such additional
risks include future adverse political or economic developments in a
foreign jurisdiction and sudden changes in foreign laws regarding the
regulation of and rights attached with such investments.
Risk/Return Bar Chart And Table
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The following bar charts and tables may assist you in deciding whether to
invest in a portfolio of the Fund. The bar charts show the change in the annual
total returns for the Class A shares of each of the Fund's portfolios over the
last ten calendar years. The tables show the average annual total returns for
the last one, five, ten year periods, and since the inception of each portfolio.
While analyzing this information, please note that the Funds' past performance
is not an indication of how the Fund will perform in the future. The current
7-day yield of each Class of each of the Fund's portfolios may be obtained by
calling the Fund toll-free at 1-800-221-3079.
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Short Term Income Fund, Inc. Money Market Portfolio - Class A Shares (1),(2),(3)
[GRAPHIC OMITTED]
Calendar Year End % Total Return
1989 8.82%
1990 7.73%
1991 5.65%
1992 3.45%
1993 2.60%
1994 3.47%
1995 5.09%
1996 4.58%
1997 4.75%
1998 4.70%
(1) As of September 30, 1999, the Fund's Money Market Portfolio had a
year-to-date return of 3.13 %.
(2) The Money Market Portfolio's highest quarterly return was 2.28% for the
quarter ended June 30, 1989; the Money Market Portfolio's lowest quarterly
return was 0.44% for the quarter ended December 31, 1993.
(3) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than the net return by investing in the Fund directly.
Average Annual Total Returns - Money Market Portfolio
Class A Class B
For the periods ended December 31, 1998
One Year 4.70% 5.06%
Five Years 4.51% 4.82%
Ten Years 5.06% N/A
Since Inception 7.15% 4.47%
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<PAGE>
(1),(2),(3)
Short Term Income Fund, Inc. U.S. Government Portfolio - Class A Shares
[GRAPHIC OMITTED]
Calendar Year End % Total Return
1989 8.25%
1990 7.47%
1991 5.47%
1992 3.29%
1993 2.45%
1994 3.43%
1995 5.18%
1996 4.71%
1997 4.76%
1998 4.64%
(1) As of September 30, 1999, the Fund's U.S. Government Portfolio had a
year-to-date return of 3.01%.
(2) The U.S. Government Portfolio's highest quarterly return was 2.10% for the
quarter ended June 30, 1989; the U.S. Government Portfolio's lowest
quarterly return was 0.60% for the quarter ended December 31,1993.
(3) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than the net return by investing in the Fund directly.
Average Annual Total Returns - U.S. Government Portfolio
Class A Class B
For the periods ended December 31, 1998
One Year 4.64% 4.98%
Five Years 4.54% 4.82%
Ten Years 4.95% N/A
Since Inception 5.83% 4.45%
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FEE TABLE
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This table describes the fees and expenses that you may pay if you buy and hold
shares in any of the Fund's portfolios.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
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Money Market U.S. Government
Portfolio Portfolio
--------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Management Fees..................... .29% .29% .26% .26%
Distribution and Service (12b-1) Fees .25% .00% .25% .00%
Other Expenses...................... .45% .35% .38% .30%
Administration Fees............... .21% .21% .21% .21%
---- ---- ----- -----
Total Fund Operating Expenses....... .99% .64% .89% .56%
==== ==== ==== ====
</TABLE>
Example
This Example is intended to help you compare the cost of investing in any of the
Fund's portfolios with the cost of investing in other money market funds.
The Example assumes that you invest $10,000 in either portfolio of the Fund for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
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1 Year 3 Years 5 Years 10 Years
Money Market Portfolio Class A: $101 $315 $547 $1,213
Class B: $65 $205 $357 $798
U.S. Government Portfolio Class A: $91 $284 $493 $1,096
Class B: $57 $179 $313 $701
</TABLE>
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<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
Investment Objective
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The Fund is a money market fund, which, through its two portfolios, seeks as
high a level of current income to the extent consistent with maintaining
liquidity and preserving capital. There can be no assurance that the Fund will
achieve its investment objectives.
The investment objective of the Fund described in this section may only be
changed upon the approval of the holders of a majority of the outstanding shares
of the Fund that would be affected by such a change.
Principal Investment Strategies
- --------------------------------------------------------------------------------
In order to maintain a share price of $1.00, the Fund must comply with
certain industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in each individual portfolio of the Fund, on a dollar-weighted basis,
will be 90 days or less.
The Fund will only invest in either securities which have been rated (or
whose issuers have been rated) in the highest short-term rating category by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's Board of Directors to be
of comparable quality.
Subsequent to its purchase by the Fund, the quality of an investment may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. If this occurs, the Board of Directors of the Fund shall
reassess the security's credit risks and shall take such action as the Board of
Directors determines is in the best interest of the Fund and its shareholders.
Reassessment is not required, however, if the security is disposed of or matures
within five business days of the investment adviser becoming aware of the new
rating and provided further that the Board of Directors is subsequently notified
of the investment adviser's actions.
Each portfolio of the Fund shall invest not more than 5% of its total assets
in securities issued by a single issuer.
The Fund's investment adviser considers the following factors when buying
and selling securities for each of the Portfolios: (i) availability of cash,
(ii) redemption requests, (iii) yield management, and (iv) credit management.
Money Market Portfolio
The Money Market Portfolio of the Fund is intended to attain the Fund's
investment objective through investments in the following securities.
(I) United States Government Securities: The Money Market Portfolio may
purchase short-term obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities. These obligations include
issues of the United States Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an act of Congress.
Some of these securities are supported by the full faith and credit of the
United States Treasury, others are supported by the right of the issuer to
borrow from the Treasury, and still others are supported only by the
credit of the agency or instrumentality.
(II) Bank Obligations: The Money Market Portfolio may purchase certificates of
deposit, time deposits and bankers' acceptances issued by domestic banks,
foreign branches of domestic banks, foreign subsidiaries of domestic banks,
and domestic and foreign branches of foreign banks. Certificates of deposit
are certificates representing the obligation of a bank to repay funds
deposited with it for a specified period of time. Time deposits are
non-negotiable deposits maintained in a bank for a specified period of time
(in no event longer than seven days) at a stated interest rate. Time
deposits
-6-
<PAGE>
purchased by the Fund will not benefit from insurance from the Federal
Deposit Insurance Corporation. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a
customer. The Money Market Portfolio limits its investments in obligations
of domestic banks, foreign branches of domestic banks and foreign
subsidiaries of domestic banks to banks having total assets in excess of $1
billion or the equivalent in other currencies. The Money Market Portfolio
limits its investments in obligations of domestic and foreign branches of
foreign banks to dollar denominated obligations of such banks which at the
time of investment have more than $5 billion, or the equivalent in other
currencies, in total assets.
(III) Commercial Paper and Certain Debt Obligations: The Money Market Portfolio
may purchase commercial paper or similar debt obligations. Commercial
paper is generally considered to be short-term, unsecured debt of
corporations.
(IV) Repurchase Agreements: The Money Market Portfolio may enter into
repurchase agreements provided that the instruments serving as collateral
for the agreements are eligible for inclusion in the Money Market
Portfolio. A repurchase agreement arises when a buyer purchases a security
and simultaneously agrees with the vendor to resell the security to the
vendor at an agreed upon time and price.
U.S. Government Portfolio
The U.S. Government Portfolio is intended to attain the Fund's investment
objective through investments limited to obligations issued or guaranteed by the
United States Government, including repurchase agreements covering these types
of obligations. The Fund will enter into repurchase agreements for inclusion in
the U.S. Government Portfolio only if the instruments serving as collateral for
the agreements are eligible for inclusion in the U.S. Government Portfolio.
Risks
- --------------------------------------------------------------------------------
The Fund complies with industry-standard requirements on the quality,
maturity and diversification of its investments which are designed to help
maintain a $1.00 share price. A significant change in interest rates or a
default on the Fund's investments could cause its share price (and the value of
your investment) to change.
Since the Money Market Portfolio may contain securities issued by foreign
governments and other foreign issuers, the Money Market Portfolio may be subject
to additional investment risks when compared with those incurred by a fund which
invests only in domestic issuers. Foreign securities markets generally are not
as developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of comparable
United States issuers. Similarly, volume in most foreign securities markets are
less than in the United States. The issuers of some of these securities may be
subject to less stringent or different regulation than are United States
issuers. In addition, there may be less publicly available information about a
non-United States issuer, and non-United States issuers generally are not
subject to uniform accounting and financial reporting standards and
requirements. Additional risks associated with foreign investments might include
adverse political and economic developments, seizure or nationalization of
foreign deposits and adoption of governmental restrictions which might adversely
affect the payment of principal and interest on the foreign securities.
Furthermore, some of these foreign securities may be subject to stamp,
withholding or other excise taxes levied by foreign governments, which have the
effect of increasing the cost of such securities and reducing the realized gain
or increasing the realized loss on such securities at the time of sale.
The investment policies of the U.S. Government Portfolio may produce a lower
yield than a policy of investing in other types of instruments. The yield of the
U.S. Government Portfolio is likely to be lower than the yield of the Money
Market Portfolio.
-7-
<PAGE>
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be year 2000 compliant. Although the Manager does not anticipate that the
year 2000 issue will have a material impact on the Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the year 2000 will be sufficient to avoid an adverse impact on
the Fund. The year 2000 problem may also adversely effect issuers of the
securities contained in the Portfolios, to varying degrees based upon various
factors, and thus may have a corresponding adverse effect on a Portfolio's
performance. The Manager is unable to predict what effect, if any, the year 2000
problem will have on such issuers.
III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of November 30, 1999, the Manager was the
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $14.4 billion. The Manager has been an investment adviser since 1970
and currently is manager of eighteen other registered investment companies and
also advises pension trusts, profit-sharing trusts and endowments.
Pursuant to the Investment Management Contract for each Portfolio, the
Manager manages each Portfolio's portfolio of securities and makes the decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Directors of the Fund. Under the Investment Management
Contract: (i) the Money Market Portfolio will pay an annual management fee 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; and (ii) the
U.S. Government Portfolio will pay an annual management fee of .275% of the
Portfolio's average daily net assets not in excess of $250 million, plus .25% of
such assets in excess of $250 million.
Pursuant to the Administrative Services Contract for each Portfolio, the
Manager performs clerical, accounting supervision and office service functions
for the Fund. The Manager provides the Fund with personnel to perform all of the
clerical and accounting type functions not performed by the Manager. The
Manager, at its discretion, may voluntarily waive all or a portion of the
administrative services fee. For its services under the Administrative Services
Contract, the Manager receives 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. Any portion of the total fees received by the
Manager and its past profits may be used to provide shareholder services and for
distribution of Fund shares. In addition, Reich & Tang Distributors, Inc.,
receives a fee equal to .25% per annum of the average daily net assets of the
Class A shares of each Portfolio under the Shareholder Servicing Agreement. The
fees are accrued daily and paid monthly.
Investment management fees and operating expenses, which are attributable to
both Classes of a Portfolio, will be allocated daily to each Class share based
on the percentage of outstanding shares at the end of the day.
IV. SHAREHOLDER INFORMATION
The Fund sells and redeems its shares on a continuing basis at their net
asset value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions
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<PAGE>
from Participating Organizations and from investors directly.
Pricing of Fund Shares
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The net asset value of each Class of each portfolio of the Fund's shares is
determined as of 12 noon, New York City time, on each Fund Business Day. Fund
Business Day means weekdays (Monday through Friday) except days on which the New
York Stock Exchange is closed for trading (i.e. national holidays). The net
asset value of a Class is computed by dividing the value of the Fund's net
assets for such Class (i.e., the value of its securities and other assets less
its liabilities, including expenses payable or accrued, but excluding capital
stock and surplus) by the total number of shares outstanding for such Class. The
Fund intends to maintain a stable net asset value at $1.00 per share, although
there can be no assurance that this will be achieved.
The Fund's portfolio securities are valued at their amortized cost in
compliance with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost
valuation involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. If fluctuating
interest rates cause the market value of the securities in a portfolio to
deviate more than 1/2 of 1% from the value determined on the basis of amortized
cost, the Board of Directors will consider whether any action should be
initiated. Although the amortized cost method provides certainty in valuation,
it may result in periods during which the value of an instrument is higher or
lower than the price an investment company would receive if the instrument were
sold.
Shares will be issued as of the first determination of the Fund's net asset
value per share for each Class made after receipt and acceptance of the
investor's purchase order at the net asset value per share next determined after
receipt of the purchase order. Except as described below in the case of certain
Participating Organizations (see "Investment Through Participating
Organizations" herein), an investor's funds will not be invested by the Fund
during the period before the Fund's receipt of Federal Funds and its issuance of
Fund shares. The Fund reserves the right to reject any subscription to its
shares. Certificates for Fund shares will not be issued to an investor.
Subscribing to the Fund--Money Market Portfolio and U.S. Government Portfolio
- --------------------------------------------------------------------------------
At the time of initial investment in the Fund, investors must elect on their
subscription order form the Class of shares of the Portfolio in which they wish
to invest. Subject to the Portfolios' initial investment minimums, investors may
divide their investment in the Fund between the Portfolios in any manner they
choose by submitting a separate subscription order form for each Portfolio.
Investors who purchase shares of the Portfolios from a Participating
Organization that is compensated for its services by the Manager and the
Distributor may purchase Class A shares of the Portfolios. Subject to a $100
minimum, shareholders in the Fund may transfer all or a portion of their shares
from one open Portfolio account to another open Portfolio account at any time.
Any transfer into a Portfolio in which the shareholder does not have an open
account must satisfy the Portfolio's initial investment minimum. Shareholders
will have a separate account with the Fund for each Portfolio in which they
invest. Certificates for Fund shares will not be issued to an investor.
Purchase of Fund Shares
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Shares are issued as of 12 noon, New York City time, on any Fund Business
Day, as defined herein, on which an order for the shares and accompanying
Federal Funds are received by the Fund's transfer agent before 12 noon. Orders
accompanied by Federal Funds and received after 12 noon on a Fund Business Day
will not result in share issuance until the following Fund Business Day. Fund
shares begin accruing income on the day the shares are issued to an investor.
Investors purchasing shares through a Participating Organization with which
they have an account ("Participant Investors")become Class A shareholders.
"Participating Organizations" are securities brokers, banks and financial
institutions or other industry professionals or organizations which have entered
into shareholder servicing
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<PAGE>
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. All other investors, and investors who have accounts with
Participating Organizations but do not wish to invest in the Fund through them,
may invest in the Fund directly as Class B shareholders of the Fund. Class B
shareholders do not receive the benefit of the servicing functions performed by
a Participating Organization. Class B shares may also be offered to investors
who purchase their shares through Participating Organizations who, because they
may not be legally permitted to receive such as fiduciaries, do not receive
compensation from the Distributor or the Manager.
The minimum initial investment in the Fund for both classes of shares in
each Portfolio is $1,000 for Participating Organizations which are shareholders
in the Fund and shareholders who invest through Participating Organizations. The
minimum initial investment for securities brokers, financial institutions and
other industry professionals that are not Participating Organizations is also
$1,000. The minimum initial investment is $5,000 for all other investors. The
minimum amount for subsequent investments is $100 for all shareholders.
Each shareholder, except certain Participant Investors, will receive from
the Fund a personalized monthly statement (i) listing the total number of Fund
shares owned as of the statement closing date, (ii) purchase and redemptions of
Fund shares and (iii) the dividends paid on Fund shares (including dividends
paid in cash or reinvested in additional Fund shares).
Investments Through Participating Organizations--Purchase of Class A Shares
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Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. When instructed by
its customer to purchase or redeem Fund shares, the Participating Organization,
on behalf of the customer, transmits to the Fund's transfer agent a purchase or
redemption order, and in the case of a purchase order, payment for the shares
being purchased.
Participating Organizations may confirm to their customers who are
shareholders in the Fund each purchase and redemption of Fund shares for the
customers' accounts. Also, Participating Organizations may send their customers
periodic account statements showing the total number of Fund shares owned by
each customer as of the statement closing date, purchases and redemptions of
Fund shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in
connection with their use of specialized purchase and redemption procedures. In
addition, Participating Organizations offering purchase and redemption
procedures similar to those offered to shareholders who invest in the Fund
directly, may impose charges, limitations, minimums and restrictions in addition
to or different from those applicable to shareholders who invest in the Fund
directly. Accordingly, the net yield to investors who invest through
Participating Organizations may be less than the net yield that could be
achieved by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 12 noon, New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will result in share issuance
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<PAGE>
the following Fund Business Day. Participating Organizations are responsible for
instituting procedures to insure that purchase orders by their respective
clients are processed expeditiously.
Initial Direct Purchases of Class B Shares
- --------------------------------------------------------------------------------
Investors who wish to invest in the Fund directly may obtain a current
Prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
Mail
Investors may send a check made payable to "Short Term Income Fund, Inc."
along with a completed subscription order form to:
Short Term Income Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency. Payment by a check drawn on any member of the Federal Reserve System
will normally be converted into Federal Funds within two business days after
receipt of the check. Checks drawn on a non-member bank may take substantially
longer to convert into Federal Funds. An investor's purchase order will not be
accepted until the Fund receives Federal Funds.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of
money among banks, investors should first obtain a new account number by
telephoning the Fund at 212-830-5220 (within New York) or at 800-221-3079
(outside New York) and then instruct a member commercial bank to wire money
immediately to:
For Money Market Portfolio:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
DDA # 890752-953-8
For Short Term Income Fund, Inc.
Money Market Portfolio
Account of (Investor's Name)
Fund Account #
SS#/Tax ID#
For U.S. Government Portfolio:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
DDA # 890752-953-8
For Short Term Income Fund, Inc.
U.S. Government Portfolio
Account of (Investor's Name)
Fund Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order
form.
Investors planning to wire funds should instruct their bank early in the day
so the wire transfer can be accomplished before 12 noon, New York City time, on
the same day. There may be a charge by the investor's bank for transmitting the
money by bank wire, and there also may be a charge for use of Federal Funds. The
Fund does not charge investors in the Fund for its receipt of wire transfers.
Payment in the form of a "bank wire" received prior to 12 noon, New York City
time, on a Fund Business Day will be treated as a Federal Funds payment received
on that day.
Personal Delivery
Deliver a check made payable to "Short Term Income Fund, Inc." along with a
completed subscription order form to:
Reich & Tang Mutual Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Electronic Funds Transfers (EFT), Pre-authorized Credit and Direct Deposit
Privilege
- --------------------------------------------------------------------------------
You may purchase shares of the Fund (minimum of $100) by having salary,
dividend payments, interest payments or any other payments designated by you, or
by having federal
-11-
<PAGE>
salary, social security, or certain veteran's, military or other payments from
the federal government, automatically deposited into your Fund account. You can
also have money debited from your checking account. To enroll in any one of
these programs, you must file with the Fund a completed EFT Application,
Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form for each
type of payment that you desire to include in the Privilege. The appropriate
form may be obtained from your broker or the Fund. You may elect at any time to
terminate your participation by notifying in writing the appropriate depositing
entity and/or federal agency. Death or legal incapacity will automatically
terminate your participation in the Privilege. Further, the Fund may terminate
your participation upon 30 days' notice to you.
Subsequent Purchases of Shares
- --------------------------------------------------------------------------------
Subsequent purchases can be made by bank wire, as indicated above, or by
mailing a check to:
Short Term Income Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
There is a $100 minimum for subsequent purchases of shares. All payments
should clearly indicate the shareholder's account number.
A shareholder may reopen an account without filing a new subscription order
form at any time during the year the shareholder's account is closed or during
the following calendar year, provided that the information on the subscription
form on file with the Fund is still applicable.
Redemption of Shares
- --------------------------------------------------------------------------------
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of each
Class of each Portfolio following receipt by the Fund's transfer agent of the
redemption order (and any supporting documentation which it may require).
Normally, payment for redeemed shares is made on the same Fund Business Day
after the redemption is effected, provided the redemption request is received
prior to 12 noon, New York City time. However, redemption payments will not be
paid out unless the check (including a certified or cashier's check) used for
investment has been cleared for payment by the investor's bank, which could take
up to 15 days after investment. Shares redeemed are not entitled to participate
in dividends declared on the day a redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have
"Signature Guaranteed" stamped under his signature. It should be signed and
guaranteed by an eligible guarantor institution which includes a domestic bank,
a domestic savings and loan institution, a domestic credit union, a member bank
of the Federal Reserve system or a member firm of a national securities
exchange, pursuant to the Fund's transfer agent's standards and procedures.
Written Requests
Shareholders may make a redemption in any amount by sending a written
request to the Fund addressed to:
Short Term Income Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be endorsed
by the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the
shareholder of record.
Checks
-12-
<PAGE>
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Portfolios in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $250 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which the check clears. Checks provided by the Fund may not be certified.
Fund shares purchased by check may not be redeemed by check until the check has
cleared, which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The
Fund reserves the right to impose a charge or impose a different minimum check
amount in the future, if the Board of Directors determines that doing so is in
the best interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures,
rules and regulations of the Fund's agent bank governing checking accounts.
Checks drawn on a jointly owned account may, at the shareholder's election,
require only one signature. Checks in amounts exceeding the value of the
shareholder's account at the time the check is presented for payment will not be
honored. Since the dollar value of the account changes daily, the total value of
the account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a post-dated check. The
Fund reserves the right to terminate or modify the check redemption procedure at
any time or to impose additional fees following notification to the Fund's
shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution or other evidence of authorization in accordance
with the Fund's normal practices. Individuals and joint tenants are not required
to furnish any supporting documentation. Appropriate authorization forms will be
sent by the Fund or its agents to corporations and other shareholders who select
this option. As soon as the authorization forms are filed in good order with the
Fund's agent bank, it will provide the shareholder with a supply of checks.
Telephone
The Fund accepts telephone requests for redemption from shareholders who
elect this option on their subscription order form. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or, if in excess
of $1,000, to their bank accounts, both as set forth in the subscription order
form or in a subsequent written authorization. The Fund may accept telephone
redemption instructions from any person with respect to accounts of shareholders
who elect this service and thus such shareholders risk possible loss of
principal and interest in the event of a telephone redemption not authorized by
them. The Fund will employ reasonable procedures to confirm that telephone
redemption instructions are genuine, and will require that shareholders electing
such option provide a form of personal identification. The failure by the Fund
to employ such reasonable procedures may cause the Fund to be liable for the
losses incurred by investors due to telephone redemptions based upon
unauthorized or fraudulent instructions.
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds
-13-
<PAGE>
are sent to the designated bank account or address on the same Fund Business Day
the redemption is effected, provided the redemption request is received before
12 noon, New York City time and on the next Fund Business Day if the redemption
request is received after 12 noon, New York City time. The Fund reserves the
right to terminate or modify the telephone redemption service in whole or in
part at any time and will notify shareholders accordingly.
Generally
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholder's address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Any period during which
an emergency (as determined by the SEC) exists as a result of which disposal by
the Fund of its portfolio securities is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or for such other period as the SEC may
by order permit for the protection of the shareholders of the Fund.
The Fund has reserved the right to redeem the shares of any shareholder if
the net asset value of all the remaining shares in the shareholder's or his
Participating Organization's account after a withdrawal is less than $500.
Written notice of a proposed mandatory redemption will be given at least 30 days
in advance to any shareholder whose account is to be redeemed or the Fund may
impose a monthly service charge of $10 on such accounts. For Participant
Investor accounts, notice of a proposed mandatory redemption will be made to the
appropriate Participating Organization only. The Participating Organization will
be responsible for notifying Participant Investors of the proposed mandatory
redemption. Shareholders may avoid mandatory redemption by purchasing sufficient
additional shares to increase his total net asset value to the minimum amount
during the notice period.
Specified Amount Automatic Withdrawal Plan
- --------------------------------------------------------------------------------
Shareholders may elect to withdraw shares and receive payment from the Fund
of a specified amount of $50 or more automatically on a monthly or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the 23rd day of the month. Whenever such 23rd day of a month
is not a Fund Business Day, the payment date is the Fund Business Day preceding
the 23rd day of the month. In order to make a payment, a number of shares equal
in aggregate net asset value to the payment amount are redeemed at their net
asset value on the Fund Business Day immediately preceding the date of payment.
To the extent that the redemptions to make plan payments exceed the number of
shares purchased through reinvestment of dividends and distributions, the
redemptions reduce the number of shares purchased on original investment, and
may ultimately liquidate a shareholder's investment.
The election to receive automatic withdrawal payments may be made at the
time of the original subscription by so indicating on the subscription order
form. The election may also be made, changed or terminated at any later time by
sending a signature guaranteed written request to the transfer agent. Because
the withdrawal plan involves the redemption of Fund shares, such withdrawals may
constitute taxable events to the shareholder but the Fund does not expect that
there will be any realized capital gains.
-14-
<PAGE>
Dividends and Distributions
- --------------------------------------------------------------------------------
The Fund declares dividends equal to all its net investment income
(excluding capital gains and losses, if any, and amortization of market
discount) on each Fund Business Day and pays dividends monthly. There is no
fixed dividend rate.
In computing these dividends, interest earned and expenses are accrued daily.
Distributions of long-term capital gains, if any, are paid by both
Portfolios at least once a year and, at the shareholder's option, are reinvested
in additional shares of the Portfolio from which they were paid or are paid in
cash.
All dividends and distributions of capital gains are automatically invested,
at no charge, in additional Fund shares of the same Class of shares immediately
upon payment thereof unless a shareholder has elected by written notice to the
Fund to receive either of such distributions in cash.
Because Class A shares bear the service fee under the Fund's 12b-1 Plan, the
net income of and the dividends payable to the Class A shares will be lower than
the net income of and dividends payable to the Class B shares of the Fund.
Dividends paid to each Class of shares of each portfolio of the Fund will,
however, be declared and paid on the same days at the same times and, except as
noted with respect to the service fees payable under the Plan, will be
determined in the same manner and paid in the same amounts.
Exchange Privilege
- --------------------------------------------------------------------------------
Shareholders of the Fund are entitled to exchange some or all of their Class
of shares in the Fund for shares of each portfolio the same Class of certain
other investment companies which retain Reich & Tang Asset Management L.P. as
investment adviser and which participate in the exchange privilege program with
the Fund. If only one Class of shares is available in a particular exchange
fund, the shareholder of the Fund is entitled to exchange their shares for the
shares available in that exchange fund. Currently the exchange privilege program
has been established between the Fund and California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily
Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily Municipal Income
Fund, Georgia Daily Municipal Income Fund, Inc., Michigan Daily Tax Free Income
Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax
Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc. In the future, the exchange privilege
program may be extended to other investment companies which retain Reich & Tang
Asset Management L.P. as investment adviser or manager.
There is no charge for the exchange privilege or limitation as to frequency
of exchange. The minimum amount for an exchange is $1,000. However, shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure that a sufficient number of shares are exchanged
to meet the minimum initial investment required for the investment company into
which the exchange is being made. Each Class of shares is exchanged at its
respective net asset value.
The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Shares of the same Class may be exchanged
only between investment company accounts registered in identical names. Before
making an exchange, the investor should review the current prospectus of the
investment company into which the exchange is to be made. An exchange is a
taxable event.
Instructions for exchanges may be made by sending a signature guaranteed
written request to:
Short Term Income Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
-15-
<PAGE>
or, for shareholders who have elected that option, by telephoning the Fund
at 212-830-5220 (within New York) or 800-221-3079 (outside New York). The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.
Tax Consequences
- --------------------------------------------------------------------------------
The purchase of shares will be the purchase of an asset. Dividends paid by
the Fund from its investment company taxable income including its net short-term
capital gains, are taxable to shareholders as ordinary income whether they are
distributed to the shareholder or reinvested in additional Fund shares.
Dividends designated by the Fund as from long-term capital gains which are
taxable to shareholders at capital gain rates are also taxable to shareholders
whether they are distributed to them or reinvested. A shareholder will be
subject to tax on dividends of investment company taxable income or capital
gains dividends paid shortly following the shareholder's purchase of shares of
the Fund, even though the dividend might be viewed economically as a return of
capital to the shareholder.
It is expected that no portion of dividends to shareholders will qualify for
the dividends-received deduction for corporations.
Distributions from the U.S. Government Portfolio that are derived from
interest on certain obligations of the United States Government and agencies
thereof may be exempt from state and local taxes in certain states.
Since the Fund expects to maintain the net asset value of each Class of
shares of the Fund at $1.00, a shareholder will generally not realize any gain
for Federal income tax purposes upon a redemption of their Class of shares in
the Fund. However the redemption of shares in the Fund, or the exchange of
shares for shares in another Fund will be taxable events, on which any gain
realized will be subject to tax.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to certain shareholders who have failed to provide a correct Social
Security or tax identification number or when the Fund or shareholder has been
notified by the IRS that the shareholder is subject to 31% backup withholding.
Reports containing appropriate information with respect to the Federal income
tax status of dividends paid by the Fund during the year are mailed to
shareholders annually.
In view of the continuous changes in the tax law and the regulations
thereunder, it is recommended that shareholders consult with counsel and other
competent tax advisors.
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
- --------------------------------------------------------------------------------
Investors do not pay a sales charge to purchase shares of the Fund. However,
the Fund pays fees in connection with the distribution of shares and for
services provided to the Class A shareholders. The Fund pays these fees from its
assets on an ongoing basis and therefore, over time, the payment of these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and
service plan (the "Plan") and, pursuant to the Plan, the Fund and Reich & Tang
Distributors, Inc. (the "Distributor") have entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to the Class A
shares of the Fund only).
Under the Distribution Agreement, the Distributor serves as distributor of
the Fund's shares and, for nominal consideration (i.e., $1.00) and as agent for
the Fund, will solicit orders for the purchase of the Fund's shares, provided
that any orders will not be binding on the Fund until accepted by the Fund as
principal.
Under the Shareholder Servicing Agreement, the Distributor receives, with
respect only to the Class A shares, a service fee equal to .25% per annum of
each Portfolio's Class A shares' average daily net assets (the "Shareholder
Servicing Fee") for providing personal shareholder services and for the
maintenance of shareholder accounts. This fee is accrued daily and paid monthly
and any portion of the fee may be deemed to be used by the Distributor for
payments to Participating Organizations with respect to their provision of
-16-
<PAGE>
such services to their clients or customers who are shareholders of the Class A
shares of each Portfolio. The Class B shareholders will not receive the benefit
of such services from Participating Organizations and, therefore, will not be
assessed a Shareholder Servicing Fee.
The Plan provides that, in addition to the Shareholder Servicing Fee, the
Fund will pay for (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by the Distributor and Participating
Organizations in carrying out their obligations under the Shareholder Servicing
Agreement with respect to Class A shares, and (ii) preparing, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
The Plan provides that the Manager may make payments from time to time from
its own resources, which may include the management fee and past profits for the
following purposes: (i) to defray costs, and to compensate others, including
Participating Organizations with whom the Distributor has entered into written
agreements, for performing shareholder servicing on behalf of the Class A shares
of the Fund; (ii) to compensate certain Participating Organizations for
providing assistance in distributing the Class A shares of the Fund; and (iii)
to pay the costs of printing and distributing the Fund's prospectus to
prospective investors, and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the Fund's
Class A shares. The Distributor may also make payments from time to time from
its own resources, which may include the Shareholder Servicing Fee (with respect
to Class A shares) and past profits, for the purposes enumerated in (i) above.
The Distributor will determine the amount of such payments made pursuant to the
Plan, provided that such payments will not increase the amount which the Fund is
required to pay to the Manager and Distributor for any fiscal year under either
the Investment Management Contract in effect for that year or under the
Shareholder Servicing Agreement in effect for that year.
-17-
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the
financial performance of both classes of the Money Market Portfolio and the
U.S. Government Portfolio for the past 5 years. Certain information
reflects financial results for a single Portfolio share. The total returns
in the table represent the rate that an investor would have earned [or
lost] on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, for the fiscal year ended August 31, 1999, and
by other auditors for the fiscal years before August 31, 1999.
<TABLE>
<CAPTION>
Money Market Portfolio
Year Ended August 31,
CLASS A -----------------------------------------------------------------------
------- 1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income....................... 0.042 0.047 0.046 0.047 0.047
Less distributions:
Dividends from net investment income........ ( 0.042) ( 0.047) ( 0.046) ( 0.047) ( 0.047)
--------- --------- --------- --------- ---------
Net asset value, end of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return................................... 4.30% 4.80% 4.66% 4.71% 4.82%(a)
Ratios/Supplemental Data
Net assets, end of year (000).................. $1,193,420 $ 985,377 $ 801,001 $ 756,094 $ 661,795
Ratios to average net assets:
Expenses (includes expenses paid indirectly) 0.99% 0.97% 0.99% 0.98% 0.88%
Net investment income....................... 4.19% 4.57% 4.57% 4.63% 4.75%
Management, administration and
shareholder servicing fees waived......... 0.00% 0.02% 0.00% 0.02% 0.13%
Expenses paid indirectly.................... 0.00% 0.00% 0.01% 0.01% 0.00%
<CAPTION>
Money Market Portfolio
Year Ended August 31,
CLASS B -----------------------------------------------------------------------
------- 1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income....................... 0.046 0.050 0.049 0.049 0.050
Less distributions:
Dividends from net investment income........ ( 0.046) ( 0.050) ( 0.049) ( 0.049) ( 0.050)
--------- --------- --------- --------- ---------
Net asset value, end of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return................................... 4.67% 5.16% 5.01% 5.00% 5.08%(a)
Ratios/Supplemental Data
Net assets, end of year (000).................. $ 297,248 $ 296,177 $ 267,439 $ 219,810 $ 217,877
Ratios to average net assets:
Expenses (includes expenses paid indirectly) 0.64% 0.62% 0.66% 0.70% 0.62%
Net investment income....................... 4.55% 5.07% 4.90% 4.91% 4.90%
Management, administration and
shareholder servicing fees waived......... 0.00% 0.02% 0.00% 0.02% 0.13%
Expenses paid indirectly.................... 0.00% 0.00% 0.01% 0.01% 0.00%
(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>
-18-
<PAGE>
VI. FINANCIAL HIGHLIGHTS (continued)
This financial highlights table is intended to help you understand the
financial performance of both classes of the Money Market Portfolio and the
U.S. Government Portfolio for the past 5 years. Certain information
reflects financial results for a single Portfolio share. The total returns
in the table represent the rate that an investor would have earned [or
lost] on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, for the fiscal year ended August 31, 1999, and
by other auditors for the fiscal years before August 31, 1999.
<TABLE>
<CAPTION>
U.S. Government Portfolio
Year Ended August 31,
CLASS A -----------------------------------------------------------------------
------- 1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income....................... 0.040 0.047 0.046 0.047 0.048
Less distributions:
Dividends from net investment income........ ( 0.040) ( 0.047) ( 0.046) ( 0.047) ( 0.048)
--------- --------- --------- --------- ---------
Net asset value, end of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return................................... 4.10% 4.82% 4.73% 4.81% 4.93%
Ratios/Supplemental Data
Net assets, end of year (000).................. $ 723,952 $ 752,497 $ 735,581 $ 666,620 $ 469,592
Ratios to average net assets:
Expenses.................................... 0.89% 0.87% 0.81% 0.81% 0.80%
Net investment income....................... 4.03% 4.71% 4.61% 4.68% 4.83%
<CAPTION>
U.S. Government Portfolio
Year Ended August 31,
CLASS B -----------------------------------------------------------------------
------- 1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income....................... 0.043 0.050 0.049 0.050 0.051
Less distributions:
Dividends from net investment income........ ( 0.043) ( 0.050) ( 0.049) ( 0.050) ( 0.051)
--------- --------- --------- --------- ---------
Net asset value, end of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return................................... 4.44% 5.15% 5.00% 5.07% 5.19%
Ratios/Supplemental Data
Net assets, end of year (000).................. $ 117,996 $ 70,168 $ 68,967 $ 126,169 $ 306,799
Ratios to average net assets:
Expenses.................................... 0.56% 0.55% 0.55% 0.56% 0.55%
Net investment income....................... 4.32% 5.03% 4.86% 5.04% 5.20%
</TABLE>
-19-
<PAGE>
A Statement of Additional Information (SAI) dated January 1, 2000, and the
Fund's Annual and Semi-Annual Reports include additional information about the
Fund and its investments and are incorporated by reference into this Prospectus.
You may obtain the SAI, the Annual and Semi-Annual Reports and material
incorporated by reference without charge by calling the Fund at 1-800-221-3079.
To request other information, please call your financial intermediary or the
Fund.
======================================================
SHORT
TERM
INCOME
FUND, INC.
PROSPECTUS
January 1, 2000
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
(212) 830-5220
======================================================
A current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's
Public Reference Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.
811-2950
STIF2000P
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS
January 1, 2000
Short Term Income Fund, Inc.
Total Resource Account
- --------------------------------------------------------------------------------
Class of Shares ("TRA Shares")
of U.S. Government Portfolio
A money market fund whose investment
objective through its U.S. Government
Portfolio is to seek as high a level
of current income to the extent consistent [IMAGE OMITTED]
with the preservation of capital and
the maintenance of liquidity.
The Securities and Exchange Commission
has not approved or disapproved these
securities or passed upon the accuracy
or adequacy of this prospectus. Any
representation to the contrary is a
criminal offense.
MetLife (R) Securities
Investing Made Easy(R)
<PAGE>
TABLE OF CONTENTS
2 Risk/Return Summary: Investments, Risks,
and Performance
5 Fee Table
6 Investment Objectives, Principal Investment
Strategies and Related Risks
8 Management, Organization and Capital Structure
10 Shareholder Information
19 Distribution Arrangements
22 Financial Highlights
<PAGE>
I. Risk/Return Summary: Investments, Risks, and Performance
Investment Objective
The objective of the Fund through its U.S. Government Portfolio is to seek as
high a level of current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. There is no assurance that the Fund
will achieve its investment objective.
Principal Investment Strategies
The U.S. Government Portfolio is a money market fund which invests in high
quality, short-term debt instruments. The Fund seeks to maintain investment
portfolios with a dollar-weighted average maturity of 90 days or less, to value
its investment portfolio at amortized cost and maintain a net asset value of
$1.00 per share.
The U.S. Government Portfolio
The U.S. Government Portfolio of the Fund seeks to achieve its objective by
investing in obligations issued or guaranteed by the United States Government,
including repurchase agreements covering these types of obligations. Repurchase
agreements are agreements in which a buyer purchases a security and
simultaneously agrees with the vendor to resell the security to the vendor at an
agreed upon time and price.
Principal Risks
o Although the Fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Fund.
o The value of the Fund's shares and the securities held by the Fund can each
decline in value.
o The amount of income the Fund generates will vary with changes in
prevailing interest rates.
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o An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other governmental agency.
o The U.S. Government Portfolio's investment policy of investing in
obligations issued or guaranteed by the United States Government, while
minimizing risk of loss, may produce a lower yield than a policy of
investing in other types of instruments.
Risk/Return Bar Chart and Table
The following bar chart and table may assist in your decision to invest in the
TRA Shares of the Fund. The bar chart shows the change in the annual total
returns of the Class A shares of the Fund over the last ten calendar years. The
table shows the average annual total returns for the last one, five, ten year
periods, and since the inception of the Class A shares of the Fund. While
analyzing this information, please note that the Fund's past performance is not
an indication of how the Fund will perform in the future. Also, the returns
presented are for a Class that is not offered by this Prospectus. The Class
presented has substantially similar annual returns because the shares are
invested in the same portfolio of securities and the annual returns differ only
to the extent that the classes do not have the same expenses. The current 7-day
yield of the Fund's Classes may be obtained by calling the Fund toll-free at
1-800-221-3079.
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(1),(2),(3),(4)
Short Term Income Fund, Inc. U.S. Government Portfolio - Class A Shares
[GRAPHIC OMITTED]
Calendar Year End % Total Return
1989 8.25%
1990 7.47%
1991 5.47%
1992 3.29%
1993 2.45%
1994 3.43%
1995 5.18%
1996 4.71%
1997 4.76%
1998 4.64%
(1) The chart shows returns for the Class A shares of the Fund's U.S.
Government Portfolio (which are not offered by this Prospectus) since as of
December 31, 1998 there were no TRA Shares issued by the Fund. All Classes
of the Fund will have substantially similar annual returns because the
shares are invested in the same portfolio of securities and the annual
returns differ only to the extent that the Classes do not have the same
expenses. If the expenses of the TRA Shares are higher than the Class A
shares, then your annual return may be lower.
(2) As of September 30, 1999, the Fund's U.S. Government Portfolio had a
year-to-date return of 3.01%.
(3) The U.S. Government Portfolio's highest quarterly return was 2.10% for the
quarter ended June 30, 1989; the U.S. Government Portfolio's lowest
quarterly return was 0.60% for the quarter ended December 31, 1993.
(4) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than the net return by investing in the Fund directly.
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Average Annual Total Returns - U.S. Government Portfolio
Class A
For the periods ended December 31, 1998
One Year 4.64%
Five Years 4.54%
Ten Years 4.95%
Since Inception 5.83%
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Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
the TRA Shares of the Fund's U.S. Government Portfolio.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
TRA Shares
----------
Management Fees................................ .26%
*Distribution and Service (12b-1) Fees......... .25%
Other Expenses................................. .25%
Administration Fees....................... .21%
------
Total Annual Fund Operating Expenses........... .76%
======
* The Distributor has voluntarily waived a portion of the 12b-1 Fee. After
such waiver, the 12b-1 Fee with respect to the TRA shares is 0.22%. Total
Fund Operating Expenses are 0.73%. This fee waiver arrangement may be
terminated or changed at any time at the option of the Distributor or the
Fund, respectively.
Example
This Example is intended to help you compare the cost of investing in the Fund's
U.S. Government Portfolio with the cost of investing in other money market
funds.
The Example assumes that you invest $10,000 in the U.S. Government Portfolio of
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 year 3 years
U.S. Government Portfolio - TRA Shares $103 $322
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II. Investment Objectives, Principal Investment Strategies and Related Risks
Investment Objective
The U.S. Government Portfolio is a money market fund which seeks as high a level
of current income to the extent consistent with maintaining liquidity and
preserving capital.
The Fund's investment objective described in this section may only be changed
upon the approval of the holders of a majority of the outstanding shares of the
Fund that would be affected by such a change.
Principal Investment Strategies
Generally
In order to maintain a share price of $1.00, the Fund must comply with certain
industry regulations. The Fund will only invest in securities which are
denominated in United States dollars. Other regulations pertain to the maturity
and credit quality of the securities in which the Fund may invest. The Fund will
only invest in securities which have, or are deemed to have, a remaining
maturity of 397 days or less. Also, the average maturity for all securities
contained in the Fund, on a dollar-weighted basis, will be 90 days or less.
The Fund will only invest in either securities which have been rated (or whose
issuers have been rated) in the highest two short-term rating categories by
nationally recognized statistical rating organizations, or are unrated
securities but which have been determined by the Fund's Board of Directors to be
of comparable quality.
Subsequent to its purchase by the Fund, the quality of an investment may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. If this occurs, the Board of Directors of the Fund shall reassess
the security's credit risks and shall take such action as the Board of
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Directors determines is in the best interest of the Fund and its shareholders.
Reassessment is not required, however, if the security is disposed of or matures
within five business days of the investment adviser becoming aware of the new
rating and provided further that the Board of Directors is subsequently notified
of the investment adviser's actions.
The Fund shall invest not more than 5% of its total assets in securities issued
by a single issuer.
The Fund's investment adviser considers the following factors when buying and
selling securities for the Fund: (i) availability of cash, (ii) redemption
requests, (iii) yield management, and (iv) credit management.
U.S. Government Portfolio
The U.S. Government Portfolio is intended to attain the Fund's investment
objectives through investments limited to obligations issued or guaranteed by
the United States Government, including repurchase agreements covering these
types of obligations. The Fund will enter into repurchase agreements for
inclusion in the U.S. Government Portfolio only if the instruments serving as
collateral for the agreements are eligible for inclusion in the U.S. Government
Portfolio.
Risks
The Fund complies with industry-standard requirements on the quality, maturity
and diversification of its investments which are designed to help maintain a
$1.00 share price. A significant change in interest rates or a default on the
Fund's investments could cause its share price (and the value of your
investment) to change.
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<PAGE>
The investment policies of the U.S. Government Portfolio may produce a lower
yield than a policy of investing in other types of instruments.
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be year 2000 compliant. Although the Manager does not anticipate that the
year 2000 issue will have a material impact on the Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the year 2000 will be sufficient to avoid an adverse impact on
the Fund. The year 2000 problem may also adversely affect issuers of the
securities contained in the Fund's Portfolio, to varying degrees based upon
various factors, and thus may have a corresponding adverse affect on the
portfolio's performance. The Manager is unable to predict what affect, if any,
the year 2000 problem will have on such issuers.
III. Management, Organization and Capital Structure
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of November 30, 1999, the Manager was the
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $14.4 billion. The Manager has been an investment adviser since 1970
and currently is manager of eighteen other registered investment companies and
also advises pension trusts, profit-sharing trusts and endowments.
Pursuant to the Investment Management Contract for the U.S. Government
Portfolio, the Manager manages the portfolio of securities and makes the
decisions with respect to the purchase and sale of investments, subject to the
general control of the Board of Directors of the Fund. Under the Investment
Management Contract the U.S. Government Portfolio will pay an
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<PAGE>
annual management fee of .275% of the Portfolio's average daily net assets not
in excess of $250 million, plus .25% of such assets in excess of $250 million.
Pursuant to the Administrative Services Contract for the U.S. Government
Portfolio, the Manager performs clerical, accounting supervision and office
service functions for the Fund. The Manager provides the Fund with personnel to
perform all of the clerical and accounting type functions not performed by the
Manager. The Manager, at its discretion, may voluntarily waive all or a portion
of the administrative services fee. For its services under the Administrative
Services Contract, the Manager receives 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. Any portion of the total
fees received by the Manager and its past profits may be used to provide
shareholder services and for distribution of Fund shares. In addition, Reich &
Tang Distributors, Inc. receives a fee equal to .25% per annum of the average
daily net assets of the TRA Shares of the U.S. Government Portfolio under the
Shareholder Servicing Agreement. The fees are accrued daily and paid monthly.
Investment management fees and operating expenses, which are attributable to all
Classes of the U.S. Government Portfolio, will be allocated daily to each Class
share based on the percentage of outstanding shares at the end of the day.
IV. Shareholder Information
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a charge for either sales or redemptions. All
transactions in TRA Shares are effected through the Fund's transfer agent, who
accepts orders for purchases and redemptions from MetLife Securities, Inc.
("MSI").
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Pricing of Fund Shares
The net asset value of the TRA Shares is determined as of 12 noon, New York City
time, on each Fund Business Day. Fund Business Day means weekdays (Monday
through Friday) except days on which the New York Stock Exchange is closed for
trading (i.e. national holidays). The net asset value of the TRA Shares is
computed by dividing the value of the Fund's net assets for such Class (i.e.,
the value of its securities and other assets less its liabilities, including
expenses payable or accrued, but excluding capital stock and surplus) by the
total number of shares outstanding for such Class. The Fund intends to maintain
a stable net asset value at $1.00 per share, although there can be no assurance
that this will be achieved.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the Investment Company Act of 1940 (the
"1940 Act"). Amortized cost valuation involves valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the securities
in a portfolio to deviate more than 1/2 of 1% from the value determined on the
basis of amortized cost, the Board of Directors will consider whether any action
should be initiated. Although the amortized cost method provides certainty in
valuation, it may result in periods during which the value of an instrument is
higher or lower than the price an investment company would receive if the
instrument were sold.
Shares will be issued as of the first determination of the Fund's net asset
value per share made after receipt and acceptance of MSI's purchase order at the
net asset value per share next determined after receipt of the purchase order.
Orders received by the Fund's transfer agent before 12 noon, New York City time,
on a Fund Business Day, without accompanying Federal Funds will result in the
issuance of shares on that day only if the Federal Funds required in connection
with the orders are received by the Fund's transfer agent before 4:00 p.m., New
York City time, on that day. Orders for which Federal Funds are received after
4:00 p.m., New York City time, will result in share issuance the following Fund
Business Day.
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<PAGE>
The Fund reserves the right to reject any order for its shares. Fund shares
begin accruing income on the day the shares are issued. Certificates for the TRA
Shares will not be issued to an investor.
Purchase of TRA Shares
Only the TRA Shares of the U.S. Government Portfolio are offered through this
Prospectus. These shares are only offered through MSI's Total Resource Account.
All shares are held in an omnibus account at the Fund through MSI, which will
maintain individual investor accounts.
The minimum initial investment in the Fund for the TRA Shares is $2,500. The
minimum amount for subsequent investments is $100.
Each TRA shareholder will receive from MSI a personalized monthly statement (i)
listing the total number of Fund shares owned as of the statement closing date,
(ii) purchase and redemptions of Fund shares and (iii) the dividends paid on
Fund shares (including dividends paid in cash or reinvested in additional Fund
shares).
When instructed by a TRA shareholder to purchase or redeem Fund shares, MSI, on
behalf of the TRA shareholder, promptly transmits to the Fund's transfer agent a
purchase or redemption order, and in the case of a purchase order, payment for
the shares being purchased.
MSI confirms to its customers who are shareholders in the Fund each purchase and
redemption of Fund shares for the customers' accounts.
Application forms and checks should be sent to Total Resource Account, c/o PFPC,
P.O. Box 8908, Wilmington, DE 19899-8908.
Electronic Funds Transfers (EFT)
You may purchase the TRA Shares of the Fund by having salary, dividend payments,
interest payments or any other payments
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<PAGE>
designated by you, automatically deposited into your Fund account. To enroll,
you must file with the entity that makes payments to you the forms that the
entity requests. Contact the depositing entity to obtain its forms. You may
elect at any time to terminate your participation by notifying in writing the
appropriate depositing entity. Death or legal incapacity will automatically
terminate your participation. Further, MSI, on behalf of the Fund, may terminate
your participation in the EFT program upon 30 days' notice to you.
Subsequent Purchases of Shares
Subsequent purchases can be made by mailing a check to:
Total Resource Account
c/o PFPC
P.O. Box 8908
Wilmington, DE 19899-8908
There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate your Total Resource Account number.
Redemption of Shares
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share of the TRA
Shares following receipt by the Fund's transfer agent of the redemption order
(and any supporting documentation which it may require) from MSI. Normally,
payment for redeemed shares is made on the same Fund Business Day after the
redemption is effected, provided the redemption request is received prior to 12
noon, New York City time. However, redemption payments will not be paid unless
the check (including a certified or cashier's check) used for investment has
been cleared for payment by the investor's bank, which could take up to 15 days
after investment. Shares redeemed are not entitled to participate in dividends
declared on the day a redemption becomes effective.
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<PAGE>
Written Requests
The Total Resource Account application form permits you to redeem by written
request and to elect one or more of the additional redemption procedures
described below. You may only change the instructions indicated on your original
application form by transmitting a written direction to MSI. MSI will promptly
notify the transfer agent when you place a redemption order.
You may make a redemption in any amount by sending a written request to the Fund
addressed to:
Total Resource Account
c/o PFPC
P.O. Box 8908
Wilmington, DE 19899-8908
All written requests for redemption must be signed, in each case with signature
guaranteed.
When a signature guarantee is called for, you should have "Signature Guaranteed"
stamped under your signature. A signature guarantee may be obtained from a
domestic bank or trust company, broker, dealer, clearing agency, savings
association or other financial institution which is participating in a medallion
program recognized by the Securities Transfer Association. The three recognized
medallion programs are Securities Transfer Agents Medallion Program (STAMP),
Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc.
Medallion Signature Program (MSP). Signature guarantees from financial
institutions which are not participating in one of these programs will not be
accepted.
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<PAGE>
Normally the redemption proceeds are paid by check and mailed by MSI's agent
bank, which will disburse payment on behalf of MSI's customer.
Checks
You will receive a supply of checks which may be used to effect redemptions in
the TRA Shares. The checks, which will be issued in your name, are drawn on a
special account maintained by MSI, on behalf of the Fund, with MSI's agent bank.
When a check is presented to MSI's agent bank, it instructs the Fund's transfer
agent to redeem a sufficient number of full and fractional shares in the MSI
omnibus account to cover the amount of the check. The use of a check to make a
withdrawal enables you to receive dividends on the shares to be redeemed up to
the Fund Business Day on which the check clears. Checks may not be certified.
Investors who purchase Fund shares by check may not receive their redemption
proceeds until the check has cleared, which can take up to 15 days following the
date of purchase.
There is no charge to you for checks provided by MSI. MSI, on behalf of the
Fund, reserves the right to impose a charge or impose a different minimum check
amount in the future.
Shareholders electing the checking option are subject to the procedures, rules
and regulations of MSI's agent bank governing checking accounts. Checks drawn on
a jointly owned account may, at your election, require only one signature.
Checks in amounts exceeding the value of your account at the time the
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check is presented for payment will not be honored. Since the dollar value of
the account changes daily, the total value of the account may not be determined
in advance and the account may not be entirely redeemed by check. In addition,
MSI, on behalf of the Fund, reserves the right to charge your account a fee of
up to $25 for checks not honored as a result of an insufficient account value, a
check deemed not negotiable because it has been held longer than six months, an
unsigned check and/or a post-dated check. MSI, on behalf of the Fund, reserves
the right to terminate or modify the check redemption procedure at any time or
to impose additional fees following notification to the TRA shareholders.
Corporations and other entities electing the checking option are required to
furnish a certified resolution in accordance with MSI's normal practices.
Individuals and joint tenants are not required to furnish any supporting
documentation. As soon as the appropriate documentation is filed in good order
with MSI's agent bank, it will provide the shareholder with a supply of checks.
Telephone
The Fund accepts telephone requests for redemption from TRA shareholders who
elect this option on their application form. The proceeds of a telephone
redemption may be sent to you at your address or, if in excess of $1,000, to
your bank account designated in writing. MSI, on behalf of the Fund, may accept
telephone redemption instructions from any TRA shareholders who elect this
service and thus such TRA shareholders risk possible loss of principal and
interest in the event of a telephone redemption not authorized by them. MSI, on
behalf of the Fund, will employ reasonable procedures to confirm that telephone
redemption instructions are genuine, and will require that TRA shareholders
electing such option provide a form of personal identification. The failure by
the Fund to employ such reasonable procedures may cause the Fund to be liable
for the losses incurred by
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investors due to telephone redemptions based upon unauthorized or fraudulent
instructions.
A TRA shareholder making a telephone withdrawal should call MSI at
1-800-638-7283 and state: (i) the name of the TRA shareholder appearing on the
TRA records; (ii) the Total Resource Account number with MSI; (iii) the amount
to be withdrawn; (iv) whether such amount is to be forwarded to the
shareholder's designated bank account or address; and (v) the name of the person
requesting the redemption. Usually the proceeds are sent to MSI's designated
bank account on the same Fund Business Day the redemption is effected, provided
the redemption request is received before 12 noon, New York City time and on the
next Fund Business Day if the redemption request is received after 12 noon, New
York City time. MSI, on behalf of the Fund, reserves the right to terminate or
modify the telephone redemption service in whole or in part at any time and will
notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent by MSI to the TRA shareholder's address of record. If
the TRA shareholder elects to redeem all the shares of his Total Resource
Account, all dividends accrued to the date of such redemption will be paid to
the TRA shareholder along with the proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for (i) any period during which the New York Stock Exchange,
Inc. is closed (other than customary weekend and holiday closings), (ii) any
period during which the SEC determines that trading thereon is restricted, (iii)
any period during which an emergency (as determined by the SEC) exists as a
result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or (iv) for
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such other period as the SEC may by order permit for the protection of the
shareholders of the Fund.
MSI, on behalf of the Fund, has reserved the right to redeem the shares of any
TRA shareholder if the net asset value of all the remaining shares in the
account after a withdrawal is less than $250. A TRA shareholder may avoid
mandatory redemption by purchasing sufficient additional shares to increase his
total net asset value to the minimum amount.
Dividends and Distributions
The Fund declares dividends equal to all its net investment income (excluding
capital gains and losses, if any, and amortization of market discount) on each
Fund Business Day and pays dividends monthly. There is no fixed dividend rate.
In computing these dividends, interest earned and expenses are accrued daily.
All dividends and distributions of capital gains are automatically invested, at
no charge, in additional TRA Shares immediately upon payment thereof.
Tax Consequences
The purchase of shares will be the purchase of an asset. Dividends paid by the
Fund from its investment company taxable income including its net short-term
capital gains, are taxable to shareholders as ordinary income. Your purchase
price is based on the Fund's net asset value, which may include undistributed
income and capital gains. You will be subject to tax on dividends of investment
company taxable income or capital gains dividends paid shortly following your
purchase of shares of the Fund, even though the dividend might be viewed
economically as a return of capital.
It is expected that no portion of dividends to shareholders will qualify for the
dividends-received deduction for corporations.
Distributions from the U.S. Government Portfolio that are derived from interest
on certain obligations of the United States
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Government and agencies thereof may be exempt from state and local taxes in
certain states.
Since the Fund expects to maintain the net asset value of the TRA Shares of the
Fund at $1.00, you will generally not realize any gain for Federal income tax
purposes upon a redemption of your shares in the Fund. However, the redemption
of shares in the Fund will be a taxable event on which any gain realized will be
subject to tax.
The Fund is required by Federal law to withhold 31% of reportable payments paid
to certain shareholders who have failed to provide a correct Social Security or
tax identification number or when the Fund or shareholder has been notified by
the IRS that the shareholder is subject to 31% backup withholding.
Reports containing appropriate information with respect to the Federal income
tax status of dividends paid by the Fund during the year are mailed to
shareholders annually.
In view of the continuous changes in the tax law and the regulations thereunder,
it is recommended that you consult with counsel and other competent tax
advisors.
V. Distribution Arrangements Rule 12b-1 Fees
Investors do not pay a sales charge to purchase the TRA Shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and
for services provided to TRA shareholders. The Fund pays these fees from its
assets on an ongoing basis and therefore, over time, the payment of these fees
will increase the cost of your investment and may cost you more than paying
sales charges.
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<PAGE>
The Fund's Board of Directors has adopted a Rule 12b-1 distribution and service
plan (the "Plan") and, pursuant to the Plan, the Fund and Reich & Tang
Distributors, Inc. (the "Distributor") have entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to the TRA Shares
of the Fund).
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares and, for nominal consideration (i.e., $1.00) and as agent for the
Fund, will solicit orders for the purchase of the Fund's shares, provided that
any orders will not be binding on the Fund until accepted by the Fund as
principal.
Under the Shareholder Servicing Agreement, the Distributor receives, with
respect to the TRA Shares, a service fee equal to .25% per annum of the TRA
Shares' average daily net assets (the "Shareholder Servicing Fee") for providing
personal shareholder services and for the maintenance of shareholder accounts.
This fee is accrued daily and paid monthly and any portion of the fee may be
deemed to be used by the Distributor for payments to MSI with respect to its
provision of such services to its clients or customers who are shareholders of
the TRA Shares. Shareholders of other classes offered by the Fund who do not
receive the benefit of such services from participating organizations such as
MSI will not be assessed a Shareholder Servicing Fee.
The Plan and the Shareholder Servicing Agreement provide that the Fund will pay
for (i) telecommunications expenses including the cost of dedicated lines and
CRT terminals, incurred by the Distributor and participating organizations such
as MSI in carrying out their obligations under the Shareholder Servicing
Agreement with respect to TRA Shares, and (ii) preparing, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
The Plan provides that the Manager may make payments from time to time from its
own resources, which may include the management fee and past profits for the
following purposes: (i) to defray costs, and to compensate others, including
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participating organizations with whom the Distributor has entered into written
agreements, for performing shareholder servicing on behalf of the TRA Shares;
(ii) to compensate certain participating organizations such as MSI for providing
assistance in distributing the TRA Shares; and (iii) to pay the costs of
printing and distributing the Fund's prospectus to prospective investors, and to
defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective shareholders, advertising, and
other promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's TRA Shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee (with respect to the TRA Shares)
and past profits, for the purposes enumerated in (i) above. The Distributor will
determine the amount of such payments made pursuant to the Plan, provided that
such payments will not increase the amount which the Fund is required to pay to
the Manager and Distributor for any fiscal year under either the Investment
Management Contract in effect for that year or under the Shareholder Servicing
Agreement in effect for that year.
PFPC has contracted with the Distributor to perform certain sub-transfer agent
accounting services for the TRA shareholders. In consideration of the provisions
of these sub-transfer agency accounting services, PFPC will receive sub-transfer
agency fees from the Distributor or its affiliate, the Fund's transfer agent. As
a result of the payment of the sub-transfer agency accounting fees to PFPC, TRA
Shares will have higher transfer agency charges than the other classes of the
Fund.
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VI. Financial Highlights
This financial highlights table is intended to help you understand the
financial performance for the TRA Class of the U.S. Goverment Portfolio
since inception. Certain information reflects the financial results of a
single Fund share. The total returns in the table represent the rate that
an investor would have earned on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, for the fiscal year ended August 31,
1999.
U.S. Government Portfolio
July 12, 1999
TRA CLASS (Commencement of Sales)
August 31, 1999
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.............. $ 1.00
---------
Income from investment operations:
Net investment income........................... 0.006
Less distributions:
Dividends from net investment income.............. ( 0.006)
-------
Net asset value, end of period.................... $ 1.00
=========
Total Return...................................... 4.33%*
Ratios/Supplemental Data
Net assets, end of period (000)................... $ 1
Ratios to average net assets:
Expenses........................................ 0.73%*
Net investment income........................... 4.25%*
* Annualized
<PAGE>
-22-
<PAGE>
Short Term Income Fund, Inc.
Total Resource Account
Class of Shares ("TRA Shares")
of U.S. Government Portfolio
A Statement of Additional Information
(SAI) dated January 1, 2000, and the
Fund's Annual and Semi-Annual Reports
include additional information about the
Fund and its investments and are
incorporated by reference into this
prospectus. You may obtain the SAI, the
Annual and Semi-Annual Reports and
material incorporated by reference
without charge by calling the Fund at
1-800-221-3079. To request other
information, please call your financial
intermediary or the Fund.
A current SAI has been filed with the
Securities and Exchange Commission. You
may visit the Securities and Exchange
Commission's Internet website
(www.sec.gov) to view the SAI, material
incorporated by reference and other
information. These materials can also be
reviewed and copied at the Commission's
Public Reference Room in Washington D.C.
Information on the operation of the
Public Reference Room may be obtained by
calling the Commission at
1-800-SEC-0330. In addition, copies of
these materials may be obtained, upon
payment of a duplicating fee, by writing
the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.
TRA Shares
distributed through
MetLife Securities, Inc.
Home Office
One Madison Avenue
New York, NY 10010
1-800-638-7283
Member NASD, SIPC
TRASTIF2000P
811-2950
<PAGE>
SHORT TERM
INCOME FUND, INC. 600 Fifth Avenue, New York, NY 10020
(212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
January 1, 2000
RELATING TO THE SHORT TERM INCOME FUND, INC.
PROSPECTUS DATED JANUARY 1, 2000
and the
TOTAL RESOURCE ACCOUNT CLASS OF SHARES ("TRA Shares") OF THE
U.S. GOVERNMENT PORTFOLIO PROSPECTUS DATED JANUARY 1, 2000
This Statement of Additional Information (SAI) is not a Prospectus. The SAI
expands upon and supplements the information contained in the current Prospectus
of Short Term Income Fund, Inc. (the "Fund") and the current Prospectus of the
TRA Shares of the U.S. Government Portfolio of the Fund, both dated January 1,
2000 and should be read in conjunction with each Prospectus.
A Prospectus may be obtained from any Participating Organization or by writing
or calling the Fund toll-free at 1-(800) 221-3079. The audited Financial
Statements of the Fund have been incorporated by reference into the SAI from the
Fund's Annual Report. The Annual Report is available, without charge, upon
request by calling the toll-free number provided.
The material relating to the Purchase, Redemption and Pricing of Shares has been
incorporated by reference to the Prospectus for each Class of shares.
This Statement of Additional Information is incorporated by reference into the
Fund's Prospectus in its entirety.
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund History.........................................2 Capital Stock and Other Securities......................11
Description of the Fund and its Investments and Purchase, Redemption and Pricing of Shares..............12
Risks..............................................2 Taxation of the Fund....................................13
Management of the Fund...............................5 Underwriters............................................13
Control Persons and Principal Holders of Calculation of Performance Data.........................14
Securities.........................................6 Financial Statements....................................15
Investment Advisory and Other Services...............7 Description of Ratings..................................16
Brokerage Allocation and Other Practices.............11
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
I. FUND HISTORY
The Fund was incorporated on August 22, 1979 in the state of Maryland.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is an open-end, diversified management investment company. The Fund's
investment objective is to seek as high a level of current income to the extent
consistent with preserving capital and maintaining liquidity. No assurance can
be given that these objectives will be achieved.
The following discussion expands upon the description of the Fund's investment
objectives and policies in the Prospectus.
The Fund may only purchase United States dollar-denominated securities that have
been determined by the Fund's Board of Directors to present minimal credit risks
and that are Eligible Securities at the time of acquisition. The term Eligible
Securities means: (i) securities which have or are deemed to have remaining
maturities of 397 days or less and rated in the two highest short-term rating
categories by any two nationally recognized statistical rating organizations
("NRSROs") or in such categories by the only NRSRO that has rated the Municipal
Obligations (collectively, the "Requisite NRSROs"); or (ii) unrated securities
determined by the Fund's Board of Directors to be of comparable quality. In
addition, securities which have or are deemed to have remaining maturities of
397 days or less but that at the time of issuance were long-term securities
(i.e. with maturities greater than 366 days) are deemed unrated and may be
purchased if such had received a long-term rating from the Requisite NRSROs in
one of the three highest rating categories. Provided, however, that such may not
be purchased if it (i) does not satisfy the rating requirements set forth in the
preceding sentence and (ii) has received a long-term rating from any NRSRO that
is not within the three highest long-term rating categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities. While there are several organizations that currently qualify as
NRSROs, two examples of NRSROs are Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, ("S&P") and Moody's Investors Service, Inc.
("Moody's"). The two highest ratings by S&P and Moody's are "AAA" and "AA" by
S&P in the case of long-term bonds and notes or "Aaa" and "Aa" by Moody's in the
case of bonds; "SP-1" and "SP-2" by S&P or "MIG-1" and "MIG-2" by Moody's in the
case of notes; "A-1" and "A-2" by S&P or "Prime-1" and "Prime-2" by Moody's in
the case of tax-exempt commercial paper. The highest rating in the case of
variable and floating demand notes is "VMIG-1" by Moody's or "SP-1/AA" by S&P.
Such instruments may produce a lower yield than would be available from less
highly rated instruments.
All investments by the Fund will mature or will be deemed to mature within 397
days or less from the date of acquisition and the average maturity of the Fund
portfolio (on a dollar-weighted basis) will be 90 days or less. The maturities
of variable rate demand instruments held in the Fund's portfolio will be deemed
to be the longer of the period required before the Fund is entitled to receive
payment of the principal amount of the instrument through demand, or the period
remaining until the next interest rate adjustment, although the stated
maturities may be in excess of 397 days.
Subsequent to its purchase by the Fund, a rated security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Fund. If this occurs, the Board of Directors of the Fund shall promptly reassess
whether the security presents minimal credit risks and shall cause the Fund to
take such action as the Board of Directors determines is in the best interest of
the Fund and its shareholders. However, reassessment is not required if the
security is disposed of or matures within five business days of the Manager
becoming aware of the new rating and provided further that the Board of
Directors is subsequently notified of the Manager's actions.
In addition, in the event that a security (i) is in default, (ii) ceases to be
an Eligible Security under Rule 2a-7 of the 1940 Act or (iii) is determined to
no longer present minimal credit risks, or an event of insolvency occurs with
respect to the issues of a portfolio security or the provider of any Demand
Feature or Guarantee, the Fund will dispose of the security absent a
determination by the Fund's Board of Directors that disposal of the security
would not be in the best interests of the Fund. Disposal of the security shall
occur as soon as practicable consistent with achieving an orderly disposition by
sale, exercise of any demand feature or otherwise. In the event of a default
with respect to a security which immediately before default accounted for 1/2 of
1% or more of the Fund's total assets, the Fund shall promptly notify the SEC of
such fact and of the actions that the Fund intends to take in response to the
situation.
The Fund shall not invest more than 5% of the total market value of any
Portfolio's assets (determined at the time of the proposed investment and giving
effect thereto) in the securities of any one issuer other than the United States
Government, its agencies or instrumentalities.
2
<PAGE>
There is no guarantee that the Fund will be able to maintain a stable price of
$1.00 and thus, it is possible to lose money in this Fund. The income from the
Fund will vary with changes in prevailing interest rates. In addition, the
Fund's investments are subject to "credit risk", which is the risk that an
issuer will be unable to repay its obligations at maturity. The U.S. Government
Portfolio reduces credit risk by investing exclusively in obligations issued or
guaranteed by the U.S. Government.
The Fund intends to continue qualify as a "regulated investment company" under
Subchapter M of the Code (the "Code"). For the Fund to qualify, at the close of
each quarter of the taxable year, at least 50% of the value of its total assets
must consist of cash, government securities, regulated investment company
securities and other securities. The other securities must be limited in respect
of any one issuer to not more than 5% in value of the total assets of the Fund
and to not more than 10% of the outstanding voting securities of such issuer. In
addition, at the close of each quarter of its taxable year, not more than 25% in
value of the Fund's total assets may be invested in securities of one issuer
(however, this restriction does not apply to the Fund's investing in Government
securities or regulated investment company securities). The limitations
described in this paragraph regarding qualification as a "regulated investment
company" are not fundamental policies and may be revised if applicable Federal
income tax requirements are revised. (See "Federal Income Taxes" herein.)
Description Of Investments
The following discussion expands upon the description in the Prospectus of the
types of securities in which the portfolios of the Fund invest.
Bank Obligations
Domestic banks organized under Federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the Federal Deposit Insurance Corporation
("FDIC"). Domestic banks organized under state law are supervised and examined
by state banking authorities. State banks whose certificates of deposit may be
purchased by the Fund are insured by the FDIC and are subject to Federal
examination and to Federal law and regulation.
Obligations of foreign branches of domestic banks, foreign subsidiaries of
domestic banks and domestic and foreign branches of foreign banks, such as
certificates of deposit ("CDs") and time deposits ("TDs") may be general
obligations of the parent banks in addition to the issuing branch, or may be
limited by the terms of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of domestic banks.
These risks include foreign economic and political developments, foreign
governmental restrictions that may adversely affect payment of principal and
interest on the obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. Foreign branches and subsidiaries are not
necessarily subject to the same or similar regulatory requirements that apply to
domestic banks, such as mandatory reserve requirements, loan limitations, and
accounting, auditing and financial recordkeeping requirements. In addition, less
information may be publicly available about a foreign branch of a domestic bank
or about a foreign subsidiary of a domestic bank or about a domestic or foreign
branch of a foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and State
regulation as well as governmental action in the country in which the foreign
bank has its head office. In addition, branches licensed by the Comptroller of
the Currency and branches licensed by certain states ("State Branches") may or
may not be required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, an amount of its assets equal to 5% of its
total liabilities; and (2) maintain assets within the state of an amount equal
to a specified percentage of the aggregate amount of liabilities of the foreign
bank payable at or through all of its agencies or branches within the state. The
deposits of State Branches may not necessarily be insured by the FDIC.
In view of the foregoing factors associated with the purchase of CDs and the TDs
issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, the Manager carefully evaluates such investments on a case by
case basis.
Repurchase Agreements
Investments by the Fund in repurchase agreements are made in accordance with
procedures established by the Fund providing that the securities serving as
collateral for each repurchase agreement are delivered to the Fund's custodian
either physically or in book entry form and that the collateral is marked to the
market with sufficient frequency to ensure that each repurchase agreement is
fully collateralized at all times. A buyer of a repurchase agreement runs the
risk of loss with respect to his investment in the event of a default by the
issuer if, at the time of
3
<PAGE>
default, the value of the collateral securing the agreement is less than the
price paid for the repurchase agreement. Were a default to occur, the Fund would
look to the collateral securing the repurchase agreement to recover its entire
investment. In the event that a vendor defaults on its repurchase obligation,
the Fund might suffer a loss to the extent that the proceeds from the sale of
the collateral are less than the repurchase price. If the vendor becomes
bankrupt, the Fund might be delayed, or may incur costs or possible losses in
selling the collateral. The Fund enters into repurchase agreements only with
member banks of the Federal Reserve System and "primary dealers" (as designated
by the Federal Reserve Bank of New York) in United States government securities.
In the view of the management of the Fund, the restrictions and procedures
described above which govern the Fund's investments in repurchase agreements
substantially minimize the Fund's risk of losses in making those investments.
Repurchase agreements may be considered to be loans under the Investment Company
Act of 1940, as amended (the "1940 Act").
Investment Restrictions
The Fund has adopted the following fundamental investment restrictions which
apply to all portfolios. They may not be changed unless approved by a majority
of the outstanding shares "of each series of the Fund's shares that would be
affected by such a change." The term "majority of the outstanding shares" of the
Fund means the vote of the lesser of (i) 67% or more of the shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
The Fund may not:
(a) invest in securities of companies that have conducted operations for less
than three years, including the operations of predecessors;
(b) invest in or hold securities of any issuer if officers and directors of the
Fund or Reich & Tang Asset Management, Inc., the general partner of its
investment manager, individually own beneficially more than 1/2 of 1% of
the issuer's securities or in the aggregate own more than 5% of the
issuer's securities; and
(c) (1) make investments for the purpose of exercising control over any issuer
or other person; (2) purchase securities having voting rights at the time
of purchase; (3) purchase securities of other investment companies, except
in connection with a merger, acquisition, consolidation or reorganization
involving the Fund; (4) invest in real estate (other than debt obligations
secured by real estate or interests therein or debt obligations issued by
companies which invest in real estate or interests therein), commodities,
commodity contracts, commodity options, interests in oil or gas or
interests in other mineral exploration or development programs; (5)
purchase restricted securities or purchase securities on margin; (6) make
short sales of securities or intentionally maintain a short position in any
security or write, purchase or sell puts, calls, straddles, spreads or any
combination thereof; (7) act as an underwriter of securities; (8) issue
senior securities, except insofar as the Fund may be deemed to have issued
a senior security in connection with any permitted borrowings; (9) invest
more than 5% of the total market value of any Portfolio's assets
(determined at the time of the proposed investment and giving effect
thereto) in the securities of any one issuer other than the United States
Government, its agencies or instrumentalities; (10) invest more than 25% of
the total market value of any Portfolio's assets (determined at the time of
the proposed investment and giving effect thereto) in the securities of
issuers conducting their principal business activities in any one industry;
provided, however, there is no limitation on the aggregate of a Portfolio's
investment in obligations of domestic commercial banks, savings banks and
savings and loan associations and in instruments secured by these
obligations or in obligations of the United States Government, its agencies
or its instrumentalities and in instruments secured by those obligations.
Provided, however, that a Portfolio will not acquire securities that are
not readily marketable or repurchase agreements calling for resale within
more than seven days if, as a result thereof, more than 10% of the value of
its net assets would be invested in such securities; and with respect to
75% of any portfolio's total assets, the Fund shall not invest more than
10% of such total assets in securities backed by a demand feature or
guarantee from the same institution; (11) make loans, except that the Fund
may purchase for a Portfolio the debt securities described above under
"Description of Investments " and may enter into repurchase agreements as
therein described; (12) borrow money, unless the borrowing does not exceed
10% of the total market value of the assets of the Portfolio with respect
to which the borrowing is made (determined at the time of borrowing but
without giving effect thereto) and the money is borrowed from one or more
banks as a temporary measure for extraordinary or emergency (not
leveraging) purposes or to meet unexpectedly heavy redemption requests.
While borrowings exceed 5% of the value of a Portfolio's total assets, a
Portfolio will not make any investments; and (13) pledge, mortgage, assign
or encumber any of a Portfolio's assets except to the extent necessary to
secure a borrowing permitted by clause (12) made with respect to the
Portfolio.
4
<PAGE>
If a percentage restriction is adhered to at the time of an investment a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or in the amount of a Fund's portfolio's assets will not
constitute a violation of such restriction.
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed the Manager to serve as investment
manager of the Fund. The Manager provides persons satisfactory to the Fund's
Board of Directors to serve as officers of the Fund. Such officers, as well as
certain other employees and directors of the Fund, may be directors or officers
of Reich & Tang Asset Management, Inc., the sole general partner of the Manager
or employees of the Manager or its affiliates. Due to the services performed by
the Manager, the Fund currently has no employees and its officers are not
required to devote their full-time to the affairs of the Fund.
The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below. Unless otherwise specified, the address
of each of the following persons is 600 Fifth Avenue, New York, New York 10020.
Mr. Duff may be deemed an "interested person" of the Fund, as defined in the
1940 Act, on the basis of his affiliation with Reich & Tang Asset Management
L.P.
Steven W. Duff, 46 - President and Director of the Fund, has been President of
the Mutual Funds Division of the Manager since September 1994. Mr. Duff was
formerly Director of Mutual Fund Administration at NationsBank which he was
associated with from June 1981 to August 1994. Mr. Duff is also President and a
Director/Trustee of 13 other funds in the Reich & Tang Fund Complex, Director of
Pax World Money Market Fund, Inc., Executive Vice President of Reich & Tang
Equity Fund, Inc., President of Back Bay Funds, Inc., and President and Chief
Executive Officer of Tax Exempt Proceeds Fund, Inc.
Dr. W. Giles Mellon, 68 - Director of the Fund, has been Professor of Business
Administration and Area Chairman of Economics in the Graduate School of
Management, Rutgers University since 1966. His address is Rutgers University
Graduate School of Management, 92 New Street, Newark, New Jersey 07102. Dr.
Mellon is a Director/Trustee of 15 other funds in the Reich & Tang Fund Complex.
Robert Straniere, 58 - Director of the Fund, has been a member of the New York
State Assembly and a partner with The Straniere Law Firm since 1981. His address
is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also a
Director/Trustee of 15 other funds in the Reich & Tang Fund Complex, and a
Director of Life Cycle Mutual Funds, Inc.
Dr. Yung Wong, 61 - Director of the Fund, was Director of Shaw Investment
Management (UK) Limited from 1994 to October 1995 and formerly General Partner
of Abacus Partners Limited Partnership (a general partner of a venture capital
investment firm) from 1984 to 1994. His address is 29 Alden Road, Greenwich,
Connecticut 06831. Dr. Wong is a Director/Trustee of 15 other funds in the Reich
& Tang Fund Complex . Dr. Wong is also a Trustee of Eclipse Financial Asset
Trust.
Molly Flewharty, 48 - Vice President of the Fund, has been Vice President of the
Mutual Funds Division of the Manager since September 1993. Ms. Flewharty was
formerly Vice President of Reich & Tang, Inc. which she was associated with from
December 1977 to September 1993. Ms. Flewharty is also Vice President of 18
other funds in the Reich & Tang Fund Complex.
Lesley M. Jones, 51 - Vice President of the Fund, has been Senior Vice President
of the Mutual Funds Division of the Manager since September 1993. Ms. Jones was
formerly Senior Vice President of Reich & Tang, Inc. which she was associated
with from April 1973 to September 1993. Ms. Jones is also a Vice President of 14
other funds in the Reich & Tang Fund Complex.
Dana E. Messina, 43 - Vice President of the Fund, has been Executive Vice
President of the Mutual Funds Division of the Manager since January 1995 and was
Vice President from September 1993 to January 1995. Ms. Messina was formerly
Vice President of Reich & Tang, Inc. with which she was associated with from
December 1980 to September 1993. Ms. Messina is also Vice President of 15 other
funds in the Reich & Tang Fund Complex.
Bernadette N. Finn, 52 - Vice President and Secretary of the Fund, has been Vice
President of the Mutual Funds Division of the Manager since September 1993. Ms.
Finn was formerly Vice President and Assistant Secretary of Reich & Tang, Inc.
which she was associated with from September 1970 to September 1993. Ms. Finn is
also Vice President and Secretary of 4 other funds, and a Secretary of 14
additional funds in the Reich & Tang Fund Complex.
Richard De Sanctis, 43 - Treasurer of the Fund, has been Assistant Treasurer of
NEIC since September 1993. Mr. De Sanctis was formerly Controller of Reich &
Tang, Inc., from January 1991 to September 1993 and Vice President and Treasurer
of Cortland Financial Group, Inc. and Vice President of Cortland Distributors,
Inc. from 1989 to
5
<PAGE>
December 1990. Mr. De Sanctis is also Treasurer of 17 other funds in the Reich &
Tang Fund Complex, and is Vice President and Treasurer of Cortland Trust, Inc.
Rosanne Holtzer, 35 - Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Manager since December 1997. Ms. Holtzer was
formerly Manager of Fund Accounting for the Manager with which she has been
associated with from June 1986. Ms. Holtzer is also Assistant Treasurer of 18
other funds in the Reich & Tang Fund Complex.
The Fund paid an aggregate remuneration of $42,000 to its directors with respect
to the period ended August 31, 1999, all of which consisted of directors' fees
paid to the three disinterested directors, pursuant to the terms of the
Investment Management Contract (see "Manager" herein).
<TABLE>
<CAPTION>
COMPENSATION TABLE
<S> <C> <C> <C> <C>
Aggreagate Pension or Retirement Estimated Annual Total Compensation from
Name of Person, Compensation from Benefits Accrued as Benefits upon Fund and Fund Complex
Position the Fund Part of Fund Expenses Retirement Paid to Directors*
Dr. W. Giles
Mellon, $14,000 0 0 $59,500 (16 Funds)
Director
Robert Straniere, $14,000 0 0 $59,500 (16 Funds)
Director
Dr. Yung Wong, $14,000 0 0 $59,500 (16 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex
for the fiscal year ending August 31, 1999. The parenthetical number
represents the number of investment companies (including the Fund) from
which the directors receive compensation. A Fund is considered to be in the
same Fund complex if among other things, it shares a common investment
adviser with the Fund.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On November 30, 1999 there were 1,173,935,179 Money Market Portfolio - Class A
shares outstanding, 296,331,156 Money Market Portfolio - Class B shares
outstanding, 665,049,617 U.S. Government Portfolio -Class A shares outstanding,
117,878,135 U.S. Government Portfolio - Class B shares outstanding and 3,946
U.S. Government Portfolio -TRA Class shares outstanding. As of November 30,
1999, the amount of shares owned by all officers and directors of the Fund, as a
group, was less than 1% of the outstanding shares. Set forth below is certain
information as to persons who owned 5% or more of the Fund's outstanding shares
as of November 30, 1999:
Name and Address % of Class Nature of Ownership
Money Market Portfolio - Class A
National Financial Services Corp. 6.51% Record
as Agent for Various
Beneficial Owners
200 Liberty Street
New York, NY 10281
H.G. Wellington 5.16% Record
14 Wall Street
New York, NY 10005
6
<PAGE>
Name and Address % of Class Nature of Ownership
Money Market Portfolio - Class B
Education for Youth Society, Inc. 5.04% Beneficial
120 Broadway
New York, NY 10271
U.S. Government Portfolio - Class A
None
U.S. Government Portfolio - Class B
The Tyrell Foundation 8.10% Beneficial
354 Pequot Avenue
Southport, CT 06490
U.S. Government Portfolio - TRA Class
MetLife Securities for the 100.00% Record
Exclusive Benefit of Total Resource
Account Shareholders
485 Rte. 1 South, Bldg. E
Island, NY 08830
V. INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020. The Manager was as of November 30, 1999, investment
manager, adviser, or supervisor with respect to assets aggregating in excess of
$14.4 billion. In addition to the Fund, the Manager acts as investment manager
and administrator of eighteen other investment companies and also advises
pension trusts, profit-sharing trusts and endowments.
Effective January 1, 1998, NEIC Operating Partnership, L.P. ("NEICOP") was the
limited partner and owner of a 99.5% interest in the Manager replacing New
England Investment Companies, L.P. ("NEICLP") as the limited partner and owner
of such interest in the Manager due to a restructuring by New England Investment
Companies, Inc. ("NEIC"). Subsequently, effective March 31, 1998, Nvest
Companies, L.P. ("Nvest Companies") due to a change in name of NEICOP, replaced
NEICOP as the limited partner and owner of a 99.5% interest in the Manager.
Reich & Tang Asset Management, Inc. (an indirect wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining 0.5%
interest of the Manager. Nvest Corporation, a Massachusetts Corporation
(formerly known as New England Investment Companies, Inc.), serves as the
managing general partner of Nvest Companies.
Reich & Tang Asset Management, Inc. is an indirect subsidiary of Metropolitan
Life Insurance Company ("MetLife"). MetLife directly and indirectly owns
approximately 47% of the outstanding partnership interests of Nvest Companies
and may be deemed a "controlling person" of the Manager. Reich & Tang, Inc.
owns, directly and indirectly, approximately 13% of the outstanding partnership
interests of Nvest Companies.
MetLife is a mutual life insurance company and is the second largest life
insurance company in the United States in terms of total assets. MetLife
provides a wide range of insurance and investment products and services to
individuals and groups and is the leader among United States life insurance
companies in terms of total life insurance in force. MetLife and its affiliates
provide insurance or other financial services to approximately 36 million people
worldwide.
Nvest Companies is a holding company offering a broad array of investment styles
across a wide range of asset categories through more than seventeen
subsidiaries, divisions and affiliates offering a wide array of investment
styles and products to institutional clients. Its business units, in addition to
the Manager, include AEW Capital Management, L.P., Back Bay Advisors, L.P.,
Capital Growth Management L.P., Graystone Partners, L.P., Harris Associates,
L.P., Jurika & Voyles, L.P., Kobrick Funds, LLC, Loomis, Sayles & Company, L.P.,
New England Funds, L.P., Nvest Advisor Services, L.P., Nvest Associates, Inc.,
Nvest Retirement Services, Nvest Services Company, Snyder Capital Management,
L.P., Vaughan, Nelson, Scarborough & McCullough, L.P., and Westpeak Investment
7
<PAGE>
Advisors, L.P. These affiliates in the aggregate are investment advisors or
managers of more than 80 other registered investment companies.
On January 21, 1999, the Board of Directors, including a majority of the
directors who are not interested persons (as defined in the 1940 Act) of the
Fund or the Manager, approved the continuance of the Investment Management
Contract effective May 1, 1999, which has a term which extends to April 30,
2000. The contract is continued in force thereafter for successive twelve-month
periods beginning each May 1, provided that such majority vote of the Fund's
outstanding voting securities or by a majority of the directors who are not
parties to the Investment Management Contract or interested persons of any such
party, by votes cast in person at a meeting called for the purpose of voting on
such matter.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund.
The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of NEIC, the
sole general partner of the Manager, or employees of the Manager or its
affiliates.
The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by the Manager on sixty days written notice, and will automatically terminate
in the event of its assignment. The Investment Management Contract provides that
in the absence of willful misfeasance, bad faith or gross negligence on the part
of the Manager, or of reckless disregard of its obligations thereunder, the
Manager shall not be liable for any action or failure to act in accordance with
its duties thereunder.
Under the Investment Management Contract, (i) the Money Market Portfolio will
pay an annual management fee 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 and (ii) the U.S. Government Portfolio will pay an annual
management fee of .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, at its discretion, may voluntarily waive all or a portion of the
management fee. The fees are accrued daily and paid monthly. Any portion of the
total fees received by the Manager may be used by the Manager to provide
shareholder services and for distribution of Fund shares. For the Fund's fiscal
year ended August 31, 1999 the Manager received investment management fees
totaling $4,153,608 and $2,351,952 from the Money Market Portfolio and the U.S.
Government Portfolio, respectively, none of which was waived. For the Fund's
fiscal year ended August 31, 1998 the Manager received investment management
fees totaling $3,491,263 of which $276,258 was waived and $2,060,639 from the
Money Market Portfolio and the U.S. Government Portfolio, respectively. For the
Fund's fiscal year ended August 31, 1997 the Manager received investment
management fees totaling $3,041,228 and $1,968,002 from the Money Market
Portfolio and the U.S. Government Portfolio, respectively.
Pursuant to an Administrative Services Contract with the Fund, the Manager also
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to (i) supervise the
performance of bookkeeping related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping agent, (ii) prepare reports to and filings with
regulatory authorities, and (iii) perform such other services as the Fund may
from time to time request of the Manager. The personnel rendering such services
may be employees of the Manager, of its affiliates or of other organizations.
The Manager, at its discretion, may voluntarily waive all or a portion of the
administrative services fee. For its services under the Administrative Services
Contract, the Manager receives from the Fund an annual fee equal to .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. For the Funds fiscal year
ended August 31, 1999, the Manager received administration fees in the aggregate
of $2,983,956 and $1,923,140 from the Money Market Portfolio and the U.S.
Government Portfolio, respectively, none of which was waived. For the Funds
fiscal year ended August 31, 1998, the Manager received administration fees in
the aggregate of $2,487,557 of which $9,742 was waived and $1,678,581 from the
Money Market Portfolio and the U.S. Government Portfolio, respectively. For the
Fund's fiscal year ended August 31, 1997, the Manager received administration
fees in the aggregate of $2,150,030 and $1,600,765 from the Money Market
Portfolio and the U.S. Government Portfolio, respectively.
The Manager at its discretion may waive its rights to any portion of the
management fee or the administrative services fee and may use any portion of the
management fee for purposes of shareholder and administrative
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services and distribution of the Fund's shares. There can be no assurance that
such fees will be waived in the future.
Investment management fees and operating expenses which are attributable to all
Classes of a portfolio will be allocated daily to each Class based on the
percentage of outstanding shares at the end of the day. Additional shareholder
services provided by Participating Organizations to Class A and TRA shareholders
pursuant to the Plan shall be compensated by the Distributor from its own
resources which includes the shareholder servicing fee and past profits, and the
Manager from its own resources which includes the management fee and past
profits. Expenses incurred in the distribution of Class B shares and the
servicing of Class B shares shall be paid by the Manager.
Expense Limitation
The Manager has agreed, pursuant to the Investment Management Contract, to
reimburse the Fund for its expenses (exclusive of interest, taxes, brokerage and
extraordinary expenses) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. For the purpose of this obligation to reimburse expenses,
the Fund's annual expenses are estimated and accrued daily, and any appropriate
estimated payments are made to it on a monthly basis. Subject to the obligations
of the Manager to reimburse the Fund for its excess expenses as described above,
the Fund has, under the Investment Management Contract, confirmed its obligation
for payment of all its other expenses. This includes all operating expenses,
taxes, brokerage fees and commissions, commitment fees, certain insurance
premiums, interest charges and expenses of the custodian, transfer agent and
dividend disbursing agent's fees, telecommunications expenses, auditing and
legal expenses, bookkeeping agent fees, costs of forming the corporation and
maintaining corporate existence, compensation of directors, officers and
employees of the Fund and costs of other personnel performing services for the
Fund who are not officers of the Manager or its affiliates, costs of investor
services, shareholders' reports and corporate meetings, SEC registration fees
and expenses, state securities laws registration fees and expenses, expenses of
preparing and printing the Fund's prospectus for delivery to existing
shareholders and of printing application forms for shareholder accounts, and the
fees and reimbursements payable to the Manager under the Investment Management
Contract and the Distributor under the Shareholder Servicing Agreement.
The Fund may from time to time hire its own employees or contract to have
management services performed by third parties (including Participating
Organizations) as discussed herein. The management of the Fund intends to do so
whenever it appears advantageous to the Fund. The Fund's expenses for employees
and for such services are among the expenses subject to the expense limitation
described above.
Distribution And Service Plan
The Fund's distributor is Reich & Tang Distributors, Inc., a Delaware
corporation with principal officers at 600 Fifth Avenue, New York, New York
10020. Pursuant to Rule 12b-1 under the 1940 Act, the SEC has required that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund has entered into a Distribution
Agreement and a Shareholder Servicing Agreement (with respect to Class A shares
and TRA Shares only) with Reich & Tang Distributors, Inc., (the "Distributor"),
as distributor of the Fund's shares.
Under the Plan, the Portfolios and the Distributor will enter into a Shareholder
Servicing Agreement with respect to the Class A shares and TRA Shares. Under the
Shareholder Servicing Agreement, the Distributor receives from each Portfolio a
service fee equal to .25% per annum of each Portfolio's Class A shares and TRA
Shares average daily net assets (the "Service Fee"). The service fee is in
exchange for providing personal shareholder services and for the maintenance of
shareholder accounts. The Service Fee is accrued daily and paid monthly and any
portion of the Service Fee may be deemed to be used by the Distributor for
payments to Participating Organizations with respect to servicing their clients
or customers who are shareholders of the Fund. The Class B shareholders will not
receive the benefit of such services from Participating Organizations and,
therefore, will not be assessed a Shareholder Servicing Fee.
The following information applies only to the Class A and TRA Class of shares of
the Portfolios. For the fiscal year ended August 31,1999, the Fund paid a
Service Fee for expenditures pursuant to the Plan in amounts aggregating
$2,797,974 with respect to the Money Market Portfolio and $1,956,474 with
respect to the U.S. Government Portfolio. During such period, the Manager and
Distributor made payments pursuant to the Plan to or on behalf of Participating
Organizations of $5,831,652 with respect to the Money Market Portfolio and
$3,794,102 with respect to the U.S. Government Portfolio. Of the payments made
pursuant to the Plan by the Fund, with respect to the Money Market Portfolio, $0
was spent on advertising, $9,214 on printing and mailing of prospectuses to
other than current
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shareholders, $0 on compensation to underwriters, $0 on compensation to
broker-dealers, $45,653 on compensation to sales personnel, and $2,623 on other
expenses. Of the payments made pursuant to the Plan by the Fund, with respect to
the U.S. Government Portfolio, $0 was spent on advertising, $8,583 on printing
and mailing of prospectuses to other than current shareholders, $0 on
compensation to underwriters, $0 on compensation to broker-dealers, $37,099 on
compensation to sales personnel, and $1,799 on other expenses. The excess of
such payments over the total payments the Distributor received from the Fund
represents distribution and servicing expenses funded by the Distributor from
its own resources, or the Manager from its own resources (which may be deemed to
be an indirect payment by the Fund).
For the fiscal year ended August 31, 1999, the total amount spent pursuant to
the Distribution Plan for the Class A shares for the Money Market Portfolio and
the U.S. Government Portfolio were .53% and .49%, respectively, of the average
daily net assets of the Class A shares of the particular Portfolio. Of these
amounts, 0.25% and 0.25% were paid by the Money Market Portfolio and the U.S.
Government Portfolio, respectively, to the Distributor, pursuant to the
Shareholder Servicing Agreement.
Under the Distribution Agreement, the Distributor, for nominal consideration
(i.e., $1.00) and as agent for the Fund, will solicit orders for the purchase of
the Fund's shares, provided that any subscriptions and orders will not be
binding on the Fund until accepted by the Fund as principal.
The Plan and the Shareholder Servicing Agreement provide that the Fund will pay
for (i) telecommunications expenses, including the cost of dedicated lines and
CRT terminals, incurred by the Participating Organizations and Distributor in
carrying out their obligations under the Shareholder Servicing Agreement with
respect to the Class A shares and TRA Shares and (ii) preparing, printing and
delivering the Fund's prospectus to existing shareholders of the Fund and
preparing and printing subscription application forms for shareholder accounts.
The Plan provides that the Manager may make payments from time to time from
their own resources, which may include the management fee, and past profits for
the following purposes: (i) to defray the costs of, and to compensate others,
including Participating Organizations with whom the Distributor has entered into
written agreements for performing shareholder servicing and related
administrative functions on behalf of the Class A and TRA Shares of the Fund;
(ii) to compensate certain Participating Organizations for providing assistance
in distributing the Fund's shares; and (iii) to pay the costs of printing and
distributing the Fund's prospectus to prospective investors, and to defray the
cost of the preparation and printing of brochures and other promotional
materials, mailings to prospective shareholders, advertising, and other
promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. The
Distributor may also make payments from time to time from its own resources,
which may include the Shareholder Servicing Fee with respect to Class A shares
and TRA Shares and past profits for the purpose enumerated in (i) above. The
Distributor will determine the amount of such payments made pursuant to the
Plan, provided that such payments will not increase the amount which the Fund is
required to pay to the Manager or the Distributor for any fiscal year under the
Investment Management Contract or the Shareholder Servicing Agreement in effect
for that year.
In accordance with the 12b-1 Rule, the Plan provides that all written agreements
relating to the Plan entered into between either the Fund or the Distributor and
Participating Organizations or other organizations must be in a form
satisfactory to the Fund's Board of Directors. In addition, the Plan requires
the Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and the
Distributor pursuant to the Plan and identifying the distribution activities for
which those expenditures were made.
The Plan provides that it will remain in effect until April 30, 2000. Thereafter
it may continue in effect for successive annual periods commencing May 1,
provided it is approved by the Fund's shareholders or by the Board of Directors.
This includes a majority of directors who are not interested persons of the Fund
and who have no direct or indirect interest in the operation of the Plan or in
the agreements related to the Plan. The Plan further provides that it may not be
amended to increase materially the costs which may be spent by the Fund for
distribution pursuant to the Plan without shareholder approval, and the other
material amendments must be approved by the directors in the manner described in
the preceding sentence. The Plan may be terminated at any time by a vote of a
majority of the disinterested directors of the Fund or the Fund's shareholders.
Custodian And Transfer Agent
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., an affiliate of the Fund's Manager, located at 600 Fifth Avenue, New York,
NY 10020, is transfer agent and dividend agent for the shares of the Fund. The
custodian and transfer agent do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
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Counsel and Auditors
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, independent certified public accountants, have been selected as auditors
for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
The Fund's purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities are normally purchased directly from the
issuer, from banks and financial institutions or from an underwriter or market
maker for the securities. There usually are no brokerage commissions paid for
such purchases. The Fund has paid no brokerage commissions since its formation.
Any transaction for which the Fund pays a brokerage commission will be effected
at the best price and execution available. Thus, the Fund will select a broker
for such a transaction based upon which broker can effect the trade at the best
price and execution available. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price. The Fund purchases participation
certificates in variable rate Municipal Obligations with a demand feature from
banks or other financial institutions at a negotiated yield to the Fund based on
the applicable interest rate adjustment index for the security. The interest
received by the Fund is net of a fee charged by the issuing institution for
servicing the underlying obligation and issuing the participation certificate,
letter of credit, guarantee or insurance and providing the demand repurchase
feature.
Allocation of transactions, including their frequency, to various dealers is
determined by the Manager in its best judgment and in a manner deemed in the
best interest of shareholders of the Fund rather than by any formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. No preference in purchasing portfolio securities will
be given to banks or dealers that are Participating Organizations.
Investment decisions for the Fund will be made independently from those for any
other investment companies or accounts that may be or become managed by the
Manager or its affiliates. If, however, the Fund and other investment companies
or accounts managed by the Manager are simultaneously engaged in the purchase or
sale of the same security, the transactions may be averaged as to price and
allocated equitably to each account. In some cases, this policy might adversely
affect the price paid or received by the Fund or the size of the position
obtainable for the Fund. In addition, when purchases or sales of the same
security for the Fund and for other investment companies managed by the Manager
occur contemporaneously, the purchase or sale orders may be aggregated in order
to obtain any price advantage available to large denomination purchasers or
sellers.
No portfolio transactions are executed with the Manager or its affiliates acting
as principal. In addition, the Fund will not buy bankers' acceptances,
certificates of deposit or commercial paper from the Manager or its affiliates.
VII. CAPITAL STOCK AND OTHER SECURITIES
The authorized capital stock of the Fund consists of ten billion shares of stock
having a par value of one tenth of one cent ($.001) per share. The Fund's Board
of Directors is authorized to divide the shares into separate series of stock,
one for each of the portfolios that may be created. Except as noted below, each
share of any series of shares when issued will have equal dividend, distribution
and liquidation rights within the series for which it was issued and each
fractional share has those rights in proportion to the percentage that the
fractional share represents of a whole share. Shares of all series have
identical voting rights, except where, by law, certain matters must be approved
by a majority of the shares of the unaffected series. Shares will be voted in
the aggregate. There are no conversion or preemptive rights in connection with
any shares of the Fund. All shares, when issued in accordance with the terms of
the offering, will be fully paid and nonassessable. Shares are redeemable at net
asset value, at the option of the shareholder. The Money Market Portfolio offers
two classes of common stock, Class A and Class B. The U.S. Government Portfolio
offers three classes of common stock, Class A, Class B and the TRA Class of
Shares. Each share, regardless of class, will represent an interest in the same
portfolio of investments and will have identical voting, dividend, liquidation
and other rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions, except that: (i) the
Class A, Class B and TRA Shares will have different class designations; (ii)
only the Class A and the TRA Shares will be assessed a service fee pursuant to
the Rule 12b-1 Distribution and Service Plan of the Fund of .25% of the Class A
shares' average daily net assets; (iii) only the holders of the Class A and TRA
shares will be entitled to vote on matters pertaining to the Plan and any
related agreements in accordance with provisions of Rule 12b-1; and (iv) the
exchange privilege will permit stockholders to exchange their shares only for
shares of the same class of an investment company that participates on an
exchange
11
<PAGE>
privilege program with the Fund. Payments that are made under the Plan will be
calculated and charged daily to the appropriate class prior to determining daily
net asset value per share and dividends/distributions.
Under its amended Articles of Incorporation, the Fund has the right to redeem
for cash shares of stock owned by any shareholder to the extent and at such
times as the Fund's Board of Directors determines to be necessary or appropriate
to prevent an undue concentration of stock ownership which would cause the Fund
to become a "personal holding company" for Federal income tax purposes. In this
regard, the Fund may also exercise its right to reject purchase orders.
The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors can elect 100% of the directors if the holders choose to do so. In
that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Unless specifically requested by an
investor, the Fund will not issue certificates evidencing Fund shares.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the By-laws of the Fund provide for annual
or special meetings only (i) for the election (or re-election) of directors,
(ii) for approval of the revised investment advisory contracts with respect to a
particular class or series of stock, (iii) for approval of the Fund's
distribution agreement with respect to a particular class or series of stock,
and (iv) upon the written request of shareholders entitled to cast not less than
25% of all the votes entitled to be cast at such meeting. Annual and other
meetings may be required with respect to such additional matters relating to the
Fund as may be required by the 1940 Act, including the removal of Fund
director(s) and communication among shareholders, any registration of the Fund
with the SEC or any state, or as the Directors may consider necessary or
desirable. Each Director serves until his successor is elected or qualified, or
until such Director sooner dies, resigns, retires or is removed by the vote of
the shareholders.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
The material relating to the purchase and redemption of shares in each
Prospectus is hereby incorporated by reference.
Net Asset Value
The Fund does not determine net asset value per share of each Class on any day
in which the New York Stock Exchange is closed for trading. Those days include:
New Year's Day, Martin Luther King Jr Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The net asset value of each portfolio of the Fund's shares is determined as of
12 noon, New York City time, on each Fund Business Day. The net asset value of a
Class is computed by dividing the value of the Fund's net assets for such Class
(i.e., the value of its securities and other assets less its liabilities,
including expenses payable or accrued but excluding capital stock and surplus)
by the total number of shares outstanding for such Class.
The Fund's portfolio securities are valued at their amortized cost in compliance
with the provisions of Rule 2a-7 under the 1940 Act. Amortized cost valuation
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. If fluctuating interest
rates cause the market value of the Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Board of
Directors will consider whether any action should be initiated, as described in
the following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the value of an instrument
is higher or lower than the price an investment company would receive if the
instrument were sold.
The Fund's Board of Directors has established procedures to stabilize the Fund's
net asset value at $1.00 per share of each Class. These procedures include a
review of the extent of any deviation of net asset value per share, based on
available market rates, from the Fund's $1.00 amortized cost per share of each
Class. Should that deviation exceed 1/2 of 1%, the Board will consider whether
any action should be initiated to eliminate or reduce material dilution or other
unfair results to shareholders. Such action may include redemption of shares in
kind, selling portfolio securities prior to maturity, reducing or withholding
dividends and utilizing a net asset value per share as determined by using
available market quotations. The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less, will not purchase any instrument with a
remaining maturity greater than 397 days, will limit portfolio investments,
including repurchase agreements, to those United States dollar-denominated
instruments that the Fund's Board of Directors determines present minimal credit
risks, and will comply with certain reporting and record keeping procedures. The
Fund has also established procedures to ensure compliance with the requirement
that portfolio securities are Eligible Securities.
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<PAGE>
IX. TAXATION OF THE FUND
Federal Income Taxes
The Fund has elected to qualify under the Code as a "regulated investment
company" that distributes "exempt-interest dividends". The Fund intends to
continue to qualify for regulated investment company status so long as such
qualification is in the best interests of its shareholders. Such qualification
relieves the Fund of liability for Federal income taxes to the extent its
earnings are distributed in accordance with the applicable provisions of the
Code.
The Fund intends to distribute at least 90% of its investment company taxable
income (taxable income subject to certain adjustments exclusive of the excess of
its net long-term capital gain over its net short-term capital loss) for each
taxable year. These distributions will be taxable to shareholders as ordinary
income. The Fund will be subject to Federal income tax on any undistributed
investment company taxable income and undistributed net long-term capital gains.
If the Fund does not distribute at least 98% of its ordinary income and 98% of
its capital gain net income for a taxable year, the Fund will be subject to a
nondeductible 4% excise tax on the excess of such amounts over the amounts
actually distributed.
Dividends paid by the Fund from its investment company taxable income including
its net short-term capital gains are taxable to shareholders as ordinary income
whether they are distributed to the shareholders or reinvested in additional
Fund shares. Dividends designated by the Fund as from long-term capital gains
which are taxable to shareholders at capital gain rates are also taxable to
shareholders whether they are distributed to them or reinvested. A shareholder
will be subject to tax on dividends of investment company taxable income or
capital gains dividends paid shortly following the shareholder's purchase of
shares of the Fund, even though the dividend might be viewed economically as a
return of capital to the shareholder.
Although it is not intended, it is possible that the Fund may realize short-term
or long-term capital gains or losses from its portfolio transactions. The Fund
may also realize short-term or long-term capital gains or accrued market
discount upon the maturity or disposition of securities acquired at discounts
resulting from market fluctuations. Short-term capital gains and accrued market
discount will be taxable to shareholders as ordinary income. Any net capital
gains (the excess of net long-term capital gain over net short-term capital
loss) will be distributed by the Fund annually. The Fund will have no tax
liability with respect to distributed net capital gains and the distributions
will be taxable to shareholders as long-term capital gains regardless of how
long the shareholders have held their shares. However, shareholders who at the
time of such a net capital gain distribution have not held their shares for more
than 6 months, and who subsequently dispose of those shares at a loss, will be
required to treat such loss as a long-term capital loss to the extent of the net
capital gain distribution. Distributions of net capital gain will be designated
as a "capital gain dividend" in a written notice mailed to the Fund's
shareholders after the close of the Fund's taxable year. Capital gains realized
by corporations are generally taxed at the same rate as ordinary income.
However, long-term capital gains (i.e. gains resulting from assets with a
holding of more than one year) realized as non-corporate shareholder are taxable
at a maximum rate of 20%. Corresponding maximum rate and holding period rules
apply with respect to capital gains dividends distributed by the Fund, without
regard to the length of time shares have been held by the shareholder.
If a shareholder fails to provide the Fund with a current taxpayer
identification number, the Fund generally is required to withhold 31% of taxable
dividend payments, and proceeds from the redemption of shares.
Dividends and distributions to shareholders will be taxable whether received in
cash or reinvested in additional shares of the Fund.
X. UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e., $1.00)
and as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. In the opinion of the Manager,
however, based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to
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<PAGE>
the Fund's operations, including discontinuance of any payments then being made
under the Plan to banks and other depository institutions, in the event of any
future change in such laws or regulations which may affect the ability of such
institutions to provide the above-mentioned services. It is not anticipated that
the discontinuance of payments to such an institution would result in loss to
shareholders or change in the Fund's net asset value. In addition, state
securities laws on this issue may differ from the interpretations of Federal law
expressed herein and banks and financial institutions may be required to
register ad dealers pursuant to state law.
XI. CALCULATION OF PERFORMANCE DATA
The Fund calculates a seven-day yield quotation using a standard method
prescribed by the rules of the SEC. Under that method, the Fund's portfolios'
yield figures, which are based on a chosen seven-day period, are computed as
follows: the portfolio's return for the seven-day period is obtained by dividing
the net change in the value of a hypothetical account having a balance of one
share at the beginning of the period by the value of such account at the
beginning of the period (expected to always be $1.00). This is multiplied by
(365/7) with the resulting annualized figure carried to the nearest hundredth of
one percent. For purposes of the foregoing computation, the determination of the
net change in account value during the seven-day period reflects (i) dividends
declared on the original share and on any additional shares, including the value
of any additional shares purchased with dividends paid on the original share,
and (ii) fees charged to all shareholder accounts. Realized capital gains or
losses and unrealized appreciation or depreciation of the Fund's portfolio
securities are not included in the computation. Therefore annualized yields may
be different from effective yields quoted for the same period.
The portfolio's "effective yield" for each Class is obtained by adjusting its
"current yield" to give effect to the compounding nature of the Fund's
portfolio, as follows: the unannualized base period return is compounded and
brought out to the nearest one hundredth of one percent by adding one to the
base period return, raising the sum to a power equal to 365 divided by 7, and
subtracting one from the result, i.e., effective yield = [(base period return +
1)365/7] - 1.
Although published yield information is useful to investors in reviewing the
Fund's portfolios' performance, investors should be aware that the Fund's
portfolios' yields fluctuate from day to day. The Fund's portfolios' yields for
any given period are not an indication, or representation by the Fund, of future
yields or rates of return on the Fund's shares, and may not provide a basis for
comparison with bank deposits or other investments that pay a fixed yield for a
stated period of time. Investors who purchase the Fund's shares directly may
realize a higher yield than Participant Investors because they will not be
subject to any fees or charges that may be imposed by Participating
Organizations.
The Fund may from time to time advertise its portfolios' tax equivalent current
yield. The tax equivalent yield for each Class is computed based upon a 30-day
(or one month) period ended on the date of the most recent balance sheet
included in this Statement of Additional Information. It is computed by dividing
that portion of the yield of the Fund (as computed pursuant to the formulae
previously discussed) which is tax exempt by one minus a stated income tax rate
and adding the quotient to that portion, if any, of the yield of the Fund that
is not tax exempt. The tax equivalent yield for the Fund may also fluctuate
daily and does not provide a basis for determining future yields.
The Fund may from time to time advertise a tax equivalent effective yield table
which shows the yield that an investor would need to receive from a taxable
investment in order to equal a tax-free yield from the Fund. This is calculated
by dividing that portion of the Fund's effective yield that is tax-exempt by 1
minus a stated income tax rate and adding the quotient to that portion, if any,
of the Fund's effective yield that is not tax-exempt.
The Fund's Money Market Portfolio's Class A shares' yield for the seven day
period ended November 30, 1999 was 4.69% which is equivalent to an effective
yield of 4.60%. The Fund's U.S. Government Portfolio's Class A shares' yield for
the seven day period ended November 30, 1999 was 4.58% which is equivalent to an
effective yield of 4.68%.
The Fund's Money Market Portfolio's Class B shares' yield for the seven day
period ended November 30, 1999 was 5.09% which is equivalent to an effective
yield of 5.22%. The Fund's U.S. Government Portfolio's Class B shares' yield for
the seven day period ended November 30, 1999 was 4.97% which is equivalent to an
effective yield of 5.09%.
The Fund's U.S. Government Portfolio's TRA Class shares' yield for the seven day
period ended November 30, 1999 was 4.53% which is equivalent to an effective
yield of 4.63%.
14
<PAGE>
XII. FINANCIAL STATEMENTS
The audited financial statements for the fiscal year ended August 31, 1999 and
the report therein of PricewaterhouseCoopers LLP are herein incorporated by
reference to the Fund's Annual Report. The Semi-Annual and Annual Reports are
available upon request and without charge.
15
<PAGE>
DESCRIPTION OF RATINGS*
Description of Moody's Investors Service, Inc.'s Two Highest Municipal Bond
Ratings:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, or fluctuation of protective elements
may be of greater amplitude, or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Con. (c): Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by (i) earnings of projects under construction, (ii) earnings of
projects unseasoned in operating experience, (iii) rentals which begin when
facilities are completed, or (iv) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
Description of Moody's Investors Service, Inc.'s Two Highest Ratings of State
and Municipal Notes and Other Short-Term Loans:
Moody's ratings for state and municipal notes and other short-term loans will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in bond risk
are of lesser importance in the short run. Symbols used will be as follows:
MIG-1: Loans bearing this designation are of the best quality, enjoying strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing, or both.
MIG-2: Loans bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.
Description of Standard & Poor's Rating Services Two Highest Debt Ratings:
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only to a small degree.
Plus ( + ) or Minus ( - ): The AA rating may be modified by the addition of a
plus or minus sign to show relative standing within the AA rating category.
Provisional Ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.
Standard & Poor's does not provide ratings for state and municipal notes.
Description of Standard & Poor's Rating Services Two Highest Commercial Paper
Ratings:
A: Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1: This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Description of Moody's Investors Service, Inc.'s Two Highest Commercial Paper
Ratings:
Moody's employs the following designations, both judged to be investment grade,
to indicate the relative repayment capacity of rated issues: Prime-1, highest
quality; Prime-2, higher quality.
* As described by the rating agencies.
16
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits.
(a) Articles of Incorporation of Registrant (filed as Exhibit 1 to
Registration Statement and re-filed herein for EDGAR purposes only).
(a.1) Articles of Amendment
(b) By-Laws of Registrant (filed as Exhibit 2 to Registration Statement
and re-filed herein for EDGAR purposes only).
(c) Form of Certificate for shares of the Money Market Portfolio and U.S.
Government Portfolio Common Stock of Registrant (filed as Exhibit 4 to
Registration Statement and re-filed herein for EDGAR purposes only).
(d) Investment Management Contract between the Registrant and Reich & Tang
Asset Management L.P. (filed as Exhibit 5 to Post Effective Amendment
No. 30 to the Registration Statement and incorporated herein by
reference).
(e) Distribution Agreement between the Registrant and Reich & Tang
Distributors L.P. (filed as Exhibit 6 to Post Effective Amendment No.
30 to the Registration Statement and incorporated herein by
reference).
(e.1) Form of Distribution Agreement (for TRA Shares) between Registrant
and Reich & Tang Distributors, Inc. (filed as Exhibit e.1 to
Post-Effective Amendment No. 34 to Registration Statement and
incorporated herein by reference).
(f) Not applicable.
(g) Custody Agreement between Registrant and Investors Fiduciary Trust
Company (filed as Exhibit 8 to Post-Effective Amendment No. 26 to
Registration Statement and re-filed herein for EDGAR purposes only).
(h) Participating Broker agreements with Discount Brokerage Corporation,
Neuberger & Berman and L.F. Rothschild, Uterberg Towbin, respectively,
(filed as Exhibits 9(a), (b) and (c), respectively, to Post-Effective
Amendment No. 2 to Registration Statement and re-filed herein for
EDGAR purposes only).
(h.1) Administrative Services Contract between Registrant and Reich & Tang
L.P. (filed as Exhibit 9(d) to Post-Effective Amendment No. 23 to
Registration Statement and re-filed herein for EDGAR purposes only).
(h.2) Transfer Agency Agreement (filed as Exhibit 9(e) to Post-Effective
Amendment No. 26 to Registration Statement and re-filed herein for
EDGAR purposes only).
(i) Opinion and Consent of Messrs. Seward & Kissel (filed as Exhibit 10(a)
to Pre-Effective Amendment No. 1 to Registration Statement and
re-filed herein for EDGAR purposes only).
(i.1) Opinion of Messrs. Venable, Baetjer and Howard (filed as Exhibit
10(b) to Pre-Effective Amendment No. 1 to Registration Statement and
re-filed herein for EDGAR purposes only).
(j) Consent of Independent Auditor.
(j.1) Consent of Independent Auditor.
(k) Audited Financial Statements for the fiscal year ended August 31, 1999
(filed with the annual report) and incorporated herein by reference.
C-1
<PAGE>
(l) Written assurance of Reich & Tang, Inc. that the purchase of shares of
the registrant was for investment purposes without any present
intention of redeeming on reselling (filed as Exhibit 13 to
Pre-Effective Amendment No. 1 to Registration Statement and re-filed
herein for EDGAR purposes only).
(m) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (filed as Exhibit 15.1 to Post
Effective Amendment No. 30 to the Registration Statement and
incorporated herein by reference).
(m.1) Distribution Agreement between Registrant and Reich & Tang
Distributors L.P. (filed as Exhibit 6 to Post Effective Amendment No.
30 to the Registration Statement and incorporated herein by
reference).
(m.2) Shareholder Servicing Agreement between Registrant and Reich & Tang
Distributors L.P. (filed as Exhibit 15.3 to Post Effective
Registration Statement No. 30 and incorporated herein by reference).
(m.3) Form of Distribution and Service Plan (relating to TRA Shares)
pursuant to Rule 12b-1 under the Investment Company Act of 1940.
(filed as Exhibit m.3 to Post-Effective Amendment No. 34 to
Registration Statement and incorporated herein by reference).
(m.4) Form of Distribution Agreement (relating to TRA Shares) between
Registrant and Reich & Tang Distributors, Inc. (filed as Exhibit m.4
to Post-Effective Amendment No. 34 to Registration Statement and
incorporated herein by reference).
(m.5) Form of Shareholder Servicing Agreement (relating to TRA Shares)
between Registrant and Reich & Tang Distributors, Inc. (filed as
Exhibit m.5 to Post-Effective Amendment No. 34 to Registration
Statement and incorporated herein by reference).
(n) Not applicable.
(o) Amendment No. 3 to Rule 18f-3 Plan for Multi Class. (filed as Exhibit
o to Post-Effective Amendment No. 34 to Registration Statement and
incorporated herein by reference).
(p) Powers of Attorney.
ITEM 24. Persons Controlled by or under Common Control with the Fund.
None.
ITEM 25. Indemnification.
In accordance with Section 2-418 of the General Corporation Law of the
State of Maryland, Article EIGHTH of the Registrants Articles of Incorporation
provides as follows:
EIGHTH: (1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgements, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgement, order, settlement
conviction, or upon a plea of nolo contendere or its equivalent, shall not, in
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
C-2
<PAGE>
(2) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgement in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation, unless and only to the extent that the court in which
such action or suit was brought, or a court of equity in the country in which
the Corporation has its principal office, shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper.
(3) To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (1) and (2) of this Article
EIGHTH or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(4) Any indemnification under paragraphs (1) and (2) of this
Article EIGHTH (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in such paragraphs. Such
determination shall be made (i) by the Board of Directors by a majority vote of
quorum consisting of directors who were not parties to such actions, suit or
proceeding, or (ii) if such a quorum is not obtainable or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion or (iii) by the stockholders provided, however, that if there is
neither a court determination on the merits that such director, officer,
employee or agent is not liable in such action, suit or proceeding nor a court
determination that director, officer, employee or agent was not guilty of
willful misfeasance , bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, then such determination shall be
made by an independent legal counsel (other than a counsel who performs legal
serves for the Corporation; its investment adviser or principle underwriter, or
persons affiliated with these persons).
(5) Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding if
authorized by the Board of Directors in the specific case, upon receipt of an
undertaking, secured by a surety bond or other insurance, by or on behalf of the
director, officer, employee or agent reasonably assuring that such amount will
be repaid unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article EIGHTH.
(6) The indemnification provided by this Article EIGHTH shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(7) The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out or his status as such,
whether or not the Corporation would have the power to indemnify him against the
liability under the provisions of these Articles of Incorporation or the general
laws of the State of Maryland.
(8) Nothing contained in this Article EIGHTH shall protect or
purport to protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
C-3
<PAGE>
(9) For the purposes of this Article EIGHTH, references to "the
Corporation" include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents as well as the resulting or surviving
corporation; so that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article EIGHTH with
respect to the resulting or surviving corporation as he would have with respect
to such a constituent corporation if its separate existence had continued.
Item 26. Business and Other Connections of the Investment Adviser.
The description of Reich & Tang Asset Management L.P. ("RTAMLP") under
the caption "Management, Organization and Capital Structure" in the Prospectus
and "Investment Advisory and Other Services" and "Management of the Fund" in the
Statement of Additional Information constituting parts A and B, respectively, of
this Post-Effective Amendment to the Registration Statement are incorporated
herein by reference.
Registrant's investment advisor, RTAMLP, is a registered investment
advisor. Nvest Companies, L.P. (Nvest) is the limited partner and owner of a
99.5% interest in RTAMLP. Reich & Tang Asset Management, Inc. ("RTAM")(an
indirect wholly-owned subsidiary of Nvest) is the sole general partner and owner
of the remaining .05% interest in RTAMLP. RTAMLP's investment advisory clients
include more than twenty-one registered investment companies which invest in
money market instruments, equity securities and debt securities. In addition,
RTAMLP is the sole general partner of ten investment partnerships organized as
limited partnerships.
Peter S. Voss, President, has been Chief Executive Officer and a
Director of Nvest Corporation (formerly New England Investment Companies, Inc.)
since October 1992, Chairman of the Board of Nvest Corporation since December
1992, Director of The New England since March 1993, Chairman of the Board of
Directors of NEIC's subsidiaries other than Loomis, Sayles & Company, L.P.
("Loomis") and Back Bay Advisors, L.P. ("Back Bay"), where he serves as a
Director, and Chairman of the Board of Trustees of all of the mutual funds in
the TNE Fund Group and the Zenith Funds. G. Neil Ryland, Executive Vice
President, Treasurer and Chief Financial Officer Nvest Corporation since July
1993. Edward N. Wadsworth, Executive Vice President, General Counsel, Clerk and
Secretary of Nvest Corporation since December 1989, and Secretary of Westpeak
and Draycott and the Treasurer of Nvest Corporation. Lorraine C. Hysler has been
Secretary of RTAM since July 1994, Assistant Secretary of NEIC since September
1993, and Vice President of Reich & Tang Mutual Funds since July 1994. Richard
E. Smith, III has been a Director of RTAM since July 1994, and President and
Director of RTAM since July 1994, President and Chief Operating Officer of the
Reich & Tang Capital Management Group since July 1994. Steven W. Duff has been a
Director of RTAM since October 1994, and President and Chief Executive Officer
of Reich & Tang Mutual Funds since August 1994. Mr. Duff is President and a
Director/Trustee of 14 funds in the Reich & Tang Fund Complex, President of Back
Bay Funds, Inc., Director of Pax World Money Market Fund, Inc., President and
Chief Executive Officer of Tax Exempt Proceeds Fund, Inc., and Executive Vice
President of Reich & Tang Equity Fund, Inc. Bernadette N. Finn has been Vice
President/Compliance of RTAM since July 1994, and Vice President of Reich & Tang
Mutual Funds since July 1994. Ms. Finn is also Secretary of 14 funds in the
Reich & Tang Complex and a Vice President and Secretary of 5 funds in the Reich
& Tang Fund Complex. Richard DeSanctis has been Treasurer of RTAM since July
1994, Assistant Treasurer of NEIC since September 1993, Treasurer of the Reich &
Tang Mutual Funds since July 1994. Mr. DeSanctis is also Treasurer of 18 funds
in the Reich & Tang Fund Complex and is Vice President and Treasurer of Cortland
Trust, Inc. Richard I. Weiner has been Vice President of RTAM since July 1994,
Vice President of NEIC since September 1993, and Vice President of Reich & Tang
Asset Management L.P. Capital Management Group since July 1994. Mr. Weiner has
served as a Vice President of Reich & Tang, Inc. since September 1982. Rosanne
Holtzer has been Vice President of the Mutual Funds division of the Manager
since December 1997. Ms. Holtzer was formerly Manager of Fund Accounting for the
Manager with which she was associated with from June 1986. In addition she is
also Assistant Treasurer of 19 funds in the Reich & Tang Fund Complex.
Item 27. Principal Underwriters.
(a) Reich & Tang Distributors, Inc., the Registrant's Distributor, is
also distributor for Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund,
Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund,
Georgia Daily Municipal Income Fund, Institutional Daily Income
Fund, New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily
C-4
<PAGE>
Municipal Income Fund, Inc., Pax World Money Market Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Reich & Tang Equity
Fund, Inc., Short Term Income Fund, Inc., Tax Exempt Proceeds
Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.
(b) The following are the directors and officers of Reich & Tang
Distributors Inc. The principal business address of Messrs. Voss,
Ryland, and Wadsworth is 399 Boylston Street, Boston,
Massachusetts 02116. For all other persons the principal address
is 600 Fifth Avenue, New York, New York 10020.
Positions and Offices Positions and Offices
Name with the Distributor with the Registrant
Peter S. Voss Director None
G. Neal Ryland Director None
Edward N. Wadsworth Executive Officer None
Richard E. Smith III President None
Peter DeMarco Executive Vice President None
Steven W. Duff Director President
Bernadette N. Finn Vice President Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Treasurer Treasurer
Richard I. Weiner Vice President None
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of the Registrant or
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, the Registrant's custodian.
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
Not applicable.
C-5
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Post-Effective Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 29th day of
December, 1999.
SHORT TERM INCOME FUND, INC.
By: /s/ Steven Duff
Steven Duff
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
(1) Principal Executive Officer
/s/ Steven Duff
Steven Duff President and Director 12/29/99
(2) Principal Financial and
Accounting Officer
/s/ Richard De Sanctis
Richard De Sanctis Treasurer 12/29/99
(3) Majority of Directors
/s/ Steven Duff
Steven Duff Director 12/29/99
W. Giles Mellon (Director) *
Robert Straniere (Director) *
Yung Wong (Director) *
By: /s/ Bernadette N. Finn
Bernadette N. Finn
*Attorney-in-Fact 12/29/99
* See exhibit (p)
Exhibit (a)
ARTICLES OF INCORPORATION
OF
SHORT TERM INCOME FUND, INC.
FIRST: (1) the name of the incorporator is William Goodwin.
(2) The incorporator's post office address is 63 Wall Street,
New York, New York 10005.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in
these Articles of Incorporation under the general laws of the State of Maryland.
SECOND: The name of the corporation (hereinafter celled the
"Corporation") is Short Tern Income Fund, Inc.
THIRD: The purposes for which the Corporation is formed are:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe or, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise dispose of notes, 'bills,
bonds, debentures and other negotiable or non-negotiable
instruments, obligations and evidences of indebtedness issued or
guaranteed as to principal and interest by the United States
Government, or any agency or instrumentality thereof, any State
or local government, or any agency or instrumentality thereof, or
any other securities of any kind issued by any corporation or
other issuer organized under the laws of the United States or any
State,
<PAGE>
territory or possession thereof or otherwise, to pay for the
sane in cash or by the issue of stock, including treasury stock,
bonds or notes or the Corporation or otherwise; and to exercise
any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind
and description, including and without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more persons,: firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any said investments;
(c) to conduct research and investigations in respect of
securities, organizations, business and general business and
financial conditions in the United States of America and
elsewhere for the purpose of obtaining information pertinent to
the investment and employment of the assets of. the Corporation
and to procure any or all of the foregoing to be done by others
as independent contractors and to pay compensation therefor;
(d) to borrow money or otherwise obtain credit and to secure
the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Corporation, and to endorse, guarantee
or undertake the performance of any obligation, contract or
engagement of any other person, firm, association or corporation;
(e) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, shares of Common Stock of the Corporation,
including
-2-
<PAGE>
shares of Common Stock of the Corporation in fractional
denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of shares of Common Stock
of the Corporation, any funds or property-of the Corporation,
whether capital or surplus or otherwise, to the full extent now
or hereafter permitted by the laws of the State of Maryland and
by these Articles of Incorporation;
(f) to conduct its business, promote its purposes, and carry
on its operations in any and all of its branches and maintain
offices both within and without the State of Maryland, in any and
all States of the United States of America, in the District of
Columbia, and in any or all commonwealths, territories,
dependencies, colonies, possessions, agencies, or
instrumentalities of the United States of America and of foreign
governments;
(g) to carry out all or any part o(pound) the foregoing
purposes or objects as principal or agent, or in conjunction with
any other person, firm, association, corporation or other entity,
or as a partner or member of a partnership, syndicate or joint
venture or otherwise, and in any part of the world to the same
extent and as fully as natural persons night or could do;
(h) to have and exercise all of the powers and privileges
conferred by the laws of the State of Maryland upon corporations
formed under the laws of such state; and
(i) to do any and all such further acts and things and to
exercise any and all such further powers and privileges as may be
necessary, incidental, relative, conducive, appropriate or
desirable for the foregoing purposes.
-3-
<PAGE>
The enumeration herein of the objects and purposes of the Corporation
shall be construed as powers as well as objects and purposes and shall not be
deemed to exclude by inference any powers, objects or purposes which the
Corporation is empowered to exercise, whether expressly by force of the laws of
the State of Maryland now or hereafter in effect, or impliedly by the reasonable
construction of the- said laws.
FOURTH: The post office address of the principal office of the
Corporation within the State of Maryland is 1300 Mercantile Bank & Trust
Building, 2 Hopkins Plaza, Baltimore, Maryland 21201, in care of United States
Corporation Company.
The resident agent of the Corporation in the State of Maryland is
United States Corporation Company, 1300 Mercantile Bank & Trust Building, 2
Hopkins Plaza, Baltimore, Maryland 21201.
FIFTH: The total number of shares of stock of all classes which the
Corporation shall have authority to issue is One Billion (1,000,000,000) all of
which shall be Common Stock having a par value of one mil ($.OO1) per share and
an aggregate par value of One Million Dollars ($1,000,000). Such shares and the
holders thereof shall be subject to the following provisions:
(a) Each holder of Common Stock of the Corporation, upon
request to the Corporation (accompanied by surrender of the
appropriate stock certificate or certificates in proper form for
transfer, if any certificates have been issued to represent such
shares) shall be entitled to require the Corporation to redeem,
to the extent that the Corporation ma lawfully effect such
redemption under the laws of the State of Maryland, all or any
part of the shares of Common Stock standing in the name of such
holder on the books of the Corporation at a price per share equal
to the net asset value per share computed in accordance with
Article NINTH hereof. Payment of the aggregate such price may be
made in cash or, at the option of the Corporation, wholly or
partly in such portfolio securities of the Corporation as the
Corporation shall select.
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<PAGE>
(b)(i) The Corporation shall be entitled but not required to
redeem shares of Common Stock from any stockholder or
stockholders, to the extent and at such times as the Board of
Directors shall, in its absolute discretion, determine to be
necessary or advisable to prevent the Corporation from qualifying
as a "personal holding company", within the meaning of the
Internal Revenue Code of 1954, as amended from time to time.
Notice of such redemption shall be given in accordance with
subparagraph (iii) of this paragraph (b).
(ii) The Corporation shall be entitled to purchase shares of
Common Stock, to the extent that the Corporation may lawfully
effect such purchase under the laws of the State of Maryland,
upon such terms and conditions and for such consideration as the
Board of-Directors shall deem advisable, by agreement with the
stockholder at a price not exceeding the net asset value per
share computed in accordance with Article NINTH hereof.
(iii) If any purchase or redemption under subparagraph (i)
of this paragraph (b) is upon notice, the notice shall be in
writing personally delivered or deposited in the mail at least
thirty days prior to such purchase or redemption. If mailed the
notice shall be addressed to the stockholder at his post office
address as shown on the books of the Corporation, and sent by
certified or registered mail, postage prepaid. The price for
shares acquired by the Corporation pursuant to subparagraph (i)
of this paragraph (b) shall be paid in cash in an amount equal to
the net asset value of such shares, computed in accordance with
Article NINTH hereof.
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<PAGE>
(c) Payment by the Corporation for shares of Common Stock of
the Corporation surrendered to it for redemption shall be made by
the Corporation within seven business days of such surrender out
of the funds legally available therefor, provided that the
Corporation may suspend the right of the holders of Common Stock
of the Corporation to redeem shares of Common Stock and may
postpone the right of such holders to receive payment for any
shares (i) for any period during which the New York Stock
Exchange, Inc. is closed other than customary weekend and holiday
closings or during which trading on the New York Stock Exchange,
Inc. is restricted, as determined by the rules and regulations of
the Securities and Exchange Commission or any successor thereto;
(ii) for any period during which an emergency, as determined by
the rules and regulations of the Securities and Exchange
Commission or any successor thereto, exists as a result of which
disposal by the Corporation of securities owned by it is not
reasonably practicable or as a result of which it is not
reasonably practicable for the Corporation to fairly determine
the value of its net assets; or (iii) for such other periods as
the Securities and Exchange Commission or any successor thereto
may by order permit for the protection of security holders of the
Corporation.
(d) For the purpose of allowing the net asset value per
share of the Corporation's Common Stock to remain constant, the
Corporation shall be entitled to declare, pay and credit as
dividends daily the net income (which may include or give effect
to realized and unrealized gains and losses, as determined in
accordance with the Corporation's accounting and portfolio
valuation
-6-
<PAGE>
policies) of the Corporation. If the amount so determined
for any day is negative, the Corporation shall be entitled,
without the payment of monetary compensation but in consideration
of the interest of the Corporation and its shareholders in
maintaining a constant net asset value per share, to redeem pro
rata from all the shareholders of record at the time of such
redemption (in proportion to their respective holdings of shares)
such number of the Corporation's outstanding shares of Common
Stock, or fractions thereof, as shall be required to permit the
net asset value per share to remain constant.
(e) The right of any holder of Common Stock of the
Corporation purchased or redeemed by the Corporation as provided
in paragraphs (a), (b), or (d) of this Article FIFTH to receive
dividends thereon and all other rights of such holder with
respect to such shares shall terminate at the time as of which
the purchase or redemption price of such shares is determined,
except the right of such holder to receive (i) the purchase or
redemption price of such shares from the Corporation or its
designated agent and (ii) any dividend or distribution to which
such holder has previously become entitled as the record holder
of such shares on the record date for such dividend or
distribution.
(f) The Corporation may issue shares of Common Stock in
fractional denominations to the same extent as its whole shares,
and shares in fractional denominations shall be shares of Common
Stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including
without limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate upon
liquidation of the Corporation, excluding, however, the right to
receive a stock certificate representing such fractional shares.
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<PAGE>
(g) In the absence of any specification as to the purpose
for which such shares of Common Stock of the Corporation are
redeemed or purchased by it, all shares so redeemed or purchased
shall be deemed to be retired in the sense contemplated by the
laws of the State of Maryland and the number of authorized shares
of Common Stock of the Corporation shall not be reduced by the
number of any shares redeemed or purchased by it.
(h) No holder of any shares of Common Stock of the
Corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any such shares which the
Corporation shall issue or pro--pose to issue; and any and all of
the shares of Common Stock of the Corporation, whether now or
hereafter authorized, may be issued, or may be reissued or
transferred if the same have been reacquired and have treasury
status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration,
and on such terms, as the Board of Directors in its discretion
nay determine, without first offering same, or any thereof, to
any said holder.
(i) All persons who shall acquire stock or other securities
of the Corporation shall acquire the same subject to the
provisions of these Articles of Incorporation, as from time to
time amended.
SIXTH: The number of directors of the Corporation, until such number
shall be increased or decreased pursuant to the By-Laws of the Corporation,
shall be two. The number of directors shall never be less than the number
prescribed by the General Corporation Law of the State of Maryland and shall
never be more than twenty. The names of the persons who shall act as directors
of the Corporation until the first annual meeting or until their successors are
duly chosen and qualify are as follows:
Joseph H. Reich
Oscar L. Tang
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<PAGE>
SEVENTH; The following provisions are inserted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the Board
of Directors and stockholders,
(a) The business and affairs of the Corporation shall be
managed by the Board of Directors which shall have and may
exercise all powers of the Corporation except those powers which
are by law, by these Articles of Incorporation or by the By-Laws
conferred upon or reserved to the stockholders. In furtherance
and not in limitation of the powers conferred by law, the Board
of Directors shall have power:
(1) to make, alter and repeal by-laws of the Corporation;
(2) to issue and sell, from time to time, shares of Common
Stock of the Corporation in such amounts and on such terms and
conditions, and for such amount and kind of consideration as the
Board of Directors shall determine, provided that the
consideration per share to be received by the Corporation shall
be not less than the greater of the net asset value per share of
Common Stock outstanding at such time computed in accordance with
Article NINTH hereof or the par value thereof;
(3) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or
reserves for working capital or for any other proper purpose or
purposes, and to reduce, abolish or add to any such reserve or
reserves from time to time as said Board of Directors may deem to
be in the best interests of the Corporation; and to determine in
its discretion what part of the assets of the Corporation
available for dividends in excess of such reserve or reserves
shall be declared in dividends and paid to the stockholders of
the Corporation; and
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(4) from time to time to determine to what extent and at
what times and places and under what conditions and regulations
the accounts, books and records of the Corporation, or any of
them, shall be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect -any account or book
or document o(pound) the Corporation, except as conferred by the
laws of the State of Maryland, unless and until authorized so to
do by resolution of the Board of Directors or of the stockholders
of the Corporation.
(b) Notwithstanding any provision of the General Corporation
Law of the State of Maryland requiring a greater proportion than
a majority of the votes entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized
upon the concurrence of a majority of the aggregate number of
votes entitled to be cast thereon subject to any applicable
requirements of the Investment Company Act of 1940, as from time
to time in effect, or rules or orders of the Securities and
Exchange Commission or any successor thereto.
(c) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the direction of
the Board of Directors, as to the amount of the assets, debts,
obligations, or liabilities of the Corporation, as to the amount
of any reserves or charges set up and the propriety thereof, as
to the time of or purpose for creating such reserves or charges,
as to the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required
to be paid or discharged), as to the price or closing bid or
asked price of any investment owned or held by the Corporation,
as
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<PAGE>
to the market value of any investment or fair value of any other
asset of the Corporation, as to the number of shares of the
Corporation outstanding, as to the estimated expense to the
Corporation in connection with purchases o-(pound) its shares, as
to the ability to liquidate investments in orderly fashion, or as
to any other matters relating to the issue, sale, purchase and/or
other acquisition or disposition of investments or shares of the
Corporation, shall be final and conclusive and shall be binding
upon the Corporation and all holders of its shares, past, present
and future, and shares of the Corporation are issued and sold on
the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(d)- Except to the extent prohibited by the Investment
Company Act of 1940, as amended, or rules, regulations or orders
thereunder promulgated by the Securities and Exchange Commission
or any successor thereto or by the By-Laws of the Corporation, a
director, officer or employee of the Corporation shall not be
disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the
Corporation be void or voidable by reason of the fact that any
director, officer or employee or any firm of which any director,
officer or employee is a member or any corporation of which any
director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or
contract; provided that in case a director, or a firm or
corporation of which a director is a member, stockholder, officer
or director is so interested, such fact shall be disclosed to or
shall have been known by the Board of Directors or a majority
thereof; and any director of the Corporation who is so
interested, or who is a member, stockholder, officer or director
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<PAGE>
of such firm or corporation, may be counted in determining the
existence of a quorum at any meeting of the Board o(pound)
Directors of the Corporation which shall authorize any such
transaction or contract, with like force and effect as if he were
not such director, or member, stockholder, officer or director of
such firm or corporation.
(e) Specifically and without limitation of the foregoing
paragraph (d) but subject to the exception therein prescribed,
the Corporation may enter into management or advisory,
underwriting, distribution and administration contracts and other
contracts, and nay otherwise do business, with the firm of Reich
& Tang, Inc., and any parent, subsidiary or affiliate of such
firm or any affiliate of any such affiliate, or the stockholders,
directors, officers and employees thereof, notwithstanding that
the Board of Directors of the Corporation may be composed in part
of directors, officers or employees of said firm and/or its
parents, subsidiaries or affiliates and that officers of the
Corporation may have been, be or become directors, officers, or
employees of said firm and/or its parents, subsidiaries or
affiliates, may deal freely with one another, and neither such
management or advisory, underwriting, distribution or
administration contracts nor any ether contract or transaction
between the Corporation and such firm and/or its parents,
subsidiaries or affiliates shall be invalidated or in any way
affected thereby, nor shall any director or officer of the
Corporation be liable to the Corporation or to any stockholder or
creditor thereof or to any person for any loss incurred by it or
him under or by reason of such contract or transaction; provided
that nothing herein shall protect any director or officer of the
Corporation against any liability to the Corporation or to its
security holders to which he would
-12-
<PAGE>
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office; and provided always that such contract
or transaction shall have been on terms that were not unfair to
the Corporation at the time at which it was entered into.
EIGHTH: (1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in conjunction
with such action, suit or proceedinq if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
terminiation of any action, suit or proceeding by judgement, order,
settlement, onviction, or upon a plea of solo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith or in a manner which he resonably belived to be in or not
opposed to the best interests of the Corporation and, with
respect to any crininal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a party
or i? threatened to be made a party to any threatened, pending or completed
actior or suit by or in the right of the Corporation to procure a judgement in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
-13-
<PAGE>
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to bo liable for negligence or misconduct in the
performance of his duty to the Corporation, unless and only to the extent that
the court in which such action or suit was brought, or a court of equity in the
country in which the Corporation has its principal office, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
(3) To the extent that a director, officer, employee or agenct of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraohs (1) and (2) of this Article
EIGHTH or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(4) Any indemnification under paragraphs (1) and (2) of this Article EIGHTH
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has not met
the applicable standard of conduct set forth in such paragraphs. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion or (iii) by the stockholders provided, however, that if there is
neither a court determination on the merits that such director, officer,
employee or agent is not liable in such action, suit or proceeding nor a court
determination that such director, officer, employee or agent was not guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, then such determination shall be
made by an independent legal counsel (other than a counsel who performs legal
services for the Corporation, its investment adviser or principal underwriter,
or persons affiliated with these persons).
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<PAGE>
(5) Expenses (including attorneys' fees) incurred in defending a
civil or crininal action, suit or proceeding may be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding if
authorized by the Board of Directors in the specific case, upon receipt
of an undertaking, secured by a surety bond or other insurance, by or on behalf
of the director, officer, employee or agent reasonably assuring that such
amount will be repaid unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in this Article
EIGHTH.
(6) The indemnification provided by this Article EIGHTH shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-laws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(7) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against the liability under
the provisions of these Articles of Incorporation or the general laws of the
State of Maryland.
(8) Nothing contained in this Article EIGHTH shall protect or purport to
protect any director or officer of the Corporation against any liability to the
Corporation or to its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
(9) For the purposes of this Article-EIGHTH, references to "the
Corporation" include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence
-15-
<PAGE>
had continued, would have had power and authority to indemnify its directors,
officers, employees or agents as well as resulting or surviving corporation; so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such constituent
corporation ss a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article EIGHTH with respect to the
resulting or surviving corporation as he would have with respect to such a
constituent corporation if its separate existence had continued.
NINTH: For the purposes of the computation of net asset value
referred to in these Articles of Incorporation, the following rules shall
apply:
(a) The net asset value of each share of Common Stock of the
Corporation issued or sold at its net asset value shall be the net
asset value per share of the Corporation's Common Stock when next
determined as provided in paragraph (d) of this Article NINTH
following acceptance by the Corporation of the subscription or other
agreement with respect to the issue or sale of such share.
(b) The net asset value of each share of Common Stock of the
Corporation redeemed by the Corporation at the request of its holder
shall be the net asset value per share of the Corporation's Common
Stock when next determined as provided in paragraph (d) of this
Article NINTH following the time the Corporation receives a request
for redemption of such share, in good order with all appropriate
documentation including stock certificates, if any, duly endorsed for
transfer.
(c) The net asset value of each share of Comnon Stock of the
Corporation purchased or redeemed by it otherwise than upon request
for redemption by its holder shall be the net asset value per share of
the Corporation's Common Stock when next determined as provided in
paragraph (d) of this Article NINTH following the Corporation's
determination or
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<PAGE>
agreement to purcahse or redeem such tshare, the expiration of any
notice period and fulfillment of any other conditions precedent to
such purchase or redemption, or such lower price per share as may be
specified in the agreement, if any, with the stockholder for the
purchase or redemtpion of his shares.
(d) The net asset value of a share of Common Stock of the
Corporation as at the time of a particular determination shall be the
quotient obtained by dividing the value at such time of the net assets
of the Corporation (i.e., the value of the assets of the Corporation
less its liabilities exclusive of capital stock and surplus) by the
total number of shares of Common Stock outstanidng at such time, all
determined and computed as provided in the Corporation's By-Laws.
(e) The Corporation shall determine net asset value per share of
its Common Stock on such days and at such times as prescribed by the
rules and regulations of the Securities and Exchange Commission or any
successor thereto. The Corporation may also determine such net asset
vlue at other times.
(f) The Corporation may suspend the determination of net asset
value during any period when it may suspend the right of its
stockholders to require the Corportion to redeem their shares.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained int hese Articles of Incorporation or in any
amendment hereto in the manner now or hereafter prescribed by the laws of the
State of Maryland, and all rights conferred upon stockholders herein are granted
subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation Law of the State of Maryland and does hereby acknowledge that
said adoption and signing are his act.
/s/ William Goodwin
--------------------
William Goodwin
Dated: August 21, 1979
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SHORT TERM INCOME FUND, INC.
ARTICLES OF AMENDMENT
SHORT TERM INCOME FUND, INC., a Maryland corporation having its
principal office in Maryland in the City of Baltimore (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation
of Maryland that:
FIRST: The Articles of Incorporation of the Corporation are hereby
amended as follows:
1. Paragraph (e) of Article THIRD of the Articles of Incorporation is
amended by striking the phrase "Common Stock" wherever it appears in that
paragraph and inserting in lieu thereof the word "stock".
2. Article FIFTH of the Articles of Incorporation is amended to read
in its entirety as follows:
"FIFTH: (1) The total number of shares of stock
of all classes which the Corporation shall have authority
to issue is ten billion (10,000 ,"000,000), all of which
stock shall have a par value of one mill ($.001) per share
and an aggregate par value of Ten Million Dollars
($10,000,000).
(2)(a) The Board of Directors of the Corporation
is authorized to classify or to reclassify, from time to
time, any
<PAGE>
unissued shares of stock of the Corporation, whether now or
hereafter authorized, by setting, changing or eliminating
the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, and
qualifications or terms and conditions of or rights to
require redemption of the stock and, pursuant to such
classification or reclassification, to increase or decrease
the number of authorized shares of any class, but the
number of shares of any class shall not be reduced by the
Board of Directors below the number of shares thereof then
outstanding.
"(b) Without limiting the generality of the
foregoing, the dividends and distributions of investment
income and capital gains with respect to the stock of the
Corporation, and with respect to each class that thereafter
may be created, shall be in such amount as may be declared
from time to time by the Board of Directors, and such
dividends and distributions may vary from class to class to
such extent and for such purposes as the Board of Directors
may deem appropriate, including, but not limited to, the
purpose of complying with requirements of regulatory or
legislative authorities.
"(3) Until such time as the Board of Directors shall provide otherwise in
accordance with paragraph (2) of this Article FIFTH, seven billion
(7,000,000,000) of the authorized shares of stock of the Corporation are
designated as Money Market Portfolio Common Stock and three billion
(3,000,000,000) of such shares are designated as U.S. Government Portfolio
Common Stock. Each share of the Corporation's Common Stock issued and
outstanding immediately prior to the effectiveness of this paragraph (3) shall
be redesignated Money Market Portfolio Common Stock, and any certificate for
shares of the Corporation's Common Stock then outstanding shall be deemed to
represent the same number of shares of Money Market Portfolio Common Stock.
Shares of Money Market Portfolio Common Stock and of U.S. Government Portfolio
Common Stock and the holders thereof shall be subject to the following
provisions.
2
<PAGE>
"(a) As more fully set forth hereafter, the
assets and liabilities and the income and expenses of each
class of the Corporation's stock shall be determined
separately and, accordingly, the net asset value, the
dividends payable to holders, and the amounts distributable
in the event of dissolution of the Corporation to holders,
of shares of the Corporation's stock may vary from class to
class. Except for these differences and certain other
differences hereafter set forth, each class of the
Corporation's stock shall have the same preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of and rights to require redemption.
"(b) All consideration received by the
Corporation for the issue or sale of shares of a class of
the Corporation's stock, together with all income,
earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any
reinvestment of such proceeds ir) whatever form the same
may be, shall irrevocably belong to that class for all
purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the
Corporation. Such consideration, income, earnings, profits,
and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds, in
whatever form the same may be, are herein referred to as
"assets belonging to" that class.
"(c) The assets belonging to a class of the
Corporation's stock shall be charged with the liabilities
of the Corporation with respect to that class and with-that
class' share of the liabilities of the Corporation not
attributable to any particular class, in the latter case in
the proportion that the net asset value of that class
(determined without regard to such liabilities) bears to
the net asset value of all classes of the Corporation's
stock (determined without regard to such liabilities) as
determined in accordance with Article NINTH hereof. The
determination of the Board of Directors shall be conclusive
as to the allocation of liabilities,
3
<PAGE>
including accrued expenses and reserves, ar assets to a
particular class or classes.
"(d) Each holder of stock of the Corporation,
upon request to the Corporation (accompanied by surrender
of the appropriate stock certificate or certificates in
proper form for transfer, if any certificates have been
issued to represent such shares) shall be entitled to
require the Corporation to redeem, to the extent that the
Corporation may lawfully effect such redemption under the
laws of the State of Maryland, all or any part of the
shares of stock standing in the name of such holder on the
books of the Corporation at a price per share equal to the
net asset value per share computed in accordance with
Article NINTH hereof. Payment of the aggregate such price
may be made in cash or, at the option of the Corporation,
wholly or partly in such portfolio securities of the
Corporation as the Corporation shall select.
"(e)(i) The Corporation shall be entitled but
not required to redeem shares of stock from any stockholder
or stockholders, to the extent and at such times as the
Board of Directors 'shall, in its absolute discretion,
determine to be necessary or advisable to prevent the
Corporation from qualifying as a "personal holding
company", within the meaning of the Internal Revenue Code
of 1954, as amended from time to time. Notice shall be
given in accordance with subparagraph (iii) of this
paragraph (e).
"(ii) The Corporation shall be entitled to
purchase shares of stock, to the extent that the
Corporation may lawfully effect such purchase under the
laws of the State of Maryland, upon such terms and
conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the
stockholder at a price not exceeding the net asset value
per share computed in accordance with Article NINTH hereof.
"(iii) If any purchase or redemption under
subparagraph (i) of this paragraph (e) is upon notice, the
notice shall be in writing personally delivered or
deposited in the mail. If mailed the notice shall be
4
<PAGE>
addressed to the stockholder at his post office address as
shown on the books of the Corporation, and sent by
certified or registered mail, postage prepaid. The price
for shares acquired by the Corporation pursuant to
subparagraph (i) of this paragraph (e) shall be paid in
cash in an amount equal to the net asset value of such
shares, computed in accordance with Article NINTH hereof.
"(f) Payment by the Corporation for shares of
stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven business days
of such surrender out of the funds legally available
therefor, provided that the Corporation may suspend the
right of the holders of stock of the Corporation to redeem
shares of stock and may postpone the right of such holders
to receive payment for any shares (i) for any period during
which the New York Stock Exchange is closed other than
customary weekend and holiday closings or during which
trading on the New York Stock Exchange is restricted, as
determined by the rules and regulations of the Securities
and Exchange Commission or any successor thereto; (ii) for
any period during which an emergency, as determined by the
rules and regulations of the Securities and Exchange
Commission or any successor thereto, exists as a result of
which disposal by the Corporation of securities owned by it
is not reasonably practicable or as a result of which it is
not reasonably practicable for the Corporation to fairly
determine the value of its net assets; or (iii) for such
other periods as the Securities and Exchange Commission or
any successor thereto may by order permit for the
protection of stockholders of the Corporation.
"(g) Shares of each class of stock shall be
entitled to such dividends or distributions, in stock or
.in cash or both, as may be declared from time to time by
the Board of Directors, acting in its sole discretion, with
respect to such class, provided that dividends or
distributions shall be paid on shares of a class of stock
only out of lawfully available assets belonging to that
class.
5
<PAGE>
"(h) For the purpose of allowing the net asset
value per share of a class of the Corporation's stock to
remain constant, the Corporation shall be entitled to
declare, pay and credit as dividends daily the net income
(which may include or give effect to realized and
unrealized gains and losses, as determined in accordance
with the Corporation's accounting and portfolio valuation
policies) of the Corporation allocated to that class. If
the amount so determined for any day is negative, the
Corporation shall be entitled, witnout the payment of
monetary compensation but in consideration of the interest
of the Corporation and its stockholders in maintaining a
constant net asset value per share of the class, to redeem
pro rata from all the stockholders of record of that class
at the time of such redemption (in proportion to their
respective holdings of shares of that class) such number of
the Corporation's outstanding shares of that class, or
fractions thereof, as shall be required to permit the net
asset value per share of the class to remain constant.
"(i) The right of any holder of stock of the
Corporation purchased or redeemed by the Corporation as
provided in paragraphs (d), (e) or (h) of this Article
FIFTH to receive dividends thereon and all other rights of
such holder with respect to such shares shall terminate at
the time as of which the purchase or redemption price of
such shares is determined, except the right of such holder
to receive (i) the purchase or redemption price of such
shares from the Corporation or its designated agent and
(ii) any dividend or distribution to which such holder has
previously become entitled as the record holder of such
shares on the record date for such dividend or
distribution.
"(j) In the. event of the liquidation or
dissolution of the Corporation, the stockholders of a class
of the Corporation's stock shall be entitled to receive, as
a class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that
class. The assets so distributable to the stockholders of a
class shall be distributed among such stockholders
6
<PAGE>
in proportion to the number of shares of that class held by
them and recorded on the books of the Corporation. In the
event that there are any assets available for distribution
that are not attributable to any particular class of stock,
such assets shall be allocated to all classes in proportion
to the net asset value of the respective classes and then
distributed to the holders of stock of each class in
proportion to the net asset value of the shares of that
class held by the respective holders.
"(k) On each matter submitted to a vote of the
stockholders, each holder of a share of stock shall be
entitled to one vote for each such share standing in his
name on the books of the Corporation irrespective of the
class thereof; provided, however, that to the extent class
voting is required by the Investment Company Act of 1940 or
regulations thereunder, as from time to time amended, or
the laws of the State of Maryland as to any such matter,
those requirements shall apply.
"(1) The Corporation may issue shares of stock
in fractional denominations to the same extent as its whole
shares, arid shares in fractional denominations shall be
shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole
shares, including, without limitation, the right to vote,
the right to receive dividends and distributions, and the
right to participate upon liquidation of the Corporation,
excluding, however, the right to receive a stock
certificate representing such fractional shares.
"(m) In the absence of any specification as to
the purpose for which such shares of stock of the
Corporation are redeemed or purchased by it, all shares so
redeemed or purchased shall be deemed to be retired in the
sense contemplated by the laws of the State of Maryland and
the number of authorized shares of stock of the Corporation
shall not be reduced by the number of any shares redeemed
or purchased by it. Until their classification is changed
in accordance with section (2) of this Article FIFTH, all
shares so redeemed or purchased shall continue to belong to
the class or series to which they belonged at the time of
their redemption or purchase.
7
<PAGE>
"(4) No holder of any shares of stock of the
Corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any such shares which the
Corporation shall issue or propose to issue; and any and
all of the shares of stock of the Corporation, whether now
or hereafter authorized, may be issued, or may be reissued
or transferred if the same have been reacquired and have
treasury status, by the Board of Directors to such persons,
firms, corporations' and associations, and for such lawful
consideration, and on such terms, as the Board of Directors
in its discretion may determine, without first offering
same, or any thereof, to any said holder.
"(5) All persons who shall acquire stock or
other securities of the Corporation shall acquire the same
subject to the provisions of these Articles of
Incorporation, as from time to time amended."
3. Paragraph (a)(2) of Article SEVENTH of the Articles of
Incorporation is amended by striking the phrase "Common Stock" where it first
appears in that paragraph and inserting in lieu thereof the words "any class of
stock" and by striking the phrase "Common Stock" where it second appears in that
paragraph and inserting in lieu thereof the words "that class of stock".
4. Paragraph (b) of Article SEVENTH of the Articles of Incorporation
is amended by adding the words "of all classes or of any class of the
Corporation's stock" immediately following the word "votes" in the fourth and
eighth lines thereof.
5. Article SEVENTH of the Articles of Incorporation is amended by
adding the following new paragraph as paragraph (f) to read in its entirety as
follows:
"(f) The presence in person or by proxy of the
holders of one-third of the shares of stock of the
Corporation entitled to vote (without
8
<PAGE>
regard to class) shall constitute a quorum at any meeting
of the stockholders, except with respect to any matter
which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one
or more classes of stock, in which case the presence in
person or by proxy of the holders of one-third of the
shares of stock of each class required to vote as a class
on the matter shall constitute a quorum."
6. Article NINTH of the Articles of Incorporation is amended to read
in its entirety as follows:
"NINTH: For the purposes of the computation of
net asset value referred to in these Articles of
Incorporation, the following rules shall apply:
"(a) The net asset value of each share of a
class of stock of the Corporation issued or sold at its net
asset value shall be the net asset value per share of that
class when next determined as provided in paragraph (d) of
this Article NINTH following acceptance by the Corporation
of the subscription or other agreement with respect to the
issue or sale of such share.
"(b) The net asset value of each share of a
class of stock of the Corporation redeemed by the
Corporation at the request of its holder shall be the net
asset value per share of that class when next determined as
provided in paragraph (d) of this Article NINTH following
the time the Corporation received a request for redemption
of such share, in good order with all appropriate
documentation including stock certificates, if any, duly
endorsed for transfer.
"(c) The net asset value of each share of a
class of stock of the Corporation purchased or redeemed by
it otherwise than upon request for redemption by its holder
shall be the net asset value per share of that class when
next determined as provided in paragraph (d) of this
Article NINTH following the Corporation's determination or
agreement to purchase or redeem such share, the expiration
of any notice period and fulfillment of any other
conditions precedent to such purchase or redemption, or
such lower price per share as may be specified in the
agreement, if any, with the
9
<PAGE>
stockholder for the purchase or redemption of his shares.
"(d) The net asset value of a share of a class
of stock of the Corporation as at the time of a particular
determination shall be the quotient obtained by dividing
the value at such time of the net assets of that class
(i.e., the value of the assets belonging to that class less
the liabilities charged to that class exclusive of capital
stock and surplus) by the total number of shares of that
class outstanding at such time, all determined and computed
as provided in the Corporation's By-Laws.
"(e) The Corporation shall determine net asset
value per share of a class of its stock on such days and at
such times as prescribed by the rules and regulations of
the Securities and Exchange Commission or any successor
thereto. The Corporation may also determine such net asset
value at other times.
"(f) The Corporation may suspend the
determination of net asset value during any period when it
may suspend the right of its stockholders to require the
Corporation to redeem their shares."
SECOND: The board of directors of the Corporation on September 17,
1982, duly adopted a resolution in which was set forth the foregoing amendment
to the Articles of Incorporation declaring that the said amendment of the
Articles of Incorporation as proposed was advisable and directing that it be
submitted for action thereon by the stockholders of the Corporation at the
annual meeting to be held on November 19, 1982.
THIRD: Notice setting forth a summary of the changes
to be effected by said amendment of the Articles of Incorporation and stating
that a purpose of the meeting of the stock-
10
<PAGE>
holders would be to take action thereon was given, as required by law, to all
stockholders entitled to vote thereon. The amendment of the Articles of
Incorporation of the Corporation as hereinabove set forth was approved by the
stockholders of the Corporation at said meeting by the affirmative vote of a
majority of the votes entitled to be cast thereon pursuant to the provisions of
paragraph (b) of Article SEVENTH of the Articles of Incorporation which provides
that certain actions may be taken or authorized upon the concurrence of a
majority of the aggregate number of votes entitled to be cast thereon.
FOURTH: The amendment of the Articles of Incorporation of the
Corporation as hereinabove set forth has been duly advised by the board of
directors and approved by the stockholders of the Corporation.
FIFTH: (a) The total number of shares of stock which the Corporation
was heretofore authorized to issue is two billion (2,000,000,000) shares, all of
one class, par value of one mill ($.001) per share with an aggregate par value
of Two Million Dollars ($2,000,000).
(b) The total number of shares of all classes of stock is increased
by this amendment to ten billion (10,000,000,000) shares, par value of one mill
($.001) per share with an aggregate par value of Ten Million Dollars
($10,000,000), consisting of seven billion (7,000,000,000) shares of Money
Market Portfolio Common Stock and three
11
<PAGE>
billion (3,000,000,000) shares of U.S. Government Portfolio Common Stock.
(c) The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of each class of the authorized capital stock as
increased are as set forth in Article FIRST of these Articles of Amendment.
IN WITNESS WHEREOF, SHORT TERM INCOME FUND, INC. has caused these
presents to be signed in its name and on its behalf by its President and
attested by its Secretary on November 19, 1982.
SHORT TERM INCOME FUND, INC.
By: _______________________
/s/ Stephen L. Wald
President
Attest:
- -------------------------
/s/ Bernadette N. Finn
Secretary
12
<PAGE>
ACKNOWLEDGMENT
THE UNDERSIGNED, President of SHORT TERM INCOME FUND, INC., who
executed on behalf of said corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
----------------------------
/s/Stephen L. Wald
<PAGE>
BY-LAWS
OF
SHORT TERM INCOME FUND, INC.
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The principal office shall
be in the City of Baltimore, State of Maryland
Section 2. Other Offices. The Corporation may have offices also at
such other places within and without the State of Maryland as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders shall be held at
such place, either within, the State of Maryland or at such other place within
the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. Annual meetings of stockholders shall be
held on a date fixed from time to time by the Board of Directors not less than
60 nor more than 120 days following the end of each fiscal year of the
Corporation, for the election of directors and the transaction of any other
business within the powers of the Corporation.
<PAGE>
2.
Section 3. Notice of Annual Meeting. Written or printed notice of the
annual meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten or more than ninety days
before the date of the meeting.
Section 4. Special Meetings. Special meetings of stockholders may be
called by the president or by the Board of Directors and shall be called by the
secretary upon the written request of holders of shares entitled to cast not
less than twenty-five per cent of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. In the case of such request for a
special meeting, upon payment by such stockholders to the Corporation of the
estimated reasonable cost of preparing and mailing a notice of such meeting, the
secretary shall give the notice of such meeting. The secretary shall not be
required to call a special meeting to consider any matter which is substantially
the same as a matter acted upon at any special meeting of stockholders held
within the preceding twelve months unless requested to do so by holders of
shares entitled to cast not less than a majority of all votes entitled to be
cast at such meeting.
<PAGE>
3.
Section 5. Notice of Special Meeting. Written or printed notice of a
special meeting of stockholders, staling the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. Business of Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice thereof.
Section 7. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business.
Section 8. Voting. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of the Investment Company Act of 1940, as from time to time in effect,
or other statutes or rules or orders of the Securities and Exchange Commission
or any successor thereto or of the Articles
<PAGE>
4.
of Incorporation a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 9. Proxies. Each stockholder shall at every meeting of
stockholders be entitled to one vote in person or by proxy for each share of the
Common Stock having voting power held by such stockholder, but no proxy shall be
voted after eleven months from its date, unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date which shall be
not more than sixty days and, in the case of a meeting of stockholders, not less
than ten days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. In lieu of fixing a
<PAGE>
5.
record date, the Board of Directors may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case, twenty days.
If the stock transfer books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders, such
books shall be closed for at least ten days immediately preceding such meeting.
If no record date is fixed and the stock transfer books are not closed for the
determination of stockholders: (1) The record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of stockholders
shall be at the close of business on the day on which notice of the meeting of
stockholders is mailed or the day thirty days before the meeting, whichever is
the closer date to the meeting; and (2) The record date for the determination of
stockholders entitled to receive-payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which the resolution of
the Board of Directors, declaring the dividend or allotment of rights, is
adopted, provided that the payment or allotment date shall not be more than
sixty days after the date of the adoption of such resolution.
Section 11. Inspectors of Election. The directors, in advance of any
meeting, may, but need not, appoint one or
<PAGE>
5.
more inspectors to act at the meeting or any adjournment thereof. If an
inspector or inspectors are not appointed, the person presiding at the meeting
may, but need not, appoint one or more inspectors. In case any person who may be
appointed as an inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors, if any, shall determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the validity and effect of proxies, and
shall receivevotes', ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting or any stockholder the inspector
or inspectors, if any, shall make a report in veiling of any challenge, question
or matter determined by him or them and execute a certificate of any fact found
by him or them.
<PAGE>
7.
Section 12. Infernal Action by Stockholders. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission .or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of directors which shall
constitute the entire Board of Directors shall be two. By amendment of this
by-law the number may be increased or decreased from time to time by the vote of
a majority of the entire Board of Directors within the limits permitted by law
but at no time may be more than twenty as provided in the Articles of
Incorporation, but the tenure of office of a director in
<PAGE>
8.
office at the time of any decrease in the number of directors shall not be
affected as a result thereof. The directors shall be elected to hold office at
the annual meeting of stockholders, except as provided in Section 2 of this
Article, and each director shall hold office until the next annual meeting of
stockholders or until his successor is elected and qualified. Any director may
resign at any time upon written notice to the Corporation. Any director may be
removed, either with or without cause, at any meeting of stockholders duly
called and at which a quorum is present by the affirmative vote of the majority
of the votes entitled to be cast thereon, and. the vacancy in the Board of
Dirctors caused by such removal may be filled by the stockholders at the time of
such removal. Directors need not be stockholders.
Section 2. Vacancies and Newly-created Directorships. Any vacancy
occurring in the Board of Directors for any cause other than by reason of an
increase in the number of directors may be filled by a majority of the remaining
members of the Board of Directors although such majority is less than a quorum.
Any vacancy occurring by reason of an .increase in the number of directors may
be filled by a majority of the directors then in office, though less than a
quorum. A director elected by the Board of Directors to fill a vacancy shall be
elected to 'hold
<PAGE>
9.
office until the next annual meeting of stockholders or until his successor is
elected and qualifies.
Section 3. Powers. The business and affairs of the Corporation shall
be managed by the Board of Directors which shall exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these By-Laws conferred upon or reserved to
the stockholders.
Section 4. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
annual meeting of stockholders and at the place thereof. No notice of such
meeting to the directors shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the Board of
Directors.
Section 5. Other Meetings. The Board of Directors of the Corporation
or any committee thereof may hold meetings, both regular and special, either
within or without the State of Maryland. Regular meetings of the Board of
Directors may be
<PAGE>
10.
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by the president or by two or more directors. Notice of special
meetings of the Board of Directors shall be. given by the secretary to each
director at least three days before the meeting if by mail or at least 24 hours
before the meeting if given in person or by telephone or by telegraph. The
notice need not specify the business to be transacted.
Section 6. Quorum and Voting. At meetings of the Board of Directors,
two of the directors in office at the time, but in no event less than one-third
of the entire Board of Directors, shall constitute a quorum for the transaction
of business. The action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board of Directors. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of
<PAGE>
11.
Directors, appoint from among its members an executive committee and other
committees of the Board of Directors, each committee to be composed of two or
more of the directors of the Corporation. The Board of Directors may, to the
extent provided in the resolution, delegate to such committees, in the intervals
between meetings of the Board of Directors, any or all of the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, except the power to declare dividends, to issue stock or to
recommend to stockholders any action requiring stockholders' approval. Such
committee or committees shall have the name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Unless the Board
of Directors designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member at any meeting of
the committee, the members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or alternate members
of such committee shall constitute a quorum for the transaction of business and
the act of a majority of
<PAGE>
12.
the members or alternate members present at any meeting at which a quorum is
present shall be the act of the committee.
Section 8. Minutes of Committee Meetings. The committees shall keep
regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and Committees. Any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
Section 10. Meetings by Conference Telephone. The members of the Board
of Directors or any committee thereof may participate in a meeting of the Board
of Directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and such participation shall
constitute presence in person at such meeting.
Section 11. Fees and Expenses. The directors may be paid their
expenses of attendance at each meeting of the Board
<PAGE>
13.
of Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like reimbursement and compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and stockholders mailed to
them at their post office addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes, of the Articles of Incorporation or
of these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the
<PAGE>
14.
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a president, a secretary and a treasurer. The Board of
Directors may choose also such vice presidents and additional officers or
assistant officers as it may deem advisable. Any number of offices, except the
offices of president and vice president, may be held by the same person. No
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law to be executed, acknowledged or
verified by two or more officers.
Section 2. Other Officers and Agents. The Board of Directors may
appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
<PAGE>
15.
Section 3. Tenure of Officers. The officers of the Corporation shall
hold office at the pleasure of the Board of Directors. Each officer shall hold
his office until his successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
may be removed at any time by the Board of Directors when, in its judgment, the
best interests of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise
shall be filled by the Board of Directors.
Section 4. President. The president shall be the chief executive
officer of the Corporation, shall preside at all meetings of stockholders and of
the Board of Directors, shall have general and active management of the business
of the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute on behalf of the
Corporation, and may affix the seal or cause the seal to be affixed to, all
instruments requiring such execution except to the extent the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
<PAGE>
16.
Section 5. Vice Presidents. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the powers of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the .duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 6. Secretary. The secretary shall act under the direction of
the president. Subject to the direction of the president he shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
the proceedings in a book to be kept for that purpose and shall perform like
duties for the committees designated by the Board of Directors when required. He
shall give, or cause to be given, notice of all meetings of stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the president or the Board of Directors. He shall keep
in safe custody the seal of the
<PAGE>
17.
Corporation and shall affix the seal or cause it to be affixed to any instrument
requiring it.
Section 7. Assistant Secretaries. The assistant secretaries in the
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
Section 8. Treasurer. The treasurer shall act under the direction of
the president. Subject to the direction of the president he shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the Corporation as may be ordered
by the president or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board
<PAGE>
18.
of Directors so requires, an account of all his transactions as treasurer and of
the financial condition of the Corporation.
Section 9. Assistant Treasurers. The assistant treasurers in the order
of their seniority unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.
ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of Common Stock of the Corporation who
has made full payment of the consideration for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation by,
the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number of whole shares of Common Stock owned by him
in the Corporation.
<PAGE>
19.
Section 2. Fractional Share Interests or Scrip. The Corporation may,
but shall not be obliged to, issue fractions of a share of Common Stock, arrange
for the disposition of fractional interests by those entitled thereto, pay in
cash the fair value of fractions of a share of Common Stock as of the time when
those entitled to receive such fractions are determined, or issue scrip or other
evidence of ownership which shall entitle the holder to receive a certificate
for a full share of Common Stock upon the surrender of such scrip or other
evidence of ownership aggregating a full share. Fractional shares of Common
Stock shall have proportionately to the respective fractions represented thereby
all the rights of whole shares, including the right to vote, the right to
receive dividends and distributions and the right to participate upon
liquidation of the Corporation, excluding however the right to receive a stock
certificate representing such fractional shares. The Board of Directors may
cause such scrip or evidence of ownership to be issued subject to the condition
that it shall become void if not exchanged for certificates representing full
shares of Common Stock before a specified date or subject to the condition that
the shares of Common Stock for which such scrip or evidence of ownership is
exchangeable may be sold by the Corporation and the proceeds thereof distributed
to the
<PAGE>
20.
holders of such scrip or evidence of ownership, or subject to any other
reasonable conditions which the Board of Directors shall deem advisable,
including provision for forfeiture of such proceeds to the Corporation if not
claimed within a period of not less than three years after the date of the
original issuance of scrip certificates.
Section 3. Signatures on Certificates, 7\ny of or all the signatures
on a certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the Corporation or
a facsimile thereof may, but need not, be affixed to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in
<PAGE>
21.
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed.
Section 5. Transfer of Shares. Upon request by the registered owner of
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of Common Stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, subject to the
Corporation's rights to purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transaction upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
<PAGE>
22.
Section 6. Registered Owners. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including redemption, voting and dividends, and
the Corporation shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Maryland.
ARTICLE VII
Net Asset Value
The net asset value of a share of Common Stock of the Corporation as at
the time of a particular determination shall be the quotient obtained by
dividing the value at such time of the net assets of the Corporation (i.e., the
value of the assets of the Corporation less its liabilities exclusive of capital
and surplus) by the total number of shares of Common Stock outstanding at such
time, all determined and computed as follows:
(1) The assets of the Corporation shall be
deemed to include (A) all cash on hand, on deposit, or on
call, (B) all bills and notes and accounts receivable, (C)
all shares of stock and subscription rights and other
securities owned or contracted for
<PAGE>
23.
by the Corporation, other than shares of its own Common Stock, (D) all stock and
cash dividends and cash distributions to be received by the Corporation and not
yet received by it but declared to stockholders of record on 'or before the time
at which the net asset value is being determined, (E) all interest accrued on
any interest bearing securities owned by the Corporation and (F) all other
property of every kind and nature including prepaid expenses; the value of such
assets to be determined as follows:
(a) Securities listed or admitted to trading on
a national securities exchange shall be valued at their
last sale price prior to the time of the determination of
value; or if no sales are reported on that date at the mean
of the current bid and asked price. Securities listed or
admitted to trading on more than one national securities
exchange shall be valued at the last sale price or at the
mean of the last quoted bid and asked price, whichever is
appropriate, on the exchange which in the opinion of the
Board of Directors represents the principal market for such
securities. Unlisted securities shall be valued at the mean
of the current bid and asked price as obtained from at
least two dealers regularly making a market in such
securities, provided that when a bid and asked price can be
obtained from only one such dealer such securities shall be
valued at the mean of the bid and asked price obtained from
such dealer. Securities and other assets for which market
quotations are not readily available shall be valued at
their fair value, as determined by or under the authority
of the Board of Directors.
(2) The liabilities of the Corporation shall include
(A) all bills and notes and accounts payable, (B) all
administrative expenses payable and/or accrued (including
management and advisory fees payable and/or accrued, including
in the case of any
<PAGE>
24.
contingent feature thereof, an estimate based on the facts
existing at the time), (C) all contractual obligations for the
payment of money or property, including the amount of any unpaid
dividend declared upon the Corporation's Common Stock and
payable to stockholders of record on or before the time at which
net asset value is being determined, (D) all reserves, if any,
authorized or approved by the Board of Directors for taxes,
including reserves for taxes at. current rates based on any
unrealized appreciation in the value of the assets of the
Corporation and (E) all other liabilities of the Corporation of
whatsoever kind and nature except liabilities represented by
outstanding capital stock and surplus of the Corporation.
(3) For the purposes hereof
(A) Common Stock subscribed for shall not be deemed
to be outstanding until immediately after the time as of which
its net asset v : 1 u is determined as provided in the Articles
of Incorporation next following .?, acceptance of the
subscription therefor c.:.~ the subscription price thereof shall
not be deemed to be an asset of the Corporation until such time,
but immediately thereafter such capital stock shall be deemed to
be outstanding and until paid the subscription price thereof
shall be deemed to be an asset of the Corporation.
(B) Common Stock surrendered for redemption by the
Corporation pursuant to the provisions of the Articles of
Incorporation or purchased by the Corporation pursuant to the
provisions of the Articles of Incorporation or these By-Laws
shall be deemed to be outstanding to and including the time as
of which its net asset value is determined as provided in the
Articles of Incorporation but not thereafter, and thereupon and
until paid the redemption or purchase price thereof shall be
deemed to be a liability of the Corporation.
<PAGE>
25.
(C) Changes in the holdings of the Corporation's
portfolio securities shall be accounted for on a trade date
basis.
(D) Expenses, including management and advisory fees,
shall be included to date of calculation.
In addition to the foregoing, the Board of Directors is empowered subject to
applicable legal requirements, in its absolute discretion, to establish other
methods for determining the net asset value of each share of Common Stock of the
Corporation.
ARTICLE VIII
Miscellaneous
Section 1. Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for repairing or maintaining any property of
the Corporation, or for the purchase of additional property, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
Section 2. Dividends. Dividends upon the Common Stock of the
Corporation may, subject to the provisions of the Articles of Incorporation and
of the provisions of applicable
<PAGE>
26.
law, be declared by the Board of Directors at any time. Dividends may be paid in
cash, in property or in shares of the Corporation's Common Stock, subject to the
provisions of the statute and of the Articles of Incorporation and of applicable
law.
Section 3. Capital Gains Distributions. The amount and number of
capital gain distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the ex-tent
required by law.
Section 4. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 6. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.
<PAGE>
27.
Section 7. Filing of By-Laws. A certified copy of the By-Laws,
including all amendments, shall be kept at the principal office of the
Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the Corporation
shall be examined by an independent firm of public accountants at the close of
each annual fiscal period of the Corporation and at such other times, if any, as
may be directed by the Board of Directors of the Corporation. Within 120 days of
the close of each annual fiscal period a report based upon such examination at
the close of that fiscal period shall be mailed to each stockholder of the
Corporation of record at the close of such annual fiscal period, unless the
Board of Directors shall set another record date, at his address as the same
appears on the books of the Corporation. Each such report shall contain such
information as is required to be set forth therein by the Investment Company Act
of 1940 and the rules and regulations promulgated by the Securities and Exchange
Commission thereunder. Such report shall also be submitted at the annual meeting
of the stockholders and filed within twenty days thereafter at the principal
office of the Corporation in the State of Maryland.
Section 9. Stock Ledger. The Corporation shall maintain at its
principal office outside of the State of Maryland
<PAGE>
28.
an original or duplicate stock lodger containing the names and addresses of all
stockholders and the number of shares of stock held by each stockholder. Such
stock ledger may be in written form or in any other form capable of being
converted into written form within a reasonable time for visual inspection.
Section 10. Ratification of Accountants by Stockholders At every
annual meeting of the stockholders of the Corporation there shall be submitted
for ratification or rejection the name of the firm of independent public
accountants which has been selected for the current fiscal year in which such
annual meeting is held by a majority of those members of the Board of Directors
who are not investment advisors of, or interested persons (as defined in the
Investment Company Act of 1940) of an investment advisor of, or officers or
employees of, the Corporation.
Section 11. Custodian. All securities and similar investments owned by
the Corporation shall be held by a custodian which shall be either a trust
company or a national bank of good standing, having a capital surplus and
undivided profits abrogating not less than two million dollars ($2,000,000), or
a member firm of the New York Stock Exchange. The terms of custody of such
securities and cash shall include such provi-
<PAGE>
29.
sions required to be contained therein by the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder by the Securities and Exchange
Commission.
Upon the resignation or inability to serve of any such custodian the
Corporation shall (a) use its best efforts to obtain a successor custodian, (b)
require the cash and securities of the Corporation held by the custodian to be
delivered directly to the successor custodian, and (c) in the event that no
successor custodian can be found, submit to the stockholders of the Corporation,
before permitting delivery of such cash and securities to anyone other than a
successor custodian, the question whether the Corporation shall be dissolved or
shall function without a custodian; provided, however, that nothing herein
contained shall prevent the termination of any agreement between the Corporation
and any such custodian by the affirmative vote of the holders of a majority of
all the capital stock of the Corporation at the time outstanding and entitled to
vote. Upon its resignation or inability to serve and pending action by the
Corporation as set forth in this section, the custodian may deliver any assets
of the Corporation held by it to a qualified bank or trust company in the City
of New York, or to a member firm of the New York
<PAGE>
30.
Stock Exchange selected by it, such assets to be held subject to the terms of
custody which governed such retiring custodian.
Section 11. Investment Adviser. The Corporation may enter into a
management or advisory, underwriting, distribution or administration contract
with any person, firm, partnership, association or corporation but such contract
or contracts shall continue in effect only so long as such continuance is
specifically approved annually by a majority of the Board of Directors or by
vote of the holders of a majority of the voting securities of the Corporation,
and in either case by vote of a majority of the directors who are not parties to
such contract or interested persons (as defined in the Investment Company Act)
of any such party cast in person at a meeting called for the purpose of voting
on such approval.
ARTICLE IX
Amendments
The Board of Directors shall have the power, by a majority vote of the
entire Board of Directors at any meeting thereof, to make, alter and repeal
by-laws of the Corporation.
[GRAPHIC [GRAPHIC
OMITTED] OMMITTED]
NUMBER SHARES
Incorporated under the Laws of the State of Maryland
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP 825249 10 5
THIS IS TO CERTIFY THAT is the owner of
SHORT TERM INCOMR FUND, INC.
MONEY MARKET PORTFOLIO COMMON STOCK
fully paid and non-assessable shares of Money Market Portfolio Common
Stock, par value $.001 per share, of
SHORT TERM INCOME FUND, INC.
(herein called the "Corporation") transferable on the books of the Corporation
in person or by attorney duly authorized in writing upon surrender of this
certificate properly endorsed. The holder hereof by accepting this certificate
properly endorsed. The holder hereof by accepting this certificate expressly
assents to and is bound by the Articles of Incorporation, as amended, and the
By-Laws, as amended, of the Corporation, copies of which are available for
inspection at the principal office of the Corporation in the State of Maryland.
THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE REDEEMED BY THE
CORPORATION UPON REQUEST OF THE STOCKHOLDER AS PROVIDED IN THE ARTICLES OF
INCORPORATION OF THE CORPORATION. IN ADDITION, THE ARTICLES OF INCORPORATION
PROVIDE THAT THE CORPORATION, AT ITS OPTION, MAY REDEEM SHARES OF ITS STOCK
UNDER CERTAIN OTHER CIRCUMSTANCES. THE CORPORATION IS AUTHORIZED TO ISSUE TWO
CLASSES OF STOCK, MONEY MARKET PORTFOLIO COMMON STOCK AND U.S. GOVERNMENT
PORTFOLIO COMMON STOCK. A FULL STATEMENT OF THE DESIGNATION AND ANY PREFERENCES,
CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO
DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITI9ONS OF REDEMPTION OF THE STOCK
OF EACH CLASS MAY BE OBTAINED FROM THE CORPORATION BY ANY STOCKHOLDER UPON
REQUEST AND WITHOUT CHARGE.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
Short Term Income Fund, Inc.
Corporate
Seal
1979
Maryland
/s/ Bernadette N. Finn /s/ Stephen L. Wald
Secretary President
COUNTERSIGNED:
BY: THE BANK OF NEW YORK
TRANSFER AGENT
AUTHORIZED SIGNER
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
accofding to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
UNIF GIFT MIN ACT - __________________Custodian_________, under Uniform Gifts
to Minors Act_________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value REceived, _______hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]_________________________________________________
_____________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint_____________________________Attorney to transfer the said Shares on the
books of the within named Corporation with full power of substitution in the
premises.
Dated________________19__________
In presence of
____________________________________________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
[GRAPHIC [GRAPHIC
OMITTED] OMMITTED]
NUMBER SHARES
Incorporated under the Laws of the State of Maryland
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP 825249 20 4
THIS IS TO CERTIFY THAT is the owner of
SHORT TERM INCOMR FUND, INC.
U.S. GOVERNMENT PORTFOLIO COMMON STOCK
fully paid and non-assessable shares of U.S. Government Portfolio Common
Stock, par value $.001 per share, of
SHORT TERM INCOME FUND, INC.
(herein called the "Corporation") transferable on the books of the Corporation
in person or by attorney duly authorized in writing upon surrender of this
certificate properly endorsed. The holder hereof by accepting this certificate
properly endorsed. The holder hereof by accepting this certificate expressly
assents to and is bound by the Articles of Incorporation, as amended, and the
By-Laws, as amended, of the Corporation, copies of which are available for
inspection at the principal office of the Corporation in the State of Maryland.
THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE REDEEMED BY THE
CORPORATION UPON REQUEST OF THE STOCKHOLDER AS PROVIDED IN THE ARTICLES OF
INCORPORATION OF THE CORPORATION. IN ADDITION, THE ARTICLES OF INCORPORATION
PROVIDE THAT THE CORPORATION, AT ITS OPTION, MAY REDEEM SHARES OF ITS STOCK
UNDER CERTAIN OTHER CIRCUMSTANCES. THE CORPORATION IS AUTHORIZED TO ISSUE TWO
CLASSES OF STOCK, MONEY MARKET PORTFOLIO COMMON STOCK AND U.S. GOVERNMENT
PORTFOLIO COMMON STOCK. A FULL STATEMENT OF THE DESIGNATION AND ANY PREFERENCES,
CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO
DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITI9ONS OF REDEMPTION OF THE STOCK
OF EACH CLASS MAY BE OBTAINED FROM THE CORPORATION BY ANY STOCKHOLDER UPON
REQUEST AND WITHOUT CHARGE.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
Short Term Income Fund, Inc.
Corporate
Seal
1979
Maryland
/s/ Bernadette N. Finn /s/ Stephen L. Wald
Secretary President
COUNTERSIGNED:
BY: THE BANK OF NEW YORK
TRANSFER AGENT
AUTHORIZED SIGNER
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
accofding to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
UNIF GIFT MIN ACT - __________________Custodian_________, under Uniform Gifts
to Minors Act_________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value REceived, _______hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]_________________________________________________
_____________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint_____________________________Attorney to transfer the said Shares on the
books of the within named Corporation with full power of substitution in the
premises.
Dated________________19__________
In presence of
____________________________________________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
CUSTODY AGREEMENT
THIS AGREEMENT made the 1st day of April , 1994, by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), and The Funds listed in Exhibit A , a
_______________ corporation, having its principal office and place of business
at 600 Fifth Avenue; New York, New York 10020 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian as
custodian of the securities and monies at any time owned by the Fund.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a corporation or trust (as specified above) duly
organized and existing and in good standing under the laws of its
state of organization, and that it is registered under the
Investment Company Act of 1940 (the "1940 Act"); and
2. That it has the requisite power and authority under applicable
law, its articles of incorporation and its bylaws to enter into
this Agreement; that it has taken all requisite action necessary
to appoint Custodian as custodian for the Fund; that this
Agreement has been duly executed and delivered by Fund; and that
this Agreement constitutes a legal, valid and binding obligation
of Fund, enforceable in accordance with its terms.
<PAGE>
B. Custodian hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in
good standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into and perform this
Agreement; that this Agreement has been duly executed and
delivered by Custodian; and that this Agreement constitutes a
legal, valid and binding obligation of Custodian, enforceable in
accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Except as permitted by the 1940 Act, Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or as
soon thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it or
from time to time coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of securities
or monies not so delivered.
B. Delivery of Accounts and Records
Fund shall turn over or cause to be turned over to Custodian all of
the Fund's relevant accounts and records previously maintained.
Custodian shall be entitled to rely conclusively on the completeness
and correctness of the accounts and records turned over to it, and
Fund shall indemnify and hold Custodian harmless of and from any and
all expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of
such accounts and records or in the failure of Fund to provide, or to
provide in a timely manner, any accounts, records or information
needed by the Custodian to perform its functions hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time segregated in a separate account,
and if Fund
2
<PAGE>
is comprised of more than one portfolio of investment securities (each
a "Portfolio") Custodian shall keep the assets of each Portfolio
segregated in a separate account. Custodian will not deliver, assign,
pledge or hypothecate any such assets to any person except as
permitted by the provisions of this Agreement or any agreement
executed by it according to the terms of Section 3.S. of this
Agreement. Upon delivery of any such assets to a subcustodian pursuant
to Section 3.S. of this Agreement, Custo-dian will create and maintain
records identifying those assets which have been delivered to the
subcustodian as belonging to the Fund, by Portfolio if applicable. The
Custodian is responsible for the safekeeping of the securities and
monies of Fund only until they have been transmitted to and received
by other persons as permitted under the terms of this Agreement,
except for securities and monies transmitted to subcustodians
appointed under Section 3.S. of this Agreement, for which Custodian
remains responsible to the extent provided in Section 3.S. hereof.
Custodian may participate directly or indirectly through a
subcustodian in the Depository Trust Company (DTC), Treasury/Federal
Reserve Book Entry System (Fed System), Participant Trust Company
(PTC) or other depository approved by the Fund (as such entities are
defined at 17 CFR Section 270.17f-4(b)) (each a "Depository" and
collectively, the "Depositories").
D. Registration of Securities
The Custodian shall at all times hold registered securities of the
Fund in the name of the Custodian, the Fund, or a nominee of either of
them, unless specifically directed by instructions to hold such
registered securities in so-called "street name," provided that, in
any event, all such securities and other assets shall be held in an
account of the Custodian containing only assets of the Fund, or only
assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian at
all time shall indicate the Fund or other customer for which such
securities and other assets are held in such account and the
respective interests therein. If,
3
<PAGE>
however, the Fund directs the
Custodian to maintain securities in "street name", notwithstanding
anything contained herein to the contrary, the Custodian shall be
obligated only to utilize its best efforts to timely collect income
due the Fund on such securities and to notify the Fund of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers. All securities, and the
ownership thereof by Fund, which are held by Custodian hereunder,
however, shall at all times be identifiable on the records of the
Custodian. The Fund agrees to hold Custodian and its nominee harmless
for any liability as a shareholder of record of securities held in
custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other securities or
cash issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of shares, change of
par value, conversion or otherwise, and will deposit any such
securities in accordance with the terms of any reorganization or
protective plan. Without instructions, Custodian is authorized to
exchange securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par value of
the stock is changed, and, upon receiving payment therefor, to
surrender bonds or other securities held by it at maturity or when
advised of earlier call for redemption, except that Custodian shall
receive instructions prior to surrendering any convertible security.
F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of securities
shall be made by it, deliver to Custodian instructions which shall
specify with respect to each such purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
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3. The number of shares and the principal amount purchased, and accrued
interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer through whom
the purchase was made.
9. Whether the security is to be received in certificated form or via a
specified Depository.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of Fund, but only insofar as such monies
are available for such purpose, and receive the portfolio securities
so purchased by or for the account of Fund, except that Custodian may
in its sole discretion advance funds to the Fund which may result in
an overdraft because the monies held by the Custodian on behalf of the
Fund are insufficient to pay the total amount payable upon such
purchase. Except as otherwise instructed by Fund, such payment shall
be made by the Custodian only upon receipt of securities: (a) by the
Custodian; (b) by a clearing corporation of a national exchange of
which the Custodian is a member; or (c) by a Depository.
Notwithstanding the foregoing, (i) in the case of a repurchase
agreement, the Custodian may release funds to a Depository prior to
the receipt of advice from the Depository that the securities
underlying such repurchase agreement have been transferred by
book-entry into the account maintained with such Depository by the
Custodian, on behalf of its customers, provided that the Custodian's
instructions to the Depository require that the Depository make
payment of such funds only upon transfer by book-entry of the
securities underlying the repurchase agreement in such account; (ii)
in the case of time deposits, call account deposits, currency deposits
and other deposits, foreign
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exchange transactions, futures contracts or options, the Custodian may
make payment therefor before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; and (iii) in
the case of the purchase of securities, the settlement of which occurs
outside of the United States of America, the Custodian may make, or
cause a subcustodian appointed pursuant to Section 3.S.2. of this
Agreement to make, payment therefor in accordance with generally
accepted local custom and market practice.
G. Sales and Deliveries of Investments of the Fund - Other than Options
and Futures
Fund will, on each business day on which a sale of investment
securities (other than options and futures) of Fund has been made,
deliver to Custodian instructions specifying with respect to each such
sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or person
to whom the sale was made. 1.
In accordance with such instructions, Custodian will deliver or cause
to be delivered the securities thus designated as sold for the account
of Fund to the broker or other person specified in the instructions
relating to such sale. Except as otherwise instructed by Fund, such
delivery shall be made upon receipt of payment therefor: (a) in such
form as is satisfactory to the
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Custodian; (b) credit to the account of the Custodian with a clearing
corporation of a national securities exchange of which the Custodian
is a member; or (c) credit to the account of the Custodian, on behalf
of its customers, with a Depository. Notwithstanding the foregoing:
(i) in the case of securities held in physical form, such securities
shall be delivered in accordance with "street delivery custom" to a
broker or its clearing agent; or (ii) in the case of the sale of
securities, the settlement of which occurs outside of the United
States of America, the Custodian may make, or cause a subcustodian
appointed pursuant to Section 3.S.2. of this Agreement to make,
payment therefor in accordance with generally accepted local custom
and market practice.
H. Purchases or Sales of Options and Futures
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
1. If applicable, the name of the Portfolio making such purchase or
sale;
2. Security Options
A. The underlying security;
B. The price at which purchased or sold;
C. The expiration date;
D. The number of contracts;
E. The exercise price;
F. Whether the transaction is an opening, exercising, expiring
or closing transaction;
G. Whether the transaction involves a put or call;
H. Whether the option is written or purchased;
I. Market on which option traded; and
J. Name and address of the broker or dealer through whom the
sale or purchase was made.
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3. Options on Indices
A. The index;
B. The price at which purchased or sold;
C. The exercise price;
D. The premium;
E. The multiple;
F. The expiration date;
G. Whether the transaction is an opening, exercising, expiring
or closing transaction;
H. Whether the transaction involves a put or call;
I. Whether the option is written or purchased; and
J. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
A. The last trading date specified in the contract and, when
available, the closing level, thereof;
B. The index level on the date the contract is entered into;
C. The multiple;
D. Any margin requirements;
E. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into this
Custody Agreement); and
F. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions. 1.
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5. Options on Index Future Contracts
A. The underlying index future contract;
B. The premium;
C. The expiration date;
D. The number of options;
E. The exercise price;
F. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
G. Whether the transaction involves a put or call;
H. Whether the option is written or purchased; and
I. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund, and subject to
such additional terms and conditions as Custodian may require:
1. Upon receipt of instructions, Custodian will release or cause to
be released securities held in custody to the pledgee designated
in such instructions by way of pledge or hypothecation to secure
any loan incurred by Fund; provided, however, that the securities
shall be released only upon payment to Custodian of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further securities
may be released or caused to be released for that purpose upon
receipt of instructions. Upon receipt of instructions, Custodian
will pay, but only from funds available for such purpose, any
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities
held in custody to the borrower designated in such instructions;
provided, however, that the securities will be released only upon
deposit with Custodian of full cash collateral as specified in
such instructions, and
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that Fund will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will release
the cash collateral to the borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution, purchase,
transfer, or other dealings with securities or other property of Fund
except as may be otherwise provided in this Agreement or directed from
time to time by the Fund in writing.
K. Deposit Accounts
Custodian will open and maintain one or more special purpose deposit
accounts in the name of Custodian ("Accounts"), subject only to draft
or order by Custodian upon receipt of instructions. All monies
received by Custodian from or for the account of Fund shall be
deposited in said Accounts. Barring events not in the control of the
Custodian such as strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire, flood, earthquake
or other natural disaster, action or inaction of governmental
authority or other causes beyond its control, at 9:00 a.m., Kansas
City time, on the second business day after deposit of any check into
an Account, Custodian agrees to make Fed Funds available to the Fund
in the amount of the check. Deposits made by Federal Reserve wire will
be available to the Fund immediately and ACH wires will be available
to the Fund on the next business day. Income earned on the portfolio
securities will be credited to the Fund based on the schedule attached
as Exhibit A. The Custodian will be entitled to reverse any credited
amounts where credits have been made and monies are not finally
collected. If monies are collected after such reversal, the Custodian
will credit the Fund in that amount. Custodian may open and maintain
Accounts in its own banking department, or in such other banks or
trust companies as may be designated by it or by Fund in writing, all
such Accounts, however, to be in the name of Custodian and subject
only to its
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draft or order. Funds received and held for the account of different
Portfolios shall be maintained in separate Accounts established for
each Portfolio.
L. Income and other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the account of Fund
all income and other payments which become due and payable on or
after the effective date of this Agreement with respect to the
securities deposited under this Agreement, and credit the account
of Fund in accordance with the schedule attached hereto as
Exhibit A. If, for any reason, the Fund is credited with income
that is not subsequently collected, Custodian may reverse that
credited amount.
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
should reasonably be expected to have knowledge; and
b. the endorsement for collection, in the name of Fund, of all
checks, drafts or other negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt
of instructions and upon being indemnified to its satisfaction against
the costs and expenses
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of such suit or other actions. Custodian will receive, claim and
collect all stock dividends, rights and other similar items and will
deal with the same pursuant to instructions. Unless prior instructions
have been received to the contrary, Custodian will, without further
instructions, sell any rights held for the account of Fund on the last
trade date prior to the date of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the shares
of capital stock of Fund ("Fund Shares") by the Board of Directors of
Fund, Fund shall deliver to Custodian instructions with respect
thereto. On the date specified in such instructions for the payment of
such dividend or other distribution, Custodian will pay out of the
monies held for the account of Fund, insofar as the same shall be
available for such purposes, and credit to the account of the Dividend
Disbursing Agent for Fund, such amount as may be necessary to pay the
amount per share payable in cash on Fund Shares issued and outstanding
on the record date established by such resolution.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or
its agent shall advise Custodian of the aggregate dollar amount to be
paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the account of Fund and either deposit the same in the
account maintained for the purpose of paying for the repurchase or
redemption of Fund Shares or deliver the same in accordance with such
advice. Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of Fund
Shares have been cancelled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such
shares.
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Custodian shall not have any duty or responsibility to determine that
Fund Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such
shares have been added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such proxies
or other authorizations as may be required. Except as provided by this
Agreement or pursuant to instructions hereafter received by Custodian,
neither it nor its nominee will exercise any power inherent in any
such securities, including any power to vote the same, or execute any
proxy, power of attorney, or other similar instrument voting any of
such securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid, insofar as funds are available
for the purpose, bills, statements and other obligations of Fund
(including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund,
interest charges, dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth the
name of the person to whom payment is to be made, the amount of the
payment, and the purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund a detailed
statement of the amounts received or paid and of securities received
or delivered for
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the account of Fund during each business day. Custodian will, from
time to time, upon request by Fund, render a detailed statement of the
securities and monies held for Fund under this Agreement, and
Custodian will maintain such books and records as are necessary to
enable it to do so. Custodian will permit such persons as are
authorized by Fund, including Fund's independent public accountants,
reasonable access to such records or will provide reasonable
confirmation of the contents of such records, and if demanded,
Custodian will permit federal and state regulatory agencies to examine
the securities, books and records. Upon the written instruc-tions of
Fund or as demanded by federal or state regulatory agencies, Custodian
will instruct any subcustodian to permit such persons as are
authorized by Fund, including Fund's independent public accountants,
reasonable access to such records or to provide reasonable
confirmation of the contents of such records, and to permit such
agencies to examine the books, records and securities held by such
subcustodian which relate to Fund.
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies acting subcustodians as may be selected
by Custodian. Any such subcustodian selected by the Custodian
must have the qualifications required for a custodian under the
1940 Act, as amended. It is understood that Custodian initially
intends to appoint United Missouri Bank, N.A. (UMB) and United
Missouri Trust Company of New York (UMTCNY) as subcustodians.
Custodian shall be responsible to the Fund for any loss, damage
or expense suffered or incurred by the Fund resulting from the
actions or omissions of UMB, UMTCNY and any other subcustodians
selected and appointed by Custodian (except subcustodians
appointed at the request of Fund and as provided in Subsection 2
below) to the same extent Custodian
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<PAGE>
would be responsible to the Fund under Section 5. of this
Agreement if it committed the act or omission itself. Upon
request of the Fund, Custodian shall be willing to contract with
other subcustodians reasonably acceptable to the Custodian for
purposes of (i) effecting third-party repurchase transactions
with banks, brokers, dealers, or other entities through the use
of a common custodian or subcustodian, or (ii) providing
depository and clearing agency services with respect to certain
variable rate demand note securities, or (iii) for other
reasonable purposes specified by Fund; provided, however, that
the Custodian shall be responsible to the Fund for any loss,
damage or expense suffered or incurred by the Fund resulting from
the actions or omissions of any such subcustodian only to the
same extent such subcustodian is responsible to the Custodian.
The Fund shall be entitled to review the Custodian's contracts
with any such subcustodians appointed at the request of Fund.
Custodian shall be responsible to the Fund for any loss, damage
or expense suffered or incurred by the Fund resulting from the
actions or omissions of any Depository only to the same extent
such Depository is responsible to Custodian.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the 1940
Act) and Fund's cash or cash equivalents, in amounts deemed by
the Fund to be reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody of one or
more banks or trust companies acting as subcustodians, and
thereafter, pursuant to a written contract or contracts as
approved by Fund's Board of Directors, may be transferred to
accounts maintained by any such subcustodian with eligible
foreign custodians, as defined in Rule 17f-5(c)(2). Custodian
shall be responsible to the Fund for any loss, damage or expense
suffered or incurred by the Fund resulting from the actions or
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omissions of any foreign subcustodians or a domestic subcustodian
contracting with such foreign subcustodians only to the same
extent such domestic subcustodian is responsible to the
Custodian.
T. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records maintained
by Custodian pursuant to this Agreement are the property of Fund, and
will be made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts and
records but shall be reimbursed by Fund for all expenses and employee
time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from Fund of the necessary information
or instructions, Custodian will supply information from the books and
records it maintains for Fund that Fund needs for tax returns,
questionnaires, periodic reports to shareholders and such other
reports and information requests as Fund and Custodian shall agree
upon from time to time.
U. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved or directed by Fund or its accountants or other advisors
conflicts with or violates any requirements of its prospectus,
articles of incorporation, bylaws, any applicable law, rule or
regulation, or any order, decree or agreement by which Fund may be
bound. Fund will be responsible to notify Custodian of any changes in
statutes, regulations, rules, requirements or policies which might
necessitate changes in Custodian's responsibilities or procedures.
V. Overdrafts
If Custodian shall in its sole discretion advance funds to the account
of the Fund which results in an overdraft in any Account because the
monies held therein by Custodian on behalf of the Fund are
insufficient to pay the total
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amount payable upon a purchase of securities as specified in Fund's
instructions or for some other reason, the amount of the overdraft
shall be payable by the Fund to Custodian upon demand together with
the overdraft charge set forth on the then-current Fee Schedule from
the date advanced until the date of payment. Fund hereby grants
Custodian a lien on and security interest in the assets of the Fund to
secure the full amount of any outstanding overdraft and related
overdraft charges.
W. Exercise of Rights; Tender Offers
Upon receipt of instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to the agent of such issuer or trustee, for the
purpose of exercise or sale, provided that the new securities, cash or
other assets, if any, are to be delivered to the Custodian; and (b)
deposit securities upon invitations for tenders thereof, provided that
the consideration for such securities is to be paid or delivered to
the Custodian or the tendered securities are to be returned to the
Custodian.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund shall
deliver to Custodian, prior to delivery of any assets to Custodian and
thereafter from time to time as changes therein are necessary, written
instructions naming one or more designated representatives to give
instructions in the name and on behalf of Fund, which instructions may
be received and accepted by Custodian as conclusive evidence of the
authority of any designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will be
fully), protected in acting in reliance thereon) until receipt by
Custodian of notice to the contrary. Unless such written instructions
delegating authority to any person to give instructions specifically
limit such authority to specific matters or require that the approval
of anyone else will first have been
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obtained, Custodian will be under no obligation to inquire into the
right of such person, acting alone, to give any instructions
whatsoever which Custodian may receive from such person. If Fund fails
to provide Custodian any such instructions naming designated
representatives, any instructions received by Custodian from a person
reasonably believed to be an appropriate representative of Fund shall
constitute valid and proper instructions hereunder.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may record
on tape, or otherwise, any oral instruction whether given in person or
via telephone, each such recording identifying the parties, the date
and the time of the beginning and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify
and hold Custodian harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted against Custodian, incurred by
Custodian or for which Custodian may be held to be liable, arising out
of or attributable to:
1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian
has acted in good faith and with due diligence and reasonable
care; and
2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay
or reimburse Custodian under this indemnification provision), the
Fund's negligence or willful misconduct, or the failure of any
representation or warranty of the Fund hereunder to be and remain
true and correct in all respects at all times.
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B. Custodian may request and obtain at the expense of Fund the advice and
opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law, and it shall be without liability to Fund
for any action taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the Fund or
the Fund's accountants or counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or other authorized individuals, and other
persons believed by it in good faith to be expert in matters upon
which they are consulted, and Custodian shall not be liable for any
actions taken, in good faith, upon such advice and statements.
D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money by Custodian, or which might make it or
its nominee liable for payment of monies or in any other way,
Custodian shall be indemnified and held harmless by Fund against any
liability on account of such action; provided, however, that nothing
herein shall obligate Custodian to take any such action except in its
sole discretion.
E. Custodian shall be protected in acting as custodian hereunder upon any
instruc-tions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed and shall be entitled to receive upon request as
conclusive proof of any fact or matter required to be ascertained from
Fund hereunder a certificate signed by an officer or designated
representative of Fund.
F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase of any securities or foreign
currency positions or evidence of ownership required by Fund to
be received by
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Custodian, or the propriety of the decision to purchase or amount
paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for
which the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the payment
of money to be received by it on behalf of Fund until Custodian
actually receives such money; provided, however, that it shall advise
Fund promptly if it fails to receive any such money in the ordinary
course of business and shall cooperate with Fund toward the end that
such money shall be received.
H. Except as provided in Section 3.S., Custodian shall not be responsible
for loss occasioned by the acts, neglects, defaults or insolvency of
any broker, bank, trust company, or any other person with whom
Custodian may deal.
I. Custodian shall not be responsible or liable for the failure or delay
in performance of its obligations under this Agreement, or those of
any entity for which it is responsible hereunder, arising out of or
caused, directly or indirectly, by circumstances beyond the affected
entity's reasonable control, including, without limitation: any
interruption, loss or malfunction of any utility, transportation,
computer (hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance,
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terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection.
J. IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS
AGREEMENT BE LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE
OTHER PARTY, FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES FOR ANY
ACT OR FAILURE TO ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF
ADVISED OF THIS POSSIBILITY THEREOF.
6. COMPENSATION. In consideration for its services hereunder, Fund will pay to
Custodian such compensation as shall be set forth in a separate fee
schedule to be agreed to by Fund and Custodian from time to time. A copy of
the initial fee schedule is attached hereto and incorporated herein by
reference. Custodian shall also be entitled to receive, and Fund agrees to
pay to Custodian, on demand, reimbursement for Custodian's cash
disbursements and reasonable out-of-pocket costs and expenses, including
attorney's fees, incurred by Custodian in connection with the performance
of services hereunder. Custodian may charge such compensation against
monies held by it for the account of Fund. Custodian will also be entitled
to charge against any monies held by it for the account of Fund the amount
of any loss, damage, liability, advance, overdraft or expense for which it
shall be entitled to reimbursement from Fund, including but not limited to
fees and expenses due to Custodian for other services provided to the Fund
by Custodian. Custodian will be entitled to reimbursement by the Fund for
the losses, damages, liabilities, advances, overdrafts and expenses of
subcustodians only to the extent that (i) Custodian would have been
entitled to reimbursement hereunder if it had incurred the same itself
directly, and (ii) Custodian is obligated to reimburse the subcustodian
therefor.
7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of _____. Thereafter, either party to this Agreement may terminate
the same by notice in writing, delivered or mailed, postage prepaid, to the
other party hereto and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination of this
Agreement, Fund will pay
21
<PAGE>
Custodian its fees and compensation due hereunder and its reimbursable
disbursements, costs and expenses paid or incurred to such date and Fund
shall designate a successor custodian by notice in writing to Custodian by
the termination date. In the event no written order designating a successor
custodian has been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian may, at its option, deliver
the securities, funds and properties of Fund to a bank or trust company at
the selection of Custodian, and meeting the qualifications for custodian
set forth in the 1940 Act and having not less than Two Million Dollars
($2,000,000) aggregate capital, surplus and undivided profits, as shown by
its last published report, or apply to a court of competent jurisdiction
for the appointment of a successor custodian or other proper relief, or
take any other lawful action under the circumstances; provided, however,
that Fund shall reimburse Custodian for its costs and expenses, including
reasonable attorney's fees, incurred in connection therewith. Custodian
will, upon termination of this Agreement and payment of all sums due to
Custodian from Fund hereunder or otherwise, deliver to the successor
custodian so specified or appointed, or as specified by the court, at
Custodian's office, all securities then held by Custodian hereunder, duly
endorsed and in form for transfer, and all funds and other properties of
Fund deposited with or held by Custodian hereunder, and Custodian will
co-operate in effecting changes in book-entries at all Depositories. Upon
delivery to a successor custodian or as specified by the court, Custodian
will have no further obligations or liabilities under this Agreement.
Thereafter such successor will be the successor custodian under this
Agreement and will be entitled to reasonable compensation for its services.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to appoint a successor custodian, the Custodian shall
be entitled to compensation as provided in the then-current fee schedule
hereunder for its services during such period as the Custodian retains
possession of such securities, funds and other properties, and the
provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
22
<PAGE>
8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at __________________, or at such other address as Fund may have
designated to Custodian in writing, will be deemed to have been properly
given to Fund hereunder; and notices, requests, instructions and other
writings addressed to Custodian at its offices at 127 West 10th Street,
Kansas City, Missouri 64105, Attention: Custody Department, or to such
other address as it may have designated to Fund in writing, will be deemed
to have been properly given to Custodian hereunder.
9. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund shall be deemed to
relate solely to the particular Portfolio to which such transaction
relates. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio. The use of
this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and shall
not constitute any basis for joining the Portfolios for any reason.
B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund in
writing.
10. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
23
<PAGE>
C. The representations and warranties and the indemnifications extended
hereunder are intended to and shall continue after and survive the
expiration, termination or cancellation of this Agreement. 1.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forbearance or waiver had occurred. No
waiver, release or discharge of any party's rights hereunder shall be
effective unless contained in a written instrument signed by the party
sought to be charged.
F. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
H. If any part, term or provision of this Agreement is determined by the
courts or any regulatory authority to be illegal, in conflict with any
law or otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held
to be illegal or invalid.
I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.
24
<PAGE>
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Custodian and Fund.
K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder shall not
affect any rights or obligations of the other party hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Allen A. Straun
Title: EVP
FUND
By: /s/ Bernadette N. Finn
Title: Secretary
25
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSACTION DTC PHYSICAL FED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
- ---- ----------- ---------- ----------- ---------- ----------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
Calls Put As Received C or F* As Received C or F*
- ------------------------------------------------------------------------------------------------------------------------------------
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
- ------------------------------------------------------------------------------------------------------------------------------------
Tender Reorgs. As Received C As Received C N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends Paydate C Paydate C N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Floating Rate Int. Paydate C Paydate C N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Floating Rate Int. N/A As Rate Received C N/A
(No Rate)
- ------------------------------------------------------------------------------------------------------------------------------------
Mtg. Backed P&I Paydate C Paydate + 1 Bus. Day C Paydate F
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Rate Int. Paydate C Paydate C Paydate F
- ------------------------------------------------------------------------------------------------------------------------------------
Euroclear N/A C Paydate C
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Legend
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
26
<PAGE>
EXHIBIT A
Name of Fund
California Daily Tax Free Income Fund, Inc.*
Connecticut Daily Tax Free Income Fund, Inc.*
Cortland Trust, Inc.*
Daily Tax Free Income Fund, Inc.*
Delafield Fund, Inc.*
Florida Daily Municipal Income Fund+
Institutional Daily Income Fund+
Michigan Daily Tax Free Income Fund, Inc.*
New Jersey Daily Municipal Income Fund, Inc.*
New York Daily Tax Free Income Fund, Inc.*
North Carolina Daily Municipal Income Fund, Inc.*
Pennsylvania Daily Municipal Income Fund+
Reich & Tang Equity Fund, Inc.*
Reich & Tang Government Securities Trust+
Short Term Income Fund, Inc.*
Tax Exempt Proceeds Fund, Inc.*
* Maryland Corporation
+ Massachusetts Business Trust
Dated: August 30, 1994
AGREEMENT dated December 12, 1980 between Short Term Income Fund, Inc., a
Maryland corporation (the "Fund") and Discount Brokerage Corporation, a Delaware
corporation (the "Broker").
Short Term Income Fund, Inc. is registered as an
investment company under the Investment Company Act of 1940, as amended, and a
registration statement under the Securities Act of 1933, as amended, relating to
its shares of common stock, par value $.001 per share ("Shares'), is in effect.
Short Term Income Fund, Inc. and the Broker desire to enter into an agreement to
enable the Broker to establish accounts through which its customers may acquire
Shares in accordance with the terms of the prospectus contained in the said
registration statement, as amended and supplemented from time to time (the
"Prospectus").
NOW, THEREFORE, the Broker and the Fund agree as follows:
1. Definitions. The following terms shall have
the following meanings:
(a) "Bank Business Day" means any Business Day that is not a bank
holiday in the State of New York.
(b) "Business Day" means any day the New York Stock Exchange, Inc. is
open for trading.
(c) "Correspondent" means Tweedy Browne Clearing Corporation, a
Delaware corporation, or any other registered broker-dealer appearing, directly
or in "street" or "nominee" name, on the Fund's records as the owner of Shares
held for the Broker or for any of its customers.
(d) "Customer Account" means an account with the Fund established by
and in the name of the Correspondent, on behalf of a customer of the Broker
acquiring Shares, having the same account number or designation as the
customer's account with the Broker.
(e) "Transfer Agent" means The Bank of New York and any successor
transfer agent appointed from time to time by the Fund.
(f) "Participating Broker' means any registered broker-dealer which
has established and maintains accounts with the Fund on behalf of the broker's
customers similar to
II - 6
<PAGE>
the Customer Accounts established pursuant to this Agreement, and any other
registered broker-dealer appearing, directly or in "street' or "nominee" name,
on the Fund's records as the owner of Shares held for a Participating Broker or
any of its customers.
2. The Broker acknowledges that it has received the Fund's Prospectus
and agrees that prior to or simultaneously with establishing any Customer
Account the Broker shall deliver or cause the Correspondent to deliver a current
Prospectus to the customer on whose behalf the Customer Account is being
established. The Fund shall from-time to time provide the Broker or, if so
directed by the Broker, the Correspondent with such quantities of current
Prospectuses as the Broker may reasonably request.
3. The Broker shall cause the Correspondent to act as the holder of
record of all Shares held from time to time in the Customer Accounts and neither
the Fund nor the Transfer Agent shall be obligated to accept instructions
relating to the purchase or redemption of Shares from anyone other than the
Correspondent. The Broker shall cause the Correspondent to prepare monthly, and
furnish to the Transfer Agent, a current list showing, for each of the
Correspondent's Customer Accounts, the customer's name, address, and broker's
identification number, and, if requested by the Fund, shall prepare and furnish
to the Transfer Agent, within one Business Day of the request, unless unusual
circumstances render doing so infeasible, and, in any event not later than
within two Business Days of the request, a current list updating the information
contained in the previously furnished monthly list. The Fund shall not use any
list provided pursuant to this paragraph for any purpose other than furnishing
the list to the staff of the Securities and Exchange Commission if the staff
requests the list from the Fund.
4. (a) Each Bank Business Day, after the close of trading on the New
York Stock Exchange, Inc. on such day, the Broker shall cause the Correspondent
to deliver to the Transfer Agent, in such form as may be agreed upon from time
to time by the Broker and the Fund, all orders received or initiated by the
Broker on such day for the purchase or redemption of Shares on behalf of any
Customer Account. Orders for the purchase or redemption of Shares received or
initiated by the Broker on any Business Day that is not a Bank: Business Day
shall be combined with such orders so received or initiated on the next
following Bank Business Day. If an order for the
II - 7
<PAGE>
purchase of Shares on behalf of a Customer Account, is not accompanied by an
amount in Federal Funds sufficient to effect the purchase, then the Broker shall
cause the Correspondent to deliver the order to the Fund's Transfer Agent
promptly following the availability to the Correspondent of sufficient Federal
Funds to effect the purchase.
(b) If on any Business Day there is an excess of the aggregate
number of Shares to be purchased pursuant to orders delivered by the
Correspondent to the Transfer Agent over the aggregate number of Shares' to be
redeemed pursuant to such orders (the "Excess Purchased Shares"), then the
Broker shall cause the Correspondent to transfer to the Transfer Agent for the
account of the Fund, as soon as practicable but not later than Noon. New York
City time, on the Bank Business Day next following such Business Day, an amount
in Federal Funds equal to the net asset value per share last computed by the
Fund on such Business Day multiplied by the number of Excess Purchased Shares
for that day.
(c) If on any Business Day there is an excess of the aggregate
number of Shares to be redeemed' pursuant to orders delivered by the
Correspondent to the Transfer Agent over the aggregate number of Shares to be
purchased pursuant to such orders (the "Excess Redeemed Shares"),then the Fund
shall transfer to a bank account of the Correspondent which it has designated in
writing, as soon as practicable but not later than Noon, New York City time, on
the Bank Business Day next following such Business Day, an amount in Federal
Funds equal to the net asset value per share last computed by the Fund on such
Business Day multiplied by the number of Excess Redeemed Shares for that day.
(d) On the first Business Day following any Business Day on which
Shares are purchased or redeemed for any customer of the Broker, the Broker
shall send its customer a written confirmation of the purchase or redemption,
identifying the number of the Customer Account maintained on behalf of the
customer.
(e) As a fee for the services performed by the Broker pursuant to
this Section 4, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $1.00 for each confirmation of a purchase or of a redemption of Shares
sent to the Broker's customers during the month.
II - 8
<PAGE>
(f) The Broker shall not impose any charges on any Customer
Account for effecting the purchase or redemption of Shares on behalf of a
Customer Account or transferring to or receiving from a Participating Broker
Shares held for any Customer Account or establish any minimum redemption or
investment maintenance requirements unless at least 10 days prior to the
imposition of the charge or establishment of the requirements the Broker has
given the Fund written notice specifying the amount or rate of the charge or
requirements and the circumstances under which the charge or requirements will
be imposed. The Broker shall not impose any initial or subsequent minimum
purchase requirement higher than the initial or subsequent minimum purchase
requirements established by the Fund from time to time.
5. Promptly following the receipt thereof from the Fund, the Broker
shall mail to each customer on whose behalf a Customer Account is then
maintained the Fund's annual reports to shareholders, proxies, proxy statements
and other communications to shareholders, including the Prospectus as amended or
supplemented from time to time, which the Fund may from time to time furnish to
the Broker, and the Fund shall reimburse the Broker for its reasonable expenses
incurred in making such mailings.
6. (a) The Broker shall include in all periodic statements of account
sent to any customer on whose behalf a Customer Account is then maintained
information regarding (i) all purchases and redemptions of Shares in the
Customer Account during the period covered by the statement,(ii) all dividends
on Shares paid into the Customer Account during such period and (iii) the number
of Shares held in the Customer Account on the closing date of the statement.
(b) The Broker shall reasonably assist the Fund and its agents in
maintaining and servicing Customer Accounts, including (without limitation)
responding to inquiries from any customer on whose behalf a Customer Account is
then maintained relating to the Customer Account.
(c) As a fee for the services performed by the Broker pursuant to
this Section 6, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $.50 per month for each Customer Account maintained by the Broker on
behalf of its customers.
II - 9
<PAGE>
7. The aggregate annual amount of any monthly payments the Fund may
be required to make to the Broker pursuant to subsection (e) of Section 4 and
subsection (c) of Section 6 of this Agreement during the first and each
subsequent year during the term of this Agreement shall not exceed an amount
equal to $1,800 plus one tenth of one percent (.001) of the average net asset
value of the Shares held by customers of the Broker during the year or, in the
case of monthly payments made with respect to a period of less than one year, an
amount equal to the percentage of $1,800 that the period is of one year plus the
percentage of one tenth of one percent (.001) of the average net asset value of
the Shares held by customers of the Broker during the period that the period is
of one year.
8. (a) Upon a customer's request to the Broker to have the
customer's Shares transferred to another Participating Broker, the Broker shall
direct the Correspondent to instruct the Fund to effect the transfer. Except for
a transfer of Shares to a Participating Broker, which the Fund will effect
promptly following receipt of an instruction from the Correspondent, the Broker
shall not direct the Correspondent to transfer any Shares to any person except
on 20 days' written notice to the Fund setting forth the name and address of the
proposed transferee and the terms of the proposed transfer (including the
purchase price). Upon the giving of such notice, the Fund shall have the right,
at its option, to purchase from the Correspondent all or any part of the Shares
proposed to be transferred at a price computed in accordance with this-section.
(b) If the Fund determines to exercise such right to purchase,
it shall so notify the Correspondent in writing prior to the expiration of such
20--day period. If a certificate or certificates representing the Shares to be
purchased have been issued, the Broker shall cause the Correspondent to
surrender, within five days after the giving of the written notice from the Fund
of its intention to purchase such Shares, such certificate or certificates, duly
endorsed for transfer, to the Transfer Agent and the Fund shall promptly, but in
no event later than the seventh day following such surrender, pay the
Correspondent for the Shares purchased an amount in cash or marketable
securities or both equal to the net asset value per share of Shares next
determined by the Fund following the surrender, multiplied by the number of
Shares purchased.
II - 10
<PAGE>
(c) If no certificate or certificates for the shares to be
purchased have been issued, then the Fund shall promptly, but in no event later
than the seventh day following the giving of the written notice of its intention
to purchase such Shares, pay the Correspondent for the Shares purchased an
amount in cash or marketable securities or both equal to the net asset value per
share of Shares next determined by the Fund following the giving of such written
notice multiplied by the number of Shares purchased.
(d) Any certificates representing Shares issued to the Correspondent
shall contain on their face a legend referring to this section and stating that
the transfer of such Shares is restricted and to be governed by this section.
9. The Broker shall, and shall cause the Correspondent to, permit the
Fund's independent public accountants to make such examination of the Broker's
and the Correspondent's systems for effecting purchases and redemptions, and
recording ownership, of Shares as may be necessary to enable the accountants to
provide the Fund, both at the time operations under this Agreement are initiated
and annually in connection with the Fund's preparation of its annual report on
Form N-lR under the Investment Company Act of 1940, as amended, (the "Investment
Company Act"), a report in the form required by Form N-1R under the Investment
Company Act regarding the adequacy of the Fund's internal accounting control and
systems for safeguarding securities. In addition, the Broker shall, and shall
cause the Correspondent to, promptly furnish the Fund copies of any letters of
complaint received from customers of the Broker on whose behalf Customer
Accounts are maintained regarding the Fund or its Shares as well as copies of
any replies the Broker or the Correspondent makes to those letters.
10. The Fund may terminate this Agreement at any time on not less than
seven days' written notice. The Broker may terminate this Agreement at any time
without notice by so informing the Fund in writing. No later than the seventh
day following any such termination, the Broker shall cause the Correspondent,
for any Shares of which it is the record holder for a Customer Account, (i) to
redeem the Shares, (ii) to instruct the Fund to transfer record ownership of the
Shares to a Participating Broker or (iii)to instruct the Correspondent to
transfer ownership of the Shares on the Correspondent's books and records to a
Participating Broker.
II - 11
<PAGE>
11. Any notice required or permitted to be given in writing
pursuant to this Agreement may be sent by mail, in which case the notice shall
be deemed given on the third Business Day following the deposit of the notice
into the custody of the United States Post Office, and shall be given to the
Broker or the Fund at the following addresses:
If to the Broker
Discount Brokerage Corporation
67 Wall Street
New York, New York 10005
If to the Correspondent:
Tweedy Browne Clearing Corporation
67 Wall Street
New York, New York 10005
If to the Fund:
Short Term Income Fund, Inc.
230 Park Avenue - Suite 3300
New York, New York 10017
Attention of the President
12. This Agreement may not be assigned by the Broker or by the Fund,
except that this Agreement shall be binding on and inure to the benefit of the
surviving entity of a merger or consolidation between the Broker and any other
entity, provided, however, that such surviving entity is registered as a
broker-dealer under the Securities Exchange Act of 1934 or any successor
statute.
IN WITNESS WHEREOF, the Broker and the Fund have executed this
Agreement as of the date first written above.
Discount Brokerage Corporation
By /s/ Marc A. Beema
--------------------
Short Term Income Fund, Inc.
By /s/ Lesley M. Jones
----------------------
<PAGE>
AGREEMENT dated September 10, 1980 between Short Term Income Fund, Inc.
a Maryland corporation (the "Fund) and Neuberger & Berman, a New York limited
partnership (the "Broker").
Short Term Income Fund, Inc. is registered as an investment company
under the Investment Company Act of 1940, as amended, and a registration
statement under the Securities Act of 1933, as amended, relating to its shares
of common stock, per value $.001 per share ("Shares"). is in effect. Short Term
Income Fund, Inc. and the Broker desire to enter into an agreement to enable the
Broker to establish accounts through which its customers may acquire Shares in
accordance with the terms of the prospectus contained in the said registration
statement, as amended and supplements from time to time (the "Prospectus").
NOW, THEREFORE, the Broker and the Fund agree as follows:
1. Definitions The following terms shall have the following meanings:
(a) "Bank Business Day" means any Business Day that is not a bank
holiday in the State of New York.
(b) "Business Day" means any day the New York Stock Exchange, Inc. is
open for trading.
(c) "Customer Account" means an account with the Fund established by
and in the name of the Broker, on behalf of a customer acquiring Shares, having
the same account number or designation as the customer's account with the
Broker.
(d) "Transfer Agent" means the Bank of New York and any successor
transfer agent appointed from time to time by the fund.
(e) "Participating Broker" means any registered broker-dealer which has
established and maintains accounts with the Fund on behalf of the Broker's
customers similar to the Customer Accounts established pursuant to this
Agreement.
2. The Broker acknowledges that it has received the Fund's Prospectus
dated January 18, 1980 and agrees that prior to or simultaneously with
establishing any Customer Account it shall deliver a current Prospectus to its
customer on whose behalf the Customer Account is being established . The Fund
shall from time to time provide the Broker with such quantities of current
Prospectuses as the Broker may reasonably request.
II-13
<PAGE>
3. The Broker shall be the holder of record of all Shares held from
time to time in the Customer Accounts and neither the Fund nor the Transfer
Agent shall be obligated to accept instructions relating to the purchase or
redemption of Shares from anyone other than the Broker. The Broker shall prepare
monthly, and furnish to the Transfer Agent, a current list showing for each of
the Broker's Customer Accounts, the customer's name, address and the broker's
identification number. The Fund shall not use the list for any purpose other
than furnishing the list to the staff of the Securities and Exchange Commission
if the staff requests the list from the Fund.
4. (a) Each Bank Business Day, after the close of trading on the New
York Stock Exchange, Inc. on such day, the Broker shall deliver to the Transfer
Agent, in such form as may be agreed upon from time to time by the Broker and
the Fund, all orders received or made by the Broker on such day for the purchase
or redemption of Shares on behalf of any Customer Account. Orders for the
purchase or redemption of Shares received or made by the Broker on any Business
Day that is not a Bank Business Day shall be combined with such orders so
received or made on the next following Bank Business Day. If an order for the
purchase of Shares on behalf of the Customer Account is not accompanied by an
amount in Federal Funds sufficient to effect the purchase, then the Broker shall
deliver the order to the Fund's Transfer Agent promptly following the
availability to the Broker of sufficient Federal Funds to effect the purchase.
(b) If on any Business Day there is an excess of the aggregate
number of Shares to be purchased pursuant to orders delivered by the Broker to
the Transfer Agent over the aggregate number of Shares to be redeemed pursuant
to such orders (the "Excess Purchases Shares"), then the Broker shall transfer
or cause to be transferred to the Transfer Agent for the account of the Fund, as
soon as practicable but not later than Noon, New York City time, on the Bank
Business Day next following such Business Day, an amount in Federal Funds equal
to the net asset value per share last computed by the Fund on such Business Day
multiplied by the number of Excess Purchased Shares for that day.
(c) If on any Business Day there is an excess of the aggregate
number of Shares to be redeemed pursuant to orders delivered by the Broker to
the Transfer Agent over the aggregate number of Shares to be purchased pursuant
to such orders (the "Excess Redeemed Shares"), then the Fund shall transfer or
cause to be transferred to a bank account of the Broker which it has designated
in writing, as soon as practicable but not late than Noon, New York City time,
on the Bank
II-14
<PAGE>
Business Day next following such Business Day, an amount in Federal Funds equal
to the net asset value per share last computed by the Fund on such Business Day
multiplied by the number of Excess Redeemed for that day.
(d) On the first Business Day following any Business Day on
which Shares are purchased or redeemed for any customer of the Broker, the
Broker shall send its customer a written confirmation of the purchase or
redemption, identifying the number of the Customer Account maintained on behalf
of the customer.
(e) As a fee for the services performed by the Broker pursuant
to this Section 4, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $1.00 for each confirmation of a purchase or of a redemption of Shares
sent to the Broker's customers during the month.
(f) The Broker shall not impose any charges on any Customer
Account for effecting the purchase or redemption of Shares on behalf of a
Customer Account or transferring to or receiving from a Participating Broker
Shares held for any Customer Account or establish any minimum purchase,
redemption or investment maintenance requirement unless at least 10 days prior
to the imposition of the charge or establishment of the requirements the Broker
has given the Fund written notice specifying the amount or rate of the charge or
requirements and the circumstances under which the charge or requirements will
be imposed.
5. Promptly following the receipt thereof from the Fund, the Broker
shall mail to each customer on whose behalf a Customer Account is then
maintained the Fund's annual reports to shareholders, proxies, proxy statements
and other communications to shareholders, including the Prospectus as amended or
supplemented from time to time, which the Fund may from time to time furnish to
the Broker and Fund shall reimburse the Broker for its reasonable expenses
incurred in making such mailings.
6. (a) The Broker shall include in all periodic statements of account
sent by it to any customer on whose behalf a Customer Account is then maintained
information regarding (i) all purchases and redemptions of Shares in the
Customer Account during the period covered by the statement, (ii) all dividends
on Shares paid into the Customer Account during such period and (iii) the number
of Shares held in the Customer Account on the closing date of the statement.
II-15
<PAGE>
(b) The Broker shall reasonably assist the Fund and its agents
in maintaining and servicing Customer Accounts, including (without limitation)
responding to inquiries from any customer on whose behalf a Customer Account is
then maintained relating to the Customer Account.
(c) As a fee for the services performed by the Broker pursuant
to this Section 6, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $.50 per month for each Customer Account maintained by the Broker on
behalf of it customers.
7. (a) Upon the request of a customer to have his Shares transferred to
another Participating Broker, the Broker shall instruct the Fund to effect the
transfer. Except for a transfer of Shares to a Participating Broker, which the
Fund will effect promptly following receipt of an instruction from the Broker,
the Broker shall not attempt to transfer any Shares to any person except on 20
days' written notice to the Fund setting forth the name and address of the
proposed transferee and the terms of the proposed transfer (including the
purchase price). Upon the giving of such notice, the Fund shall have the right,
at its option, to repurchase from the Broker all or any part of the Shares
proposed to be transferred at a price computed in accordance with this section.
(b) If the Fund determines to exercise such right to
repurchase, it shall so notify the Broker in writing prior to the expiration of
such 20-day period. If a certificate or certificates representing the Shares to
be repurchased have been issued, the Broker shall, within five days after the
giving of the written notice from the Fund of its intention to repurchase such
Shares, surrender such certificate or certificates, duly endorsed for transfer,
to the Transfer Agent and the Fund shall promptly, but in no event later than
the seventh day following such surrender, pay the Broker for the Shares
repurchased an amount in cash or marketable securities or both equal to the net
asset value per share of Shares next determined by the Fund following the
surrender, multiplied by the number of Shares repurchased.
(c) If no certificate or certificates for the shares to be
repurchased have been issued then the Fund shall promptly, but in no event later
than the seventh day following the giving of the written notice of its intention
to repurchase such Share, pay the Broker for the Shares repurchased an amount in
cash or marketable securities or both equal to the net asset value per share of
Shares next determined by the Fund following the giving of such written notice
multiplied by the number of Shares repurchased.
II-16
<PAGE>
(d) Any certificates representing Shares issued to the Broker
shall contain of their face a legend referring to this section and stating that
the transfer of such Shares is restricted and to be governed by this section.
8. The Broker shall permit the Fund's independent public accountants to
make such examination of the Broker's systems for effecting purchases and
redemptions, and recording ownership, of Shares as may be necessary to enable
the accountants to provide the Fund, both at the time operations under this
Agreement are initiated and annually in connection with the Fund's preparation
of its annual report on Form N-1R under the Investment Company Act of 1940, as
amended, (the "Investment Company Act"), a report in the form required by Form
N-1R under the Investment Company Act regarding the adequacy of the Fund's
internal accounting control and systems for safeguarding securities. In
addition, the Broker shall promptly furnish the Fund copies of any letters of
complaint received by the Broker from its customers on whose behalf Customer
Accounts are maintained regarding the Fund or its Shares as well as copies of
any replies the Broker makes to those letters.
9. The Fund may terminate this Agreement at any time on not less than
90 days written notice. The Broker may terminate this Agreement at any time
without notice by so informing the Fund in writing. No later than the seventh
day following such termination, the Broker either (i) redeem all Shares of which
it is the record holder or (ii) transfer record ownership of Shares held in one
or more Customer Accounts to a Participating Broker and redeem all Shares not so
transferred.
10. Any notice required or permitted to be given in writing pursuant to
this Agreement may be sent by mail, in which case the notice shall be deemed
given on the third Business Day following the deposit of the notice into the
custody of the United States Post Office, and shall be given to the Broker or
the Fund at the following addresses:
If to the Broker:
Mr. Vincent Cavallo Mr. Joseph Masco
522 Fifth Avenue 120 Broadway
New York, N.Y. 10036 New York, N.Y. 10005
If to the Fund:
Short Term Income Fund, Inc.
230 Park Avenue Suite 3300
New York, New York 10017
Attention of the President
II-17
<PAGE>
11. This Agreement may not be assigned by the Broker or by the Fund,
except that this Agreement shall be binding on and to the benefit of the
surviving entity of a merger consolidation between the broker and any other
entity, provided, however, that such surviving entity is registered as a
broker-dealer under the Securities Exchange Act of 1934 or any successor
statute.
IN WITNESS WHEREOF, the Broker and the Fund have executed this
Agreement as of the date first written above.
NEUBERGER & BERMAN
By: /s/ Neuberger & Berman
Short Term Income Fund, Inc.
By: /s/ Joseph H. Reich
II-18
<PAGE>
SHORT TERM INCOME FUND, INC.
AGREEMENT dated February 18, 1981 between Short Term Income Fund, Inc.
a Maryland corporation (the "Fund) and L.F. Rothschild, Unterberg, Towbin, a New
York limited partnership (the "Broker").
Short Term Income Fund, Inc. is registered as an investment company
under the Investment Company Act of 1940, as amended, and a registration
statement under the Securities Act of 1933, as amended, relating to its shares
of common stock, per value $.001 per share ("Shares"). is in effect. Short Term
Income Fund, Inc. and the Broker desire to enter into an agreement to enable the
Broker to establish accounts through which its customers may acquire Shares in
accordance with the terms of the prospectus contained in the said registration
statement, as amended and supplements from time to time (the "Prospectus").
NOW, THEREFORE, the Broker and the Fund agree as follows:
1. Definitions The following terms shall have the following meanings:
(a) "Bank Business Day" means any Business Day that is not a bank
holiday in the State of New York.
(b) "Business Day" means any day the New York Stock Exchange, Inc. is
open for trading.
(c) "Customer Account" means an account with the Fund established by
and in the name of the Broker, on behalf of a customer acquiring Shares, having
the same account number or designation as the customer's account with the
Broker.
(d) "Transfer Agent" means the Bank of New York and any successor
transfer agent appointed from time to time by the fund.
(e) "Participating Broker" means any registered broker-dealer which has
established and maintains accounts with the Fund on behalf of the Broker's
customers similar to the Customer Accounts established pursuant to this
Agreement.
2. The Broker acknowledges that it has received the Fund's Prospectus
dated January 18, 1980, amended November 5, 1980 and agrees that prior to or
simultaneously with establishing any Customer Account it shall deliver a current
Prospectus to its customer on whose behalf the Customer Account is being
established . The Fund shall from time to time provide the Broker with such
quantities of current Prospectuses as the Broker may reasonably request.
II-19
<PAGE>
3. The Broker shall be the holder of record of all Shares held from
time to time in the Customer Accounts and neither the Fund nor the Transfer
Agent shall be obligated to accept instructions relating to the purchase or
redemption of Shares from anyone other than the Broker. The Broker shall prepare
monthly, and furnish to the Transfer Agent, a current list showing for each of
the Broker's Customer Accounts, the customer's name, address and the broker's
identification number. The Fund shall not use the list for any purpose other
than furnishing the list to the staff of the Securities and Exchange Commission
if the staff requests the list from the Fund.
4. (a) Each Bank Business Day, after the close of trading on the New
York Stock Exchange, Inc. on such day, the Broker shall deliver to the Transfer
Agent, in such form as may be agreed upon from time to time by the Broker and
the Fund, all orders received or made by the Broker on such day for the purchase
or redemption of Shares on behalf of any Customer Account. Orders for the
purchase or redemption of Shares received or made by the Broker on any Business
Day that is not a Bank Business Day shall be combined with such orders so
received or made on the next following Bank Business Day. If an order for the
purchase of Shares on behalf of the Customer Account is not accompanied by an
amount in Federal Funds sufficient to effect the purchase, then the Broker shall
deliver the order to the Fund's Transfer Agent promptly following the
availability to the Broker of sufficient Federal Funds to effect the purchase.
(b) If on any Business Day there is an excess of the aggregate
number of Shares to be purchased pursuant to orders delivered by the Broker to
the Transfer Agent over the aggregate number of Shares to be redeemed pursuant
to such orders (the "Excess Purchases Shares"), then the Broker shall transfer
or cause to be transferred to the Transfer Agent for the account of the Fund, as
soon as practicable but not later than Noon, New York City time, on the Bank
Business Day next following such Business Day, an amount in Federal Funds equal
to the net asset value per share last computed by the Fund on such Business Day
multiplied by the number of Excess Purchased Shares for that day.
(c) If on any Business Day there is an excess of the aggregate
number of Shares to be redeemed pursuant to orders delivered by the Broker to
the Transfer Agent over the aggregate number of Shares to be purchased pursuant
to such orders (the "Excess Redeemed Shares"), then the Fund shall transfer or
cause to be transferred to a bank account of the Broker which it has designated
in writing, as soon as practicable but not late than Noon, New York City time,
on the Bank
II-20
<PAGE>
Business Day next following such Business Day, an amount in Federal
Funds equal to the net asset value per share last computed by the Fund on such
Business Day multiplied by the number of Excess Redeemed for that day.
(d) On the first Business Day following any Business Day on
which Shares are purchased or redeemed for any customer of the Broker, the
Broker shall send its customer a written confirmation of the purchase or
redemption, identifying the number of the Customer Account maintained on behalf
of the customer.
(e) As a fee for the services performed by the Broker pursuant
to this Section 4, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $1.00 for each confirmation of a purchase or of a redemption of Shares
sent to the Broker's customers during the month.
(f) The Broker shall not impose any charges on any Customer
Account for effecting the purchase or redemption of Shares on behalf of a
Customer Account or transferring to or receiving from a Participating Broker
Shares held for any Customer Account or establish any minimum purchase,
redemption or investment maintenance requirement unless at least 10 days prior
to the imposition of the charge or establishment of the requirements the Broker
has given the Fund written notice specifying the amount or rate of the charge or
requirements and the circumstances under which the charge or requirements will
be imposed.
5. Promptly following the receipt thereof from the Fund, the Broker
shall mail to each customer on whose behalf a Customer Account is then
maintained the Fund's annual reports to shareholders, proxies, proxy statements
and other communications to shareholders, including the Prospectus as amended or
supplemented from time to time, which the Fund may from time to time furnish to
the Broker and Fund shall reimburse the Broker for its reasonable expenses
incurred in making such mailings.
6. (a) The Broker shall include in all periodic statements of account
sent by it to any customer on whose behalf a Customer Account is then maintained
information regarding (i) all purchases and redemptions of Shares in the
Customer Account during the period covered by the statement, (ii) all dividends
on Shares paid into the Customer Account during such period and (iii) the number
of Shares held in the Customer Account on the closing date of the statement.
II-21
<PAGE>
(b) The Broker shall reasonably assist the Fund and its agents
in maintaining and servicing Customer Accounts, including (without limitation)
responding to inquiries from any customer on whose behalf a Customer Account is
then maintained relating to the Customer Account.
(c) As a fee for the services performed by the Broker pursuant
to this Section 6, and subject to the limitation contained in Section 7 of this
Agreement, the Fund shall pay the Broker, promptly following the end of each
month, $.50 per month for each Customer Account maintained by the Broker on
behalf of it customers.
7. The aggregate annual amount of any monthly payments the Fund may be
required to make to the Broker pursuant to subsection (e) of Section 4 and
subsection (C) of Section 6 of the Agreement during the first and each
subsequent year during one term of this Agreement shall not exceed an amount
equal to one tenth of one percent (.001) of the average net asset value of the
Shares held by customers of the Broker during the yeat or, in the case of
monthly payments made with respect to a period of less than one year, an amount
equal to the percentage of one tenth of one percent (.001) of the average net
asset value of the Shares held by the customers of the Broker during the period
that the period is of one year.
8. (a) Upon the request of a customer to have his Shares transferred to
another Participating Broker, the Broker shall instruct the Fund to effect the
transfer. Except for a transfer of Shares to a Participating Broker, which the
Fund will effect promptly following receipt of an instruction from the Broker,
the Broker shall not attempt to transfer any Shares to any person except on 20
days' written notice to the Fund setting forth the name and address of the
proposed transferred and the terms of the proposed transfer (including the
purchase price). Upon the giving of such notice, the Fund shall have the right,
at its option, to repurchase from the Broker all or any part of the Shares
proposed to be transferred at a price computed in accordance with this section.
(b) If the Fund determines to exercise such right to repurchase,
it shall so notify the Broker in writing prior to the expiration of such 20-day
period. If a certificate or certificates representing the Shares to be
repurchased have been issued, the Broker shall, within five days after the
giving of the written notice from the Fund of its intention to repurchase such
Shares, surrender such certificate or certificates, duly endorsed for transfer,
to the Transfer Agent and
II-22
<PAGE>
the Fund shall promptly, but in no event later than the seventh day following
such surrender, pay the Broker for the Shares repurchased an amount in cash or
marketable securities or both equal to the net asset value per share of Shares
next determined by the Fund following the surrender, multiplied by the number of
Shares repurchased.
(c) If no certificate or certificates for the shares to be
repurchased have been issued then the Fund shall promptly, but in no event later
than the seventh day following the giving of the written notice of its intention
to repurchase such Share, pay the Broker for the Shares repurchased an amount in
cash or marketable securities or both equal to the net asset value per share of
Shares next determined by the Fund following the giving of such written notice
multiplied by the number of Shares repurchased.
(d) Any certificates representing Shares issued to the Broker
shall contain of their face a legend referring to this section and stating that
the transfer of such Shares is restricted and to be governed by this section.
9. The Broker shall permit the Fund's independent public accountants to
make such examination of the Broker's systems for effecting purchases and
redemptions, and recording ownership, of Shares as may be necessary to enable
the accountants to provide the Fund, both at the time operations under this
Agreement are initiated and annually in connection with the Fund's preparation
of its annual report on Form N-1R under the Investment Company Act of 1940, as
amended, (the "Investment Company Act"), a report in the form required by Form
N-1R under the Investment Company Act regarding the adequacy of the Fund's
internal accounting control and systems for safeguarding securities. In
addition, the Broker shall promptly furnish the Fund copies of any letters of
complaint received by the Broker from its customers on whose behalf Customer
Accounts are maintained regarding the Fund or its Shares as well as copies of
any replies the Broker makes to those letters.
10. The Fund may terminate this Agreement at any time on not less than
90 days written notice. The Broker may terminate this Agreement at any time
without notice by so informing the Fund in writing. No later than the seventh
day following such termination, the Broker either (i) redeem all Shares of which
it is the record holder or (ii) transfer record ownership of Shares held in one
or more Customer Accounts to a Participating Broker and redeem all Shares not so
transferred.
II-23
<PAGE>
11. Any notice required or permitted to be given in writing pursuant to
this Agreement may be sent by mail, in which case the notice shall be deemed
given on the third Business Day following the deposit of the notice into the
custody of the United States Post Office, and shall be given to the Broker or
the Fund at the Following addresses:
If to the Broker:
L.F. Rothschild, Uterberg, Towbin
55 Water Street
New York, New York 10041
If to the Fund:
Short Term Income Fund, Inc.
230 Park Avenue Suite 3300
New York, New York 10160
Attention of the President
12. This Agreement may not be assigned by the Broker or by the Fund,
except that this Agreement shall be binding on and to the benefit of the
surviving entity of a merger consolidation between the broker and any other
entity, provided, however, that such surviving entity is registered as a
broker-dealer under the Securities Exchange Act of 1934 or any successor
statute.
IN WITNESS WHEREOF, the Broker and the Fund have executed this
Agreement as of the date first written above.
L.F. Rothschild, Unterberg, Towbin
By: /s/ L.F. Rothschild, Unterberg, Towbin
------------------------------------------
Short Term Income Fund, Inc.
By: /s/ Joseph H. Reich
-----------------------
II-24
ADMINISTRATIVE SERVICES CONTRACT
SHORT TERM INCOME FUND, INC.
the "Fund"
Money Market Portfolio
U.S. Government Portfolio
the "Portfolios"
New York, New York
December 1, 1995
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and
reinvesting our assets in securities of the type, and in accordance with the
limitations, specified in our Articles of Incorporation, By-Laws and
Registration Statement filed with the Securities and Exchange Commission under
the Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to such
extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the documents listed above and will furnish you such
amendments thereto as may be made from time to time.
2. a. On behalf of the Portfolios, we hereby employ you as our
administrator (the "Administrator") to provide all management and administrative
services reasonably necessary for our operation, other than those services you
provide to us pursuant to the Investment Management Contract. The services to be
provided by you shall include but not be limited to those enumerated on Exhibit
A hereto. The personnel providing these services may be your employees or
employees of your affiliates or of other organizations. You shall make periodic
reports to the Fund's Board of Directors in the performance of your obligations
under this Agreement and the execution of your duties hereunder is subject to
the general control of the Board of Directors.
b. It is understood that you will from time to time employ,
subcontract with or otherwise associate with
<PAGE>
yourself, entirely at your expense, such persons as you believe to be
particularly fitted to assist you in the execution of your duties hereunder.
While this agreement is in effect, you or persons affiliated with you, other
than us ("your affiliates"), will provide persons satisfactory to our Board of
Directors to be elected or appointed officers or employees of our corporation.
These shall be a president, a secretary, a treasurer, and such additional
officers and employees as may reasonably be necessary for the conduct of our
business.
c. You or your affiliates will also provide persons, who may
be our officers, to (i) supervise the performance of bookkeeping and related
services and calculation of net asset value and yield by our bookkeeping agent
and (ii) prepare reports to and the filings with regulatory authorities, and
(iii) perform such clerical, other office and shareholder services for us as we
may from time to time request of you. Such personnel may be your employees or
employees of your affiliates or of other organizations. Notwithstanding the
preceding, you shall not be required to perform any accounting services not
expressly provided for herein.
d. You or your affiliates will also furnish us such
administrative and management supervision and assistance and such office
facilities as you may believe appropriate or as we may reasonably request
subject to the requirements of any regulatory authority to which you may be
subject. You or your affiliates will also pay the expenses of promoting the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, printing copies of the prospectus contained therein and
complying with other applicable regulatory requirements), except to the extent
that we are permitted to bear such expenses under a plan adopted pursuant to
Rule 12b-1 under the 1940 Act or a similar rule.
3. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
2
<PAGE>
4. In consideration of the foregoing, each Portfolio will pay
you a fee of .21% of the 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. Your
fee will be accrued by us daily, and will be payable on the last day of each
calendar month for services performed hereunder during that month or on such
other schedule as we may agree in writing. You may use any portion of this fee
for distribution of our shares, or for making payments to organizations whose
customers or clients are our stockholders. You may waive your right to any fee
to which you are entitled hereunder, provided such waiver is delivered to us in
writing.
5. This Agreement will become effective on the date hereof
and shall continue in effect until April 30, 1996 and thereafter for successive
twelve-month periods (computed from each May 1 ), provided that such
continuation is specifically approved at least annually by our Board of
Directors and by a majority of those of our directors who are neither party to
this Agreement nor, other than by their service as directors of the corporation,
interested persons, as defined in the 1940 Act, of any such person who is party
to this Agreement. With respect to each Portfolio, this Agreement may be
terminated at any time, without the payment of any penalty, (i) by vote of a
majority of the outstanding voting securities of each respective Portfolio
voting separately, as defined in the 1940 Act, or (ii) by a vote of a majority
of our entire Board of Directors, on sixty days' written notice to you, or by
you on sixty days' written notice to us.
6. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
7. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
3
<PAGE>
8. This Agreement shall be construed in accordance with the
laws of the State of New York and the applicable provisions of the 1940 Act.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
U.S. Government Portfolio
By: \s\ Bernadette N. Finn
ACCEPTED: December 1, 1995
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC., General Partner
By: \s\ Lorraine C. Hysler
4
<PAGE>
Exhibit A
Administration Services To Be Performed
By Reich & Tang Asset Management L.P.
Administration Services
1. In conjunction with Fund counsel, prepare and file all
Post-Effective Amendments to the Registration Statement, all
state and federal tax returns and all other required
regulatory filings.
2. In conjunction with Fund counsel, prepare and file all Blue
Sky filings, reports and renewals.
3. Coordinate, but not pay for, required Fidelity Bond and
Directors and Officers Insurance (if any) and monitor their
compliance with Investment Company Act.
4. Coordinate the preparation and distribution of all materials
for Directors, including the agenda for meetings and all
exhibits thereto, and actual and projected quarterly
summaries.
5. Coordinate the activities of the Fund's Manager, Custodian,
Legal Counsel and Independent Accountants.
6. Prepare and file all periodic reports to shareholders and
proxies and provide support for shareholder meetings.
7. Monitor daily and periodic compliance with respect to all
requirements and restrictions of the Investment Company Act,
the Internal Revenue Code and the Prospectus.
8. Monitor daily the Fund's bookkeeping services agent's
calculation of all income and expense accruals, sales and
redemptions of capital shares outstanding.
9. Evaluate expenses, project future expenses, and process
payments of expenses.
10. Monitor and evaluate performance of accounting and
accounting related services by Fund's bookkeeping services
agent. Nothing herein shall be construed to require you to
perform any accounting services not expressly provided for
in this Agreement.
5
TRANSFER AGENCY AGREEMENT
Agreement made as of the 22 day of April, 1996,
between each fund listed on the attached Schedule A having its principal office
and place of business at 600 Fifth Avenue, New York, New York 10020 (each fund
hereinafter referred to as the "Fund"), and Reich & Tang Services L.P., a
Delaware limited partnership, having its principal office and place of business
at 600 Fifth Avenue NYC, NY 10020 (hereinafter referred to
as the "Transfer Agent").
W I T N E S S E T H
That for and in consideration of the mutual promises
hereinafter set forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases shall have the following meanings:
1. "Approved Institution" shall mean an entity so named in a
Certificate. From time to time the Find may amend a previously delivered
Certificate by delivering to the Transfer Agent a Certificate naming an
additional entity or deleting any entity named in a previously delivered
Certificate.
2. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Transfer Agent by the Fund which is signed by any Officer, as hereinafter
defined, and actually received by the Transfer Agent.
3. "Custodian" shall mean The Bank of New York, as custodian
under the terms and conditions of the Custody Agreement between The Bank of New
York and the Fund, or its successor(s).
4. "Fund Business Day" shall be deemed to be each day on which
the New York Stock Exchange, Inc. is open for trading.
5. "Officer" shall be deemed to be the Fund's Chairman of the
Board, the Fund's President, any Vice President of the Fund, the Fund's
Secretary, the Fund's Treasurer, the Fund's Controller, any Assistant Controller
of the Fund, any Assistant to the Board of Directors of the Fund to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund and
named in the Certificate annexed hereto as Appendix
<PAGE>
A, as such Certificate may be amended from time to time, and any person
reasonably believed by the Transfer Agent to be such a person.
6. "Series" shall mean the various portfolios of the
Fund as described from time to time in the current and effective
Prospectus.
7. "Shares: shall mean all or any part of each class of the
shares of capital stock of the Fund and of any Series of the Fund listed in the
Certificate annexed hereto as Appendix B, as may be amended from time to time,
which from time to time are authorized and/or issued by the Fund.
8. "Prospectus" shall mean the last Fund prospectus actually
received by the Transfer Agent from the Fund with respect to which the Fund has
indicated a registration statement under the Federal Securities Act of 1933 has
become effective, including the statement of Additional Information incorporated
by reference therein.
9. "Transfer Agent" shall mean Reich & Tang Services L.P., as
transfer agent and divided disbursing agent under the terms and conditions of
this Agreement, its successor(s) or assign(s).
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. The Fund hereby constitutes and appoints the Transfer Agent
as transfer agent of all the Shares of the Fund and as dividend disbursing agent
during the period of this Agreement.
2. The Transfer Agent hereby accepts appointment as transfer
agent and dividend disbursing agent and agrees to perform the duties thereof as
hereinafter set forth.
3. In connection with such appointment, the Fund shall deliver
the following documents to the Transfer Agent:
(a) A certified copy of the Articles of Incorporation
of the Fund and all amendments thereto;
(b) A certified copy of the By-Laws of the Fund;
(c) A certified copy of a resolution of the Board of Directors
of the Fund appointing the Transfer Agent and authorizing the execution of this
Transfer Agency Agreement;
<PAGE>
(d) A Certificate signed by the Secretary of the Fund
specifying with respect to each Series: the number of authorized Shares, the
number of authorized Shares issued, and the number of such authorized Shares
issued and currently outstanding, the names and specimen signatures of the
Officers of the Fund, and the name and address of the legal counsel for the
Fund;
(e) Specimen Share certificates for each class of Shares in
the form approved by the Board of Directors of the Fund, together with a
certificate signed by the Secretary of the Fund as to such approval;
(f) Copies of the Fund's Registration Statement, as amended to
date, and the most recently filed Post-Effective Amendment thereto, filed by the
Fund with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and under the Investment Company Act of 1940, as amended,
together with any applications filed in connection therewith; and
(g) Opinion of counsel for the Fund with respect to the
validity of the authorized and outstanding Shares, whether such Shares are fully
paid and non-assessable and the status of such Shares under the Securities Act
of 1933, as amended, and any other applicable federal law or regulation (i.e.,
if subject to registration, that they have been registered and that the
Registration Statement has become effective or, if exempt, the specific grounds
therefor).
4. To the extent that the Fund issues certificates to its shareholders
pursuant to its current prospectus, the Fund shall furnish the Transfer Agent
with a sufficient supply of blank Share certificates and from time to time will
renew such supply upon request of the Transfer Agent. Such blank Share
certificates shall be properly signed, by facsimile or otherwise, by Officers of
the Fund authorized by law or by the by-laws to sign Share certificates, and, if
required, shall bear the corporate seal or facsimile thereof.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Fund shall deliver to the Transfer Agent the following documents
on or before the effective date of any increase or decrease in the total number
of Shares authorized to be issued:
(a) A certified copy of the amendment to the Articles
of Incorporation giving effect to such increase or decrease;
(b) In the case of an increase, an opinion of counsel for the
Fund with respect to the validity of the Shares of the
<PAGE>
Fund and the status of such Shares under the Securities Act of 1933, as amended,
and any other appropriate federal law or regulation (i.e., if subject to
registration, that they have been registered and that the Registration Statement
has become effective or, if exempt, the specific grounds therefor); and
(c) In the case of an increase, if the appointment of the
Transfer Agent was theretofore expressly limited, if the appointment of the
Transfer Agent was theretofore expressly limited, a certified copy of a
resolution of the Board of Directors of the Fund increasing the authority of the
Transfer Agent.
2. Prior to the issuance of any additional Shares of the Fund pursuant
to stock dividends or stock splits, etc., and prior to any reduction in the
number of shares outstanding, the Fund shall deliver the following documents to
the Transfer Agent:
(a) A certified copy of the resolution(s) adopted by the Board
of Directors and/or the shareholders of the Fund authorizing such issuance of
additional Shares of the Fund or such reduction, as the case may be, and
(b) An opinion of counsel for the Fund with respect to the
validity of the Shares of the Fund and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable federal law or
regulation (i.e., if subject to registration, that they have been registered and
that the Registration Statement has become effective, or, if exempt, the
specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or other
capital adjustment requiring a change in the form of Share certificates, the
Transfer Agent will issue Share certificates in the new form in exchange for, or
upon transfer of, outstanding Share certificates in the old form, upon
receiving:
(a) A Certificate authorizing the issuance of Share
certificates in the new form;
(b) A certified copy of any amendment to the Articles of
Incorporation with respect to the change;
(c) Specimen Share certificates for each class of Shares in
the new form approved by the Board of Directors of the Fund, with a Certificate
signed by the Secretary of the Fund as to such approval; and
<PAGE>
(d) An opinion of counsel for the Fund with respect to the
validity of the Shares in the new form and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable federal law or
regulation (i.e., if subject to registration, that the Shares have been
registered and that the Registration Statement has become effective or, if
exempt, the specific grounds therefor).
2. To the extent that the Fund issues certificates to its shareholders
pursuant to its current prospectus, the Fund shall furnish the Transfer Agent
with a sufficient supply of blank Share certificates in the new form, and from
time to time will replenish such supply upon the request of the Transfer Agent.
Such blank Share certificates shall be properly signed by Officers of the Fund
authorized by law or by the by-laws to sign Share certificates and, if required,
shall bear the corporate seal or facsimile thereof. The Fund agrees to indemnify
and exonerate, save and hold the Transfer Agent harmless, from and against any
and all claims or demands that may be asserted against the Transfer Agent with
respect to the genuineness of any Share certificate supplied to the Transfer
Agent pursuant to this section.
ARTICLE V
ISSUANCE, REDEMPTION, EXCHANGE AND TRANSFER OF SHARES
1. (a) The Transfer Agent shall accept with respect to each Fund
Business Day, at such times as are agreed upon from time to time by the Transfer
Agent and the Fund, each (i) purchase order received from a purchaser, or
shareholder, whether or not an Approved Institution, (ii) exchange request
involving shares of certain other investment companies listed in the Fund's
prospectus, and (iii) redemption request either received from a shareholder,
whether or not an Approved Institution, or contained in a Certificate, provided,
that (A) such purchase order or redemption request, as the case may be, is
reasonably believed by the Transfer Agent to be in conformity with the Fund's
purchase and redemption procedures described in the Prospectus, (B) where such
redemption request states redemption instructions which vary from the
instructions indicated on the shareholder's original subscription order form,
such request contains a signature guarantee, (C) such exchange request contains
a signature guarantee and instructs exchange into a fund that is listed in the
Fund's current prospectus, and (D) the Transfer Agent has agreed to accept and
act in accordance with such type of purchase order or redemption request, as the
case may be.
(b) The Transfer Agent shall also accept with respect to each
Fund Business Day, at such times as are agreed upon from time to time by the
Transfer Agent and the Fund, a computer tape consistent in all respects with the
Transfer Agent's tape layout
<PAGE>
package, as amended from time to time, which is believed by the Transfer Agent
to be furnished by or on behalf of any Approved Institution.
2. On each Fund Business Day the Transfer Agent shall, as of the time
at which the Fund computes the net asset value of each Series, issue to, and
redeem from, the accounts specified in a purchase order, redemption request, or
computer tape which in accordance with the Prospectus is effective on such Fund
Business Day the appropriate number of full and fractional Shares based on the
net asset value per Share of such Series specified in an advice received on such
Fund Business Day from the Fund. Notwithstanding the foregoing, if a redemption
specified in a computer tape is for a dollar value of Shares in excess of the
dollar value of uncertificated Shares in the specified account, the Transfer
Agent shall not effect such redemption in whole or in part, and shall orally
advise both the Fund and the Approved Institution which supplied such tape of
such discrepancy.
3. The Transfer Agent shall, as of each Fund Business Day specified in
a Certificate or resolution described in paragraph 1 of succeeding Article VI,
issue Shares of a Series, based on the net asset value per Share of such Series
specified in an advice received from the Fund on such Fund Business Day, in
connection with a reinvestment of a dividend or distribution on Shares of such
Series.
4. On each Fund Business Day the Transfer Agent shall supply the Fund
with a statement specifying with respect to the immediately preceding Fund
Business Day: the total number of Shares of each Series (including fractional
Shares) issued and outstanding at the opening of business on such day; the total
number of Shares of each Series sold to Reich & Tang Services L.P., as agent for
the purchasers, on such day, pursuant to preceding paragraph 2 of this Article;
the total number of Shares of each Series redeemed by Reich & Tang Services
L.P., as agent for the respective redeeming shareholders, on such day; the total
number of Shares of each Series, if any, sold to Reich & Tang Services L.P., as
agent for shareholders, on such day pursuant to preceding paragraph 3 of this
Article, and the total number of Shares of each Series issued and outstanding.
On the same day such statement is received by the Fund, the Fund shall confirm
the information contained therein by delivering to the Transfer Agent a
Certificate with respect to the same.
5. In connection with each purchase, each exchange and each redemption
of Shares, the Transfer Agent shall send such statements as are described in the
Prospectus. If the Prospectus indicates that certificates for Shares are
available, and if specifically requested in writing by any shareholder, or if
otherwise required hereunder, the Transfer Agent will countersign, issue and
mail by not less than first class insured
<PAGE>
mail, to such shareholder at the address set forth in the records of the
Transfer Agent, a Share certificate for any full Shares requested.
6. As of each Fund Business Day the Transfer Agent shall furnish the
Custodian with an advice setting forth the number and dollar amount of Shares to
be redeemed on such Fund Business Day in accordance with paragraph 2 of this
Article.
7. Upon receipt of moneys paid to it by the Custodian in connection
with a redemption of Shares, the Transfer Agent shall cancel the redeemed Shares
and after making appropriate deduction for any withholding of taxes required of
it by applicable law (a) in the case of a redemption of Shares pursuant to a
redemption described in preceding paragraph 1(a) of this Article, make payment
in accordance with the Fund's redemption and payment procedures described in the
Prospectus, and (b) in the case of a redemption of Shares pursuant to a computer
tape described in preceding paragraph 1(b) of the Article, make payment by
directing a federal funds wire order to the account previously designated by the
Approved Institution specified in said computer tape.
8. The Transfer Agent shall not be required to issue any Shares after
it has received from an Officer of the Fund or from an appropriate federal or
state authority written notification that the sale of Shares has been suspended
or discontinued, and the Transfer Agent shall be entitled to rely upon such
written notification.
9. Upon the issuance of any Shares in accordance with this Agreement
the Transfer Agent shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Fund in connection with such
issuance of any Shares.
10. Shares which are subject to restriction on transfer or redemption
(including, without limitation, Shares acquired pursuant to a restrictive
investment representation, Shares held by controlling persons, Shares subject to
shareholder's agreements, etc.), other than the general restrictions on the
transferability of the shares described in the Prospectus, must be issued in
Share certificate form and must be stamped on the face thereof with a legend
describing the extent and conditions of the restriction or referring to the
source of such restriction, and shall be so issued and so legended by the
Transfer Agent only if the Fund so directs in a Certificate. Legended Shares may
not be transferred or redeemed except upon receipt by the Transfer Agent of an
opinion of counsel for the Fund stating that such transfer or redemption is in
accordance with applicable law, and may be properly effected. The Transfer Agent
shall be entitled to rely upon such opinion and shall be
<PAGE>
indemnified by the Fund for any transfer or redemption made in
reliance upon any such opinion.
11. The Transfer Agent shall accept a computer tape consistent with the
Transfer Agent's tape layout package, as amended from time to time, which is
reasonably believed by the Transfer Agent to be furnished by or on behalf of any
Approved Institution and is represented to be instructions with respect to the
transfer of Shares from one account of such Approved Institution to another such
account, and shall effect the transfers specified in said computer tape.
12. (a) Except as otherwise provided in sub-paragraph (b) of this
paragraph and in paragraph 13 of this Article, Shares will be transferred,
exchanged or redeemed upon presentation to the Transfer Agent of Share
certificates, telephone redemption requests where such requests are authorized
in the subscription order form or in a subsequent written authorization or
instructions properly endorsed for transfer, exchange or redemption, and bearing
satisfactory evidence of the payment of stock transfer taxes. In the case of
small estates, where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate surety bond, and without further approval of
the Fund, transfer, exchange or redeem Shares registered in the name of a
decedent where the current market value of the Shares being transferred does not
exceed such amount as may from time to time be prescribed by various states. The
Transfer Agent reserves the right to refuse to transfer, exchange or redeem
Shares until it is satisfied that the endorsement on the stock certificate or
instructions is valid and genuine, and for that purpose it will require, unless
otherwise instructed by an authorized officer of the Fund, a guarantee of
signature by an eligible guarantor institution which includes a domestic bank, a
domestic credit union, a member bank of the Federal Reserve System or a member
firm of a national securities exchange; pursuant to the Transfer Agent's
standards and procedures. The Transfer Agent also reserves the right to refuse
the transfer, exchange or redeem Shares until it is satisfied that the requested
transfer or redemption is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfers, exchanges or redemptions
which the Transfer Agent, in its judgment, deems improper or unauthorized, or
until it is satisfied that there is no basis to any claims adverse to such
transfer, exchange or redemption. The Transfer Agent may, in effecting
transfers, exchanges and redemptions of Shares, rely upon those provisions of
the Uniform Act for the Simplification of Fiduciary Security Transfers or the
Uniform Commercial Code, as the same may be amended from time to time,
applicable to the transfer of securities, and the Fund shall indemnify the
Transfer Agent for any act done or omitted by it in good faith in reliance upon
such laws except where such laws conflict with the
<PAGE>
Securities Act of 1933, the Securities Exchange Act of 1934 or the Investment
Company Act of 1940.
(b) Notwithstanding the foregoing or any other provisions
contained in this Agreement to the contrary, the Transfer Agent shall be fully
protected by the Fund in not requiring any instruments, documents, assurances,
endorsements or guarantees, including, without limitation, any signature
guarantees, in connection with a redemption, or transfer, of Shares whenever the
Transfer Agent reasonably believes that requiring the same would be inconsistent
with the transfer and redemption procedures as described in the Prospectus.
13. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent shall not be required or expected to require, as a
condition to any transfer of any Shares pursuant to paragraph 11 of this Article
or any exchange or redemption of any Shares pursuant to a computer tape
described in this Article, any documents, including, without limitation, any
documents of the kind described in sub-paragraph (a) of paragraph 12 of this
Article, to evidence the authority of the person requesting the transfer or
redemption and/or the payment of any stock transfer taxes, and shall be fully
protected in acting in accordance with the applicable provisions of this
Article.
14. (a) As used in this Agreement, the terms "computer tape" and
"computer tape believed by the Transfer Agent to be furnished by an Approved
Institution", shall include any tapes generated by the Transfer Agent to reflect
information believed by the Transfer Agent to have been inputted by an Approved
Institution, via a remote terminal or other similar link, into a data
processing, storage, or collection system, or similar system (the "System"),
located on the Transfer Agent's premises. For purposes of paragraph 1 of this
Article, such a computer tape shall be deemed to have been furnished at such
times as are agreed upon from time to time by the Transfer Agent and Fund only
if the information reflected thereon was inputted into the System at such times
as are agreed upon from time to time by the Transfer Agent and the Fund.
(b) Nothing contained in this Agreement shall constitute any
agreement or representation by the Transfer Agent to permit, or to agree to
permit, any Approved Institution to input information into a System.
<PAGE>
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Fund shall furnish to the Transfer Agent a copy of a resolution
of its Board of Directors, certified by the Secretary or any Assistant
Secretary, either (i) setting forth with respect to a Series the date of the
declaration of a dividend or distribution, the date of accrual or payment, as
the case may be, thereof, the record date as of which Shareholders entitled to
payment, or accrual, as the case may be, shall be determined, the amount per
Share of such dividend or distribution, the payment date on which all previously
accrued and unpaid dividends are to be paid, and the total amount, if any,
payable to the Transfer Agent on such payment date, or (ii) authorizing the
declaration of dividends and distributions on a daily or other periodic basis
and authorizing the Transfer Agent to rely on a Certificate setting forth the
information described in subsection (i) of this paragraph.
2. Upon the payment date specified in such Certificate or resolution,
as the case may be, the Fund shall, in the case of a cash dividend or
distribution, cause the Custodian to pay to the Transfer Agent an amount of
cash, if any, sufficient for the Transfer Agent to make the payment, if any,
specified in such Certificate or resolution, as the case may be, to the
Shareholders of record as of such payment date. The Transfer Agent will, upon
receipt of any such cash, make payment of such cash dividends or distributions
to the Shareholders of record as of the record date by: (i) mailing a check,
payable to the registered shareholder, to the address of record or dividend
mailing address, or (ii) wiring such amounts to the accounts previously
designated by an Approved Institution, as the case may be. The Transfer Agent
shall not be liable for any improper payments made in accordance with a
Certificate or resolution described in the preceding paragraph. If the Transfer
Agent shall not receive from the Custodian sufficient cash to make payments of
any cash dividend or distribution to all shareholders of the Fund as of the
record date, the Transfer Agent shall, upon notifying the Fund, withhold payment
to all shareholders of record as of the record date until sufficient cash is
provided to the Transfer Agent.
3. It is understood that the Transfer Agent shall in no way be
responsible for the determination of the rate or form of dividends or capital
gain distributions due to the shareholders.
4. It is understood that the Transfer Agent shall file such appropriate
information returns concerning the payment of dividends and capital gain
distributions with the proper federal, state and local authorities as are
required by law to be filed by the Fund but shall in no way be responsible for
the collection or
<PAGE>
withholding of taxes due on such dividends or distributions due to shareholders,
except and only to the extent, required of it by applicable law.
ARTICLE VII
CONCERNING THE FUND
1. The Fund shall promptly deliver to the Transfer Agent written notice
of any change in the Officers authorized to sign Share certificates,
Certificates, notifications or requests, together with a specimen signature of
each new Officer. In the event any Officer who shall have signed manually or
whose facsimile signature shall have been affixed to blank Share certificates
shall die, resign or be removed prior to issuance of such Share certificates,
the Transfer Agent may issue such Share certificates of the Fund notwithstanding
such death, resignation or removal, and the Fund shall promptly deliver to the
Transfer Agent such approval, adoption or ratification as may be required by
law.
2. Each copy of the Articles of Incorporation of the Fund and copies of
all amendments thereto shall be certified by the Secretary of State (or other
appropriate official) of the state of organization, and if such Articles of
Incorporation and/or amendments are required by law also to be filed with a
county or other officer or official body, a certificate of such filing shall be
filed with a certified copy submitted to the Transfer Agent. Each copy of the
By-Laws and copies of all amendments thereto, and copies of resolutions of the
Board of Directors of the Fund, shall be certified by the Secretary of the Fund
under the corporate seal.
3. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent the Fund's currently effective Prospectus.
ARTICLE VIII
CONCERNING THE TRANSFER AGENT
1. The Transfer Agent shall not be liable and shall be fully protected
in acting upon any computer tape, writing or document reasonably believed by it
to be genuine and to have been signed or made by the proper person or persons
and shall not be held to have any notice of any change or authority of any
person until receipt of written notice thereof from the Fund or such person. It
shall also be protected in processing Share certificates which it reasonably
believes to bear the proper manual or facsimile signatures of the Officers of
the Fund and the property countersignature of the Transfer Agent.
<PAGE>
2. The Transfer Agent may establish such additional procedures, rules
and regulations governing the transfer or registration of certificates of stock
as it may deem advisable and consistent with such rules and regulations
generally adopted by bank transfer agents.
3. The Transfer Agent shall keep such records as are specified in
Appendix C hereto in the form and manner, and for such period, as it may deem
advisable but not inconsistent with the rules and regulations of appropriate
government authorities, in particular Rules 31a-2 and 31a-3 under the federal
Investment Company Act of 1940 as amended from time to time. The Transfer Agent
may deliver to the Fund from time to time at its discretion, for safekeeping or
disposition by the Fund in accordance with law, such records, papers, Share
certificates which have been canceled in transfer, exchange or redemption, or
other documents accumulated in the execution of its duties as such Transfer
Agent, as the Transfer Agent may deem expedient, other than those which the
Transfer Agent is itself required to maintain pursuant to applicable laws and
regulations, and the Fund shall assume all responsibility for any failure
thereafter to produce any record, paper, canceled Share certificate, or other
document so returned, if and when required. The records specified in Appendix C
hereto maintained by the Transfer Agent pursuant to this paragraph 3 shall be
considered to be the property of the Fund, shall be made available upon request
for inspection by the officers, employees, and auditors of the Fund, and records
shall be delivered to the Fund upon request and in any event upon the date of
termination of this Agreement, as specified in Article IX of this Agreement, in
the form and manner kept by the Transfer Agent on such date of termination or
such earlier date as may be requested by the Fund.
4. The Transfer Agent may employ agents or attorneys-in-fact at the
expense of the Fund, and shall not be liable for any loss or expense arising out
of, or in connection with, the actions or omissions to act of its agents or
attorneys-in-fact so long as the Transfer Agent acts in good faith and without
negligence or willful misconduct in connection with the selection of such agents
or attorneys-in-fact.
5. The Transfer Agent shall not be liable for any loss or damage,
including counsel fees, resulting from its actions or omissions to act or
otherwise, except for any loss or damage arising out of its own failure to act
in good faith, negligence or willful misconduct.
6. The Fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent from and against any and all claims (whether with or without
basis in fact or law), demands, expenses (including attorney's fees) and
liabilities of any and every nature which the Transfer Agent may sustain or
incur or which may
<PAGE>
be asserted against the Transfer Agent by any person by reason of or as a result
of any action taken or omitted to be taken by the Transfer Agent in good faith
and without negligence or willful misconduct or in reliance upon (i) any
provision of this Agreement; (ii) the Prospectus; (iii) any instruction or order
including, without limitation, any computer tape reasonably believed by the
Transfer Agent to have been received from an Approved Institution; (iv) any
instrument, order or Share certificate reasonably believed by it to be genuine
and to be signed, countersigned or executed by any duly authorized Officer of
the Fund; (v) any Certificate or other instructions of an Officer; or (vi) any
opinion of legal counsel for the Fund or the Transfer Agent. The Fund shall
indemnify and exonerate, save and hold the Transfer Agent harmless from and
against any and all claims (whether with or without basis in fact or law),
demands, expenses (including attorney's fees) and liabilities of any and every
nature which the Transfer Agent may sustain or incur or which may be asserted
against the Transfer Agent by any person by reason of or as a result of any
action taken or omitted to be taken by the Transfer Agent in good faith and
without negligence or willful misconduct in connection with its appointment or
in reliance upon any law, act, regulation or any interpretation of the same even
though such law, act or regulation may thereafter have been altered, changed,
amended or repealed.
7. Specifically, but not by way of limitation, the Fund shall indemnify
and exonerate, save and hold the Transfer Agent harmless from and against any
and all claims (whether with or without basis in fact or law), demands, expenses
(including attorney's fees) and liabilities of any and every nature which the
Transfer Agent may sustain or incur or which may be asserted against the
Transfer Agent by any person in connection with the Transfer Agent's capacity
and authorization to issue Shares and the form and amount of authorized Shares.
8. Notwithstanding the foregoing, the Transfer Agent shall be liable to
the Fund with respect to any redemption check which the Transfer Agent pays on
which the signature of the drawer is forged, but only to the extent of the
lesser of (a) the amount of such redemption check minus $2,500.00 and (b) the
amount of insurance proceeds received by the Transfer Agent with respect to such
redemption check, and only if, and for so long as each of the following
conditions is satisfied: (i) insurance with respect to Fund redemption checks is
maintained by the Transfer Agent, and (ii) the Fund pays to the Transfer Agent
monthly the amount which the Transfer Agent determines to be the Fund's pro rata
share of the cost of such insurance coverage. The Fund agrees that the insurance
may be discontinued or canceled without any prior notice, and that the Transfer
Agent shall at all times have the absolute right, without any prior notice to
the Fund, to cease to maintain such insurance, and the Transfer Agent agrees to
notify the Fund promptly upon canceling or discontinuing any
<PAGE>
such insurance or upon learning of any such cancellation or discontinuance. In
the event such insurance is not maintained, or in the event the Fund does not
pay monthly to the Transfer Agent the amount which the Transfer Agent determines
to be the Fund's pro rata share of the cost of such insurance coverage, the
Transfer Agent shall not be liable for any loss or damage, including counsel
fees, resulting from its paying or not paying any redemption check, unless such
loss or damage arises out of the Transfer Agent's failure to use good faith,
negligence or willful misconduct.
9. At any time the Transfer Agent may apply to an Officer of the Fund
for written instructions with respect to any matter arising in connection with
the Transfer Agent's duties and obligations under this Agreement, and the
Transfer Agent shall not be liable for any action taken or permitted by it in
good faith in accordance with such written instructions. Such application by the
Transfer Agent for written instructions from an Officer of the Fund may, at the
option of the Transfer Agent, set forth in writing any action proposed to be
taken or omitted by the Transfer Agent with respect to its duties or obligations
under this Agreement and the date on and/or after which such action shall be
taken, and the Transfer Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein unless, prior to taking or omitting any such
action, the Transfer Agent has received written instructions in response to such
application specifying the action to be taken or omitted. The Transfer Agent may
consult counsel to the Fund, or its own counsel, at the expense of the Fund and
shall be fully protected with respect to anything done or omitted by it in good
faith in accordance with the advice or opinion of counsel to the Fund or its own
counsel.
10. When mail is used for delivery of non-negotiable Share
certificates, the value of which does not exceed the limits of the Transfer
Agent's Blanket Bond, the Transfer Agent shall send such non-negotiable Share
certificates by first class mail, and such deliveries will be covered while in
transit by the Transfer Agent's Blanket Bond. Non-negotiable Share certificates,
the value of which exceed the limits of the Transfer Agent's Blanket Bond, will
be sent by insured registered mail. Negotiable Share certificates will be sent
by insured registered mail. The Transfer Agent shall advise the Fund of any
Share certificates returned as undelivered after being mailed as herein provided
for.
11. To the extent that the Fund issues certificates to its shareholders
pursuant to its current propspectus, the Transfer Agent may issue new Share
certificates in place of Share certificates represented to have been lost,
stolen, or destroyed upon receiving instructions in writing from an Officer and
<PAGE>
indemnity satisfactory to the Transfer Agent. Such instructions from the Fund
shall be in such form as approved by the Board of Directors of the Fund in
accordance with the provisions of law or of the By-Laws of the Fund governing
such matters. If the Transfer Agent receives written notification from the owner
of the lost, destroyed or stolen Share certificate within a reasonable time
after he has notice of it, the Transfer Agent shall promptly notify the Fund and
shall act pursuant to written instructions signed by an Officer. If the Fund
receives such written notification from the owner of the lost, destroyed or
stolen Share certificate within a reasonable time after he has notice of it, the
Fund shall promptly notify the Transfer Agent and the Transfer Agent shall act
pursuant to written instructions signed by an Officer. The Transfer Agent shall
not be liable for any act done or omitted by it pursuant to the written
instructions described herein. The Transfer Agent may issue new Share
certificates in exchange for, and upon surrender of, mutilated Share
certificates.
12. The Transfer Agent will issue and mail subscription warrants for
Shares of capital stock, Shares representing stock dividends, exchange or
splits, or act as conversion agent upon receiving written instructions from an
Officer and such other documents as the Transfer Agent may deem necessary.
13. The Transfer Agent will supply shareholder lists to the Fund from
time to time upon receiving a request therefor from an Officer of the Fund.
14. In case of any requests or demands for the inspection of the
shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an Officer as to such inspection. The
Transfer Agent reserves the right, however, to exhibit the Shareholder records
to any person whenever it receives an opinion from its counsel that there is a
reasonable likelihood that the Transfer Agent will be held liable for the
failure to exhibit the shareholder records to such person.
15. At the request of an Officer, the Transfer Agent will address and
mail such appropriate notices to shareholders as the Fund may direct.
16. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into, and
shall not be liable for:
(a) The legality of the issue or sale of any Shares, the
sufficiency of the amount to be received therefor, or the authority of the
Approved Institution or of the Fund, as the case may be, to request such sale or
issuance;
<PAGE>
(b) The legality of a transfer of Shares or of a redemption of
any Shares, the propriety of the amount to be paid therefor, or the authority of
the Approved Institution or of the Fund, as the case may be, to request such
transfer or redemption;
(c) The legality of the declaration of any dividend by the
Fund, or the legality of the issue of any Shares in payment of any stock
dividend; or
(d) The legality of any recapitalization or readjustment of
the Shares.
17. The Transfer Agent shall be entitled to receive and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Appendix C hereto, (i) its
reasonable out-of-pocket expenses (including legal expenses and attorney's fees)
incurred in connection with this Agreement and its performance hereunder and
(ii) such compensation as may be agreed upon in writing from time to time by the
Transfer Agent and the Fund.
18. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Transfer Agent.
ARTICLE IX
TERMINATION
Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than 90 days after the date of receipt of
such notice. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Directors of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement and designating a successor transfer agent or transfer agents. In
the event such notice is given by the Transfer Agent, the Fund shall, on or
before the termination date, deliver to the Transfer Agent a copy of a
resolution of its Board of Directors certified by the Secretary or any Assistant
Secretary designating a successor transfer agent. If the Fund fails to designate
a successor transfer agent and if the Transfer Agent is unable to find a
successor transfer agent, the Fund shall, upon the date specified in the notice
of termination of this Agreement and delivery of the records maintained
hereunder, be deemed to be its own transfer agent and the Transfer Agent shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement.
<PAGE>
ARTICLE X
MISCELLANEOUS
1. The Fund agrees that, prior to effecting any change in the
Prospectus which would increase or alter the duties and obligations of the
Transfer Agent hereunder, it shall advise the Transfer Agent of such proposed
change at least 30 days prior to the intended date of the same, and shall
proceed with such change only if it shall have received the written consent of
the Transfer Agent thereto.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address first
above written, or at such other place as the Fund may from time to time
designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent and mailed or delivered to it at its office as
indicated on page 1 of this Agreement or at such other place as the Transfer
Agent may from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the formality of this
Agreement, and, except for an amendment to Appendix B or Appendix C hereto,
authorized or approved by a resolution of the Board of Directors of the Fund.
5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Transfer Agent.
6. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
8. The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Attest:
/s/ Christine A. Bivetto By: /s/ Bernadette N. Finn
Attest: REICH & TANG SERVICES INC.
by Reich & Tang Asset Management, Inc.
as General Partner
/s/ Christine A. Bivetto By: /s/ Lorraine C. Hylser
<PAGE>
Schedule A
California Daily Tax Free Income Fund, Inc.
Connecticut Daily Tax Free Income Fund, Inc.
Cortland Trust, Inc.
Daily Dollar International, Ltd.
Daily Tax Free Income Fund, Inc.
Delafield Fund, Inc.
Florida Daily Municipal Income Fund
Institutional Daily Income Fund
Mexico Dollar Income Fund, Ltd.
Michigan Daily Tax Free Income Fund, Inc.
New Jersey Daily Municipal Income Fund, Inc.
New York Daily Tax Free Income Fund, Inc.
North Carolina Daily Municipal Income Fund, Inc.
Pennsylvania Daily Municipal Income Fund
Reich & Tang Equity Fund, Inc.
Short Term Income Fund, Inc.
Tax Exempt Proceeds Fund, Inc.
<PAGE>
E
SEWARD & KISSEL
63 Wall Street
New York, NY 10005
January 18, 1980
Short Term Income Fund, Inc.
230 Park Avenue
New York, New York 10017
Dear Sirs:
We have acted as counsel for Short Term Income Fund, Inc., a Maryland
corporation (the "Company"), in connection with the organization of the Company,
the registration of the Company under the Investment Company Act of 1940 and the
registration of an indefinite number of shares of Common Stock (par value $.001
per share) of the Company under the Securities Act of 1933.
As counsel for the Company we have participated in the preparation of the
Registration Statement on Form N-1 (File No. 2-65315) relating to such shares
and have examined and relied upon such corporate records of the Company and such
other documents and certificates as to factual matters as we have deemed to be
necessary to render the opinion expressed herein.
Based on such examination, wwe are of the opinion that:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Maryland.
2. The 100,000 shares of presently issued and outstanding Common Stock
of the Company have been validly and legally issued and are fully paid and
non-assessable shares of Common Stock of the Company.
<PAGE>
Short Term Income
Fund, Inc. -2- January 18, 1980
3. The shares of Common Stock of the Company to be offered for sale
pursuant to the Prospectus contained in said REgistration Statement are, to
the extent of the number of shares authorized to be issued by the Company
in its Articles of Incorporation, duly authoized and unissued shares and
when such shares have been duly sold, issued and paid for as contemplated
in the Prospectus, such shares will have been validly and legally issued
and will be fully paid and non-assessable shares of Common Stock of the
Company under the laws of the State of Maryland (assuming that the sale
price of each share is not less than the par value thereof).
As to matters of Maryland law contained in the foregoing opinion we
have relied on the opinion of Messrs. Venable, Baetjer and Howard, of
Baltimore, Maryland, dated January 18, 1980, a copy of which is attached
hereto.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to
the reference to our firm under the caption "Counsel and Auditors" in the
related Prospectus included therein.
Very truly yours,
/s/ Seward & Kissel
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
1800 Mercantile Bank & Trust Building
Plaza
Baltimore, Maryland 21201
January 18, 1980
Seward & Kissel
63 Wall Street
New York, New York 10005
Dear sirs:
We have acted as Maryland counsel for Short Term Income Fund, Inc., a
Maryland corporation (the Company), in connection with the organization of
the Company and the issuance of shares of its Common Stock.
As Maryland counsel for hte Company we have examined its Charter, its
By-Laws, its Prospectus included in its Registration Statement on Form N-1,
and have examined and relied upon such corporate records of the Comp[any
and other documents and certificates as to factual matters as we have
deemed to be necessary to render the opinion expressed herein.
Based on such examination, we are of the opinion that:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Maryland.
2. The 100,000 shares of presently issued and outstanding Common Stock
of the company hve been validly and legally issued and are full paid and
non-assessable shares of Common Stock of the Company under the laws of the
State of Maryland.
3. The balance of the shares of Common Stock of the
<PAGE>
Seward & Kissel
Page Two
Company to be offered for sale pursuant to the Prospectus contained in said
Registration Statement are duly authorized and unissued shares, and when
such shares have been duly sold, issued and paid for as contemplated in the
Prospectus, such shares will have been validly and legally issued ans will
be full paid and non assessable shares of Common Stock of the Company under
the laws of the State of Maryland (assuming that the sale price of each
share is not less than the par value thereof).
This letter expresses our opinion as to the Maryland General
corporation Law governing matters such as due incorporation and the
authorization and issuance of stock, but does not extend to the securitis
or "Blue Sky" laws of maryland or to federal securities or other laws.
You may rely upon our foregoing opinion in redering your opinion to
the Company which is to be filed as an exhibit to the Registration
Statement.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the REgistration Statement and to
the reference to our firm under the caption "Counsel and Auditors" in the
related Prospectus included therein.
Very truly yours,
/s/ Venable, Baetjer and Howard
PRICEWATERHOUSECOOPERS PWC
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated September 30, 1999, relating to the
financial statements and financial highlights which appears in the August 31,
1999 Annual Report to Shareholders of Short Term Income Fund, Inc. which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights", "Counsel and
Auditors" and "Financial Statements" in such Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
December 29, 1999
McGladrey & PULLEN, LLP RSM
_________________________ _______________
Certified Public Accountants and Consultants international
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated September 25, 1998 on the August
31, 1998 financial statements of the Short Term Income Fund, which is attached
as an Exhibit in the Registration Statement on Form N-1A of the Short Term
Income Fund as filed with the Securities and Exchange Commission.
McGladrey & Pullen, LLP
New York, New York
December 29, 1999
<PAGE>
McGladrey & PULLEN, LLP RSM
_________________________ _______________
Certified Public Accountants and Consultants international
INDEPENDENT AUDITOR'S REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
SHORT TERM INCOME FUND
We have audited the accompanying statement of changes in net assets for the year
ended August 31, 1998 and the financial highlights for each of the four years in
the period ended August 31, 1998 of the Short Term Income Fund.. This financial
statement and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to
above present fairly, in all material respects, the changes in its net assets
and the financial highlights of the Short Term Income Fund for the periods
indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
September 25, 1998
REICH & TANG, INC.
230 Park Avenue
New York, New York 10017
January 18, 1980
Short Term Income Fund, Inc.
230 Park Avenue
New York, New York 10017
Dear Sirs:
In connection with our purchase of 100,000 shares of Short Term Income
Fund, Inc. Common Stock at the price of one dollar ($1.00) per share, this
will confirm that we are buying such shares for investment for our own
account only, and not with a view to reselling or otherwise distributing
them.
Very truly yours,
REICH & TANG, INC.
By: /s/ Joseph H. Reich
-------------------
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Dr. Yung Wong, whose signature
appears below, constitutes and appoints Dana E. Messina and Bernadette N. Finn,
and each of them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf, in any and all
capacities, the Registration Statement on Form N-1A, and any and all amendments
thereto (including pre-effective amendments) filed by Short Term Income Fund,
Inc. (the "Fund") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Dr. Yung Wong
Dr. Yung Wong
Director
Dated: December 22, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Robert Strainere, whose signature
appears below, constitutes and appoints Dana E. Messina and Bernadette N. Finn,
and each of them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf, in any and all
capacities, the Registration Statement on Form N-1A, and any and all amendments
thereto (including pre-effective amendments) filed by Short Term Income Fund,
Inc. (the "Fund") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Robert Straniere
Robert Straniere
Director
Dated: December 22, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Dr. W. Giles Mellon, whose
signature appears below, constitutes and appoints Dana E. Messina and Bernadette
N. Finn, and each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf, in any and
all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including pre-effective amendments) filed by Short Term
Income Fund, Inc. (the "Fund") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Dr. W. Giles Mellon
Dr. W. Giles Mellon
Director
Dated: December 22, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Steven W. Duff, whose
signature appears below, constitutes and appoints Dana E. Messina and Bernadette
N. Finn, and each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf, in any and
all capacities, the Registration Statement on Form N-1A, and any and all
amendments thereto (including pre-effective amendments) filed by Short Term
Income Fund, Inc. (the "Fund") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorney and
agent deems necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorney and agent shall do or cause to be done
by virtue hereof.
/s/ Steven W. Duff
Steven W. Duff
Director
Dated: December 22, 1999
