RULE 497(e)
Registration No. 2-65315
SHORT TERM INCOME FUND, INC. 600 Fifth Avenue
New York, New York 10020
(212) 830-5220
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SUPPLEMENT DATED DECEMBER 18, 2000, TO THE PROSPECTUS DATED JANUARY 1, 2000.
Short Term Income Fund, Inc. (the "Fund") has modified its investment
restrictions to allow the Fund to purchase securities that are exempt from
registration under Section 4(2) or Rule 144A of the Securities Act of 1933.
On page 7, the following paragraph is added after the section entitled
Repurchase Agreements, to read as follows:
"(V) PRIVATE PLACEMENT INVESTMENTS: The Money Market Portfolio may purchase
commercial paper exempt from registration under Section 4(2) of the
Securities Act of 1933 ("4(2) Paper") and securities which are not
registered and are issued as private placements pursuant to Rule 144A of
the Securities Act of 1933 ("Rule 144A Securities"). The Portfolio intends
to purchase both liquid and illiquid 4(2) Paper and Rule 144A Securities.
Any such illiquid securities that the Money Market Portfolio purchases are
subject to a maximum of 10% of the value of its net assets."
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SHORT TERM INCOME FUND, INC. 600 Fifth Avenue
New York, New York 10020
(212) 830-5220
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SUPPLEMENT DATED DECEMBER 18, 2000, TO THE STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 1, 2000.
Short Term Income Fund, Inc. (the "Fund") has modified its investment
restrictions to allow the Fund to purchase securities that are exempt from
registration under Section 4(2) or Rule 144A of the Securities Act of 1933 (the
"Securities Act").
After the first paragraph on page 4, at the end of the section entitled
"Description of Investments," the following text is added:
"RULE 144A SECURITIES AND 4(2) PAPER
The Money Market Portfolio may purchase securities that are not registered
("registered securities") under the Securities Act, but can be offered and
sold to "qualified institutional buyers" under Rule 144A of the Securities
Act. The Portfolio may also purchase certain commercial paper issued in
reliance on the exemption from regulations in Section 4(2) of the
Securities Act ("4(2) Paper"). However, the Portfolio will not invest more
than 10% of its net assets in illiquid investments, which include
securities for which there is no readily available market, securities
subject to contractual restriction on resale, and restricted securities
(unless, with respect to these securities and 4(2) Paper, the Fund's
Directors continuously determine, based on the trading markets for the
specific restricted security, that it is liquid). The Directors have
adopted guidelines and delegated to the Manager the daily function of
determining and monitoring liquidity of Rule 144A securities and 4(2)
Paper. The Directors, however, retain sufficient oversight and are
ultimately responsible for these determinations. See "Investment
Restrictions" for further detail on how liquidity is determined."
Under the heading "Investment Restrictions" on page 4, investment
restriction (c)(5) is modified to read as follows:
". . . The Fund may not: . . . (c)(5) purchase restricted securities or
purchase securities on margin provided, however, with respect to
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the Money Market Portfolio restricted securities shall not include
privately placed securities that are exempt from registration under Section
4(2) or Rule 144A of the Securities Act of 1933."
The following paragraphs are inserted before the last full paragraph on
page 4:
With respect to the investment restriction set forth in number (c)(5)
above, the Directors have the ultimate responsibility for determining
whether specific securities are liquid or illiquid. The Directors have
delegated the function of making day-to-day determinations of liquidity to
the Manager pursuant to guidelines approved by the Directors.
The Manager takes into account a number of factors in determining whether a
Rule 144A security being considered for purchase by the Money Market
Portfolio is liquid, including at least the following: (i) the frequency
and size of trades and quotes for the Rule 144A security; (ii) the number
of dealers willing to purchase or sell the 144A security and the number of
other potential purchasers; (iii) dealer undertakings to make a market in
the 144A security; and (iv) the nature of the 144A security and the nature
of the market for the 144A security (i.e., the time needed to dispose of
the security, the method of soliciting offers, and the mechanics of
transfer).
To make the determination that an issue of 4(2) Paper is liquid, the
Manager must conclude that the following conditions have been met: (i) the
4(2) Paper must not be in default; (ii) the 4(2) Paper is rated; (a) in one
of the two highest rating categories by at least two nationally recognized
statistical rating organizations ("NRSROs"); or (b) if the security is
unrated, the Manager has determined that the security is of acceptable
credit quality; and (iii) there is a viable trading market for the specific
security, taking into account all relevant factors.
