July 15, 1996
DREYFUS INVESTMENT GRADE
BOND FUNDS, INC.
SUPPLEMENT TO PROSPECTUS
DATED MARCH 15, 1996
THE FOLLOWING INFORMATION SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE SECTION OF THE FUND'S PROSPECTUS ENTITLED "MANAGEMENT OF THE
FUND-CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT."
Mellon Bank, N.A., located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, serves as the Fund's Custodian.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE INFORMATION CONTAINED IN THE SECTION OF THE FUNDS'
PROSPECTUS ENTITLED "APPENDIX--CERTAIN PORTFOLIO SECURITIES --
MORTGAGE-RELATED SECURITIES."
Each Fund also may invest in subordinated mortgage-related securities
("Subordinated Securities"), which are issued or sponsored by commercial
banks, savings and loan institutions, mortgage bankers, private mortgage
insurance companies and other non-governmental issuers, have no governmental
guarantee, and are subordinated in some manner as to the payment of principal
and/or interest to the holders of more senior mortgage-related securities
arising out of the same pool of mortgages. Neither Fund anticipates investing
more than 20% of its assets in Subordinated Securities.
The holders of Subordinated Securities typically are compensated with
a higher stated yield than are the holders of more senior mortgage-related
securities. On the other hand, Subordinated Securities typically subject the
holder to greater risk than senior mortgage-related securities and tend to be
rated in a lower rating category, and frequently a substantially lower rating
category, than the senior mortgage-related securities issued in respect of
the same pool of mortgages. Subordinated Securities generally are likely to
be more sensitive to changes in prepayment and interest rates and the market
for
(CONTINUED ON REVERSE SIDE)
such securities may be less liquid than is the case for traditional
fixed-income securities and senior mortgage-related securities.
The mortgage-related securities in which each Fund may invest also
include multi-class pass through certificates secured principally by mortgage
loans on commercial properties. These mortgage-related securities are
structured similarly to mortgage-related securities secured by pools of
residential mortgages. Commercial lending, however, generally is viewed as
exposing the lender to a greater risk of loss than one-to four- family
residential lending. Commercial lending, for example, typically involves
larger loans to single borrowers or groups of related borrowers than
residential one-to four- family mortgage loans. In addition, the repayment of
loans secured by income producing properties typically is dependent upon the
successful operation of the related real estate project and the cash flow
generated therefrom. Consequently, adverse changes in economic conditions and
circumstances are more likely to have an adverse impact on mortgage-related
securities secured by loans on commercial properties than on those secured by
loans on residential properties.
083/082s071596
