PRESIDENT'S LETTER
Dear Shareholder:
For the six months ended January 31, 1994, the Dreyfus Short-Term
Income Fund produced an annualized distribution rate per share of 6.87%.*
A total return for the same period of 3.62% was realized after taking into
account a price change that was virtually flat as well as the reinvestment
of income dividends.**
Your Fund's performance was helped by its large exposure to corporate
debt. With the perception of improving credit quality, corporate issues
showed better performance over the six-month period than did Treasuries.
Although there is no restriction on the maximum maturity of any portfolio
holding, the dollar-weighted average maturity of the entire portfolio is
not expected to exceed three years. Currently, no holding in the portfolio
has a maturity beyond December 1998.
It has been our goal in choosing these maturity holdings to find those
issues which we estimate to have the greatest opportunity for credit
improvement. During the six-month period, several of our holdings did
significantly outperform Treasury issues. Such names as McDonnell
Douglas, Delta Airlines, Time Warner, Telecommunications and Chrysler
Finance could be included in this list. We also added small positions in
Mexican and Argentinian credits since we judge these areas to be ones
where improving political and economic conditions should lead to
significant credit upgrades. We are, however, only using U.S. dollar-
denominated Yankee and Eurocredits, not Brady bonds.
Our concern about the increasing potential for a Federal Reserve Board
tightening led us to allow a small shortening in the average maturity of
the portfolio early in 1994. This concern was realized when the Federal
Reserve tightened the Federal Funds rate to 3.25% from 3.00% on February
4. Fed Chairman Alan Greenspan said that this movement was in the nature
of a preemptive strike made to prevent the need for sharply higher rate
increases in the future. At this time, he sees no inflationary pressures in
the economy. However, the markets have not accepted this logic. They are
looking instead for the inflation signals the Fed must be seeing and then
forecasting the timing of the next Fed move. While we believe the markets
seem to be overreacting, it is still likely that price volatility will
continue to be very high.
We have allowed the overnight position in the Fund to build up a bit,
thereby shortening our average maturity. Although corporate medium- and
longer-term issues have seen spreads widen in the last week, shorter
maturities have at least held stable. At this time, we do not expect
shorter-maturity issues to see much weakening. Thus, we have not
lightened our corporate exposure.
As always, we are carefully watching market as well as economic
conditions. Should we feel changes in portfolio strategies are needed, we
will make them in order to continue to provide you with attractive
returns.
Very truly yours,
Barbara L. Kenworthy
President
February 28, 1994
New York, N.Y.
* Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
** Total return represents the change during the period in a hypothetical
account with dividends reinvested.
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS JANUARY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-98.4% AMOUNT VALUE
------------ ------------
<S> <C> <C>
AIRLINES-6.5% Delta Air Lines, Medium-Term Notes:
Ser. B, 7.79%, 1998.................................. $ 8,000,000 $ 8,025,840
Ser. A, 8 1/4%, 1998................................. 3,000,000 3,103,575
McDonnell Douglas, Notes,
8 5/8%, 1997......................................... 3,643,000 3,942,258
QANTAS Airways Ltd., Sr. Notes,
6 5/8%, 1998......................................... 6,000,000 (a) 6,129,600
------------
21,201,273
------------
BANKING-9.2% Citicorp, Sr. Medium-Term Notes,
Ser. C, 8.57%, 1997.................................. 5,725,000 6,288,569
Continental Bank, Notes,
9 7/8%, 1996............................................. 6,090,000 6,707,136
CoreStates Capital, Sr. Medium-Term Sub. Notes
(Gtd. by CoreStates Financial),
3.28%, 1995.......................................... 3,000,000 (b) 3,000,000
First Chicago, Sr. Medium-Term Notes,
8.66%, 1994.......................................... 1,000,000 1,015,430
First USA Bank, Bank Notes,
5.35%, 1996.......................................... 10,000,000 10,016,000
First Union, Sr. Notes,
5.95%, 1995.......................................... 1,000,000 1,023,010
Fleet/Norstar Financial Group, Medium-Term Notes,
Ser. C, 10%, 1995.................................... 1,000,000 1,069,560
U.S. Bancorp, Sub. Capital Notes,
8 7/8%, 1994......................................... 1,000,000 1,023,202
------------
30,142,907
------------
BROKERAGE-3.5% Merrill Lynch, Notes,
4 3/4%, 1996......................................... 3,000,000 2,998,926
Merrill Lynch International & Co., Deb.,
8 1/4%, 1996......................................... 5,000,000 5,475,000
Smith Barney Holdings, Notes,
5 3/8%, 1996......................................... 3,000,000 3,037,020
------------
11,510,946
------------
CONSUMER-10.0% Circus Circus Enterprises, Sr. Sub. Notes,
10 5/8%, 1997........................................ 5,000,000 5,776,430
Pep Boys-Manny, Moe & Jack, Notes,
8 7/8%, 1996......................................... 5,000,000 5,424,690
Phillip Morris Cos.:
Notes,
9 1/4%, 1997..................................... 1,000,000 1,143,525
Sr. Medium-Term Notes,
6 1/4%, 1995..................................... 1,000,000 1,024,850
Safeway, Sr. Medium-Term Notes,
Ser. B, 8.07%, 1997.................................. 2,000,000 (a) 2,047,800
Sears, Roebuck and Co., Notes,
9 1/4%, 1997......................................... 5,000,000 5,605,750
Time Warner, Notes:
6.05%, 1995.......................................... 3,000,000 (a) 3,059,100
7.45%, 1998.......................................... 8,150,000 8,710,313
------------
32,792,458
------------
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JANUARY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
DRUGS AND PHARMACEUTICALS-.3% Baxter International, Sinking Fund Notes,
6 1/4%, 1995.......................................... $ 1,100,000 $ 1,109,743
------------
FINANCE-20.1% Advanta, Notes,
5 1/8%, 1996......................................... 9,000,000 9,020,790
Chrysler Financial:
Medium-Term Notes,
5.55%, 1997...................................... 5,000,000 5,020,000
Reset Notes,
10.34%, 1996..................................... 7,000,000 7,766,997
Ford Motor Credit, Medium-Term Notes:
9.07%, 1996.......................................... 7,000,000 7,698,320
5.80%, 1998.......................................... 5,000,000 5,075,400
General Motors Acceptance, Notes:
8 %, 1996............................................ 6,000,000 6,424,788
7 1/4%, 1997......................................... 5,000,000 5,309,600
Greyhound Leasing & Financial, Sr. Sub. Notes,
Zero Coupon, 1994.................................... 5,995,000 5,897,701
E.F. Hutton Group, Notes,
8 7/8%, 1996......................................... 400,000 430,029
International Lease Finance, Medium-Term Notes:
Ser. B, 9.80%, 1995.................................. 1,000,000 1,075,245
6.47%, 1997.......................................... 4,000,000 4,159,760
Paine Webber Group, Sub. Medium-Term Notes,
9.08%, 1995.......................................... 1,000,000 1,064,890
U.S. Leasing International, Medium-Term Notes,
8 3/4%, 1996......................................... 1,500,000 1,633,019
Westinghouse Credit, Sr. Medium-Term Notes:
8 %, 1994............................................ 1,000,000 1,012,100
8.73%, 1994.......................................... 1,000,000 1,031,110
9.13%, 1995.......................................... 2,700,000 2,860,002
------------
65,479,751
------------
INDUSTRIAL-3.1% Federal Express:
Notes,
6 1/4%, 1998..................................... 7,000,000 7,182,259
Sr. Medium-Term Notes,
10%, 1995........................................ 1,750,000 1,899,258
Sr. Notes,
9 3/4%,1996...................................... 1,000,000 1,100,297
------------
10,181,814
------------
INSURANCE-3.4% Farmers Group, Notes,
8 1/4%, 1996......................................... 2,000,000 2,160,216
North American Mortgage, Medium-Term Notes,
Ser. A, 5.20%, 1996.................................. 5,000,000 5,008,000
SAFECO, Notes,
10 3/4%, 1995........................................ 3,500,000 3,864,032
------------
11,032,248
------------
OIL AND GAS-8.6% Arkla, Notes,
9.45%, 1995.......................................... 1,250,000 1,307,464
Maxus Energy, Medium-Term Notes,
Ser. C, 4.7625%, 1994................................ 5,000,000 (b) 4,975,000
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JANUARY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
OIL AND GAS (CONTINUED) McDermott, Notes,
10 1/4%, 1995........................................ $ 2,000,000 $ 2,139,674
Mitchell Energy & Development, Sr. Notes,
5.10%, 1997.......................................... 4,000,000 3,998,200
Tenneco Credit, Notes,
9 1/4%, 1996......................................... 4,500,000 4,967,055
Texas Gas Transmission, Notes,
9 5/8%, 1997......................................... 3,350,000 3,634,750
Transcontinental Gas Pipe Line, Notes,
6.21%, 1996.......................................... 5,000,000 5,000,000
Triton Energy, Sr. Sub. Disc. Notes,
Zero Coupon, 1997.................................... 3,000,000 2,160,000
------------
28,182,143
------------
TELECOMMUNICATIONS-3.3% Tele-Communications:
Medium-Term Notes,
Ser. B, 5.28%, 1996.............................. 5,000,000 5,054,250
Sr. Notes,
9 7/8%, 1998..................................... 5,000,000 5,802,785
------------
10,857,035
------------
TRANSPORTATION-.7% CSX, Notes,
9 1/2%, 1995......................................... 2,000,000 2,167,518
------------
UTILITIES-6.2% Boston Edison, Deb.,
5.70%, 1997.......................................... 5,000,000 5,078,635
Cleveland Electric Illuminating,
Secured Sr. Medium-Term Notes,
9.55%, 1995.......................................... 1,000,000 1,050,160
Commonwealth Edison, Notes,
5 1/2%, 1995......................................... 1,000,000 1,014,356
Connecticut Light and Power,
First and Refunding Mortgage,
Ser. WW, 4 1/4%, 1994................................ 1,000,000 1,000,435
Houston Industries, Deb.,
7 1/4%, 1996......................................... 6,450,000 6,825,371
National Rural Utilities, Medium-Term Notes,
Ser.A, 9.40%, 1995................................... 1,000,000 1,084,992
Niagara Mohawk Power, Medium-Term Notes,
9.65%, 1996.......................................... 2,000,000 2,184,520
System Energy Resources, First Mortgage,
6.12%, 1995.......................................... 1,000,000 1,012,580
Texas Utilities Electric, First Mortgage and Coll. Trust,
7 1/8%, 1997......................................... 1,000,000 1,055,971
------------
20,307,020
------------
FOREIGN-12.6% CEMEX, S.A., Notes,
8 7/8%, 1998......................................... 3,000,000 (a) 3,247,500
Compania Naviera Perez Companc, S.A.C.F.I.M.F.A.,
Medium-Term Notes,
8 3/8%, 1998......................................... 5,000,000 (a) 5,131,250
Desc, Sociedad de Fomento Industrial, S.A. de C.V.,
Medium-Term Notes,
11%, 1997............................................ 1,500,000 1,698,750
General Motors, Notes,
10 1/4%, 1995........................................ 6,224,628 (c) 6,637,320
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JANUARY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
FOREIGN (CONTINUED) Hanson Overseas B.V., Sr. Notes (Gtd.by Hanson PLC),
5 1/2%, 1996......................................... $ 4,000,000 $ 4,063,696
Household Financial Ltd., Retractable Sr. Notes,
11.85%, 1996......................................... 2,255,300 (c) 2,499,324
Kansallis-Osake-Pankki, Sub. Notes,
9 3/4%, 1998......................................... 3,000,000 3,444,312
Nacional Financiera S.N.C., Notes:
10%, 1996............................................ 3,000,000 3,270,000
5 7/8%, 1998......................................... 5,000,000 4,937,500
Province of Alberta, Deb.,
8 5/8%, 1996......................................... 1,000,000 1,099,450
Union Bank of Finland Ltd., Notes,
5 1/4%, 1996......................................... 5,000,000 5,038,165
------------
41,067,267
------------
OTHER-.2% GE Capital Mortgage Services,
Real Estate Mortgage Investment Conduit,
Multi-Class Pass Through Ctfs., Ser. 1992, Cl. 12A-3,
7 1/2%, 2015......................................... 516,493 516,493
------------
U.S. GOVERNMENT Federal Home Loan Mortgage Corp.,
AND AGENCIES-10.7% Multi-Class Mortgage Participation Ctfs.:
Ser. 1350, Cl. 1350-C,
5.65%, 2011.................................. 2,000,000 2,014,900
Ser. 1616, Cl. A,
5 1/8%, 2006................................. 8,864,855 8,820,531
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit,
Ser. 1991, Cl. 176-PJ,
7%, 2020............................................. 5,000,000 5,150,000
U.S. Treasury Notes:
9 1/4%, 1/15/1996.................................... 2,000,000 2,191,876
4 3/8%, 8/15/1996.................................... 6,000,000 6,012,185
7 1/4%, 8/31/1996.................................... 10,000,000 10,706,250
------------
34,895,742
------------
TOTAL BONDS AND NOTES
(cost $320,611,079).................................. $321,444,358
============
SHORT-TERM INVESTMENTS-2.0%
TIME DEPOSIT; Chemical Bank (London),
3 1/16%, 2/1/1994
(cost $6,527,000).................................... $ 6,527,000 $ 6,527,000
============
TOTAL INVESTMENTS (cost $327,138,079)................................................... 100.4% $327,971,358
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES.................................................. (.4%) $ (1,437,130)
====== ============
NET ASSETS.............................................................................. 100.0% $326,534,228
====== ============
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At January 31,
1994, these securities amounted to $19,615,250 or 6.0% of net assets.
(b) Variable rate security-interest rate subject to periodic change.
(c) Denominated in Canadian Dollars.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 1994 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $327,138,079)-see statement............................................... $327,971,358
Cash................................................................................ 5,561,360
Interest receivable................................................................. 5,899,869
Receivable for subscriptions to Common Stock........................................ 15,000
Prepaid expenses.................................................................... 131,388
Due from The Dreyfus Corporation.................................................... 179,991
------------
339,758,966
LIABILITIES:
Payable for investment securities purchased......................................... $10,533,819
Payable for Common Stock redeemed................................................... 2,494,774
Accrued expenses and other liabilities.............................................. 196,145 13,224,738
------------ ------------
NET ASSETS $326,534,228
============
REPRESENTED BY:
Paid-in capital..................................................................... $325,996,973
Accumulated net realized (loss) on investments...................................... (296,024)
Accumulated net unrealized appreciation on investments-Note 3....................... 833,279
------------
NET ASSETS at value applicable to 26,171,397 outstanding shares of
Common Stock, equivalent to $12.48 per share
(500 million shares of $.001 par value authorized).................................. $326,534,228
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME..................................................................... $ 9,723,955
EXPENSES:
Management fee-Note 2(a)........................................................ $ 696,170
Shareholder servicing costs-Note 2(b)........................................... 441,743
Prospectus and shareholders' reports-Note 2(b).................................. 87,547
Registration fees............................................................... 53,288
Custodian fees.................................................................. 29,755
Legal fees...................................................................... 18,403
Auditing fees................................................................... 15,554
Directors' fees and expenses-Note 2(c).......................................... 14,747
Miscellaneous................................................................... 10,252
------------
1,367,459
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)....................................................... 1,154,629
------------
TOTAL EXPENSES.......................................................... 212,830
------------
INVESTMENT INCOME-NET................................................... 9,511,125
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3........................................... $ (384,336)
Net unrealized appreciation on investments.......................................... 485,483
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS......................... 101,147
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $ 9,612,272
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
JULY 31, JANUARY 31, 1994
1993* (UNAUDITED)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................................... $ 6,501,600 $ 9,511,125
Net realized gain (loss) on investments............................................. 203,093 (384,336)
Net unrealized appreciation on investments for the period........................... 347,796 485,483
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ 7,052,489 9,612,272
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................................... (6,459,836) (9,552,889)
Net realized gain on investments.................................................... (114,781) _-
------------ ------------
TOTAL DIVIDENDS................................................................. (6,574,617) (9,552,889)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................................................... 301,055,634 241,865,743
Dividends reinvested................................................................ 5,872,820 8,198,514
Cost of shares redeemed............................................................. (101,769,908) (129,325,830)
------------ ------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.......................... 205,158,546 120,738,427
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................ 205,636,418 120,797,810
NET ASSETS:
Beginning of period................................................................. 100,000 205,736,418
------------ ------------
End of period (including undistributed investment income-net of $41,764 in 1993).... $205,736,418 $326,534,228
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
<S> <C> <C>
Shares sold......................................................................... 24,191,578 19,386,669
Shares issued for dividends reinvested.............................................. 472,319 657,563
Shares redeemed..................................................................... (8,171,405) (10,373,327)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING.............................................. 16,492,492 9,670,905
============ ============
- ----------------------
* From August 18, 1992 (commencement of operations) to July 31, 1993.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS SHORT-TERM INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from information provided in the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
JULY 31, JANUARY 31, 1994
PER SHARE DATA: 1993(1) (UNAUDITED)
------------ ------------
<S> <C> <C>
Net asset value, beginning of period................................................ $12.50 $12.47
------ ------
INVESTMENT OPERATIONS:
Investment income-net............................................................... .89 .43
Net realized and unrealized gain (loss) on investments.............................. (.01) .01
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................................ .88 .44
------ ------
DISTRIBUTIONS:
Dividends from investment income-net................................................ (.89) (.43)
Dividends from net realized gain on investments..................................... (.02) --
------ ------
TOTAL DISTRIBUTIONS............................................................. (.91) (.43)
------ ------
Net asset value, end of period...................................................... $12.47 $12.48
====== ======
TOTAL INVESTMENT RETURN 7.68%(2) 7.18%(2)
</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C>
Ratio of expenses to average net assets............................................. -- .15%(2)
Ratio of net investment income to average net assets................................ 7.58%(2) 6.83%(2)
Decrease reflected in above expense ratios due to undertakings
by the Manager.................................................................. 1.12%(2) .83%(2)
Portfolio Turnover Rate............................................................. 54.59%(3) 13.71%(3)
Net Assets, end of period (000's Omitted)........................................... $205,736 $326,534
- ------------------------
(1) From August 18, 1992 (commencement of operations) to July 31, 1993.
(2) Annualized.
(3) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a non-diversified open-end management investment company.
Dreyfus Service Corporation ("Distributor") acts as the distributor of the
Fund's shares, which are sold to the public without a sales load. The
Distributor is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-
term investments and U.S. Government obligations) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices in the
judgment of the Service are readily available and are representative of
the bid side of the market are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Investments in U.S. Government obligations are valued at the
mean between quoted bid and asked prices. Short-term investments are
carried at amortized cost, which approximates value. Investments traded
in foreign currencies are translated to U.S. dollars at the prevailing rates
of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss
from securities transactions are recorded on the identified cost basis.
Interest income including, where applicable, amortization of discount on
investments is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain are normally declared
and paid annually, but the Fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .50 of 1%
of the average daily value of the Fund's net assets and is payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund. The most
stringent state expense limitation applicable to the Fund presently
requires reimbursement of expenses in any full fiscal year that such
expenses (exclusive of distribution expenses and certain expenses as
described above) exceed 2 1/2% of the first $30 million, 2% of the next
$70 million and 1 1/2% of the excess over $100 million of the average
value of the Fund's net assets in accordance with California "blue-sky"
regulations. The Manager has undertaken from August 1, 1993 through
September 30, 1994, or until such time as the net assets of the Fund
exceed $350 million, regardless of whether they remain at that level, to
waive receipt of the management fee payable to it by the Fund. In addition
from August 1, 1993 through January 31, 1994, the Manager voluntarily
assumed other expenses of the Fund. The expense reimbursement, pursuant
to the undertaking and the voluntary assumption of other expenses,
amounted to $1,154,629 for the six months ended January 31, 1994.
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense
reimbursement would not be less than the amount required pursuant to the
Agreement.
(B) The Fund has adopted a Service Plan (the "Plan") pursuant to which
the Fund pays the Distributor, at an annual rate of .20 of 1% of the value of
the Fund's average daily net assets, for costs and expenses in connection
with advertising, marketing and distributing the Fund's shares and for
servicing shareholder accounts. The Distributor may make payments to one
or more Service Agents (a securities dealer, financial institution, or other
industry professional) based on the value of the Fund's shares owned by
clients of the Service Agent. The Plan also separately provides for the
Fund to bear the costs of preparing, printing and distributing certain of
the Fund's prospectuses and statements of additional information and
costs associated with implementing and operating the Plan, not to exceed
the greater of $100,000 or .005 of 1% of the Fund's average daily net
assets for any full fiscal year. During the six months ended January 31,
1994, $356,776 was chargeable to the Fund pursuant to the Plan, but these
amounts were not paid by the Fund pursuant to undertakings in effect (see
Note 2 (a)).
(C) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each director
who is not an "affiliated person" receives an annual fee of $2,500 and an
attendance fee of $625 per meeting. Prior to August 26, 1993, the annual
fee was $1,000 and attendance fee was $250.
(D) On December 5, 1993, the Manager entered into an Agreement and
Plan of Merger providing for the merger of the Manager with a subsidiary
of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of the Manager and of
Mellon. The merger is expected to occur in mid-1994, but could occur
later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with the Manager under the Investment Company
Act of 1940, and thus a termination of such Agreement, the Manger will
seek prior approval from the Fund's Board and shareholders.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities, other than short-term securities,
during the six months ended January 31, 1994 amounted to $167,422,402
and $35,915,513, respectively.
At January 31, 1994, accumulated net unrealized appreciation on
investments was $833,279, consisting of $2,385,656 gross unrealized
appreciation and $1,552,377 gross unrealized depreciation.
At January 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS SHORT-TERM INCOME FUND, INC.
REVIEW REPORT OF ERNST & YOUNG, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS SHORT-TERM INCOME FUND, INC.
We have reviewed the accompanying statement of assets and liabilities
of Dreyfus Short-Term Income Fund, Inc., including the statement of
investments, as of January 31, 1994, and the related statements of
operations and changes in net assets and financial highlights for the six
month period ended January 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements and financial
highlights taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements and financial
highlights referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights for the period from August 18, 1992 to July 31, 1993 and in our
report dated September 3, 1993, we expressed an unqualified opinion on
such statement of changes in net assets and financial highlights.
(Ernst & Young)
New York, New York
March 10, 1994
Dreyfus Short-Term Income Fund, Inc.
144 GLENN CURTISS BOULEVARD
UNIONDALE, NY 11556
Manager
THE DREYFUS CORPORATION
200 PARK AVENUE
NEW YORK, NY 10166
Distributor
DREYFUS SERVICE CORPORATION
200 PARK AVENUE
NEW YORK, NY 10166
Custodian
THE BANK OF NEW YORK
110 WASHINGTON STREET
NEW YORK, NY 10286
Transfer Agent &
Dividend Disbursing Agent
THE SHAREHOLDER SERVICES GROUP, INC.
P.O. BOX 9671
PROVIDENCE, RI 02940
FURTHER INFORMATION IS CONTAINED IN THE PROSPECTUS,
WHICH MUST PRECEDE OR ACCOMPANY THIS REPORT.
PRINTED IN U.S.A. 083SA941
Short-Term Income
Fund, Inc.
Semi-Annual
Report
January 31, 1994
