<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM 600 FIFTH AVENUE, NEW YORK, NY 10020
INCOME FUND, INC. (212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the annual report of Short Term Income Fund, Inc. for
the year ended August 31, 1999.
The Fund's Money Market Portfolio had 76,392 shareholders and net assets of
$1,490,668,173 as of August 31, 1999. The Government Portfolio had 13,760
shareholders and net assets of $841,948,764 as of August 31, 1999.
We thank you for your support and look forward to continuing to serve your cash
management needs.
Sincerely,
\s\Steven W. Duff
Steven W. Duff
President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Commercial Paper (9.44%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10,000,000 Bank of America 11/22/99 5.14% $ 9,887,250
30,000,000 Banque International a Luxembourg 09/17/99 5.25 29,930,267
15,000,000 Daimler-Chrysler N.A. 09/07/99 5.18 14,987,125
31,000,000 Island Finance Puerto Rico, Inc. 09/02/99 5.16 30,995,574
28,050,000 J.P. Morgan Co. Inc. 10/15/99 4.92 27,885,440
7,000,000 Lehman Brothers Holdings Inc. 09/10/99 5.25 6,990,900
20,000,000 Paine Webber Group 09/07/99 5.17 19,982,833
-------------- -------------
141,050,000 Total Commercial Paper 140,659,389
-------------- -------------
<CAPTION>
Domestic Certificates of Deposit (3.22%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Chase Manhattan Bank (USA) 10/05/99 4.93% $ 15,000,000
18,000,000 First Union National Bank 09/17/99 5.25 18,000,000
15,000,000 Northern Trust (k) 09/08/99 5.16 14,999,827
-------------- -------------
48,000,000 Total Domestic Certificates of Deposit 47,999,827
-------------- -------------
<CAPTION>
Eurodollar Certificates of Deposit (1.68%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 Deutsche Bank A.G. 12/29/99 5.42% $ 25,000,811
-------------- -------------
25,000,000 Total Eurodollar Certificates of Deposit 25,000,811
-------------- -------------
<CAPTION>
Letter of Credit Commercial Paper (23.01%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Banca Serfin S.A.
LOC Barclays Bank PLC 11/18/99 5.10% $ 14,842,375
9,500,000 Banco Bozano Simonsen S.A.
LOC Banco Santander 06/16/00 5.85 9,078,451
22,000,000 Banco de Galicia y Bueno
LOC Bayerische HypoVereinsbank, A.G. 09/22/99 5.25 21,933,010
20,000,000 China Merchants Bank
LOC Credit Suisse First Boston 09/24/99 5.20 19,934,194
13,218,000 Cogentrix of Richmond
LOC Banque Paribas 09/24/99 5.30 13,173,411
20,000,000 CSN Oversea
LOC Barclays Bank PLC 09/01/99 5.10 20,000,000
64,000,000 Dean Health System, Inc.
LOC Rabobank Nederland 09/01/99 5.12 64,000,000
10,700,000 Demir Funding Corporation
LOC Bayerische HypoVereinsbank, A.G. 10/12/99 5.25 10,636,876
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Letter of Credit Commercial Paper (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 30,000,000 Dixie Overseas Ltd.
LOC Credit Agricole 09/10/99 5.24% $ 29,960,850
10,000,000 E D & F Man Finance
LOC Rabobank Nederland 09/02/99 5.18 9,998,567
10,000,000 Louis Dreyfus Corproration
LOC ABN AMRO Bank N.V. 09/03/99 5.17 9,997,139
27,000,000 Sinochem American
LOC ABN AMRO Bank N.V. 09/10/99 5.23 26,964,833
12,000,000 Transportadora de Gas del Sur S.A.
LOC Dresdner Bank, A.G. 09/22/99 5.20 11,964,020
25,000,000 Unibanco-Uniao De Bancos Brasilieros
LOC Barclays Bank PLC 10/20/99 4.92 24,836,667
12,500,000 Unibanco-Uniao De Bancos Brasilieros
LOC Barclays Bank PLC 10/21/99 4.93 12,416,580
25,000,000 Unibanco-Uniao De Bancos Brasilieros
LOC Westdeutsche Landesbank 07/13/00 6.06 23,739,511
8,500,000 Vermont Yankee Nuclear Power Company
LOC Societe Generale 09/09/99 5.25 8,490,140
11,000,000 Vermont Yankee Nuclear Power Company
LOC Societe Generale 09/13/99 5.27 10,980,750
-------------- -------------
345,418,000 Total Letter of Credit Commercial Paper 342,947,374
-------------- -------------
<CAPTION>
Loan Participations (3.35%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Boeing Capital Corporation with Chase Manhattan Bank (g) 02/14/00 5.32% $ 15,000,000
15,000,000 Equitable Life Assurance Society with Chase Manhattan Bank (l) 03/20/00 5.21 15,000,000
20,000,000 Mount Vernon Phenol Plant Partnership with Chase Manhattan Bank (l)
Guaranteed by General Electric Company 05/17/00 5.51 20,000,000
-------------- -------------
50,000,000 Total Loan Participations 50,000,000
-------------- -------------
<CAPTION>
Master Notes (7.04%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 40,000,000 GMAC Mortgage Corp. (d) 09/01/99 5.15% $ 40,000,000
20,000,000 The Goldman Sachs Group L.P. (a) 10/19/99 5.47 20,000,000
45,000,000 Williamette Industries Incorporated (b) 06/16/00 5.25 45,000,000
-------------- -------------
105,000,000 Total Master Notes 105,000,000
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Medium Term Notes (2.35%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 The Bear Stearns Companies Inc. (e) 06/07/00 5.20% $ 20,000,000
15,000,000 Goldman Sachs Group Inc. 08/07/00 6.00 15,000,000
-------------- -------------
35,000,000 Total Medium Term Notes 35,000,000
-------------- -------------
<CAPTION>
Other Notes (22.01%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,000,000 Allegheny Co, PA (Union Electric Steel Corp.) (c)
LOC PNC Bank, N.A. 11/01/27 5.45% $ 5,000,000
4,120,000 American West Michigan Property Taxable Municipal IDRB (c)
LOC Comerica Bank 12/01/25 5.60 4,120,000
1,675,000 B & V Land Company, L.L.C. (c)
LOC First Michigan Bank 09/01/27 5.60 1,675,000
3,860,000 Bollman Capital, L.L.C. - Series 1996A (c)
LOC First of America/Michigan National Bank 12/15/26 5.60 3,860,000
2,440,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project) (c)
LOC National City Bank, Northwest 08/01/08 5.41 2,440,000
3,000,000 California PCFA Environmental Improvement Bonds
(Shell Oil Company Project) (c) 06/01/38 5.32 3,000,000
5,330,000 Capital One Funding Corporation
Floating Rate Option Notes - Series 1997D (c)
LOC Bank One Ohio 07/02/18 5.47 5,330,000
2,290,000 Carriage Inn Retirement Community of Cadiz, Inc. - Series 1996 (c)
LOC Key Bank, N.A. 10/01/17 5.39 2,290,000
2,655,000 Carriage Inn Retirement Community of Dayton, Inc. - Series 1996 (c)
LOC Key Bank, N.A. 10/01/16 5.39 2,655,000
15,000,000 Caterpillar Financial Services Corporation (h) 07/01/00 5.31 15,000,000
1,500,000 Cedar Works Project (c)
LOC FirstStar Bank 05/01/09 5.46 1,500,000
13,000,000 City and County of San Francisco (c)
LOC Bayerische HypoVereinsbank, A.G. 07/01/34 5.35 13,000,000
1,795,000 Community Ltd. Care (c)
LOC Fifth Third Bank 12/01/12 5.44 1,795,000
2,600,000 Crownover Lumber Co. (c)
LOC Fifth Third Bank 09/01/08 5.44 2,600,000
2,250,000 Defiance Metal Products Company (c)
LOC National City Bank, Northwest 09/01/09 5.38 2,250,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 6,840,000 Dickenson Press, Inc. - Series 1997 (c)
LOC First Michigan Bank 01/01/27 5.60% $ 6,840,000
1,800,000 Dormont Manufacturing Company, Inc. (c)
LOC PNC Bank, N.A. 03/01/08 5.20 1,800,000
4,700,000 DP Fox Capital, L.L.C. (c)
LOC Michigan National Bank 05/01/28 5.60 4,700,000
7,000,000 Ferriot Inc. Project (c)
LOC FirstMerit Bank 04/01/20 5.46 7,000,000
4,645,000 First Metropolitan Title Company (c)
LOC Michigan National Bank 05/01/22 5.48 4,645,000
25,000,000 First Union National Bank of North Carolina (i) 07/17/00 5.49 25,000,000
2,800,000 Gesmundo & Associates, Inc. (c)
LOC National City Bank, Northwest 08/15/27 5.35 2,800,000
3,400,000 The Goldman Sachs Group L.P. 06/15/00 5.15 3,425,350
3,835,000 Grand Valley Limited Partnership (c)
LOC National City Bank, Northwest 06/01/27 5.35 3,835,000
2,920,000 Greensboro, NC Public Improvement - Series C (c) 04/01/14 5.35 2,920,000
4,440,000 Growth Properties I, Ltd. L.P. 1997 (c)
LOC Columbus Bank & Trust Company 08/01/12 5.45 4,440,000
6,000,000 Illinois Health Facilities (Loyola University) (c)
Insured by MBIA Insurance Corp. 07/01/24 5.35 6,000,000
10,800,000 Illinois Student Assistance Commission (c)
Insured by MBIA Insurance Corp. 09/01/32 5.31 10,800,000
845,000 Jake Sweeney Automotive, Inc. (c)
LOC FirstStar Bank 04/01/05 5.41 845,000
15,000,000 John Hancock Mutual Life Insurance Company (j) 08/19/05 5.53 15,000,000
1,635,000 KBL Capital Fund, Inc. (c)
LOC Old Kent Bank & Trust Co. 07/01/15 5.50 1,635,000
3,680,000 LKWP Investments, L.L.C. (c)
LOC First Michigan Bank 03/01/27 5.45 3,680,000
3,795,000 Labelle Capital Funding - Series A (c)
LOC First of America/Michigan National Bank 09/01/26 5.50 3,795,000
4,850,000 Lam Funding, L.L.C. (c)
LOC First of America 12/15/27 5.35 4,850,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,650,000 Machining Center (c)
LOC Comerica Bank 10/01/27 5.60% $ 1,650,000
2,320,000 Maryland Health & Higher Education Finance Authority
(Glen Meadows Retirement Community) (c)
LOC First Union National Bank 07/01/29 5.40 2,320,000
1,815,000 Miami Valley Realty Associates (c)
LOC Key Bank, N.A. 06/01/12 5.44 1,815,000
965,000 Mt. Carmel East Professional Office Building - Series 1994 (c)
LOC National City Bank, Northwest 01/01/14 5.38 965,000
1,455,000 Mt. Carmel Partnership Project (c)
LOC National City Bank, Northwest 08/01/14 5.38 1,455,000
3,575,000 Mobile Airport (c)
LOC Regions Bank 10/01/24 5.35 3,575,000
2,575,000 Mubea, Inc. Project (c)
LOC Fifth Third Bank 12/01/04 5.38 2,575,000
15,860,000 Nebraska Public Power - Series B
LOC Bank of America/Toronto Dominion/
Bank of Nova Scotia/Commerzbank 09/08/99 5.16 15,860,000
4,665,000 New Federal Cold Storage (c)
LOC National City Bank, PA 11/01/12 5.38 4,665,000
18,400,000 New York State HFA (250 West 50th Street Project) (c)
Insured by Federal National Mortgage Association 05/01/29 5.35 18,400,000
1,025,000 Ohio Metallurgical Services Inc. (c)
LOC FirstMerit Bank 10/01/04 5.46 1,025,000
3,520,000 Opportunity Aviation, Ltd. Project (c)
LOC National City Bank, Northwest 12/02/02 5.38 3,520,000
9,450,000 PRD Financial L.L.C. (c)
LOC First of America 04/01/27 5.35 9,450,000
1,200,000 Pennsylvania EDFA (Southstar Canal Road Ltd) (c)
LOC PNC Bank, N.A. 12/01/10 5.45 1,200,000
8,100,000 Polar Plastics, Inc. (c)
LOC PNC Bank, N.A. 08/01/17 5.34 8,100,000
8,930,000 Riverside County, CA (Bankruptcy Courthouse) (c)
LOC Commerzbank, A.G. 11/01/27 5.35 8,930,000
2,200,000 SSM Health Care Systems - Series 1995D (c)
Insured by MBIA Insurance Corp. 06/01/24 5.53 2,200,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,025,000 Sacramento County Housing Authority
(Hidden Oaks Apartments) - Series 1999 (c)
Guaranteed by Federal National Mortgage Association 05/15/29 5.40% $ 3,025,000
4,500,000 Seven Z Enterprises (f)
LOC PNC Bank, N.A. 06/03/13 5.20 4,500,000
1,900,000 Soaring Eagle Partners L.P. (c)
LOC PNC Bank, N.A. 10/01/12 5.34 1,900,000
2,815,000 Sojourn Project (c)
LOC FirstMerit Bank 07/01/12 5.46 2,815,000
1,860,000 UAI Technologies, Inc. - Series 1998 (c)
LOC First Union National Bank 05/01/18 5.40 1,860,000
1,695,000 Valley City Linen Co. (c)
LOC First Michigan Bank 02/15/02 5.60 1,695,000
11,620,000 Washington State HFC (Country Manor One Project) (c)
LOC U.S. Bank of Washington 01/01/12 5.45 11,620,000
2,000,000 Willingboro Township, NJ BAN 10/01/99 4.93 2,000,447
4,440,000 Windsor Medical Center, Inc. (c)
LOC FirstMerit Bank 12/03/18 5.46 4,440,000
20,000,000 Winston Salem, NC COPS 09/02/99 5.25 20,000,000
1,400,000 Wulfeck Family Partnership Project (c)
LOC FirstStar Bank 09/01/17 5.41 1,400,000
4,665,000 Zylstra Funding, Inc. (c)
LOC First Michigan Bank 06/01/27 5.60 4,665,000
-------------- -------------
328,125,000 Total Other Notes 328,150,797
-------------- -------------
<CAPTION>
Repurchase Agreement, Overnight (4.09%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 61,000,000 The Goldman Sachs Group L.P. (Collateralized by $74,850,892,
GNMA, 5.371% to 6.500%, due 07/20/25 to 12/15/28) 09/01/99 5.48% $ 61,000,000
-------------- -------------
61,000,000 Total Repurchase Agreement, Overnight 61,000,000
-------------- -------------
<CAPTION>
Short Term Bank Notes (3.69%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 Bank of America 10/08/99 5.21% $ 20,000,000
15,000,000 Bank of America 12/30/99 5.00 15,000,000
20,000,000 Bank of America 01/18/00 5.02 19,998,532
-------------- -------------
55,000,000 Total Short Term Bank Notes 54,998,532
-------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Time Deposits (10.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 50,000,000 Bank One 09/01/99 5.57% $ 50,000,000
60,000,000 Toronto Dominion Bank 09/01/99 5.56 60,000,000
40,000,000 Westdeutsche Landesbank 09/01/99 5.56 40,000,000
-------------- --------------
150,000,000 Total Time Deposits 150,000,000
-------------- --------------
<CAPTION>
Yankee Certificates of Deposit (9.73%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 15,000,000 Banque Nationale De Paris 12/21/99 5.41% $ 15,000,000
20,000,000 Bayerische HypoVereinsbank 05/04/00 5.23 19,992,863
15,000,000 Commerzbank A.G. 01/10/00 5.02 14,999,481
10,000,000 Commerzbank A.G. 02/25/00 5.20 9,996,757
15,000,000 Commerzbank A.G. 05/18/00 5.32 14,994,861
15,000,000 Deutsche Bank A.G. 05/22/00 5.40 14,995,830
15,000,000 Toronto Dominion Bank 12/29/99 5.09 14,999,529
25,000,000 Unibank A/S 12/23/99 5.44 25,000,770
15,000,000 Union Bank of Switzerland 01/13/00 5.10 14,998,938
-------------- --------------
145,000,000 Total Yankee Certificates of Deposit 144,979,029
-------------- --------------
Total Investments (99.67%) (Cost $1,485,735,759+) 1,485,735,759
Cash and Other Assets, Net of Liabilities (0.33%) 4,932,414
--------------
Net Assets (100.00%) $1,490,668,173
==============
Net Assets Value, offering and redemption price per share:
Class A Shares, 1,194,797,526 shares outstanding (Note 3) $ 1.00
==============
Class B Shares, 297,590,927 shares outstanding (Note 3) $ 1.00
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
FOOTNOTES:
(a) The interest rate is adjusted daily based on opening Federal Funds
effective rate + 0.10% (daily put).
(b) The interest rate is adjusted monthly based on 1 month LIBOR + 0.05% (7 day
put).
(c) Securities payable on demand at par including accrued interest (with 7 days
notice). Interest is adjusted weekly.
(d) The interest rate is adjusted monthly based on 1 month LIBOR (7 day put).
(e) The interest rate is adjusted monthly based on 1 month LIBOR - 0.03%.
(f) The security can be put on the first business day of the month at par.
Interest is adjusted weekly.
(g) The interest rate is adjusted quarterly based on 3 month LIBOR + 3 basis
points.
(h) The interest rate is adjusted quarterly based on 3 month LIBOR - 0.07%.
(i) The interest rate is adjusted daily based on prime - 2.76%.
(j) The interest rate is adjusted quarterly based on 3 month LIBOR + 0.06% (one
year put)/Evergreen maturity
(k) The interest rate is adjusted monthly based on 1 month LIBOR - 0.05%.
(l) The interest rate is adjusted quarterly based on 3 month LIBOR + .05%
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
BAN = Bond Anticipation Note HFC = Housing Finance Corporation
COPS = Certificates of Participation IDRB = Industrial Development Revenue Bonds
EDFA = Education Development Finance Authority LOC = Letter of Credit
HFA = Hospital Finance Authority PCFA = Pollution Control Finance Authority
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements, Overnight (66.40%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 40,000,000 CIBC World Market Corp. (Collateralized by $41,665,000,
U.S. Treasury Bill, due 09/15/99, U.S. Treasury Bond, 5.500%,
due 08/15/28, U.S. Treasury Notes, 5.375% to 6.375%,
due 07/31/00 to 09/30/01) 09/01/99 5.41% $ 40,000,000
24,000,000 Fuji Bank, Ltd. (Collateralized by $24,225,000,
U.S. Treasury Note, 5.750%, due 04/30/03) 09/01/99 5.40 24,000,000
40,000,000 The Goldman Sachs Group L.P. (Collateralized by $88,834,291,
GNMA, 6.000% to 6.375%, due 02/20/26 to 04/20/29) 09/01/99 5.48 40,000,000
40,000,000 Morgan (JP) Securities, Inc. (Collateralized by $43,360,320,
GNMA, 6.500%, due 10/15/28 to 08/15/29) 09/01/99 5.45 40,000,000
205,000,000 Morgan Stanley & Company, Inc. (Collateralized by $336,339,686,
GNMA, 5.500% to 10.000% due 11/15/09 to 08/30/29) 09/01/99 5.44 205,000,000
210,000,000 Soloman Smith Barney, Inc. (Collateralized by $232,812,506,
GNMA GNRM, 6.000% to 6.250%, due 02/20/24 to 07/16/26) 09/01/99 5.47 210,000,000
-------------- --------------
559,000,000 Total Repurchase Agreements, Overnight 559,000,000
-------------- --------------
<CAPTION>
U.S. Government Obligations (33.29%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 115,000,000 U.S. Treasury Bills 09/15/99 5.18% $ 114,769,039
10,000,000 U.S. Treasury Notes, 5.75% 09/30/99 4.61 10,007,772
10,000,000 U.S. Treasury Notes, 5.875% 02/15/00 4.88 10,037,866
45,000,000 U.S. Treasury Notes, 5.50% 02/29/00 4.64 45,147,801
30,000,000 U.S. Treasury Notes, 6.375% 05/15/00 4.66 30,294,317
30,000,000 U.S. Treasury Notes, 5.50% 05/31/00 4.87 30,090,044
10,000,000 U.S. Treasury Notes, 5.875% 06/30/00 4.98 10,051,539
10,000,000 U.S. Treasury Notes, 5.375% 07/31/00 5.23 9,992,422
20,000,000 U.S. Treasury Notes, 5.125% 08/31/00 5.35 19,921,895
-------------- --------------
280,000,000 Total U.S. Government Obligations 280,312,695
-------------- --------------
Total Investments (99.69%) (Cost $839,312,695+) 839,312,695
Cash and Other Assets, Net of Liabilities (0.31%) 2,636,069
--------------
Net Assets (100.00%) $ 841,948,764
==============
Net assets value, offering and redemption price per share:
Class A Shares, 723,951,701 shares outstanding (Note 3) $ 1.00
==============
Class B Shares, 117,995,700 shares outstanding (Note 3) $ 1.00
==============
Class TRA Shares, 1,363 shares outstanding (Note 3) $ 1.00
==============
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED AUGUST 31, 1999
================================================================================
<TABLE>
<CAPTION>
Money Market U.S. Government
Portfolio Portfolio
------------ ---------------
INVESTMENT INCOME
<S> <C> <C>
Income:
Interest.............................................................. $ 73,593,566 $ 44,953,740
------------------- ------------------
Expenses: (Note 2)
Investment management fee............................................. 4,153,608 2,351,952
Administration fee.................................................... 2,983,956 1,923,140
Distribution fee (Class A)............................................ 2,797,974 1,956,474
Custodian expenses.................................................... 122,115 97,312
Shareholder servicing and related shareholder expenses................ 2,504,608 1,089,410
Legal, compliance and filing fees..................................... 245,934 137,824
Audit and accounting.................................................. 115,226 83,910
Directors' fees ...................................................... 27,161 15,161
Miscellaneous......................................................... 60,813 33,515
------------------- ------------------
Total expenses.................................................... 13,011,395 7,688,698
Less:
Expenses paid indirectly....................................... ( 494) ( 433)
------------------- ------------------
Net expenses.............................................. 13,010,901 7,688,265
------------------- ------------------
Net investment income.................................................... 60,582,665 37,265,475
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C> <C>
Net realized gain (loss) on investments.................................. 441,016 -0-
------------------- ------------------
Increase in net assets from operations................................... $ 61,023,681 $ 37,265,475
=================== ==================
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED AUGUST 31, 1999 AND 1998
================================================================================
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Government Portfolio
---------------------------------- --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................. $ 60,582,665 $ 56,795,811 $ 37,265,475 $ 37,915,374
Net realized gain (loss) on investments 441,016 69,854 -0- -0-
-------------- -------------- -------------- --------------
Increase in net assets from operations. 61,023,681 56,865,665 37,265,475 37,915,374
Dividends to shareholders:
Net investment income
Class A.............................. ( 47,165,724) ( 43,410,231) ( 31,513,153) ( 33,787,099)
Class B.............................. ( 13,831,208) ( 13,154,934) ( 5,752,312) ( 4,128,275)
TRA Class ........................... -- -- ( 10) --
Capital share transactions (Note 3):
Class A.............................. 208,077,785 184,183,496 ( 28,545,156) 16,916,289
Class B.............................. 1,009,945 28,629,584 47,828,021 1,200,649
TRA Class............................ -- -- 1,363 --
-------------- -------------- -------------- --------------
Total increase (decrease)............ 209,114,479 213,113,580 19,284,228 18,116,938
Net assets:
Beginning of year.................... 1,281,553,694 1,068,440,114 822,664,536 804,547,598
-------------- -------------- -------------- --------------
End of year (including undistributed
net investment income of $0
and $414,267 for the Money Market
Portfolio)......................... $1,490,668,173 $1,281,553,694 $ 841,948,764 $ 822,664,536
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Summary of Accounting Policies.
Short Term Income Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The Fund
is presently comprised of two Portfolios, Money Market Portfolio and U.S.
Government Portfolio. The Money Market Portfolio has two classes of stock
authorized, Class A and Class B. The U.S. Government Portfolio has three classes
of stock authorized, Class A, Class B and TRA Class. The Class A shares of each
Portfolio and the TRA Class of the U.S. Government Portfolio are subject to a
service fee pursuant to each Portfolio's Distribution and Service Plan. The
Class B shares are not subject to a service fee. Additionally, the Portfolio may
allocate among its classes certain expenses, to the extent allowable to specific
classes, including transfer agent fees, government registration fees, certain
printing and postage costs, and administrative and legal expenses. Class
specific expenses of the Fund were limited to shareholder servicing fees and
transfer agent expenses. In all other respects, the Class A and Class B shares
and TRA Class represent the same interest in the income and assets of each
respective Portfolio. The Fund's financial statements are prepared in accordance
with generally accepted accounting principles for investment companies as
follows.
a) Valuation of Securities -
Investments are valued at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any discount or premium is
amortized on a constant basis to the maturity of the instrument.
b) Federal Income Taxes -
It is the policy of each Portfolio to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision for federal income tax is required.
c) Dividends and Distributions -
Dividends from investment income (including realized capital gains and
losses), determined on a class level, are declared daily and paid monthly.
With respect to the Money Market Portfolio, realized capital gains and
losses are excluded.
d) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
e) General -
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned. Realized gains and losses from securities
transactions are recorded on the identified cost basis. It is the Fund's
policy to take possession of securities as collateral under repurchase
agreements and to determine on a daily basis that the value of such
securities are sufficient to cover the value of the repurchase agreements.
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Management Contract, the Money Market Portfolio pays a management fee
to Reich & Tang Asset Management, L.P. (the Manager) at the annual rate of .30%
of the Portfolio's average daily net assets not in excess of $750 million, plus
.29% of such assets in excess of $750 million but not in excess of $1 billion,
plus .28% of such assets in excess of $1 billion but not in excess of $1.5
billion, plus .27% of such assets in excess of $1.5 billion. The U.S. Government
Portfolio pays a management fee to the Manager equal to .275% of the Portfolio's
average daily net assets not in excess of $250 million, plus .25% of such assets
in excess of $250 million. The Manager has agreed to reimburse the Fund for its
net operating expenses (exclusive of taxes, brokerage, interest and
extraordinary expenses) to the extent that such expenses, including the
management fee, for any fiscal year exceed 1% of the average daily net assets of
each Portfolio for such fiscal year. No such reimbursement was required for the
period ended August 31, 1999.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates
(Continued).
Pursuant to an Administrative Services Agreement, each Portfolio pays to the
Manager an annual fee of .21% of each Portfolio's average daily net assets not
in excess of $1.25 billion, plus .20% of such assets in excess of $1.25 billion
but not in excess of $1.5 billion, plus .19% of such assets in excess of $1.5
billion.
Pursuant to a Distribution and Service Plan adopted under Securities and
Exchange Commission Rule 12b-1, the Fund and Reich & Tang Distributors, Inc.
(the Distributor) entered into a Distribution Agreement and a Shareholder
Servicing Agreement, only with respect to the Class A shares of each Portfolio
and the TRA Class of the U.S. Government Portfolio. For its services under the
Shareholder Servicing Agreement, the Distributor receives from each Portfolio
with respect only to the Class A shares and the TRA Class of the U.S. Government
Portfolio, a service fee equal to .25% per annum of each Portfolio's average
daily net assets.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$9,000 per annum plus $1,250 per meeting attended.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $1,269,996 and $457,961
for the Money Market Portfolio and the U.S. Government Portfolio, respectively,
paid to Reich & Tang Services L.P., an affiliate of the Manager as servicing
agent for the Fund.
Included under the captions "Custodian expenses" and "Shareholder servicing and
related shareholder expenses" are expense offsets of $494 and $433 for the Money
Market Portfolio and the U.S. Government Portfolio, respectively.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
3. Capital Stock.
At August 31, 1999, 10,000,000,000 shares of $.001 par value stock were
authorized and capital paid in for the Money Market Portfolio and the U.S.
Government Portfolio amounted to $1,492,388,453 and $841,948,764, respectively.
Transactions in capital stock, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Government Portfolio
---------------------------------------- -----------------------------------------
Year Ended Year Ended Year Ended Year Ended
8/31/99 8/31/98 8/31/99 8/31/98
Class A -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold................................ 1,028,092,330 957,881,430 621,528,982 867,760,740
Issued on reinvestment of dividends. 43,548,412 39,324,620 30,916,396 32,991,750
Redeemed............................ ( 863,562,957) ( 813,022,554) ( 680,990,534) ( 883,836,201)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 208,077,785 184,183,496 ( 28,545,156) 16,916,289
============== ============== ============== ==============
<CAPTION>
Class B
<S> <C> <C> <C> <C>
Sold................................ 805,603,469 897,301,951 491,585,714 494,551,691
Issued on reinvestment of dividends. 13,525,260 12,863,930 4,996,507 3,422,930
Redeemed............................ ( 818,118,784) ( 881,536,297) ( 448,754,200) ( 496,773,972)
-------------- -------------- -------------- --------------
Net increase (decrease)............. 1,009,945 28,629,584 47,828,021 1,200,649
============== ============== ============== ==============
<CAPTION>
July 12, 1999
(Commencement of Sales)
August 31, 1999
---------------
TRA Class
Sold................................ 2,363
Issued on reinvestment of dividends. 12
Redeemed............................ ( 1,012)
--------------
Net increase (decrease)............. 1,363
==============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses of the Money Market Portfolio at
August 31, 1999 amounted to $1,720,280. Such amount represents tax basis capital
losses which may be carried forward to offset future capital gains through
August 31, 2004.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. Financial Highlights.
<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>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
5. Financial Highlights. (Continued)
<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>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. Financial Highlights. (Continued)
<TABLE>
<CAPTION>
U.S. Government Portfolio
-------------------------
July 12, 1999
(Commencement of Sales)
TRA CLASS August 31, 1999
- --------- ---------------
<S> <C>
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
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Board of Directors and Shareholders of
Short Term Income Fund, Inc.
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Money Market Portfolio and the U.S. Government Portfolio (constituting Short
Term Income Fund, Inc., hereafter referred to as the "Fund") at August 31, 1999,
and the results of each of their operations, the changes in each of their net
assets and the financial highlights for the year then ended, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The financial statements for the year ended August
31, 1998, including the financial highlights for each of the four years in the
period then ended, were audited by other independent accountants whose report
dated September 25, 1998 expressed an unqualified opinion on those financial
statements.
PricewaterhouseCoopers LLP
New York, New York
September 30, 1999
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
CHANGE IN INDEPENDENT ACCOUNTANTS
================================================================================
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP
(PwC) to acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition have joined
PwC.
The reports of McGladrey on the financial statements of the Fund during the past
two fiscal years contained no adverse opinion or a disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audits for the two most recent fiscal years and through
August 13, 1999, there were no disagreements with McGladrey on any matter of
accounting principle or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
McGladrey would have caused it to make reference to the subject matter of
disagreement in connection with its report.
Effective August 13, 1999, the Fund, with the approval of its Board of Directors
and its Audit Committee, engaged PwC as its independent auditors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Annual Report
August 31, 1999
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------------------------------
This report is submitted for the general information
of the shareholders of the Fund. It is not
authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an
effective prospectus, which includes information
regarding the Fund's objectives and policies,
experience of its management, marketability of
shares, and other information.
- ------------------------------------------------------
Short Term Income Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Custodian
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
STIF899A
- --------------------------------------------------------------------------------
<PAGE>
