<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, 2000.
The Fund's Money Market Portfolio had 71,436 shareholders and net assets of
$1,291,534,014 as of August 31, 2000. The Government Portfolio had 7,614
shareholders and net assets of $627,305,816 as of August 31, 2000.
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, 2000
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Commercial Paper (13.78%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 Banco Santander Puerto Rico 09/14/00 6.55% $ 19,952,839
20,000,000 Bear Stearns Companies Inc. 11/21/00 6.58 19,708,400
20,000,000 Caterpillar Financial Services Corporation 09/19/00 6.35 19,938,700
27,600,000 Caterpillar Financial Services Corporation 11/15/00 6.53 27,238,900
20,000,000 Cregem North America Inc. 01/22/01 6.74 19,479,639
7,200,000 Island Finance Puerto Rico, Inc. 10/25/00 6.60 7,129,692
15,000,000 Island Finance Puerto Rico, Inc. 11/08/00 6.61 14,815,833
35,000,000 Lehman Brothers Holdings Inc. 10/11/00 6.51 34,755,000
15,000,000 National Rural Utilities Cooperative 09/11/00 6.30 14,974,542
-------------- -------------
179,800,000 Total Commercial Paper 177,993,545
-------------- -------------
<CAPTION>
Letter of Credit Commercial Paper (18.65%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 13,700,000 AES Shady Point Inc.
LOC Bank of America 11/07/00 6.60% $ 13,534,268
10,000,000 Banco Continental de Panama S.A.
LOC HSBC Bank US 01/25/01 6.69 9,735,983
15,000,000 Banco de Galicia Y Bueno
LOC Bayerische HypoVereinsbank, A.G. 10/12/00 6.64 14,888,446
25,000,000 Banco General de Negocios
LOC Barclays Bank PLC 04/06/01 6.83 24,015,965
25,000,000 Banco Hipotecario
LOC Barclays Bank PLC 11/15/00 6.66 24,660,417
15,000,000 Banco Rio de La Plata S.A.
LOC HSBC Bank US 09/01/00 6.36 15,000,000
15,000,000 Banco Santander Brasilieros
LOC Standard Chartered Bank 11/09/00 6.62 14,812,550
15,000,000 Cemex S.A. de C.V.
LOC Bayerische HypoVereinsbank, A.G. 09/21/00 6.55 14,945,667
15,000,000 Corporacion Andina de Fomento
LOC Barclays Bank PLC 09/26/00 6.53 14,932,292
17,000,000 Dean Health System, Inc.
LOC Rabobank Nederland 09/14/00 6.55 16,959,974
20,000,000 GTL Trade Corporation
LOC Banco Santander 11/22/00 6.63 19,702,978
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Letter of Credit Commercial Paper (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10,000,000 Louis Dreyfus Corporation
LOC ABN AMRO Bank 09/11/00 6.56% $ 9,981,889
10,000,000 Louis Dreyfus Corporation
LOC Dresdner Bank 10/11/00 6.56 9,927,778
15,000,000 Unibanco-Uniao de Bancos Brasilieros
LOC Westdeutsche Landesbank 07/13/01 7.14 14,125,875
9,685,000 Vermont Economic Development Authority - Series A
LOC First Union National Bank 10/17/00 6.73 9,685,000
14,000,000 Vermont Yankee Nuclear Power Company
LOC Societe Generale 09/08/00 6.59 13,982,169
-------------- -------------
244,385,000 Total Letter of Credit Commercial Paper 240,891,251
-------------- -------------
<CAPTION>
Loan Participations (4.65%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 25,000,000 Equitable Life Assurance Society with Chase Manhattan Bank (k) 03/19/01 6.82% $ 25,000,000
20,000,000 Mt. Vernon Phenol Plant Partnership with Chase Manhattan Bank (k)
Guaranteed by General Electric Company 05/17/01 6.74 20,000,000
15,000,000 Sea Launch Limited Partnership with Chase Manhattan Bank
Guaranteed by Boeing Corporation 10/24/00 6.64 15,000,000
-------------- -------------
60,000,000 Total Loan Participations 60,000,000
-------------- -------------
<CAPTION>
Master Notes (9.41%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 46,500,000 GMAC Mortgage Corporation (d) 09/01/00 6.62% $ 46,500,000
15,000,000 Goldman Sachs Group L.P. 09/18/00 6.68 15,000,000
15,000,000 Goldman Sachs Group L.P. 11/07/00 6.70 15,000,000
45,000,000 Williamette Industries Inc. (b) 06/15/01 6.67 45,000,000
-------------- -------------
121,500,000 Total Master Notes 121,500,000
-------------- -------------
<CAPTION>
Medium Term Notes (2.09%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000,000 The Bear Stearns Companies Inc. (e) 06/07/01 6.67% $ 20,000,000
7,000,000 Lehman Brothers Holdings (a) 06/01/01 6.78 7,021,192
-------------- -------------
27,000,000 Total Medium Term Notes 27,021,192
-------------- -------------
<CAPTION>
Other Notes (34.91%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,920,000 Ali Industries Inc. Project
LOC National City Bank, Northwest 07/01/10 6.71% $ 5,920,000
5,000,000 Allegheny County, PA (Union Electric Steel Corporation) (c)
LOC PNC Bank, N.A. 11/01/27 6.70 5,000,000
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 4,005,000 American West Michigan Property Taxable Municipal IDRB (c)
LOC Comerica Bank 12/01/25 6.67% $ 4,005,000
1,605,000 B & V Land Company, L.L.C. (c)
LOC First Michigan Bank 09/01/27 6.67 1,605,000
15,000,000 Bank America Bank Notes (i) 02/14/01 6.73 15,000,000
15,000,000 Bank America Bank Notes (i) 02/26/01 6.63 15,000,000
1,890,000 Bank of Kentucky Building (c)
LOC Firstar Bank 12/01/19 6.75 1,890,000
19,900,000 Bell County, TX Health Facility (Scott & White Memorial Hospital) (c)
Insured by MBIA Insurance Corp. 08/15/29 6.67 19,900,000
3,750,000 Bollman Capital, L.L.C. - Series 1996A (c)
LOC First of America/Michigan National Bank 12/15/26 6.71 3,750,000
1,000,000 Burgess & Niple Limited (c)
LOC National City Bank, Northwest 09/01/14 6.71 1,000,000
2,170,000 Burton I. Saltzman (Dave's Supermarket, Inc. Project) (c)
LOC National City Bank, Northwest 08/01/08 6.74 2,170,000
8,500,000 California HFA Home Mortgage RB - Series 1999
Insured by AMBAC Indemnity Corp. 09/01/00 6.63 8,500,000
3,000,000 California PCFA Environmental Improvement Bonds
(Shell Oil Company Project) (c) 06/01/38 6.57 3,000,000
4,544,000 Capital One Funding Corporation
Floating Rate Option Notes - Series 1997D (c)
LOC Bank One 07/02/18 6.70 4,544,000
2,215,000 Carriage Inn Retirement Community of Cadiz, Inc. - Series 1996 (c)
LOC Key Bank, N.A. 10/01/17 6.70 2,215,000
2,565,000 Carriage Inn Retirement Community of Dayton, Inc. - Series 1996 (c)
LOC Key Bank, N.A. 10/01/16 6.70 2,565,000
15,000,000 Caterpillar Financial Services Corporation (g) 07/07/01 6.74 15,000,000
27,200,000 Catholic Health Initiatives - Series C 12/01/27 6.70 27,200,000
1,380,000 Cedar Works Project (c)
LOC Firstar Bank 05/01/09 6.70 1,380,000
13,000,000 City and County of San Francisco (c)
LOC Bayerische HypoVereinsbank, A.G. 07/01/34 6.60 13,000,000
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10,000,000 Columbus, GA Development Authority (Foundry Project) (c)
LOC Bank of Nova Scotia 12/01/19 6.70% $ 10,000,000
1,710,000 Community Limited Care (c)
LOC Fifth Third Bank 12/01/12 6.75 1,710,000
2,500,000 Crownover Lumber Company (c)
LOC Fifth Third Bank 09/01/08 6.75 2,500,000
4,100,000 Defiance Metal Products Company (c)
LOC National City Bank, Northwest 09/01/09 6.71 4,100,000
6,360,000 Dickenson Press, Inc. - Series 1997 (c)
LOC First Michigan Bank 01/01/27 6.67 6,360,000
1,600,000 Dormont Manufacturing Company, Inc. (c)
LOC PNC Bank, N.A. 03/01/08 6.75 1,600,000
8,700,000 DP Fox Capital, L.L.C. (c)
LOC Michigan National Bank 09/01/29 6.62 8,700,000
6,950,000 Ferriot Inc. Project (c)
LOC First Merit Bank 04/01/20 6.79 6,950,000
3,910,000 Frank J. Catanzaro Sons and Daughters (c)
LOC Firstar Bank 01/01/15 6.70 3,910,000
2,750,000 Gesmundo & Associates, Inc. (c)
LOC National City Bank, Northwest 08/15/27 6.68 2,750,000
21,000,000 Goldman Sachs Floating Rate Note (j) 09/05/00 6.71 21,000,006
1,755,000 Goson Project- Series 1997 (c)
LOC FirstMerit Bank 11/01/17 6.79 1,755,000
3,720,000 Grand Valley Limited Partnership (c)
LOC National City Bank, Northwest 06/01/27 6.68 3,720,000
2,470,000 Growth Properties I, Limited L.P. 1997 (c)
LOC Columbus Bank & Trust Company 08/01/12 6.70 2,470,000
750,000 Jake Sweeney Automotive, Inc. (c)
LOC Firstar Bank 04/01/10 6.70 750,000
15,000,000 John Hancock Mutual Life Insurance Company (h) 08/19/05 6.75 15,000,000
1,585,000 KBL Capital Fund, Inc. (c)
LOC Old Kent Bank & Trust Co. 07/01/15 6.64 1,585,000
3,615,000 LKWP Investments, L.L.C. (c)
LOC First Michigan Bank 03/01/27 6.67 3,615,000
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,550,000 Labelle Capital Funding - Series A (c)
LOC National City Bank, Northwest 09/01/26 6.64% $ 3,550,000
4,700,000 Lam Funding, L.L.C. (c)
LOC National City Bank, Northwest 12/15/27 6.68 4,700,000
1,455,000 Machining Center (c)
LOC Comerica Bank 10/01/27 6.67 1,455,000
3,820,000 Maryland HEFA (Glen Meadows Retirement Community) (c)
LOC First Union National Bank 07/01/29 6.65 3,820,000
1,715,000 Miami Valley Realty Associates (c)
LOC Key Bank, N.A. 06/01/12 6.75 1,715,000
965,000 Mount Carmel East Professional Office Building - Series 1994 (c)
LOC National City Bank, Northwest 01/01/14 6.71 965,000
1,435,000 Mount Carmel Partnership Project (c)
LOC National City Bank, Northwest 08/01/14 6.71 1,435,000
15,695,000 Mobile, AL Springhill Medical Clinic Board RB
(Springhill Medical Complex) (c)
LOC Amsouth Bank, N.A. 06/01/20 6.65 15,695,000
3,575,000 Mobile Airport (c)
LOC Regions Bank 10/01/24 6.60 3,575,000
2,150,000 Mubea, Inc. Project (c)
LOC Fifth Third Bank 12/01/04 6.71 2,150,000
14,639,000 Nebraska Public Power - Series B
LOC Bank of America/Toronto Dominion/
Bank of Nova Scotia/Commerzbank 12/14/00 6.69 14,639,000
4,425,000 New Federal Cold Storage (c)
LOC National City Bank, PA 11/01/12 6.71 4,425,000
17,700,000 New York State HFA (250 West 50th Street Project) (c)
Collateralized by Federal National Mortgage Association 05/01/29 6.55 17,700,000
5,000,000 New York State HFA (1501 Lexington Avenue Housing ) (c)
Guaranteed by Federal Home Loan Bank 11/01/32 6.50 5,000,000
13,100,000 Newport, KY Industrial Building RB (Aquarium Holdings Project) (c)
LOC Fifth Third Bank 12/01/08 6.62 13,100,000
4,970,000 Ohio State Water Development Authority RB
(Independence Excavating, Inc.) (c)
LOC National City Bank, Northwest 12/01/09 6.71 4,970,000
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 850,000 Ohio Metallurgical Services Inc. (c)
LOC FirstMerit Bank 10/01/04 6.79% $ 850,000
3,360,000 Opportunity Aviation, Ltd. Project (c)
LOC National City Bank, Northwest 12/02/02 6.71 3,360,000
4,755,000 Ordeal Properties L.L.C. (c)
LOC Key Bank, N.A. 10/01/12 6.65 4,755,000
12,450,000 PRD Financial L.L.C. (c)
LOC National City Bank, Northwest 04/01/27 6.68 12,450,000
7,700,000 Polar Plastics, Inc. (c)
LOC PNC Bank, N.A. 08/01/17 6.61 7,700,000
2,200,000 SSM Health Care Systems - Series 1995D (c)
Insured by MBIA Insurance Corp. 06/01/24 6.62 2,200,000
2,850,000 Sacramento County Housing Authority
(Hidden Oaks Apartments) - Series 1999 (c)
Guaranteed by Federal National Mortgage Association 05/15/29 6.70 2,850,000
3,895,000 Seven Z Enterprises (f)
LOC PNC Bank, N.A. 06/03/13 6.75 3,895,000
3,610,000 Shelburne Realty & Troy Realty (c)
LOC National City Bank, Northwest 04/01/17 6.71 3,610,000
1,800,000 Soaring Eagle Partners L.P. (c)
LOC PNC Bank, N.A. 10/01/12 6.61 1,800,000
2,620,000 Sojourn Project- Series 1997 (c)
LOC FirstMerit Bank 07/01/12 6.79 2,620,000
1,810,000 UAI Technologies, Inc. - Series 1998 (c)
LOC First Union National Bank 05/01/18 6.68 1,810,000
1,605,000 Valley City Linen Co. (c)
LOC First Michigan Bank 02/15/02 6.67 1,605,000
2,800,000 Warren County, OH IDRB (Lindsey Steel Processing Inc.) (c)
LOC Firstar Bank 08/01/07 6.70 2,800,000
11,620,000 Washington State HFC (Country Manor One Project) (c)
LOC U.S. Bank of Washington 01/01/12 6.70 11,620,000
4,320,000 Windsor Medical Center, Inc. (c)
LOC FirstMerit Bank 12/03/18 6.79 4,320,000
20,000,000 Winston-Salem, NC 09/06/00 6.77 20,000,000
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Other Notes (Continued)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 6,020,000 Wise Investments L.L.C. (c)
LOC National City Bank, Northwest 11/01/27 6.68% $ 6,020,000
1,400,000 Wulfeck Family Partnership Project (c)
LOC Fifth Third Bank 09/01/17 6.70 1,400,000
720,000 Wynrose, Inc. - Series 1995A (c)
LOC Columbus Bank & Trust Company 01/01/05 6.65 720,000
4,475,000 Zylstra Funding, Inc. (c)
LOC First Michigan Bank 06/01/27 6.67 4,475,000
-------------- --------------
450,873,000 Total Other Notes 450,873,006
-------------- --------------
<CAPTION>
Repurchase Agreement, Overnight (6.89%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 89,000,000 The Goldman Sachs Group L.P. (Collateralized by $147,282,604,
GNMAs, 5.000% to 9.000%, due 03/15/11 to 07/20/30,
value $90,780,000) 09/01/00 6.64% $ 89,000,000
-------------- --------------
89,000,000 Total Repurchase Agreement, Overnight 89,000,000
-------------- --------------
<CAPTION>
Short Term Bank Note (0.77%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10,000,000 Bank of America 01/17/01 6.83% $ 10,000,000
-------------- --------------
10,000,000 Total Short Term Bank Note 10,000,000
-------------- --------------
<CAPTION>
Time Deposits (8.52%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 30,000,000 Banque Nationale de Paris 09/01/00 6.65% $ 30,000,000
30,000,000 PNC Bank, N.A. 09/01/00 6.66 30,000,000
50,000,000 Toronto Dominion Bank 09/01/00 6.66 50,000,000
-------------- --------------
110,000,000 Total Time Deposits 110,000,000
-------------- --------------
Total Investments (99.67%) (Cost $1,287,278,994+) 1,287,278,994
Cash and Other Assets, Net of Liabilities (0.33%) 4,255,020
--------------
Net Assets (100.00%) $1,291,534,014
==============
Net Assets Value, offering and redemption price per share:
Class A Shares, 941,257,369 Shares Outstanding (Note 3) $ 1.00
==============
Class B Shares, 351,730,227 Shares Outstanding (Note 3) $ 1.00
==============
</TABLE>
+ Aggregate cost for federal income tax purposes is identical.
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
================================================================================
FOOTNOTES:
(a) The interest rate is adjusted monthly based on 1 month LIBOR + 0.18%.
(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 flat.
(e) The interest rate is adjusted monthly based on 1 month LIBOR -0.03%.
(f) This 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 -0.07%.
(h) The interest rate is adjusted quarterly based on 3 month LIBOR + 0.06% (one
year put)/Evergreen maturity.
(i) The interest rate is adjusted daily based on prime -2.87%.
(j) The interest rate is adjusted monthly based on 1 month LIBOR + 0.09%.
(k) The interest rate is adjusted quarterly based on 3 month LIBOR + 0.05%.
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
HEFA = Health and Education Finance Authority LOC = Letter of Credit
HFA = Hospital Finance Authority PCFA = Pollution Control Finance Authority
HFC = Housing Finance Corporation RB = Revenue Bond
IDRB = Industrial Development Revenue Bonds
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2000
================================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date Yield (Note 1)
------ ---- ----- ------
Repurchase Agreements, Overnight (67.27%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 27,000,000 CIBC World Market Corp. (Collateralized by $27,480,000,
U.S. Treasury Notes, 6.500%, due 02/28/02, value $27,540,000) 09/01/00 6.55% $ 27,000,000
30,000,000 Fuji Bank, Ltd. (Collateralized by $23,949,000,
U.S. Treasury Notes, 7.500%, due 02/15/05; and by $4,848,000,
U.S. Treasury Bonds, 6.125%, due 11/15/27, value $30,474,000) 09/01/00 6.60 30,000,000
150,000,000 The Goldman Sachs Group L.P. (Collateralized by $646,854,522,
GNMAs, 1.313% to 9.500%, due 08/15/08 to 08/20/30,
value $153,000,000) 09/01/00 6.64 150,000,000
30,000,000 Morgan (JP) Securities, Inc. (Collateralized by $34,152,574,
GNMAs, 6.000% to 7.000%, due 07/15/28 to 02/15/29
value, $30,600,000) 09/01/00 6.62 30,000,000
30,000,000 Morgan Stanley Dean Witter & Co. (Collateralized by $48,747,934,
GNMAs, 7.000% to 8.000%, due 07/15/23 to 05/15/37,
value, $30,715,000) 09/01/00 6.62 30,000,000
155,000,000 Salomon Smith Barney, Inc. (Collateralized by $287,777,332,
GNMAs, 6.000% to 8.500%, due 05/15/09 to 11/20/29,
value $158,100,000) 09/01/00 6.64 155,000,000
------------- -------------
422,000,000 Total Repurchase Agreements, Overnight 422,000,000
------------- -------------
<CAPTION>
U.S. Government Obligations (32.57%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 145,000,000 U.S. Treasury Bills 09/21/00 6.34% $ 144,491,375
10,000,000 U.S. Treasury Notes, 5.75% 11/15/00 5.53 9,999,087
15,000,000 U.S. Treasury Notes, 4.50% 01/31/01 6.01 14,897,289
15,000,000 U.S. Treasury Notes, 5.37% 02/15/01 6.13 14,932,872
20,000,000 U.S. Treasury Notes, 6.50% 05/31/01 6.46 19,966,044
------------- -------------
205,000,000 Total U.S. Government Obligations 204,286,667
------------- -------------
Total Investments (99.84%) (Cost $626,286,667+) 626,286,667
Cash and Other Assets, Net of Liabilities (0.16%) 1,019,149
-------------
Net Assets (100.00%) $ 627,305,816
=============
Net assets value, offering and redemption price per share:
Class A Shares,491,021,737 shares outstanding (Note 3) $ 1.00
=============
Class B Shares,135,861,681 shares outstanding (Note 3) $ 1.00
=============
Class TRA, 422,398 shares outstanding (Note 3) $ 1.00
=============
</TABLE>
+ Aggregate cost for federal income tax purposes is identical.
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED AUGUST 31, 2000
================================================================================
<TABLE>
<CAPTION>
Money Market U.S. Government
Portfolio Portfolio
------------------- ------------------
INVESTMENT INCOME
<S> <C> <C>
Income:
Interest............................................................... $ 89,661,489 $ 45,440,945
------------------- ------------------
Expenses: (Note 2)
Investment management fee.............................................. 4,338,243 2,043,727
Administration fee..................................................... 3,081,652 1,664,230
Distribution fee (Class A and TRA Class)............................... 2,914,036 1,636,189
Custodian expenses..................................................... 116,664 102,289
Shareholder servicing and related shareholder expenses+................ 3,000,906 1,240,917
Legal, compliance and filing fees...................................... 108,805 120,483
Audit and accounting................................................... 83,260 113,977
Directors' fees ....................................................... 27,129 15,129
Miscellaneous.......................................................... 37,518 29,636
------------------- ------------------
Total expenses...................................................... 13,708,213 6,966,577
Less:
Fees waived...................................................... ( 200,000) --
Expenses paid indirectly......................................... ( 9,566) ( 1,024)
------------------ -----------------
Net expenses................................................. 13,498,647 6,965,553
------------------- ------------------
Net investment income..................................................... 76,162,842 38,475,392
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments................................... 166,161 -0-
------------------- ------------------
Increase in net assets from operations.................................... $ 76,329,003 $ 38,475,392
=================== ==================
</TABLE>
+ Includes class specific transfer agency expenses of $2,548,914 and $222,798
for the Money Market Portfolio for Class A and Class B, respectively and
$1,095,325 and $76,442 for the U.S. Government Portfolio for Class A and
Class B, respectively.
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED AUGUST 31, 2000 AND 1999
================================================================================
<TABLE>
<CAPTION>
Money Market Portfolio U.S. Government Portfolio
--------------------------------- -----------------------------------
2000 1999 2000 1999
--------------- --------------- --------------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................. $ 76,162,842 $ 60,582,665 $ 38,475,392 $ 37,265,475
Net realized gain (loss) on investments 166,161 441,016 -- --
-------------- -------------- -------------- --------------
Increase in net assets from operations. 76,329,003 61,023,681 38,475,392 37,265,475
Dividends to shareholders:
Net investment income
Class A............................... ( 58,471,708) ( 47,165,724) ( 31,248,791) ( 31,513,153)
Class B............................... ( 17,590,597) ( 13,831,208) ( 7,224,150) ( 5,752,312)
TRA Class ............................ -- -- ( 2,451) ( 10)
Capital share transactions (Note 3):
Class A............................... ( 253,540,157) 208,077,785 ( 232,929,964) ( 28,545,156)
Class B............................... 54,139,300 1,009,945 17,865,981 47,828,021
TRA Class............................. -- -- 421,035 1,363
-------------- -------------- -------------- --------------
Total increase (decrease)............. ( 199,134,159) 209,114,479 ( 214,642,948) 19,284,228
Net assets:
Beginning of year..................... 1,490,668,173 1,281,553,694 841,948,764 822,664,536
-------------- -------------- -------------- --------------
End of year (including undistributed
net investment income of $100,537
at August 31, 2000 for the Money
Market Portfolio)................... $1,291,534,014 $1,490,668,173 $ 627,305,816 $ 841,948,764
============== ============== ============== ==============
</TABLE>
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these 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 accounting principles generally accepted in the United States of America
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 accounting
principles generally accepted in the United States of America 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
year ended August 31, 2000.
--------------------------------------------------------------------------------
<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 a
service fee equal to .25% per annum of each Portfolio's average daily net assets
with respect only to the Class A shares and the TRA Class of the U.S. Government
Portfolio.
During the year ended August 31, 2000, the Manager voluntarily waived investment
management fees of $200,000 on the Money Market Portfolio.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$9,000 per annum plus $1,250 per meeting attended.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are fees of $1,326,907 and $396,464
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 shareholder
servicing agent for the Fund.
Included in the Statements of Operations under the caption "Shareholder
servicing and related shareholder expenses" are expense offsets of $9,566 and
$1,024 for the Money Market Portfolio and the U.S. Government Portfolio,
respectively.
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
================================================================================
3. Capital Stock.
At August 31, 2000, 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 $1,292,987,596 and $627,305,816, 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
8/31/00 8/31/99 8/31/00 8/31/99
-------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Class A
Sold................................ 3,947,898,411 1,028,092,330 1,862,104,530 621,528,982
Issued on reinvestment of dividends. 49,944,843 43,548,412 29,767,439 30,916,396
Redeemed............................ ( 4,251,383,411) ( 863,562,957) ( 2,124,801,933) ( 680,990,534)
-------------- -------------- --------------- -------------
Net increase (decrease)............. ( 253,540,157) 208,077,785 ( 232,929,964) ( 28,545,156)
============== ============== =============== =============
Class B
Sold................................ 1,297,389,381 805,603,469 778,973,763 491,585,714
Issued on reinvestment of dividends. 17,033,784 13,525,260 6,643,082 4,996,507
Redeemed............................ ( 1,260,283,865) ( 818,118,784) ( 767,750,864) ( 448,754,200)
-------------- -------------- --------------- -------------
Net increase (decrease)............. 54,139,300 1,009,945 17,865,981 47,828,021
============== ============== =============== =============
<CAPTION>
July 12, 1999
Year (Commencement
Ended of Sales) to
8/31/00 August 31, 1999
------------- ---------------
<S> <C> <C>
TRA Class
Sold............................................................... 467,048 2,363
Issued on reinvestment of dividends................................ 2,458 12
Redeemed........................................................... ( 48,471) ( 1,012)
------------ ==============
Net increase (decrease)............................................ 421,035 1,363
============ ==============
</TABLE>
4. Sales of Securities.
Accumulated undistributed realized losses of the Money Market Portfolio at
August 31, 2000 amounted to $1,554,119. 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
CLASS A Year Ended August 31,
------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<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...................... 0.050 0.042 0.047 0.046 0.047
Less distributions:
Dividends from net investment income....... ( 0.050) ( 0.042) ( 0.047) ( 0.046) ( 0.047)
-------- -------- -------- -------- --------
Net asset value, end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return.................................. 5.16% 4.30% 4.80% 4.66% 4.71%
Ratios/Supplemental Data
Net assets, end of year (000)................. $ 940,199 $1,193,420 $ 985,377 $ 801,001 $ 756,094
Ratios to average net assets:
Expenses+.................................. 0.99% 0.99% 0.97% 0.99% 0.98%
Net investment income...................... 5.02% 4.19% 4.57% 4.57% 4.63%
Management and administration fees waived.. 0.01% 0.00% 0.02% 0.00% 0.02%
Expenses paid indirectly................... 0.00% 0.00% 0.00% 0.01% 0.01%
<CAPTION>
Money Market Portfolio
CLASS B Year Ended August 31,
------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<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...................... 0.054 0.046 0.050 0.049 0.049
Less distributions:
Dividends from net investment income....... ( 0.054) ( 0.046) ( 0.050) ( 0.049) ( 0.049)
-------- -------- -------- -------- --------
Net asset value, end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return.................................. 5.58% 4.67% 5.16% 5.01% 5.00%
Ratios/Supplemental Data
Net assets, end of year (000)................. $ 351,335 $ 297,248 $ 296,177 $ 267,439 $ 219,810
Ratios to average net assets:
Expenses+.................................. 0.60% 0.64% 0.62% 0.66% 0.70%
Net investment income...................... 5.48% 4.55% 5.07% 4.90% 4.91%
Management and administration fees waived.. 0.01% 0.00% 0.02% 0.00% 0.02%
Expenses paid indirectly................... 0.00% 0.00% 0.00% 0.01% 0.01%
</TABLE>
+ Includes expenses paid indirectly.
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
================================================================================
5. Financial Highlights. (Continued)
<TABLE>
<CAPTION>
U.S. Government Portfolio
CLASS A Year Ended August 31,
------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<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...................... 0.048 0.040 0.047 0.046 0.047
Less distributions:
Dividends from net investment income....... ( 0.048) ( 0.040) ( 0.047) ( 0.046) ( 0.047)
------- ------- ------- ------- -------
Net asset value, end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return.................................. 4.95% 4.10% 4.82% 4.73% 4.81%
Ratios/Supplemental Data
Net assets, end of year (000)................. $ 491,022 $ 723,952 $ 752,497 $ 735,581 $ 666,620
Ratios to average net assets:
Expenses................................... 0.94% 0.89% 0.87% 0.81% 0.81%
Net investment income...................... 4.77% 4.03% 4.71% 4.61% 4.68%
<CAPTION>
U.S. Government Portfolio
CLASS B Year Ended August 31,
------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<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...................... 0.052 0.043 0.050 0.049 0.050
Less distributions:
Dividends from net investment income....... ( 0.052) ( 0.043) ( 0.050) ( 0.049) ( 0.050)
------- ------- ------- ------- -------
Net asset value, end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return.................................. 5.32% 4.44% 5.15% 5.00% 5.07%
Ratios/Supplemental Data
Net assets, end of year (000)................. $ 135,862 $ 117,996 $ 70,168 $ 68,967 $ 126,169
Ratios to average net assets:
Expenses................................... 0.58% 0.56% 0.55% 0.55% 0.56%
Net investment income...................... 5.23% 4.32% 5.03% 4.86% 5.04%
</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
Year Ended (Commencement of Sales) to
TRA CLASS August 31, 2000 August 31, 1999
--------- --------------- ---------------
<S> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period........... $ 1.00 $ 1.00
------------ -------------
Income from investment operations:
Net investment income....................... 0.049 0.006
Less distributions:
Dividends from net investment income........ ( 0.049 ) ( 0.006 )
----------- -----------
Net asset value, end of period................. $ 1.00 $ 1.00
============ ============
Total Return................................... 5.06% 4.33%*
Ratios/Supplemental Data
Net assets, end of period (000)................ $ 422 $ 1
Ratios to average net assets:
Expenses.................................... 0.93% 0.73%*
Net investment income....................... 5.43% 4.25%*
</TABLE>
* Annualized
--------------------------------------------------------------------------------
<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, 2000,
the results of each of their operations for the year then ended, and the changes
in each of their net assets and the financial highlights for each of the two
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America 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, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above. The financial highlights for each of the
three years in the period ended August 31, 1998, 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 29, 2000
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
SHORT TERM
INCOME
FUND, INC.
Annual Report
August 31, 2000
--------------------------------------------------------------------------------
<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
State Street Kansas City
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
STIF800A
--------------------------------------------------------------------------------
<PAGE>
