August 4, 1994
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 1994
I. PROPOSED MERGER OF THE DREYFUS CORPORATION
The Fund's adviser, The Dreyfus Corporation ("Dreyfus"), has entered into
an Agreement and Plan of Merger providing for the merger (the "Merger") of
Dreyfus with a subsidiary of Mellon Bank, N.A. ("Mellon").
Following the Merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon. Closing of the Merger is subject to a number of
contingencies, including approvals of the stockholders of Dreyfus and of
Mellon. The Merger is expected to occur in late August 1994, but could occur
significantly later.
The Merger will result in the automatic termination of the Fund's current
investment advisory agreement with Dreyfus, as required by the Investment
Company Act of 1940, as amended.
II. RESULTS OF FUND SHAREHOLDER VOTE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY
INFORMATION CONTAINED IN THE FUND'S PROSPECTUS.
On August 4, 1994, the Fund's shareholders voted to (a) approve (i) a new
investment advisory agreement with Dreyfus, to become effective upon
consummation of the Merger and (b) change certain of the Fund's fundamental
policies and investment restrictions to permit the Fund to (i) borrow money to
the extent permitted under the Investment Company Act of 1940, as amended, (ii)
pledge its assets to the extent necessary to secure permitted borrowings and
make such policy non-fundamental, (iii) invest up to 15% of the value of its
net assets in illiquid securities and make such policy non-fundamental, (iv)
sell securities short, and (v) lend its portfolio securities in an amount not
to exceed 33-1/3% of the value of its total assets.
III. REVISED MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF THE FUND--
MANAGEMENT POLICIES."
BORROWING MONEY -- As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940. However, the
Fund currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exc eed 5% of the Fund's total assets, the Fund will
not make any additional investments.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its
net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, repurchase agreements providing for settlement in more than seven days
after notice. As to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Fund's net assets
could be adversely affected.
(CONTINUED ON REVERSE SIDE)
SHORT-SELLING -- The Fund may make short sales, which are transactions in
which the Fund sells a security it does not own in anticipation of a decline in
the market value of that security. To complete such a transaction, the Fund
must borrow the security to make delivery to the buyer. The Fund then is
obligated to replace the security borrowed by purchasing it at the market price
at the time of replacement. The price at such time may be more or less than the
price at which the security was sold by the Fund. Until the security is
replaced, the Fund is required to pay to the lender amounts equal to any
dividends or interest which accrue during the period of the loan. To borrow the
security, the Fund also may be required to pay a premium, which would increase
the cost of the security sold. The proceeds of the short sale will be retained
by the broker, to the extent necessary to meet margin requirements, until the
short position is closed out.
Until the Fund closes its short position or replaces the borrowed security,
the Fund will: (a) maintain a segregated account, containing cash or U.S.
Government securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral will equal the
current value of the security sold short and (ii) the amount deposited in the
segregated account plus the amount deposited with the broker as collateral will
not be less than the market value of the security at the time it was sold
short; or (b) otherwise cover its short position.
The Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. This result is the opposite of
what one would expect from a cash purchase of a long position in a security.
The amount of any gain will be decreased, and the amount of any loss increased,
by the amount of any premium or amounts in lieu of dividends or interest the
Fund may be required to pay in connection with a short sale.
LENDING PORTFOLIO SECURITIES -- From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash, or U.S. Government securities which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. The Fund can increase its income through the investment of such
collateral. The Fund continues to be entitled to payments in amounts equal to
the interest and other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with the Fund.
542/stkr080494
August 4, 1994
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
Supplement to the Statement of Additional Information
Dated March 1, 1994
At a meeting of Fund shareholders held on August 4, 1994,
shareholders approved new Investment Restrictions which supersede and
replace any contrary statements in the Fund's current Investment
Restrictions numbered 2, 3, 4, 5 and 7 in the section in the Fund's
Statement of Additional Information entitled "Investment Objective and
Management Policies--Investment Restrictions." Investment Restrictions
numbered 2 and 7 are fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of the Fund's
outstanding voting shares. Investment Restrictions numbered 3, 4 and 5
are not fundamental policies and may be changed by vote of a majority of
the Fund's Board members at any time. The Fund may not:
2. Borrow money, except to the extent permitted under the Act.
3. Pledge, mortgage, hypothecate or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
4. Purchase securities on margin or write or purchase put or call
options or combinations thereof.
5. 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.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements referred to in the
Fund's Prospectus. 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.
The following information supplements and should be read in
conjunction with the section in the Fund's Statement of Additional
Information entitled "Investment Objective and Management Policies."
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will be a
lapse of time between the Fund's decision to sell any such security and
the registration of the security permitting sale. During any such period,
the price of the securities will be subject to market fluctuations.
However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the Securities Act of 1933, as
amended, for certain unregistered securities held by the Fund, the Fund
intends to treat such securities as liquid securities in accordance with
procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for restricted securities pursuant
to Rule 144A will develop, the Fund's Board has directed the Manager to
monitor carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in the Fund's
portfolio during such period.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral.
For purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities to be the equivalent of cash. From time to
time, the Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a
part of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan. These conditions may be subject to future
modification.
