DREYFUS STRATEGIC INCOME FUND
200 Park Avenue
New York, New York 10166
Dear Shareholder:
As a shareholder of Dreyfus Strategic Income Fund, you are entitled
to vote on several proposals being submitted to you for your approval. They
are summarized below, and explained in detail in the proxy statement.
Your Fund's management and Board of Trustees have recommended and
approved a number of changes to the Fund which are designed to increase the
Fund's overall investment flexibility and performance potential. These
proposals relate both to the kinds of securities in which the Fund invests,
and how the Fund's portfolio managers will invest in those securities. To
implement these changes, though, requires the approval of shareholders, and
the Fund's Board recommends that shareholders vote in favor of each proposal,
as presented on the accompanying proxy card.
Presently, the Fund's investment objective is to maximize current
income. Going forward, management and the Board believe that it is in the
shareholder's best interests to make use of the Fund's broad investment
parameters and invest with an objective of maximizing total return, and we
are seeking your approval to invest according to this proposed new investment
objective. It would mean that the Fund will not only concentrate on
generating a competitive monthly dividend, but also will place more emphasis
on trying to grow the principal value of your investment. In seeking
principal growth, income can sometimes be sacrificed, but the Fund's
portfolio managers believe that the dividend payout can remain competitive
while pursuing a total return objective.
The other changes discussed in the proxy statement, such as
proposed changes to certain of the Fund's management policies and investment
restrictions, are more technical in nature. The intention underlying these
changes is to further improve your Fund's investment flexibility and
performance potential. Also, the Fund's average effective maturity and
duration, as well as its overall credit quality, will be managed in largely
the same manner as in recent years, so the Fund's overall interest rate risk
and credit risk should remain relatively the same.
Please read the proxy statement carefully. After you have done so
please feel free to call a Dreyfus representative at 1-800-645-6561 with any
questions you might have. Once you are satisfied that you understand the
proposals, please fill out the proxy card and return it to us in the enclosed
postage-paid envelope. And, of course, please feel free to join us at the
meeting on October 27, 1998.
Sincerely,
Marie E. Connolly,
President
DREYFUS STRATEGIC INCOME FUND
Notice of Special Meeting of Shareholders
To the Shareholders:
A Special Meeting of Shareholders of Dreyfus Strategic Income Fund
(the "Fund") will be held at the offices of The Dreyfus Corporation, 200 Park
Avenue, 7th Floor West, Room 7G, New York, New York, on Tuesday, October 27,
1998 at 10:00 a.m., for the following purposes:
1. To (i) change the investment objective, (ii) eliminate a
fundamental management policy, and (iii) change certain other fundamental
policies and investment restrictions of the Fund.
2. To transact such other business as may properly come
before the meeting, or any adjournment or adjournments thereof.
Shareholders of record at the close of business on September 2,
1998 will be entitled to receive notice of and to vote at the Fund's meeting.
By Order of the Board
Margaret W. Chambers
Secretary
New York, New York
September 15, 1998
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY
LAW, THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING
ANY BUSINESS IF LESS THAN A QUORUM OF THE SHARES ELIGIBLE TO VOTE ARE
REPRESENTED. IN THAT EVENT, THE FUND, AT SHAREHOLDERS' EXPENSE, WOULD
CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR
VOTE COULD BE CRITICAL TO ENABLE THE FUND TO HOLD THE MEETING AS SCHEDULED,
SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS
WILL BENEFIT FROM YOUR COOPERATION.
DREYFUS STRATEGIC INCOME FUND
PROXY STATEMENT
Special Meeting of Shareholders
to be held on Tuesday, October 27, 1998
This proxy statement is furnished in connection with a solicitation of proxies
by the Board of Dreyfus Income Funds (the "Company"), on behalf of Dreyfus
Strategic Income Fund (the "Fund"), a separate series of the Company, to be
used at the Special Meeting of Shareholders (the "Meeting") of the Fund to be
held on Tuesday, October 27, 1998 at 10:00 a.m., at the offices of The Dreyfus
Corporation, 200 Park Avenue, 7th Floor West, Room 7G, New York, New York, for
the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders. Shareholders of record at the close of business on
September 2, 1998 are entitled to receive notice of and to vote at the
Meeting. Shareholders are entitled to one vote for each Fund share held and
fractional votes for each fractional Fund share held. Shares represented by
executed and unrevoked proxies will be voted in accordance with the
specifications made thereon. If the enclosed form of proxy is executed and
returned, it nevertheless may be revoked by another proxy or by letter or
telegram directed to the Fund, which must indicate the shareholder's name and
account number. To be effective, such revocation must be received before the
Meeting. In addition, any Shareholder who attends the Meeting in person may
vote by ballot at the Meeting, thereby canceling any proxy previously given.
As of August 14, 1998, the Fund had 19,744,485.648 shares of beneficial
interest issued and outstanding.
It is estimated that proxy materials will be mailed to shareholders
of record on or about September 15, 1998. The principal executive offices of
the Fund are located at 200 Park Avenue, New York, New York 10166. Copies of
the Fund's most recent Annual and Semi-Annual Reports are available upon
request, without charge, by writing to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
PROPOSALS TO (i) CHANGE THE INVESTMENT OBJECTIVE,
(ii) ELIMINATE A FUNDAMENTAL MANAGEMENT POLICY, AND
(iii) CHANGE CERTAIN OTHER FUNDAMENTAL POLICIES AND
INVESTMENT RESTRICTIONS OF THE FUND
INTRODUCTION
With this proxy statement, the Fund requests that shareholders vote
to approve (i) changing the Fund's investment objective (ii) eliminating a
fundamental management policy of the Fund, and (iii) changing certain of the
Fund's investment restrictions. The first two items are related; the third
item raises separate issues, as more fully described below. The Fund's
management has proposed these changes to broaden the Fund's investment
flexibility in an effort to better maximize the performance potential of the
Fund. Because the Fund's investment objective, and the management policy and
investment restrictions discussed, are "fundamental policies" of the Fund,
changing them requires shareholder approval. At a Board meeting of the
Company held on August 5, 1998, the Board approved the proposed changes and
directed that the proposals be submitted to shareholders for approval. These
proposals are discussed below in more detail.
Overview of Proposals to Change the Fund's Investment Objective and
Eliminate a Management Policy
The Fund's investment objective currently is to maximize current
income by investing principally in debt securities of domestic and foreign
issuers. The Fund's management believes, however, that significant
opportunities exist for the Fund to maximize TOTAL RETURN _ consisting of
capital appreciation AND current income _ for its shareholders by investing
principally in the same types of securities. Accordingly, the Company's Board
has approved, subject to shareholder approval, a change in the Fund's
investment objective. Under its proposed investment objective, the Fund would
seek to maximize total return, consisting of capital appreciation and current
income. This change would allow the Fund's portfolio manager to pursue a
greater range of investment opportunities on behalf of shareholders. Management
believes that seeking to achieve the proposed new investment objective should
not significantly affect the Fund's ability to provide current income, and will
provide the Fund with more flexibility to pursue desirable investment
opportunities for principal growth.
Under its proposed new investment objective, the Fund typically
would invest at least 65% of the value of its net assets in investment grade
(rated at least Baa/BBB by a credit rating agency or, if unrated, deemed to
be of comparable quality) debt securities and securities with debt-like
characteristics of domestic and foreign issuers. These securities include
corporate and government bonds, debentures, notes, U.S. Government and
privately issued mortgage-related securities, asset-backed securities,
convertible debt obligations, convertible preferred stock and preferred stock
(collectively, "Fixed-Income Securities"). The Fund currently has the ability
to invest in each of these Fixed-Income Securities, except direct investments
in preferred stock. (Currently, the Fund may hold preferred stock when
acquired indirectly, such as in connection with owning convertible
securities, or when "attached" to a bond as part of a "unit," or when
received as a dividend or a distribution.) Preferred stock typically has a
specified dividend and ranks after bonds and before common stocks in its
claim on income for dividend payments and on assets should the issuer be
liquidated. The Fund would invest in preferred stocks primarily for their
capital appreciation potential.
Corresponding with the Fund's proposed new investment objective,
the Fund would be permitted to invest the remaining 35% of its net assets in
Fixed-Income Securities rated lower than investment grade (or, if unrated,
deemed to be of comparable quality). However, no more than 5% of the Fund's
net assets would be invested, at the time of purchase, in securities rated as
low as the lowest credit rating assigned by the credit rating agencies, or
deemed to be of comparable quality if unrated. Securities rated below
investment grade, commonly known as "high yield" securities, carry a higher
degree of credit risk than higher rated securities, and are considered
speculative by the credit rating agencies. Although these securities may pay
a higher interest rate, they are subject to a greater risk that interest
payments, and the repayment of principal, on such debt will not occur on a
timely basis. This higher "credit risk" can increase a fund's overall
volatility, especially in times of economic recession.
Currently, it is a fundamental policy of the Fund that at least 95%
of the debt securities purchased by the Fund have a rating of at least
Caa/CCC or be of comparable quality, and that no more than 5% of the debt
securities have a rating as low as the lowest rating assigned by the credit
rating agencies (herein referred to as the "95%/5% credit quality
restriction"). The current policy does allow the Fund to invest most of its
assets in high yield securities of a "CCC"to "BB" credit quality. While the
proposed new management policy would increase the amount the Fund may invest
in securities with a credit quality equivalent to a "C" or "CC" rating, the
Fund will maintain an average portfolio credit quality of at least investment
grade (meaning, at least Baa/BBB, without reference to (+) or (-)
subcategories). As a result, the Fund's overall credit risk profile should be
substantially similar to its current profile. This is because, since early
1996 (as stated in the Fund's Prospectus), the Fund has invested less than
35% of its net assets in high yield securities (within the 95%/5% credit
quality restriction). As of April 2, 1998, the Fund's average portfolio
credit quality was "BBB" and, as of July 2, 1998, it was "A". Of course,
portfolio composition changes over time.
The Fund's investment objective, and the 95%/5% credit quality
restriction, are fundamental policies that cannot be changed without approval
by the holders of a majority (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of the Fund's outstanding shares. To
pursue the proposed new investment objective, under the desired 65%/35%
guidelines described above, the Company's Board has approved, subject to
shareholder approval, eliminating the 95%/5% credit quality restriction.
The Board also has approved a change in the Fund's name to "The
Dreyfus Core Bond Fund," a name that is more descriptive of the Fund's
management policies. In addition, management will pursue an investment
approach where the Fund's portfolio usually will have an average effective
duration ranging between 3.5 and 6 years and an average effective maturity
ranging between 5 and 10 years. Managing the Fund in this manner would
position the Fund in the "intermediate sector" of the fixed-income market.
However, if the maturity and duration of the Fund's benchmark indices move
outside these ranges, the Fund's duration and maturity also could be expected
to be outside such ranges during such times. The
[Page 2]
Board has approved this investment approach. Duration is a way of
measuring a security's maturity in terms of the average time required to
receive the present value of all interest and principal payments, which
incorporates the security's yield, coupon interest payments, final maturity
and option features into one measure. Duration is an alternative to the
concept of "term to maturity" in assessing the price volatility associated
with a 1% change in interest rates. Generally, the longer the duration, the
more volatility an investor should expect. For example, the market price of a
bond with a duration of two years would be expected to decline 2% if interest
rates rose 1%. For purposes of calculating average effective portfolio
maturity, a security that is subject to redemption at the option of the
issuer on a particular date ("call date") which is prior to the security's
stated maturity may be deemed to mature on the call date, rather than on its
stated maturity date. These changes are not required to be submitted to
shareholders for their approval, and will be implemented by the Fund even if
shareholders do not approve the foregoing Proposals.
Overview of Proposal to Change Certain of the Fund's Investment Restrictions
Management believes it is appropriate to modify certain of the
Fund's investment restrictions (which are fundamental policies), and to
change certain investment restrictions which are fundamental policies to
non-fundamental, as described below. Non-fundamental policies may be changed
by vote of the Company's Board members at any time without shareholder
approval, subject to compliance with applicable Securities and Exchange
Commission requirements. These changes are being proposed to further improve
the Fund's investment flexibility.
The 1940 Act requires that a relatively limited number of
investment policies and restrictions be designated as fundamental policies
which may not be changed without shareholder approval. These policies relate
to (a) the classification and subclassification under the 1940 Act within
which the Fund may operate, (b) borrowing money, (c) issuing senior
securities, (d) engaging in the business of underwriting securities issued by
other persons, (e) concentrating investments in a particular industry or
group of industries, (f) purchasing and selling real estate or commodities,
(g) making loans to other persons, and (h) changing the nature of the
business so as to cease to be an investment company. When the Fund was
formed, the Board designated a number of other policies as fundamental, in
large part in response to certain regulatory requirements (e.g., state
regulatory requirements that have since been repealed or are no longer
applicable as a result of the passage of the National Securities Markets
Improvement Act of 1996) or business or industry conditions that have
changed, and adopted certain restrictions which now are believed to be unduly
restrictive.
To enable the Fund to broaden its permissible investments as
described below, the Company's Board unanimously approved changes in the
Fund's investment restrictions and directed that this Proposal be submitted
to shareholders for their approval.
Proposal 1: To Change the Fund's Investment Objective
Shareholders are asked to approve changing the Fund's investment
objective. If approved, the Fund's investment objective would be to maximize
total return, consisting of capital appreciation and current income. To
achieve its investment objective, the Fund would invest principally in
Fixed-Income Securities of domestic and foreign issuers. Management believes
that Fund shareholders would benefit from the greater investment flexibility
the changed investment objective affords.
Proposal 2: To Eliminate the 95%/5% Credit Quality Restriction
Shareholders also are asked to approve eliminating the 95%/5%
credit quality restriction. If approved, the Fund would be permitted to
invest, to the extent consistent with its investment objective, up to 35% of
its net assets in Fixed-Income Securities of below investment grade credit
quality, but no more than 5% of the Fund's assets in "high yield" Fixed
Income Securities.
High yield securities include those rated Ba by Moody's Investors
Service, Inc. ("Moody's") and BB by Standard & Poor's Ratings Group ("S&P"),
Fitch IBCA, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") and as
low as C by Moody's and D by S&P, Fitch or Duff. Securities rated C by
Moody's are regarded as having extremely poor prospects of ever attaining any
real investment standing. Securities rated D by S&P, Fitch or Duff are in
default, and payment
[Page 3]
of interest and/or repayment of principal is in arrears. Such
securities, though high yielding, are characterized by great risk. They may
be subject to certain risks with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated Fixed-Income
Securities. The retail secondary market for these securities may be less
liquid than that of higher rated securities; adverse conditions could make it
difficult at times for the Fund to sell certain securities or could result in
lower prices than those used in calculating the Fund's net asset value. Bond
prices are inversely related to interest rate changes; however, bond price
volatility also is inversely related to coupon. Accordingly, below investment
grade Fixed-Income Securities also may be relatively less sensitive to
interest rate changes than higher quality Fixed-Income Securities of
comparable maturity, because of their higher coupon. This higher coupon is
what the investor receives in return for bearing greater credit risk. The
higher credit risks associated with below investment grade Fixed-Income
Securities potentially can have greater affect on the value of such
securities than may be the case with higher quality issues of comparable
maturity.
Proposal 3: To Change Certain of the Fund's Investment Restrictions
Shareholders also are asked to approve changing certain of the
Fund's investment restrictions as described below.
* Investment Restrictions numbered 1, 2, 6, 7, 8, 10, 11, 14 and
15 would not be changed, other than to renumber certain of these
restrictions.
* Investment Restrictions numbered 3, 5 and 13 would be
eliminated.
* Investment Restrictions numbered 4, 9 and 12 would be
redesignated non-fundamental policies and renumbered and
* Investment Restriction number 4 would be revised.
* New Investment Restrictions proposed to be numbered 9 and 10
would be added.
Investment Restriction No. 3, which prohibits the Fund from
investing more than 5% of its assets in unseasoned issuers, would be deleted.
This Investment Restriction was adopted to comply with certain state
securities law requirements that are no longer in effect.
Investment Restriction No. 4, which prohibits the Fund from
investing in securities of investment companies, except in certain limited
circumstances, would be revised to permit the acquisition of securities of
other investment companies to the extent permitted under the 1940 Act and
would be designated as a non-fundamental policy. Under the 1940 Act, the
Fund's investment in such securities currently would be limited to, subject
to certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Fund's total assets with respect to any one
investment company and (iii) 10% of the Fund's total assets in the aggregate.
Investments in the securities of other investment companies will involve
duplication of advisory fees and certain other expenses.
Investment Restriction No. 5, which prohibits the Fund from
purchasing or retaining securities of any issuer if more than a certain
percentage of such issuer's securities is owned by officers or Board members
of the Company, would be deleted. This Investment Restriction was adopted to
comply with certain state securities laws requirements that are no longer in
effect.
Investment Restriction No. 9, which prohibits the Fund from
pledging, mortgaging or otherwise encumbering its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to
certain permitted investment techniques, would be designated as a
non-fundamental policy.
Investment Restriction No. 12, which prohibits the Fund from
investing in companies for the purposes of exercising management or control,
would be designated as a non-fundamental policy.
Investment Restriction No. 13, which prohibits the Fund from
writing or purchasing put or call options or combinations thereof, except as
described in the Fund's Prospectus and Statement of Additional Information,
would be deleted. The Fund currently is permitted to engage in such
transactions which are described in the Fund's Prospectus and Statement of
Additional Information.
New Investment Restriction No. 9 would prohibit the Fund from
issuing any senior security, except to the extent permitted under the 1940
Act. This Investment Restriction responds to a technical requirement under
the 1940 Act and would be designated as a fundamental policy.
[Page 4]
New Investment Restriction No. 10 would prohibit the Fund from
purchasing securities on margin, except that the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indices, and options on futures
contracts or indices. This Investment Restriction responds to a technical
requirement under the 1940 Act and would be designated as a fundamental
policy.
If approved by shareholders, the Fund's Investment Restrictions
would read as follows (new language is underscored and language to be deleted
is in brackets):
The Fund may NOT:
1. Purchase the securities of any issuer (other than a bank)
if such purchase would cause more than 5% of the value of its total assets to
be invested in securities of such issuer, or invest more than 15% of its
assets in the obligations of any one bank, except that up to 25% of the value
of the Fund's total assets may be invested, and securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities may be
purchased, without regard to such limitations. Notwithstanding the foregoing,
based on rules of the Securities and Exchange Commission, the Fund will not
invest more than 5% of its assets in the obligations of any one bank, except
as otherwise provided in such rules.
2. Purchase the securities of any issuer if such purchase
would cause the Fund to hold more than 10% of the outstanding voting
securities of such issuer. This restriction applies only with respect to 75%
of the Fund's assets.
[3. Purchase securities of any company having less than three
years' continuous operations (including operations of any predecessors) if
such purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.]
3. [14.] Invest more than 25% of its assets in investments in any
particular industry or industries (including banking), provided that, when the
Fund has adopted a temporary defensive posture, there shall be no limitation
on the purchase of obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
4. [6.] Purchase, hold or deal in real estate, or oil and gas
interests, but the Fund may purchase and sell securities that are secured by
real estate and may purchase and sell securities issued by companies that
invest or deal in real estate.
[5. Purchase or retain the securities of any issuer if the
officers, Trustees or Directors of the Fund or the Manager individually own
beneficially more than 1/2 of 1% of the securities of such issuer or together
own beneficially more than 5% of the securities of such issuer.]
5. [7.] Invest in commodities, except that the Fund may
purchase and sell futures contracts, including those relating to indices, and
options on futures contracts or indices.
6. [8.] Borrow money, except to the extent permitted under the
1940 Act (which currently limits borrowing to no more than 33 1/3% of the
value of the Fund's total assets). For purposes of this investment
restriction, the entry into options, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
7. [10.] Make loans to others except through the purchase of debt
obligations or the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value
of its total assets. Any loans of portfolio securities will be made according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board members.
8. [11.] Act as an underwriter of securities of other issuers
except to the extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.
9. ISSUE ANY SENIOR SECURITY (AS SUCH TERM IS DEFINED IN
SECTION 18(F) OF THE 1940 ACT), EXCEPT TO THE EXTENT PERMITTED UNDER THE 1940
ACT.
10. PURCHASE SECURITIES ON MARGIN, BUT THE FUND MAY MAKE
MARGIN DEPOSITS IN CONNECTION WITH TRANSACTIONS IN OPTIONS, FORWARD
CONTRACTS, FUTURES CONTRACTS, INCLUDING THOSE RELATED TO INDICES, AND OPTIONS
ON FUTURES CONTRACTS OR INDICES.
11. [9.] Pledge, mortgage or hypothecate its assets, except to
the extent necessary to secure permitted borrowings and to the extent related
to the deposit of assets in escrow in connection with writing covered put and
call options and the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation margin
arrangements
[Page 5]
with respect to options, futures contracts, including those
relating to indices and options on futures contracts or indices. THIS
INVESTMENT RESTRICTION WOULD BE DESIGNATED A NON-FUNDAMENTAL POLICY.
12. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views. THIS
INVESTMENT RESTRICTION WOULD BE DESIGNATED A NON-FUNDAMENTAL POLICY.
13. [4.] Purchase securities of [closed-end] other investment
companies, except to THE EXTENT PERMITTED UNDER THE 1940 ACT [(a) in the open
market where no commission except the ordinary broker's commission is paid,
which purchases are limited to a maximum of (i) 3% of the total voting stock
of any one closed-end investment company, (ii) 5% of its net assets with
respect to any one closed-end investment company and (iii) 10% of its net
assets in the aggregate, or (b) those received as part of a merger or
consolidation. The Fund may not purchase the securities of open-end investment
companies other than itself]. THIS INVESTMENT RESTRICTION WOULD BE DESIGNATED
A NON-FUNDAMENTAL POLICY.
[13. Purchase, sell or write puts, calls or combinations
thereof, except as described in the Fund's Prospectus and this Statement of
Additional Information.]
14. [15.] Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than 15% of the
value of the Fund's net assets would be so invested.
Investment Restrictions numbered 1 through 10 would be fundamental
policies of the Fund which cannot be changed without approval by the holders
of a majority (as defined in the 1940 Act) of the Fund's outstanding voting
shares. Investment Restrictions numbered 11 through 14 would not be
fundamental policies and may be changed by vote of a majority of the Fund's
Board members at any time.
Vote Required and Board Members' Recommendation
Approval of the Proposals will be sought by ten separate votes, as
set forth in the Proxy Card accompanying this Proxy Statement. Each of the
ten votes is independent of the others and will be approved separately upon
obtaining the requisite vote described below.
Approval of each Proposal described herein, with respect to each
separate vote, requires the affirmative vote of (a) 67% of the Fund's voting
securities present at the Meeting, if the holders of more than 50% of the
Fund's outstanding voting securities are present or represented by proxy, or
(b) more than 50% of the Fund's outstanding voting securities, whichever is
less.
THE COMPANY'S BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF EACH
PROPOSAL
ADDITIONAL INFORMATION
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, serves as the Fund's investment adviser.
Premier Mutual Fund Services, Inc., with principal offices at 60
State Street, Boston, Massachusetts 02109, serves as the Fund's distributor.
Dreyfus Transfer, Inc., a wholly-owned subsidiary of The Dreyfus
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's transfer and dividend disbursing agent.
Mellon Bank, N.A., The Dreyfus Corporation's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's
investments.
VOTING INFORMATION
The Fund will bear the cost of soliciting proxies. In addition to
the use of the mail, proxies may be solicited personally, by telephone or by
telegraph, and the Fund may pay persons holding Fund shares in their names or
those of their nominees for their expenses in sending soliciting materials to
their principals. Officers, employees or agents of the Fund, or its
affiliates, also may solicit proxies by contacting shareholders by telephone
and telegram. The Fund has retained Management Information Services Corp.
("MIS") to assist in the solicitation of proxies. MIS is expected to charge a
fee of approximately $13,000 which will be borne by the Fund. Authorizations
to execute proxies may be obtained by telephonic or electronically
[Page 6]
transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity. In all cases where a telephonic
proxy is solicited, the shareholder will be asked to provide his or her
address, social security number (in the case of an individual) or taxpayer
identification number (in the case of a non-individual) and the number of
shares owned and to confirm that the shareholder has received the Fund's
proxy statement and proxy card in the mail. Within 72 hours of receiving a
shareholder's telephonic or electronically transmitted voting instructions, a
confirmation will be sent to the shareholder to ensure that the vote has been
taken in accordance with the shareholder's instructions and to provide a
telephone number to call immediately if the shareholder's instructions are
not correctly reflected in the confirmation. Any shareholder giving a proxy
may revoke it at any time before it is exercised by submitting to the Fund a
written notice of revocation or a subsequently executed proxy or by attending
the meeting and voting in person.
If a proxy is properly executed and returned accompanied by
instructions to withhold authority to vote, represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person has
not received instructions from the beneficial owner or other person entitled
to vote Fund shares on a particular matter with respect to which the broker
or nominee does not have a discretionary power) or is marked with an
abstention (collectively, "abstentions"), the Fund shares represented thereby
will be considered to be present at the Meeting for purposes of determining
the existence of a quorum for the transaction of business. Abstentions will
not constitute a vote "for" or "against" a matter and will be disregarded in
determining the "votes cast" on an issue.
If a quorum is not present at the Meeting, or if a quorum is
present but sufficient votes to approve a proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies for the proposal. In determining
whether to adjourn the Meeting, the following factors may be considered: the
nature of the proposal, the percentage of votes actually cast, the percentage
of negative votes actually cast, the nature of any further solicitation and
the information to be provided to shareholders with respect to the reasons
for the solicitation. Any adjournment will require the affirmative vote of a
majority of those shares affected by the adjournment that are represented at
the Meeting in person or by proxy. If a quorum is present, the persons named
as proxies will vote those proxies which they are entitled to vote "FOR" the
proposals in favor of such adjournment, and will vote those proxies required
to be voted "AGAINST" the proposals against any adjournment. A quorum is
constituted by the presence in person or by proxy of the holders of at least
30% of the Fund's outstanding shares entitled to vote at the Meeting.
As of August 14, 1998, the Company's Board members and officers, as
a group, beneficially owned less than 1% of the Fund's outstanding shares.
OTHER MATTERS
The Company's Board is not aware of any other matters which may
come before the Meeting. However, should any such matters properly come
before the Meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy in accordance with their
judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the Fund, in care of Dreyfus Transfer, Inc.,
Attention: Dreyfus Strategic Income Fund, P.O. Box 9671, Providence, Rhode
Island 02940-9671, whether other persons are the beneficial owners of Fund
shares for which proxies are being solicited from you, and, if so, the number
of copies of the proxy statement and other soliciting material you wish to
receive in order to supply copies to the beneficial owners of Fund shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN HIS OR HER PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.
Dated: September 15, 1998
[Page 7]
DREYFUS STRATEGIC INCOME FUND
The undersigned shareholder of DREYFUS STRATEGIC INCOME FUND
(the "Fund") hereby appoints Michael S. Petrucelli and Stephanie Pierce, and
each of them, the attorneys and proxies of the undersigned, with full power of
substitution, to vote, as indicated herein, all of the shares of the Fund
standing in the name of the undersigned at the close of business on August
14, 1998 at a Special Meeting of Shareholders to be held at the offices of
The Dreyfus Corporation, 200 Park Avenue, 7th Floor West, Room 7G, New York,
New York, at 10:00 a.m. on Tuesday, October 27, 1998, and at any and all
adjournments thereof, with all of the powers the undersigned possesses and
especially (but without limiting the general authorization and power hereby
given) to vote as indicated on each Proposal, as more fully described in the
proxy statement for the Meeting.
Please mark boxes in blue or black ink.
1. To change the Fund's investment objective.
o FOR o AGAINST o ABSTAIN
2. To eliminate the 95%/5% credit quality restriction.
o FOR o AGAINST o ABSTAIN
3. (a) To delete Investment Restriction No. 3 (unseasoned
issuers).
o FOR o AGAINST o ABSTAIN
(b) To revise Investment Restriction No. 4 (investing in other
investment companies) and redesignate it as a non-fundamental policy.
o FOR o AGAINST o ABSTAIN
(c) To delete Investment Restriction No. 5 (retaining
securities owned by officers or Board members).
o FOR o AGAINST o ABSTAIN
(d) To redesignate Investment Restriction No. 9 (pledging
assets) as a non-fundamental policy.
o FOR o AGAINST o ABSTAIN
(e) To redesignate Investment Restriction No. 12 (investing
for control) as a non-fundamental policy.
o FOR o AGAINST o ABSTAIN
(f) To delete Investment Restriction No. 13 (put and call
options).
o FOR o AGAINST o ABSTAIN
(g) To adopt a New Investment Restriction No. 9 (senior
security).
o FOR o AGAINST o ABSTAIN
(h) To adopt a New Investment Restriction No. 10 (purchasing
securities on margin).
o FOR o AGAINST o ABSTAIN
4. To transact such other business as may properly come before the
Meeting, or any adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE COMPANY'S BOARD AND WILL BE VOTED
FOR THE ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.
Signature(s) should be exactly as name or names appearing on this
form. If shares are held jointly, each holder should sign. If signing is by
attorney, executor, administra-tor, trustee or guardian, please give full
title.
Dated: , 1998
_________________________
Signature(s)
_________________________
Signature(s)
Sign, Date and Return this Proxy Card
Promptly Using the Enclosed Envelope.
