LETTER TO SHAREHOLDERS
Dear Shareholder:
It is with pleasure that we can report to you that for the twelve-month
period ended July 31, 1994, the Dreyfus Short-Term Income Fund shares
produced an annualized distribution rate per share of 7.01%.* As always, the
Fund's net asset value is subject to change. Taking into account that price
change as well as the reinvestment of income dividends, your Fund's shares
produced a total return of 2.47% for the period.**
The past year has been one marked by high volatility in the bond market.
The 3-year Treasury note was yielding 4.42% on July 30, 1993; by December 31,
1993 it was yielding 4.53%. However, as you know, the first quarter of 1994
was an extremely difficult one for the fixed-income markets. (As of July 29,
1994, the 3-year Treasury note was yielding 6.27%.) That 185 basis point rise
clearly underlines the volatility that began in the first part of 1994,
impairing the bond market and all markets in general. (The only index to show
a positive return was the gold/silver index.)
The Federal Reserve Board began tightening on February 4, 1994. This
first move of the Federal Funds rate hit the U.S. markets (and foreign
markets) like a shock wave. The Fed moved rates higher to stamp out any
incipient signs of inflation, and to maintain a growth rate of approximately
3%. As of this writing, the Federal Funds rate is at 4.75%, up from 3.00%
when the Fed began tightening in early February 1994. The latest tightening
occurred on August 16 when the Fed tightened both the Funds rate and discount
rate by 50 basis points. This latest tightening could effectively put the Fed
on hold until late in 1994, as they watch all the data to see if any more
adjustments are necessary.
In anticipation of a market with heightened volatility there are a number
of steps we have taken to provide more stability. The first and, in our
opinion, the most significant, is the upgrading of credit quality. We have
aggressively increased the percentage of single "A" rated or better paper
from 40% in July of 1993 to 52% as of July 31, 1994. Examples of issues that
we have added are names like Consolidated Rail, Ford Motor Credit, Alco
Capital Resource and Grand Metropolitan Investment. We are continuing this
process with recent additions (after July 31, 1994) of Coca-Cola, Xerox
Credit, and Deere & Co. These are solid credits that are an integral part of
our core structure. Combined with upgrading credit quality we are also
keeping the average life of the Fund just short of its maximum 3-year
dollar-weighted average maturity. Finally, another step we have undertaken is
the selling of foreign positions denominated in foreign currencies. We are
anticipating that as U.S. rates rise, the rates in foreign countries will
rise too (with possibly the exception of Japan and Germany). All of these
steps together fit into our strategy of having a conservative, high-quality
core portfolio that will give this Fund more stability and the flexibility to
adjust when market conditions change.
Our outlook for the near term is one of continued volatility and a Fed
that continues a policy of tightening. Our near-term outlook is negative, but
long term we are more positive on the market. There are a number of factors
that allow us to see some light at the end of the tunnel. First, inflation
appears to be under control, and with the latest round of tightening it
should remain in check. Keeping in mind that it is estimated to take about
4-6 months before the effect of Fed tightenings can be seen in the economic
data, we should begin to see the effect towards the end of 1994. Employment
is the next key; while non-farm payroll has had dramatic increases, we would
look for this to slow down after the summer. We have also seen capacity
utilization increasing, but with the push for companies to become more
productive, employment might not increase as much as one would expect.
Lastly, and what could be the most important factor, foreign economies are
improving but they are not yet at the point where demand for U.S. products
has increased dramatically. If this continues, it will keep pressure on our
trade balances with foreign countries, and lower GDP estimates. Finally, and
most troubling for the markets, is the weaker dollar caused in part by the tra
nsgressed trade talks between Japan and the U.S. A solid trade agreement
would remove the threat of sanctions and help bolster the dollar. We believe
that both parties will settle on a mutual agreement in the fall before the
beginning of the "Super 301" sanctions is resorted to.
We want to thank you for choosing the Dreyfus Short-Term Income Fund. As
always, our aim is to continue to provide you with an attractive investment
vehicle. With that theme in mind, we are always carefully reviewing the
market as well as economic conditions. When we estimate the timing to be
correct, we will adjust the structure of the Fund's portfolio.
Sincerely,
(Gerald E. Thunelius Signature Logo)
Gerald E. Thunelius
Portfolio Manager
August 31, 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.
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS SHORT-TERM
INCOME FUND, INC.
AND THE MERILL LYNCH CORPORATE AND GOVERNMENT MASTER INDEX*
*Source: Merrill Lynch
AVERAGE ANNUAL TOTAL RETURN
(Exhibit A)
ONE YEAR ENDED FROM INCEPTION (8/18/92)
JULY 31, 1994 TO JULY 31, 1994
----------------- ---------------------------
2.47% 4.99%
Past performance is not predictive of future results.
The above graph compares a $10,000 investment made in the Dreyfus Short-Term
Income Fund on 8/18/92 (Inception Date) to a $10,000 investment made in the
Merrill Lynch Corporate and Government Master Index on that date. All
dividends and capital gain distributions are reinvested.
The Fund invests primarily in debt securities and securities with debt-like
characteristics, and maintains a dollar-weighted average maturity of three
years or less. The Fund's performance takes into account fees and expenses.
Unlike the Fund, the Merrill Lynch Corporate and Government Master Index is
an unmanaged performance benchmark for investment grade corporate securities
and government securities with maturities greater than or equal to one year,
but no longer than 4.99 years; issues in the Index must have par amounts
outstanding greater than or equal to $25 million. The Index does not take
into account fees and expenses. Further information relating to Fund
performance including any expense reimbursements, if applicable, is contained
in the Condensed Financial Information section of the Prospectus and
elsewhere in this report.
$10,997
Dreyfus Short-Term
Income Fund
$10,806
Merrill Lynch
Corporate and Government Master Index*
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS JULY 31, 1994
PRINCIPAL
BONDS AND NOTES-96.1% AMOUNT VALUE
------------ ------------
<S> <C> <C>
BANKING-8.0% Citicorp,
Sr. Medium-Term Notes, Ser. C, 8.57%, 1997.... $ 5,725,000 $ 5,961,271
Continental Bank,
Notes, 9 7/8%, 1996........................... 6,090,000 6,385,267
First USA Bank,
Bank Notes, 5.35%, 1996....................... 10,000,000 9,701,810
------------
22,048,348
============
BROKERAGE-4.1% Merrill Lynch & Co.,
Medium-Term Floating Rate Notes,
5.79%, 1997................................. 6,000,000(a) 6,004,806
Merrill Lynch International & Co.,
Deb., 8 1/4%, 1996............................ 5,000,000 5,251,000
------------
11,255,806
============
CONSUMER-8.1% Pep Boys-Manny, Moe & Jack,
Notes, 8 7/8%, 1996........................... 5,000,000 5,203,745
Safeway,
Sr. Medium-Term Notes, Ser. B, 8.07%, 1997.... 2,000,000(b) 1,983,800
Sears, Roebuck and Co., Notes:
8.55%, 1996................................... 5,000,000 5,187,600
9 1/4%, 1997.................................. 5,000,000 5,321,920
Tele-Communications,
Medium-Term Notes, Ser. B, 5.28%, 1996........ 5,000,000 4,842,975
------------
22,540,040
============
CONSUMER/
ENTERTAINMENT-6.0% Circus Circus Enterprises,
Sr. Sub. Notes, 10 5/8%, 1997................. 5,000,000 5,414,745
Time Warner, Notes:
6.05%, 1995................................... 3,000,000(b) 2,972,400
7.45%, 1998................................... 8,150,000 8,139,812
------------
16,526,957
============
FINANCE-19.5% Advanta,
Notes, 5 1/8%, 1996........................... 9,000,000 8,681,409
Chrysler Financial:
Medium-Term Notes, 5.55%, 1997................ 5,000,000 4,784,215
Reset Notes, 10.34%, 1996..................... 7,000,000 7,434,637
Farmers Group,
Notes, 8 1/4%, 1996........................... 2,000,000 2,067,090
Ford Motor Credit, Medium-Term Notes:
9.07%, 1996................................... 7,000,000 7,340,130
5.80%, 1998................................... 5,000,000 4,801,875
General Motors Acceptance:
Medium-Term Notes, 7 1/4%, 1997............... 5,000,000 5,042,600
Notes, 8 %, 1996.............................. 6,000,000 6,147,642
International Lease Finance,
Medium-Term Notes, Ser. E, 6.47%, 1997........ 4,000,000 3,983,712
SAFECO,
Notes, 10 3/4%, 1995.......................... 3,500,000 3,682,896
------------
53,966,206
============
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1994
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
FINANCE/
ASSET BACKED-9.7% Daimler-Benz Vehicle Trust 1994-A,
Asset Backed Ctfs.,
Cl. A, 5.95%, 2000............................ $ 5,000,000 $ 5,014,063
IBM Credit Receivables Lease Asset Master Trust,
Lease Backed Ctfs.,
Ser. 1994-l, Cl. A-2, 6.55%, 2001............. 5,000,000 5,014,063
Premier Auto Trust,
Asset Backed Notes,
Ser. 1994-1, Cl. A-3, 4 3/4%, 2000............ 12,250,000 11,761,225
Standard Credit Card Master Trust 1,
Credit Card Participation Ctfs., Ser. 1991-4,
Cl. A, 8%, 1997............................... 5,000,000 5,145,500
------------
26,934,851
============
INDUSTRIAL-12.0% Alco Capital Resource,
Medium-Term Notes, Ser. A, 7.02%, 1997........ 5,000,000 4,989,063
Federal Express:
Notes, 6 1/4%, 1998........................... 7,000,000 6,775,748
Sr. Notes, 9 3/4%, 1996....................... 1,000,000 1,051,566
Grand Metropolitan Investment,
Notes (Gtd. by Grand Metropolitan),
7%, 1999...................................... 5,000,000 4,923,650
McDermott,
Notes, 10 1/4%, 1995.......................... 2,000,000 2,065,286
McDonnell Douglas,
Notes, 8 5/8%, 1997........................... 3,643,000 3,764,053
Tenneco Credit,
Notes, 9 1/4%, 1996........................... 4,500,000 4,720,896
USX,
Medium-Term Floating Rate Notes,
5.3125%, 1996................................. 5,000,000(a) 5,019,345
------------
33,309,607
============
TRANSPORTATION-6.6% Consolidated Rail,
Medium-Term Notes, 4.97%, 1996................ 5,000,000 4,903,325
Delta Air Lines,
Medium-Term Notes, Ser. B, 7.79%, 1998........ 8,000,000 7,779,176
QANTAS Airways,
Sr. Notes, 6 5/8%, 1998....................... 6,000,000(b) 5,676,000
------------
18,358,501
============
UTILITIES-8.3% Connecticut Light and Power,
First and Refunding Mortgage,
Ser. WW, 4 1/4%, 1994......................... 1,000,000 997,920
Houston Industries,
Deb., 7 1/4%, 1996............................ 6,450,000 6,530,838
Maxus Energy,
Medium-Term Notes, Ser. C, 6.0125%, 1994...... 5,000,000(a) 4,993,750
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1994
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
UTILITIES (CONTINUED) Texas Gas Transmission,
Notes, 9 5/8%, 1997........................... $ 3,350,000 $ 3,450,500
Transcontinental Gas Pipe Line,
Extendible Notes, 6.21%, 1996................. 5,000,000 4,879,750
Triton Energy,
Sr. Sub. Discount Notes, Zero Coupon, 1997.... 3,000,000 2,175,000
------------
23,027,758
============
FOREIGN-4.8% Nacional Financiera S.N.C.,
Notes, 10%, 1996.............................. 3,000,000 3,071,250
Nippon Telegraph & Telephone,
Notes, 9 1/2%, 1998........................... 5,000,000 5,423,690
Union Bank of Finland,
Notes, 5 1/4%, 1996........................... 5,000,000 4,912,160
------------
13,407,100
============
U.S. GOVERNMENT AGENCY/ Federal Home Loan Mortgage Corp.,
MORTGAGE BACKED-3.6% Multi-Class Mortgage Participation Ctfs.:
Ser. 1350, Cl. 1350-C, 5.65%, 2011........ 1,967,686 1,968,198
Ser. 1616, Cl. 1616-A, 5 1/8%, 2006....... 8,440,122 7,971,959
------------
9,940,157
============
U.S. GOVERNMENT-5.4% U.S. Treasury Notes:
6 1/8%, 7/31/1996............................. 10,000,000 10,025,780
6 7/8%, 7/31/1999............................. 5,000,000 5,031,250
------------
15,057,030
============
TOTAL BONDS AND NOTES
(cost $274,169,233)........................... $266,372,361
============
SHORT-TERM INVESTMENTS-9.2%
TIME DEPOSITS: Bankers Trust Co. (London),
4 1/8%, 8/1/1994.............................. $ 5,390,000 $ 5,390,000
Chemical Bank (London),
4 1/4%, 8/1/1994.............................. 10,000,000 10,000,000
Republic National Bank (London),
4 1/8%, 8/1/1994.............................. 10,000,000 10,000,000
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $25,390,000)............................ $ 25,390,000
============
TOTAL INVESTMENTS (cost $299,559,233) ........................................... 105.3% $291,762,361
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES............................................ (5.3%) $(14,734,257)
====== ============
NET ASSETS........................................................................ 100.0% $277,028,104
====== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable rate security-interest rate subject to periodic change.
(b) 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 July 31,
1994, these securities amounted to $10,632,200 or 3.8% of net assets.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $299,559,233)-see statement..................................... $291,762,361
Cash.................................................................... 921,568
Receivable for investment securities sold............................... 29,911,664
Interest receivable..................................................... 4,818,228
Receivable for subscriptions to Common Stock............................ 3,500
Prepaid expenses........................................................ 94,798
Due from The Dreyfus Corporation........................................ 84,497
------------
327,596,616
LIABILITIES:
Payable for investment securities purchased............................. $49,931,460
Payable for Common Stock redeemed....................................... 469,342
Accrued expenses........................................................ 167,710 50,568,512
----------- ------------
NET ASSETS ................................................................ $277,028,104
============
REPRESENTED BY:
Paid-in capital......................................................... $290,255,007
Accumulated undistributed investment income-net......................... 92,816
Accumulated net realized (loss) on investments.......................... (5,522,847)
Accumulated net unrealized (depreciation) on investments-Note 3......... (7,796,872)
------------
NET ASSETS at value applicable to 23,204,622 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $277,028,104
============
NET ASSET VALUE, offering and redemption price per share
($277,028,104 / 23,204,622 shares)...................................... $11.94
======
See notes to financial statements.
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1994
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 20,131,999
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,431,860
Shareholder servicing costs-Note 2(b)................................. 949,060
Prospectus and shareholders' reports-Note 2(b)........................ 119,839
Registration fees..................................................... 65,273
Custodian fees........................................................ 47,514
Professional fees..................................................... 40,709
Directors' fees and expenses-Note 2(c)................................ 24,203
Miscellaneous......................................................... 27,869
-----------
2,706,327
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 2,019,382
-----------
TOTAL EXPENSES.................................................. 686,945
------------
INVESTMENT INCOME-NET........................................... 19,445,054
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (5,611,159)
Net unrealized (depreciation) on investments............................ (8,144,668)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (13,755,827)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 5,689,227
============
See notes to financial statements.
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
------------------------------
1993* 1994
------------ ------------
OPERATIONS:
Investment income-net................................................... $ 6,501,600 $ 19,445,054
Net realized gain (loss) on investments................................. 203,093 (5,611,159)
Net unrealized appreciation (depreciation) on investments for the year.. 347,796 (8,144,668)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 7,052,489 5,689,227
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (6,459,836) (19,394,002)
Net realized gain on investments........................................ (114,781) ---
------------ ------------
TOTAL DIVIDENDS....................................................... (6,574,617) (19,394,002)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 301,055,634 340,428,554
Dividends reinvested.................................................... 5,872,820 16,377,882
Cost of shares redeemed................................................. (101,769,908) (271,809,975)
------------ ------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 205,158,546 84,996,461
------------ ------------
TOTAL INCREASE IN NET ASSETS...................................... 205,636,418 71,291,686
NET ASSETS:
Beginning of year....................................................... 100,000 205,736,418
------------ ------------
End of year (including undistributed investment income-net:
$41,764 in 1993 and $92,816 in 1994).................................. $205,736,418 $277,028,104
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 24,191,578 27,511,855
Shares issued for dividends reinvested.................................. 472,319 1,337,198
Shares redeemed......................................................... (8,171,405) (22,144,923)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING.................................... 16,492,492 6,704,130
============ ============
- ---------------------
*From August 18, 1992 (commencement of operations) to July 31, 1993.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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 year indicated. This information
has been derived from the Fund's financial statements.
YEAR ENDED JULY 31,
--------------------
1993(1) 1994
------- -------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year..................................................... $12.50 $12.47
------- -------
INVESTMENT OPERATIONS:
Investment income-net.................................................................. .89 .84
Net realized and unrealized (loss) on investments...................................... (.01) (.54)
------- -------
TOTAL FROM INVESTMENT OPERATIONS..................................................... .88 .30
------- -------
DISTRIBUTIONS:
Dividends from investment income-net................................................... (.89) (.83)
Dividends from net realized gain on investments........................................ (.02) --
------- -------
TOTAL DISTRIBUTIONS.................................................................. (.91) (.83)
------- -------
Net asset value, end of year........................................................... $12.47 $11.94
======= =======
TOTAL INVESTMENT RETURN 7.68%(2) 2.47%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................................ -- .24%
Ratio of net investment income to average net assets................................... 7.58%(2) 6.79%
Decrease reflected in above expense ratios due to undertakings
by the Manager....................................................................... 1.12%(2) .71%
Portfolio Turnover Rate................................................................ 54.59%(3) 74.90%
Net Assets, end of year (000's Omitted)................................................ $205,736 $277,028
- ------------------------
(1) From August 18, 1992 (commencement of operations) to July 31, 1993.
(2) Annualized.
(3) Not annualized.
See notes to financial statements.
</TABLE>
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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 acted as the distributor of the Fund's shares until August 24,
1994, which are sold to the public without a sales load. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
(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 judgement 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 denominated 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 interest of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from substantially all Federal
income tax.
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
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 May 2, 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
$2,019,382 for the year ended July 31, 1994.
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 Dreyfus Service Corporation, 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. Dreyfus Service Corporation 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 year ended July 31,
1994, $672,744 was charged to the Fund pursuant to the Plan, of which
$407,531 was waived pursuant to undertakings by the Manager (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 Dreyfus Service Corporation.
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.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended July 31, 1994,
amounted to $282,536,676 and $201,433,729, respectively.
At July 31, 1994, accumulated net unrealized depreciation on investments
was $7,796,872, consisting of $279,691 gross unrealized appreciation and
$8,076,563 gross unrealized depreciation.
At July 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, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS SHORT-TERM INCOME FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Short-Term Income Fund, Inc., including the statement of investments,
as of July 31, 1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Short-Term Income Fund, Inc. at July 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
(ERNST & YOUNG LLP, Signature Logo)
New York, New York
September 8, 1994
(Dreyfus Logo)
Short-Term Income
Fund, Inc.
Annual Report
July 31, 1994
(Dreyfus Lion "D" Logo)
DREYFUS SHORT-TERM INCOME FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 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. 083AR947
Registration Mark
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS SHORT-TERM INCOME FUND,INC. AND THE
MERRILL LYNCH CORPORATE AND GOVERNMENT MASTER INDEX *
EXHIBIT A:
________________________________________________
| | MERRILL LYNCH | DREYFUS |
| | CORPORATE AND | SHORT-TERM |
| PERIOD | GOVERNMENT MASTER | INCOME FUND |
| | INDEX * | |
|----------- | ------------------ | ------------|
| 8/18/92 | 10,000 | 10,000 |
| 10/31/92 | 10,039 | 10,000 |
| 1/31/93 | 10,268 | 10,243 |
| 4/30/93 | 10,514 | 10,550 |
| 7/31/93 | 10,618 | 10,732 |
| 10/31/93 | 10,809 | 10,940 |
| 1/31/94 | 10,925 | 11,120 |
| 4/30/94 | 10,656 | 10,861 |
| 7/31/94 | 10,806 | 10,997 |
|-----------------------------------------------|
* Source: Merrill Lynch
Average Annual Total Return
One Year Ended From Inception (8/18/92)
July 31, 1994 to July 31, 1994
--------------- --------------------------
2.47% 4.99%
