Securities Act File No. 33-48926
Investment Company Act File No. 811-6718
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 8 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 8 /x/
(Check appropriate box or boxes)
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
It is proposed that this filing will become effective (check
appropriate box)
____ immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has registered an indefinite number of its shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for its
fiscal year ended July 31, 1995 was filed on September 27, 1995.
<PAGE>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
- --------- ------- ----
1 Cover Cover
Page
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of
Registrant 6, 29
5 Management of the Fund 11
5(a) Management's Discussion of
Fund's Performance *
6 Capital Stock and Other Securities 29
7 Purchase of Securities Being
Offered 13
8 Redemption or Repurchase 21
9 Pending Legal Proceedings *
Items in All Funds
Part B of
Form N-1A Caption Page
- --------- ------- ----
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and
Policies B-2
14 Management of the Fund B-15
15 Control Persons and Principal
Holders of Securities B-20
16 Investment Advisory and Other
Services B-20
17 Brokerage Allocation B-34
18 Capital Stock and Other
Securities B-37
19 Purchase, Redemption and
Pricing of Securities Being
Offered B-22, B-25,
B-31
20 Tax Status B-32
21 Underwriters B-1, B-22
22 Calculations of Performance Data B-36
23 Financial Statements B-47
Items in
Part C of
Form N-1A Caption Page
- --------- ------- ----
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under
Common Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-2
28 Business and Other Connections
of Investment Adviser C-3
29 Principal Underwriters C-9
30 Location of Accounts and Records C-12
31 Management Services C-12
32 Undertakings C-13
- ---------
* Omitted since answer is negative or inapplicable.
<PAGE>
PROSPECTUS ______________ , 1996
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
DREYFUS INTERMEDIATE TERM INCOME FUND
Dreyfus Investment Grade Bond Funds, Inc. is an open-
end, management investment company (the "Company"), known as a
mutual fund. The Company permits you to invest in two separate
series which are described in this Prospectus (each, a "Fund"
and, collectively, the "Funds")--Dreyfus Short Term Income Fund
("Short Term Income Fund"), a non-diversified series, and
Dreyfus Intermediate Term Income Fund ("Intermediate Term Income
Fund"), a diversified series. Each Fund's investment objective
is to provide you with as high a level of current income as is
consistent with the preservation of capital.
Each Fund invests principally in a broad range of
investment grade debt securities of domestic and foreign
issuers. Under normal market conditions, the Short Term Income
Fund will invest in a portfolio of securities that has an
effective duration of three years or less. Under normal market
conditions, the Intermediate Term Income Fund will invest in a
portfolio of securities that has an effective duration ranging
between three and eight years which is approximate to an average
portfolio maturity ranging between five and ten years.
You can invest, reinvest or redeem shares at any time
without charge or penalty.
Each Fund provides free redemption checks, which you
can use in amounts of $500 or more for cash or to pay bills.
You continue to earn income on the amount of the check until it
clears. You can purchase or redeem shares by telephone using
Dreyfus TeleTransfer.
The Dreyfus Corporation professionally manages each
Fund's portfolio.
This Prospectus sets forth concisely information about
the Funds that you should know before investing. It should be
read and retained for future reference.
The Statement of Additional Information, dated
_________ , 1996, which may be revised from time to time,
provides a further discussion of certain areas in this
Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free
copy, write to the Company at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-645-6561. When
telephoning, ask for Operator 144.
Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not federally
insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other agency. The net asset value
of funds of this type will fluctuate from time to time.
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses. . . . . . . .
Condensed Financial Information . . . . . . .
Description of the Funds. . . . . . . . . . .
Management of the Funds . . . . . . . . . . .
How to Buy Shares . . . . . . . . . . . . . .
Shareholder Services. . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . .
Shareholder Services Plan . . . . . . . . . .
Dividends, Distributions and Taxes. . . . . .
Performance Information . . . . . . . . . . .
General Information . . . . . . . . . . . . .
Appendix. . . . . . . . . . . . . . . . . . .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Dreyfus Dreyfus
Short Term Intermediate Term
Income Fund Income Fund
Management Fees . . . . . . .35%* .75%
Other Expenses . . . . . . . .45% .45%
Total Fund Operating
Expenses . . . . . . . . . .80%* 1.20%
__________
*After expense reimbursement.
Example:
You would pay the following
expenses on a $1,000 invest-
ment, assuming (1) 5% annual
return and (2) redemption at
the end of each time period:
Dreyfus Dreyfus
Short Term Intermediate Term
Income Fund Income Fund
1 Year $ 8 $ 12
3 Years $26 $ 38
5 Years $44 $ 66
10 Years $99 $145
The amounts listed in the example should not be
considered as representative of past and future expenses and
actual expenses may be greater or less than those indicated.
Moreover, while the example assumes a 5% annual return, a Fund's
actual performance will vary and may result in an actual return
greater or less than 5%.
The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by each Fund, the
payment of which will reduce investors' annual return. Other
Expenses for the Intermediate Term Income Fund are based on
estimated amounts for the current fiscal year. With respect to
the Short Term Income Fund, Total Fund Operating Expenses noted
above have been restated to reflect the Company's termination of
its Rule 12b-1 plan and an undertaking by The Dreyfus Corporation
that if, in the fiscal year ending July 31, 1996, certain Fund
expenses, including the management fee, exceed .80% of the value
of the Fund's average net assets for the fiscal year, The Dreyfus
Corporation may waive its management fee or bear certain other
expenses to the extent of such excess expense. The expenses
noted above for the Short Term Income Fund, without
reimbursement, would have been: Management Fees - .50% and Total
Fund Operating Expenses - .95%. The information in the foregoing
table does not reflect any other fee waivers or expense
reimbursement arrangements that may be in effect. You can
purchase Fund shares without charge directly from the Funds'
distributor; you may be charged a nominal fee if you effect
transactions in Fund shares through a Service Agent (as defined
below). See "Management of the Funds," "How to Buy Shares" and
"Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited
by Ernst & Young LLP, each Fund's independent auditors, whose
report thereon appears in the Statement of Additional
Information. Further financial data and related notes for the
Short Term Income Fund are included in the Statement of
Additional Information, available upon request. No financial
information is provided for the Intermediate Term Income Fund
which had not commenced operations as of the date of the
financial statements.
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 the Short Term Income Fund for each year
indicated. This information has been derived from the Short Term
Income Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended July 31
-----------------------------------------------
DREYFUS SHORT TERM INCOME FUND 1993<F1> 1994 1995
- ------------------------------- -------- ---- ----
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning $12.50 $12.47 $11.94
of year . . . . . . . . . . . . . . . . .
Investment Operations:
Investment income-net . . . . . . . . . . . .89 .84 .85
Net realized and unrealized (loss) on
investments . . . . . . . . . . . . . . . . (.01) (.54) (.05)
Total from Investment Operations .88 .30 .80
Distributions:
Dividends from investment income-net . . .
(.89) (.83) (.85)
Dividends from net realized gain on
investments . . . . . . . . . . . . . . . . (.02) --- ---
Total Distributions . . . . . . . . . . . . (.91) (.83) (.85)
Net asset value, end of year . . . . . . . $12.47 $11.94 $11.89
TOTAL INVESTMENT RETURN . . . . . . . . . . . 7.68%<F2> 2.47% 7.05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . .
--- .24% .61%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . 7.58%<F2> 6.79% 7.26%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation . . . . . . . . . . . . . . . . 1.12%<F2> .71% .34%
Portfolio Turnover Rate . . . . . . . . . . 54.59%<F3> 74.90% 511.62%
Net Assets, end of year (000's omitted) . . $205,736 $277,028 $210,524
- -----------------------
<FN>1 From August 18, 1992 (commencement of operations) to July 31, 1993.
<FN>2 Annualized.
<FN>3 Not annualized.
</TABLE>
DESCRIPTION OF THE FUNDS
Investment Objective
Each Fund's investment objective is to provide you with
as high a level of current income as is consistent with the
preservation of capital. It cannot be changed as to a Fund
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 voting shares. There can be no assurance
that a Fund's investment objective will be achieved.
Management Policies
Under normal market conditions, each Fund invests at
least 65% of its net assets in investment grade debt securities
and securities with debt-like characteristics of domestic and
foreign issuers. These securities include bonds, debentures,
notes, money market instruments, mortgage-related securities,
asset-backed securities, municipal obligations, warrants,
convertible debt obligations and convertible preferred stock
(collectively, "Fixed-Income Securities"). See "Appendix--
Certain Portfolio Securities." The issuers may include domestic
and foreign corporations, partnerships or trusts, and
governments or their political subdivisions, agencies or
instrumentalities. Each Fund may invest up to 30% of the value
of its total assets in securities of foreign issuers, including
securities of companies whose principal activities are in, or
governments of, emerging markets. See "Investment
Considerations and Risks--Foreign Securities."
Under normal market conditions, the Short Term Income
Fund will invest in a portfolio of securities that has an
effective duration of three years or less and the Intermediate
Term Income Fund will invest in a portfolio of securities that
has an effective duration ranging between three and eight years.
As a measure of a fixed-income security's cash flow, duration is
an alternative to the concept of "term to maturity" in assessing
the price volatility associated with changes 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%. Conversely, the market price of the
same bond would be expected to increase 2% if interest rates
fell 1%. The market price of a bond with a duration of four
years would be expected to increase or decline twice as much as
the market price of a bond with a two-year duration. 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 as opposed to its term to
maturity. The maturity of a security measures only the time
until final payment is due; it does not take account of the
pattern of a security's cash flows over time, which would
include how cash flow is affected by prepayments and by changes
in interest rates. Incorporating a security's yield, coupon
interest payments, final maturity and option features into one
measure, duration is computed by determining the weighted
average maturity of a bond's cash flows, where the present
values of the cash flows serve as weights. In computing the
duration of the Funds, The Dreyfus Corporation will estimate the
duration of obligations that are subject to features such as
prepayment or redemption by the issuer, put options retained by
the investor or other imbedded options, taking into account the
influence of interest rates on prepayments and coupon flows.
This method of computing duration is known as option-adjusted
duration.
Investment grade Fixed-Income Securities are those
rated at least Baa by Moody's Investors Service, Inc.
("Moody's") or at least BBB by Standard & Poor's Ratings Group,
a division of The McGraw Hill Companies, Inc. ("S&P"), Fitch
Investors Service, L.P. ("Fitch") or Duff & Phelps Credit Rating
Co. ("Duff"), or, if unrated, deemed to be of comparable quality
by The Dreyfus Corporation. Fixed-Income Securities rated Baa
by Moody's and BBB by S&P, Fitch and Duff are considered
investment grade obligations which lack outstanding investment
characteristics and may have speculative characteristics as
well.
Each Fund may invest up to 35% of the value of its net
assets in Fixed-Income Securities rated lower than Baa by
Moody's and BBB by S&P, Fitch and Duff and as low as Caa by
Moody's and CCC by S&P, Fitch and Duff, or, if unrated, deemed
to be of comparable quality by The Dreyfus Corporation.
Securities rated Caa by Moody's and CCC by S&P, Fitch and Duff
are considered to have predominantly speculative characteristics
with respect to capacity to pay interest and repay principal and
to be of poor standing. Each Fund currently intends to invest
less than 35% of its net assets in Fixed-Income Securities rated
lower than investment grade or, if unrated, deemed to be of
comparable quality by The Dreyfus Corporation. See "Investment
Considerations and Risks--Lower Rated Securities" below for a
discussion of certain risks, and "Appendix" in the Statement of
Additional Information.
Each Fund may invest in money market instruments
consisting of U.S. Government securities, certificates of
deposit, time deposits, bankers' acceptances, short-term
investment grade corporate bonds and other short-term debt
instruments, and repurchase agreements, as set forth under
"Appendix--Certain Portfolio Securities--Money Market
Instruments." Under normal market conditions, neither Fund
expects to have a substantial portion of its assets invested in
money market instruments. However, when The Dreyfus Corporation
determines that adverse market conditions exist, a Fund may
adopt a temporary defensive posture and invest all of its assets
in money market instruments. Each Fund also may invest in money
market instruments in anticipation of investing cash positions.
Each Fund's annual portfolio turnover rate, under
certain market conditions, could exceed 200%. Higher portfolio
turnover rates usually generate additional brokerage commissions
and expenses (which, however, the Funds typically do not incur
when they purchase portfolio securities) and the short term
gains realized from these transactions are taxable to
shareholders as ordinary income. Each Fund may engage in
various investment techniques, such as foreign currency
transactions, options and futures transactions, leveraging, and
lending portfolio securities. The Intermediate Term Income Fund
also may engage in short-selling and interest rate swaps. See
"Investment Considerations and Risks" and "Appendix--Investment
Techniques" below and "Investment Objective and Management
Policies--Management Policies" in the Statement of Additional
Information.
Investment Considerations and Risks
General--Each Fund's net asset value per share should be
expected to fluctuate. Investors should consider a Fund as a
supplement to an overall investment program and should invest
only if they are willing to undertake the risks involved. See
"Investment Objective and Management Policies--Management
Policies" in the Statement of Additional Information for a
further discussion of certain risks.
Fixed-Income Securities--Even though interest-bearing securities
are investments which promise a stable stream of income, the
prices of such securities generally are inversely affected by
changes in interest rates and, therefore, are subject to the
risk of market price fluctuations. The values of Fixed-Income
Securities also may be affected by changes in the credit rating
or financial condition of the issuer. Certain securities
purchased by a Fund, such as those rated Baa or lower by Moody's
and BBB or lower by S&P, Fitch and Duff, may be subject to such
risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-
income securities. Once the rating of a portfolio security has
been changed, the Fund will consider all circumstances deemed
relevant in determining whether to continue to hold the
security. See "Lower Rated Securities" and "Appendix--Certain
Portfolio Securities--Ratings" below and "Appendix" in the
Statement of Additional Information.
Lower Rated Securities--Each Fund may invest up to 35% of its
net assets in higher yielding (and, therefore, higher risk) debt
securities such as those rated Ba by Moody's or BB by S&P, Fitch
or Duff or as low as Caa by Moody's or CCC by S&P, Fitch or Duff
(commonly known as junk bonds). They generally are not meant
for short-term investing and 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 a Fund to sell certain securities or could result in lower
prices than those used in calculating the Fund's net asset
value. See "Appendix--Certain Portfolio Securities--Ratings."
Foreign Securities--Foreign securities markets generally are not
as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly,
volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can
be greater than in the United States.
Because evidences of ownership of such securities
usually are held outside the United States, each Fund will be
subject to additional risks which include possible: adverse
political and economic developments, seizure or nationalization
of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and
interest on the foreign securities or restrict the payment of
principal and interest to investors located outside the country
of the issuer, whether from currency blockage or otherwise.
Developing countries have economic structures that are
generally less diverse and mature, and political systems that
are less stable, than those of developed countries. The markets
of developing countries may be more volatile than the markets of
more mature economies; however, such markets may provide higher
rates of return to investors. Many developing countries
providing investment opportunities for the Fund have experienced
substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of
these countries.
Since foreign securities often are purchased with and
payable in currencies of foreign countries, the value of these
assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and exchange control
regulations.
Foreign Currency Transactions--Currency exchange rates may
fluctuate significantly over short periods of time. They
generally are determined by the forces of supply and demand in
the foreign exchange markets and the relative merits of
investments in different countries, actual or perceived changes
in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be
affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by
currency controls or political developments in the United States
or abroad. See "Appendix--Investment Techniques--Foreign
Currency Transactions."
Use of Derivatives--Each Fund may invest in derivatives
("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an
underlying asset, index or interest rate. The Derivatives each
Fund may use include options and futures, mortgage-related
securities and asset-backed securities and, with respect to the
Intermediate Term Income Fund, interest rate swaps. While
Derivatives can be used effectively in furtherance of a Fund's
investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, can
decrease the liquidity of the Fund's portfolio and make more
difficult the accurate pricing of the Fund's portfolio. See
"Appendix--Investment Techniques--Use of Derivatives" below and
"Investment Objective and Management Policies--Management
Policies--Derivatives" in the Statement of Additional
Information.
Non-Diversified Status (Short Term Income Fund only)--The
classification of the Short-Term Income Fund as a "non-
diversified" investment company means that the proportion of the
Fund's assets that may be invested in the securities of a single
issuer is not limited by the 1940 Act. A "diversified"
investment company is required by the 1940 Act generally, with
respect to 75% of its total assets, to invest not more than 5%
of such assets in the securities of a single issuer and to hold
not more than 10% of the outstanding voting securities of a
single issuer. Since a relatively high percentage of the Fund's
assets may be invested in the securities of a limited number of
issuers, some of which may be within the same industry, the
Fund's portfolio may be more sensitive to changes in the market
value of a single issuer or industry. However, to meet Federal
tax requirements, at the close of each quarter the Fund may not
have more than 25% of its total assets invested in any one
issuer and, with respect to 50% of total assets, not more than
5% of its total assets invested in any one issuer. These
limitations do not apply to U.S. Government securities.
Simultaneous Investments--Investment decisions for each Fund are
made independently from those of the other investment companies
advised by The Dreyfus Corporation. If, however, such other
investment companies desire to invest in, or dispose of, the
same securities as a Fund, available investments or
opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by a
Fund or the price paid or received by a Fund.
MANAGEMENT OF THE FUNDS
Investment Adviser--The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves
as each Fund's investment adviser. The Dreyfus Corporation is a
wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-
owned subsidiary of Mellon Bank Corporation ("Mellon"). As of
January 31, 1996, The Dreyfus Corporation managed or
administered approximately $82 billion in assets for more than
1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the
overall management of each Fund's affairs under a Management
Agreement with the Company, subject to the authority of the
Company's Board in accordance with Maryland law. The Short Term
Income Fund's primary portfolio manager is Gerald E. Thunelius.
He has held that position since June 1994, and has been an
employee of The Dreyfus Corporation since May 1989. The
Intermediate Term Income Fund's primary portfolio manager is
Kevin M. McClintock. He has held that position since inception
of the Fund, and has been employed by The Dreyfus Corporation
since November 1995. From 1993 through October 1995,
Mr. McClintock was Managing Director, Fixed Income Investments,
for Aeltus Investment Management, Inc., a subsidiary of the
Aetna Corporation. Prior thereto, he was employed in various
capacities by the Aetna Corporation and its subsidiaries,
including head of Separate Account Portfolio Management for
Aetna Investment Management. The Funds' other portfolio
managers are identified in the Statement of Additional
Information. The Dreyfus Corporation also provides research
services for the Funds and for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio
managers and securities analysts.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under
the Federal Bank Holding Company Act of 1956, as amended.
Mellon provides a comprehensive range of financial products and
services in domestic and selected international markets. Mellon
is among the twenty-five largest bank holding companies in the
United States based on total assets. Mellon's principal wholly-
owned subsidiaries are Mellon Bank, N.A., Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company,
Inc., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its
subsidiaries, including The Dreyfus Corporation, Mellon managed
more than $209 billion in assets as of September 30, 1995,
including approximately $80 billion in proprietary mutual fund
assets. As of September 30, 1995, Mellon, through various
subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $717 billion
in assets, including approximately $55 billion in mutual fund
assets.
Under the terms of the Management Agreement, the
Company has agreed to pay The Dreyfus Corporation a monthly fee
at the annual rate of .50 of 1% of the value of the Short Term
Income Fund's average daily net assets and .75 of 1% of the
value of the Intermediate Term Income Fund's average daily net
assets. From time to time, The Dreyfus Corporation may waive
receipt of its fees and/or voluntarily assume certain expenses
of a Fund, which would have the effect of lowering the expense
ratio of the Fund and increasing yield to investors. A Fund
will not pay The Dreyfus Corporation at a later time for any
amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume. For the fiscal year
ended July 31, 1995, the Short Term Income Fund paid The Dreyfus
Corporation a monthly management fee at the effective annual
rate of .21 of 1% of the value of the Fund's average daily net
assets pursuant to undertakings by The Dreyfus Corporation.
In allocating brokerage transactions for the Funds, The
Dreyfus Corporation seeks to obtain the best execution of orders
at the most favorable net price. Subject to this determination,
The Dreyfus Corporation may consider, among other things, the
receipt of research services and/or the sale of shares of a Fund
or other funds advised by The Dreyfus Corporation as factors in
the selection of broker-dealers to execute portfolio
transactions for the Fund. See "Portfolio Transactions" in the
Statement of Additional Information.
Expenses--All expenses incurred in the operation of the Company
are borne by the Company, except to the extent specifically
assumed by The Dreyfus Corporation. The expenses borne by the
Company include: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of
Board members who are not officers, directors, employees or
holders of 5% or more of the outstanding voting securities of
The Dreyfus Corporation or any of its affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Company's
existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses. Expenses attributable
to a Fund are charged against the assets of the Fund; other
expenses of the Company are allocated between the Funds on the
basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Fund.
The Dreyfus Corporation may pay the Funds' distributor
for shareholder services from The Dreyfus Corporation's own
assets, including past profits but not including the management
fees paid by the Funds. The Funds' distributor may use part or
all of such payments to pay Service Agents in respect of these
services.
Distributor--The Funds' distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at One Exchange
Place, Boston, Massachusetts 02109. The Distributor's ultimate
parent is Boston Institutional Group, Inc.
Transfer and Dividend Disbursing Agent and Custodian--Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the Funds' Transfer and Dividend Disbursing Agent (the
"Transfer Agent"). The Bank of New York, 90 Washington Street,
New York, New York 10286, is the Funds' Custodian.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may
be charged a nominal fee if you effect transactions in Fund
shares through a securities dealer, bank or other financial
institution (collectively, "Service Agents"). Stock
certificates are issued only upon your written request. No
certificates are issued for fractional shares. Each Fund
reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if
you are a client of a Service Agent which has made an aggregate
minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. However, the
minimum initial investment for Dreyfus-sponsored Keogh Plans,
IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is
$750, with no minimum for subsequent purchases. Individuals who
open an IRA also may open a non-working spousal IRA with a
minimum initial investment of $250. Subsequent investments in a
spousal IRA must be at least $250. The initial investment must
be accompanied by the Account Application. For full-time or
part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus
Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Company's Board, or the
spouse or minor child of any of the foregoing, the minimum
initial investment is $1,000. For full-time or part-time
employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly
deposited into their Fund account, the minimum initial
investment is $50. Each Fund reserves the right to offer Fund
shares without regard to minimum purchase requirements to
employees participating in certain qualified or non-qualified
employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form
acceptable to the Fund. Each Fund reserves the right to vary
further the initial and subsequent investment minimum
requirements at any time. Fund shares also are offered without
regard to the minimum initial investment requirements through
Dreyfus-Automatic Asset Builder, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to
the Dreyfus Step Program described under "Shareholder Services."
These services enable you to make regularly scheduled
investments and may provide you with a convenient way to invest
for long-term financial goals. You should be aware, however,
that periodic investment plans do not guarantee a profit and
will not protect an investor against loss in a declining market.
You may purchase Fund shares by check or wire, or
through the Dreyfus TeleTransfer Privilege described below.
Checks should be made payable to "The Dreyfus Family of Funds,"
or, if for Dreyfus retirement plan accounts, to "The Dreyfus
Trust Company, Custodian" and should specify the Fund in which
you are investing. Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your
Account Application. For subsequent investments, your Fund
account number should appear on the check and an investment slip
should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement
plan accounts, both initial and subsequent investments should be
sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Neither initial nor
subsequent investments should be made by third party check.
Purchase orders may be delivered in person only to a Dreyfus
Financial Center. These orders will be forwarded to the Fund
and will be processed only upon receipt thereby. For the
location of the nearest Dreyfus Financial Center, please call
one of the telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System
or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The
Bank of New York, together with the applicable Fund's DDA# as
shown below, for purchase of Fund shares in your name: DDA#
8900117028/Dreyfus Investment Grade Bond Funds, Inc./Dreyfus
Short Term Income Fund; or DDA#_________/Dreyfus Investment
Grade Bond Funds, Inc./Dreyfus Intermediate Term Income Fund.
The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be
included instead), account registration and dealer number, if
applicable. If your initial purchase of Fund shares is by wire,
you should call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your
Fund account number on the Account Application and promptly mail
the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may
obtain further information about remitting funds in this manner
from your bank. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S.
banks. A charge will be imposed if any check used for
investment in your account does not clear. Each Fund makes
available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other
domestic financial institution that is an Automated Clearing
House member. You must direct the institution to transmit
immediately available funds through the Automated Clearing House
to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account
registration and Fund account number preceded by the digits
"1111."
Fund shares are sold on a continuous basis at the net
asset value per share next determined after an order in proper
form is received by the Transfer Agent or other agent. Net
asset value per share is determined as of the close of trading
on the floor of the New York Stock Exchange (currently 4:00
p.m., New York time), on each day the New York Stock Exchange is
open for business. For purposes of determining net asset value,
options and futures contracts will be valued 15 minutes after
the close of trading on the floor of the New York Stock
Exchange. Net asset value per share is computed by dividing the
value of a Fund's net assets (i.e., the value of its assets less
liabilities) by the total number of Fund shares outstanding. A
Fund's investments are valued generally by using available
market quotations or at fair value which may be determined by
one or more pricing services approved by the Company's Board.
Each pricing services' procedures are reviewed under the general
supervision of the Board. For further information regarding the
methods employed in valuing a Fund's investments, see
"Determination of Net Asset Value" in the Statement of
Additional Information.
For certain institutions that have entered into
agreements with the Distributor, payment for the purchase of
Fund shares may be transmitted, and must be received by the
Transfer Agent, within three business days after the order is
placed. If such payment is not received within three business
days after the order is placed, the order may be canceled and
the institution could be held liable for resulting fees and/or
losses.
The Distributor may pay dealers a fee of up to .5% of
the amount invested through such dealers in Fund shares by
employees participating in qualified or non-qualified employee
benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a
minimum of 250 employees eligible for participation in such
plans or programs or (ii) such plan's or program's aggregate
investment in the Dreyfus Family of Funds or certain other
products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares
of funds in the Dreyfus Family of Funds then held by Eligible
Benefit Plans will be aggregated to determine the fee payable.
The Distributor reserves the right to cease paying these fees at
any time. The Distributor will pay such fees from its own
funds, other than amounts received from a Fund, including past
profits or any other source available to it.
Federal regulations require that you provide a
certified TIN upon opening or reopening an account. See
"Dividends, Distributions and Taxes" and the Account Application
for further information concerning this requirement. Failure to
furnish a certified TIN to a Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Dreyfus TeleTransfer Privilege--You may purchase shares (minimum
$500, maximum $150,000 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred
between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing
House member may be so designated. A Fund may modify or
terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TeleTransfer
Privilege, you may request a Dreyfus TeleTransfer purchase of
shares by telephoning 1-800-645-6561 or, if you are calling from
overseas, call 516-794-5452.
SHAREHOLDER SERVICES
Fund Exchanges
You may purchase, in exchange for shares of a Fund,
shares of certain other funds managed or administered by The
Dreyfus Corporation, to the extent such shares are offered for
sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you
desire to use this service, you should consult your Service
Agent or call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed on its use.
To request an exchange, you must give exchange
instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-
6561. Except in the case of personal retirement plans, the
shares being exchanged must have a current value of at least
$500; furthermore, when establishing a new account by exchange,
the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the
exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders
automatically, unless you check the applicable "No" box on the
Account Application, indicating that you specifically refuse
this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed
by all shareholders on the account, or by a separate signed
Shareholder Services Form, also available by calling 1-800-645-
6561. If you have established the Telephone Exchange Privilege,
you may telephone exchange instructions by calling 1-800-645-
6561 or, if you are calling from overseas, call 516-794-5452.
See "How to Redeem Shares--Procedures." Upon an exchange into a
new account, the following shareholder services and privileges,
as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone
Exchange Privilege, Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TeleTransfer
Privilege and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net
asset value; however, a sales load may be charged with respect
to exchanges into funds sold with a sales load. If you are
exchanging into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or
which reflect a reduced sales load, if the shares of the fund
from which you are exchanging were: (a) purchased with a sales
load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestment of
dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange
you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to
confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although
each Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the Securities and Exchange
Commission. Each Fund reserves the right to reject any exchange
request in whole or in part. The availability of Fund Exchanges
may be modified or terminated at any time upon notice to
shareholders. See "Dividends, Distributions and Taxes."
Dreyfus Auto-Exchange Privilege
Dreyfus Auto-Exchange Privilege enables you to invest
regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of a Fund, in shares of certain
other funds in the Dreyfus Family of Funds of which you are
currently an investor. The amount you designate, which can be
expressed either in terms of a specific dollar or share amount
($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you
have selected. Shares will be exchanged at the then-current net
asset value; however, a sales load may be charged with respect
to exchanges into funds sold with a sales load. See
"Shareholder Services" in the Statement of Additional
Information. The right to exercise this Privilege may be
modified or canceled by a Fund or the Transfer Agent. You may
modify or cancel your exercise of this Privilege at any time by
mailing written notification to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. A Fund may
charge a service fee for the use of this Privilege. No such fee
currently is contemplated. See "Dividends, Distributions and
Taxes." For more information concerning this Privilege and the
funds in the Dreyfus Family of Funds eligible to participate in
this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
Dreyfus-Automatic Asset BuilderR
Dreyfus-Automatic Asset Builder permits you to purchase
Fund shares (minimum of $100 and maximum of $150,000 per
transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account
designated by you. At your option, the account designated by
you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To
establish a Dreyfus-Automatic Asset Builder account, you must
file an authorization form with the Transfer Agent. You may
obtain the necessary authorization form by calling 1-800-645-
6561. You may cancel your participation in this Privilege or
change the amount of purchase at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company,
Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427,
and the notification will be effective three business days
following receipt. A Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee
currently is contemplated.
Dreyfus Government Direct Deposit Privilege
Dreyfus Government Direct Deposit Privilege enables you
to purchase Fund shares (minimum of $100 and maximum of $50,000
per transaction) by having Federal salary, Social Security, or
certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You
may deposit as much of such payments as you elect. To enroll in
Dreyfus Government Direct Deposit, you must file with the
Transfer Agent a completed Direct Deposit Sign-Up Form for each
type of payment that you desire to include in this Privilege.
The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in
this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal
agency. A Fund may terminate your participation upon 30 days'
notice to you.
Dreyfus Payroll Savings Plan
Dreyfus Payroll Savings Plan permits you to purchase
Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit
program, you may have part or all of your paycheck transferred
to your existing Dreyfus account electronically through the
Automated Clearing House system at each pay period. To
establish a Dreyfus Payroll Savings Plan account, you must file
an authorization form with your employer's payroll department.
Your employer must complete the reverse side of the form and
return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may
change the amount of purchase or cancel the authorization only
by written notification to your employer. It is the sole
responsibility of your employer, not the Distributor, The
Dreyfus Corporation, a Fund, the Transfer Agent or any other
person, to arrange for transactions under the Dreyfus Payroll
Savings Plan. A Fund may modify or terminate this Privilege at
any time or charge a service fee. No such fee currently is
contemplated.
Dreyfus Step Program
Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan. To establish a Dreyfus Step Program account, you must
supply the necessary information on the Account Application and
file the required authorization form(s) with the Transfer Agent.
For more information concerning this Program, or to request the
necessary authorization form(s), please call toll free 1-800-
782-6620. You may terminate your participation in this Program
at any time by discontinuing your participation in Dreyfus-
Automatic Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan, as the case may be,
as provided under the terms of such Privilege(s). A Fund may
modify or terminate this Program at any time. Investors who
wish to purchase Fund shares through the Dreyfus Step Program in
conjunction with a Dreyfus-sponsored retirement plan may do so
only for IRAs, SEP-IRAs and IRA "Rollover Accounts."
Dreyfus Dividend Options
Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain
distributions, if any, paid by a Fund in shares of another fund
in the Dreyfus Family of Funds of which you are a shareholder.
Shares of the other fund will be purchased at the then-current
net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales
load. If you are investing in a fund that charges a sales load,
you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load. If you are
investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to
the contingent deferred sales charge, if any, applicable to the
purchased shares. See "Shareholder Services" in the Statement
of Additional Information. Dreyfus Dividend ACH permits you to
transfer electronically dividends or dividends and capital gain
distributions, if any, from a Fund to a designated bank account.
Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges or to
request a Dividend Options Form, please call toll free 1-800-
645-6561. You may cancel these privileges by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. To select a new fund after
cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective
three business days following receipt. These privileges are
available only for existing accounts and may not be used to open
new accounts. Minimum subsequent investments do not apply for
Dreyfus Dividend Sweep. A Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs
or other retirement plans are not eligible for Dreyfus Dividend
Sweep.
Automatic Withdrawal Plan
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if you have a $5,000 minimum
account. An application for the Automatic Withdrawal Plan can
be obtained by calling 1-800-645-6561. There is a service
charge of 50 cents for each withdrawal check. The Automatic
Withdrawal Plan may be ended at any time by you, a Fund or the
Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.
Retirement Plans
Each Fund offers a variety of pension and profit-
sharing plans, including Keogh Plans, IRAs, SEP-IRAs and IRA
"Rollover Accounts," 401(k) Salary Reduction Plans and 403(b)(7)
Plans. Plan support services also are available. You can
obtain details on the various plans by calling the following
numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs and IRA "Rollover Accounts," please call 1-800-645-
6561; for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7)
Plans, please call 1-800-322-7880.
HOW TO REDEEM SHARES
General
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent
as described below. When a request is received in proper form,
the Fund will redeem the shares at the next determined net asset
value.
Neither Fund imposes any charges when shares are
redeemed. Service Agents may charge their clients a nominal fee
for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's
then-current net asset value.
Each Fund ordinarily will make payment for all shares
redeemed within seven days after receipt by the Transfer Agent
of a redemption request in proper form, except as provided by
the rules of the Securities and Exchange Commission. However,
if you have purchased Fund shares by check, by Dreyfus
TeleTransfer Privilege or through Dreyfus-Automatic Asset
Builder and subsequently submit a written redemption request to
the Transfer Agent, the redemption proceeds will be transmitted
to you promptly upon bank clearance of your purchase check,
Dreyfus TeleTransfer purchase or Dreyfus-Automatic Asset Builder
order, which may take up to eight business days or more. In
addition, the Funds will not honor Redemption Checks under the
Check Redemption Privilege, and will reject requests to redeem
shares by wire or telephone or pursuant to the Dreyfus
TeleTransfer Privilege, for a period of eight business days
after receipt by the Transfer Agent of the purchase check, the
Dreyfus TeleTransfer purchase or the Dreyfus-Automatic Asset
Builder order against which such redemption is requested. These
procedures will not apply if your shares were purchased by wire
payment, or if you otherwise have a sufficient collected balance
in your account to cover the redemption request. Prior to the
time any redemption is effective, dividends on such shares will
accrue and be payable, and you will be entitled to exercise all
other rights of beneficial ownership. Fund shares will not be
redeemed until the Transfer Agent has received your Account
Application.
Each Fund reserves the right to redeem your account at
its option upon not less than 45 days' written notice if your
account's net asset value is $500 or less and remains so during
the notice period.
Procedures
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked
the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services
Form with the Transfer Agent, through the Check Redemption
Privilege, the Wire Redemption Privilege, the Telephone
Redemption Privilege or the Dreyfus TeleTransfer Privilege.
Other redemption procedures may be in effect for clients of
certain Service Agents. Each Fund makes available to certain
large institutions the ability to issue redemption instructions
through compatible computer facilities. Each Fund reserves the
right to refuse any request made by wire or telephone, including
requests made shortly after a change of address, and may limit
the amount involved or the number of such requests. A Fund may
modify or terminate any redemption Privilege at any time or
charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
You may redeem shares by telephone if you have checked
the appropriate box on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you
select a telephone redemption privilege or telephone exchange
privilege (which is granted automatically unless you refuse it),
you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to
be you, and reasonably believed by the Transfer Agent to be
genuine. Each Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if
it does not follow such procedures, the Fund or the Transfer
Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Funds nor the Transfer
Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions,
you may experience difficulty in contacting the Transfer Agent
by telephone to request a redemption or exchange of Fund shares.
In such cases, you should consider using the other redemption
procedures described herein. Use of these other redemption pro-
cedures may result in your redemption request being processed at
a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may
fluctuate.
Regular Redemption--Under the regular redemption procedure, you
may redeem shares by written request mailed to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-
9671, or, if for Dreyfus retirement plan accounts, to The
Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Redemption requests may be delivered
in person only to a Dreyfus Financial Center. These requests
will be forwarded to the Fund and will be processed only upon
receipt thereby. For the location of the nearest Dreyfus
Financial Center, please call one of the telephone numbers
listed under "General Information." Redemption requests must be
signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted
from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. If you
have any questions with respect to signature-guarantees, please
call one of the telephone numbers listed under "General Informa-
tion."
Redemption proceeds of at least $1,000 will be wired to
any member bank of the Federal Reserve System in accordance with
a written signature-guaranteed request.
Check Redemption Privilege--You may write Redemption Checks
drawn on your Fund account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or
more. Potential fluctuations in the net asset value of the
Fund's shares should be considered in determining the amount of
the check. Redemption Checks should not be used to close your
account. Redemption Checks are free, but the Transfer Agent
will impose a fee for stopping payment of a Redemption Check
upon your request or if the Transfer Agent cannot honor a
Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current
date when you write them. Please do not postdate your
Redemption Checks. If you do, the Transfer Agent will honor
upon presentment, even if presented before the date of the
check, all postdated Redemption Checks which are dated within
six months of presentment for payment, if they are otherwise in
good order. Shares for which certificates have been issued may
not be redeemed by Redemption Check. Shares held under Keogh
Plans, IRAs or other Dreyfus retirement plans are not eligible
for this Privilege. This Privilege will be terminated
immediately, without notice, with respect to any account which
is, or becomes, subject to backup withholding on redemptions
(see "Dividends, Distributions and Taxes"). Any Redemption
Check written on an account which has become subject to backup
withholding on redemptions will not be honored by the Transfer
Agent.
Wire Redemption Privilege--You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your
account at a bank which is a member of the Federal Reserve
System, or a correspondent bank if your bank is not a member.
You also may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and
mailed to your address. Redemption proceeds of less than $1,000
will be paid automatically by check. Holders of jointly
registered Fund or bank accounts may have redemption proceeds of
not more than $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-800-645-6561 or, if
you are calling from overseas, call 516-794-5452. The Statement
of Additional Information sets forth instructions for
transmitting redemption requests by wire. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for
which certificates have been issued, are not eligible for this
Privilege.
Telephone Redemption Privilege--You may request by telephone
that redemption proceeds (maximum $150,000 per day) be paid by
check and mailed to your address. You may telephone redemption
instructions by calling 1-800-645-6561 or, if you are calling
from overseas, call 516-794-5452. Shares held under Keogh
Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this
Privilege.
Dreyfus TeleTransfer Privilege--You may request by telephone
that redemption proceeds (minimum $500 per day) be transferred
between your Fund account and your bank account. Only a bank
account maintained in a domestic financial institution which is
an Automated Clearing House member may be designated.
Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after
receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address.
Holders of jointly registered Fund or bank accounts may redeem
through the Dreyfus TeleTransfer Privilege for transfer to their
bank account not more than $250,000 within any 30-day period.
If you have selected the Dreyfus TeleTransfer
Privilege, you may request a Dreyfus TeleTransfer redemption of
shares by telephoning 1-800-645-6561 or, if you are calling from
overseas, call 516-794-5452. Shares held under Keogh Plans,
IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Company has adopted a Shareholder Services Plan
with respect to each Fund, pursuant to which it pays the
Distributor for the provision of certain services to Fund
shareholders a fee at the annual rate of .20 of 1% of the value
of the Short Term Income Fund's average daily net assets and .25
of 1% of the value of the Intermediate Term Income Fund's
average daily net assets. The services provided may include
personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing
reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make
payments to Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Internal Revenue Code of 1986, as amended
(the "Code"), each Fund is treated as a separate corporation for
purposes of qualification and taxation as a regulated investment
company. Each Fund ordinarily declares dividends from its net
investment income on each day the New York Stock Exchange is
open for business. Dividends usually are paid on the last
business day of each month. Each Fund's earnings for Saturdays,
Sundays and holidays are declared as dividends on the next
business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled
will be paid to you along with the proceeds of the redemption.
If you are an omnibus accountholder and indicate in a partial
redemption request that a portion of any accrued dividends to
which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along
with the proceeds of the redemption. Distributions from net
realized securities gains, if any, generally are declared and
paid once a year, but a Fund may make distributions on a more
frequent basis to comply with the distribution requirements of
the Code, in all events in a manner consistent with the
provisions of the 1940 Act. Neither Fund will make
distributions from net realized securities gains unless capital
loss carryovers, if any, have been utilized or have expired.
You may choose whether to receive dividends and distributions in
cash or to reinvest in additional shares at net asset value.
All expenses are accrued daily and deducted before declaration
of dividends to investors.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds, paid by a
Fund will be taxable to U.S. shareholders as ordinary income
whether received in cash or reinvested in additional shares. No
dividend paid by a Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions
from net realized long-term securities gains of a Fund will be
taxable to U.S. shareholders as long-term capital gains for
Federal income tax purposes, regardless of how long shareholders
have held their Fund shares and whether such distributions are
received in cash or reinvested in Fund shares. The Code
provides that the net capital gain of an individual generally
will not be subject to Federal income tax at a rate in excess of
28%. Dividends and distributions may be subject to state and
local taxes.
Dividends derived from net investment income, together
with distributions from net realized short-term securities gains
and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds, paid by a
Fund to a foreign investor generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in
a tax treaty. Distributions from net realized long-term
securities gains paid by a Fund to a foreign investor as well as
the proceeds of any redemptions from a foreign investor's
account, regardless of the extent to which gain or loss may be
realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign
investor certifies his non-U.S. residency status.
The exchange of shares of one fund for shares of
another is treated for Federal income tax purposes as a sale of
the shares given in exchange by the shareholder and, therefore,
an exchanging shareholder may realize a taxable gain or loss.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will
receive periodic summaries of your account which will include
information as to dividends and distributions from securities
gains, if any, paid during the year.
Federal regulations generally require a Fund to
withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends, distributions from net realized securities
gains and the proceeds of any redemption, regardless of the
extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct
or that such shareholder has not received notice from the IRS of
being subject to backup withholding as a result of a failure to
properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify a Fund to
institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to
properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any
tax withheld as a result of backup withholding does not consti-
tute an additional tax imposed on the record owner of the
account, and may be claimed as a credit on the record owner's
Federal income tax return.
Management of the Company believes that the Short Term
Income Fund has qualified for the fiscal year ended July 31,
1995 as a "regulated investment company" under the Code. The
Short Term Income Fund intends to continue to so qualify if such
qualification is in the best interests of its shareholders. It
is expected that the Intermediate Term Income Fund will qualify
as a "regulated investment company" under the Code so long as
such qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the
Fund of any liability for Federal income tax to the extent its
earnings are distributed in accordance with applicable
provisions of the Code. Each Fund is subject to a non-
deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital
gains.
You should consult your tax adviser regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be
calculated on several bases, including current yield, average
annual total return and/or total return.
Current yield refers to a Fund's annualized net
investment income per share over a 30-day period, expressed as a
percentage of the net asset value per share at the end of the
period. For purposes of calculating current yield, the amount
of net investment income per share during that 30-day period,
computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate
over a six-month period. An identical result is then assumed to
have occurred during a second six-month period which, when added
to the result for the first six months, provides an "annualized"
yield for an entire one-year period. Calculations of current
yield may reflect absorbed expenses pursuant to any undertaking
that may be in effect. See "Management of the Funds."
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment was
purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the
end of the period. Advertisements of a Fund's performance will
include the Fund's average annual total return for one, five and
ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated.
Total return is computed on a per share basis and
assumes the reinvestment of dividends and distributions. Total
return generally is expressed as a percentage rate which is
calculated by combining the income and principal changes for a
specified period and dividing by the net asset value per share
at the beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes
the application of the percentage rate of total return.
Performance will vary from time to time and past
results are not necessarily representative of future results.
You should remember that performance is a function of portfolio
management in selecting the type and quality of portfolio
securities and is affected by operating expenses. Performance
information, such as that described above, may not provide a
basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Under normal market conditions, the Intermediate Term
Income Fund will seek to provide performance results that equal
or exceed the Lehman Brothers Aggregate Bond Index, which is a
broad investment grade bond index that measures the total
investment return (capital change plus income) provided by a
universe of over 6,000 fixed-income securities, weighted by the
market value outstanding of each security.
Comparative performance information may be used from
time to time in advertising or marketing Fund shares, including
data from Lipper Analytical Services, Inc., the Lehman Brothers
Aggregate Bond Index, Moody's Bond Survey Bond Index, Bond
Buyer's 20-Bond Index, Morningstar, Inc. and other industry
publications. Each Fund's yield should generally be higher than
money market funds (neither Fund, however, seeks to maintain a
stabilized price per share nor may it be able to return an
investor's principal), and its price per share should fluctuate
less than long term bond funds (which generally have somewhat
higher yields).
GENERAL INFORMATION
The Company was incorporated under Maryland law on
June 26, 1992, and commenced operations on August 18, 1992.
Before November 8, 1995, the Company's name was Dreyfus Short-
Term Income Fund, Inc. The Company is authorized to issue one
billion shares of Common Stock (with 500 million shares
allocated to each Fund), par value $.001 per share. Each share
has one vote.
Unless otherwise required by the 1940 Act, ordinarily
it will not be necessary for a Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider
each year the election of Board members or the appointment of
auditors. However, pursuant to the Company's By-Laws, the
holders of at least 10% of the shares outstanding and entitled
to vote may require the Company to hold a special meeting of
shareholders for purposes of removing a Board member from office
or for any other purpose. Shareholders may remove a Board
member by the affirmative vote of a majority of the Company's
outstanding voting shares. In addition, the Board will call a
meeting of shareholders for the purpose of electing Board
members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Company is a "series fund," which is a mutual fund
divided into separate portfolios, each of which is treated as a
separate entity for certain matters under the 1940 Act and for
other purposes. A shareholder of one portfolio is not deemed to
be a shareholder of any other portfolio. For certain matters
shareholders vote together as a group; as to others they vote
separately by portfolio. By this Prospectus, shares of each
Fund are being offered. Other portfolios may be sold pursuant
to other offering documents.
To date, the Board has authorized the creation of two
series of shares. All consideration received by the Company for
shares of one of the series and all assets in which such
consideration is invested will belong to that series (subject
only to the rights of creditors of the Company) and will be
subject to the liabilities related thereto. The income
attributable to, and the expenses of, one series are treated
separately from those of the other series. The Company has the
ability to create, from time to time, new series without
shareholder approval.
The Transfer Agent maintains a record of your ownership
and sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the
Company at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or by calling toll free 1-800-645-6561. In New York
City, call 1-718-895-1206; outside the U.S. and Canada, call
516-794-5452.
<PAGE>
APPENDIX
Investment Techniques
Foreign Currency Transactions--Foreign currency transactions may
be entered into for a variety of purposes, including: to fix in
U.S. dollars, between trade and settlement date, the value of a
security the Fund has agreed to buy or sell; or to hedge the
U.S. dollar value of securities a Fund already owns,
particularly if it expects a decrease in the value of the
currency in which the foreign security is denominated; or to
gain exposure to the foreign currency in an attempt to realize
gains.
Foreign currency transactions may involve, for example,
a Fund's purchase of foreign currencies for U.S. dollars or the
maintenance of short positions in foreign currencies, which
would involve the Fund agreeing to exchange an amount of a
currency it did not currently own for another currency at a
future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to
receive in the exchange. A Fund's success in these transactions
will depend principally on The Dreyfus Corporation's ability to
predict accurately the future exchange rates between foreign
currencies and the U.S. dollar.
Leverage--Leveraging exaggerates the effect on net asset value
of any increase or decrease in the market value of a Fund's
portfolio. Money borrowed for leveraging will be limited to 33-
1/3% of the value of the Fund's total assets. These borrowings
will be subject to interest costs which may or may not be
recovered by appreciation of the securities purchased; in
certain cases, interest costs may exceed the return received on
the securities purchased.
Each Fund may enter into reverse repurchase agreements
with banks, brokers or dealers. This form of borrowing involves
the transfer by the Fund of an underlying debt instrument in
return for cash proceeds based on a percentage of the value of
the security. The Fund retains the right to receive interest
and principal payments on the security. At an agreed upon
future date, the Fund repurchases the security at principal plus
accrued interest. Except for these transactions, each Fund's
borrowings generally will be unsecured.
Short-Selling--(Intermediate Term Income Fund only) In these
transactions, the Fund sells a security it does not own in
anticipation of a decline in the market value of the security.
To complete the transaction, the Fund must borrow the security
to make delivery to the buyer. The Fund is obligated to replace
the security borrowed by purchasing it subsequently 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, which would result in a loss or gain,
respectively.
Securities will not be sold short if, after effect is
given to any such short sale, the total market value of all
securities sold short would exceed 25% of the value of the
Fund's net assets. The Fund may not sell short the securities
of any single issuer listed on a national securities exchange to
the extent of more than 5% of the value of the Fund's net
assets. The Fund may not make a short sale which results in the
Fund having sold short in the aggregate more than 5% of the
outstanding securities of any class of an issuer.
The Intermediate Term Income Fund also may make short
sales "against the box," in which the Fund enters into a short
sale of a security it owns in order to hedge an unrealized gain
on the security. At no time will more than 15% of the value of
the Fund's net assets be in deposits on short sales against the
box.
Use of Derivatives--Each Fund may invest in the types of
Derivatives enumerated under "Description of the Funds--
Investment Considerations and Risks--Use of Derivatives." These
instruments and certain related risks are described more
specifically under "Investment Objective and Management
Policies--Management Policies--Derivatives" in the Statement of
Additional Information.
Derivatives can be volatile and involve various types
and degrees of risk, depending upon the characteristics of the
particular Derivative and the portfolio as a whole. Derivatives
permit a Fund to increase or decrease the level of risk, or
change the character of the risk, to which its portfolio is
exposed in much the same way as a Fund can increase or decrease
the level of the risk, or change the character of the risk, of
its portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are
greater than their cost would suggest, meaning that a small
investment in Derivatives could have a large potential impact on
a Fund's performance.
If a Fund invests in Derivatives at inappropriate times
or judges market conditions incorrectly, such investments may
lower the Fund's return or result in a loss. A Fund also could
experience losses if it were unable to liquidate its position
because of an illiquid secondary market. The market for many
Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable
changes in the prices for Derivatives.
Although neither Fund will be a commodity pool,
Derivatives subject the Fund to the rules of the Commodity
Futures Trading Commission which limit the extent to which the
Fund can invest in certain Derivatives. Each Fund may invest in
futures contracts and options with respect thereto for hedging
purposes without limit. The Intermediate Term Income Fund may
invest in futures contracts and options thereon for other than
hedging purposes. However, the Intermediate Term Income Fund
may not invest in such contracts and options for other purposes
if the sum of the amount of initial margin deposits and premiums
paid for unexpired options with respect to such contracts, other
than for bona fide hedging purposes, exceed 5% of the
liquidation value of the Fund's assets, after taking into
account unrealized profits and unrealized losses on such
contracts and options; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-
money amount may be excluded in calculating the 5% limitation.
The Intermediate Term Income Fund also may invest up to
5% of its assets, represented by the premium paid, in the
purchase of call and put options. The Intermediate Term Income
Fund may write (i.e., sell) covered call and put option
contracts to the extent of 20% of the value of its net assets at
the time such option contracts are written. When required by
the Securities and Exchange Commission, the Fund will set aside
permissible liquid assets in a segregated account to cover its
obligations relating to its transactions in Derivatives. To
maintain this required cover, the Fund may have to sell
portfolio securities at disadvantageous prices or times since it
may not be possible to liquidate a Derivative position at a
reasonable price.
Lending Portfolio Securities--Each Fund may lend securities from
its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
transactions. In connection with such loans, the Fund continues
to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned
securities. Loans of portfolio securities afford a Fund an
opportunity to earn interest on the amount of the loan and at
the same time to earn income on the loaned securities'
collateral. Loans of portfolio securities 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, U.S. Government securities or irrevocable letters of
credit which will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned
securities. Such loans are terminable by the Fund 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.
Forward Commitments--Each Fund may purchase securities on a
forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date
of the commitment to purchase. The payment obligation and the
interest rate that will be received on a forward commitment or
when-issued security are fixed when a Fund enters into the
commitment, but a Fund does not make a payment until it receives
delivery from the counterparty. A Fund will commit to purchase
such securities only with the intention of actually acquiring
the securities, but the Fund may sell these securities before
the settlement date if it is deemed advisable. A segregated
account of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the
commitments will be established and maintained at the Fund's
custodian bank.
Forward Roll Transactions--To enhance current income, each Fund
may enter into forward roll transactions with respect to
mortgage-related securities. In a forward roll transaction, the
Fund sells a mortgage security to a financial institution, such
as a bank or broker-dealer, and simultaneously agrees to
repurchase a similar security from the institution at a later
date at an agreed upon price. The mortgage securities that are
repurchased will bear the same interest rate as those sold, but
generally will be collateralized by different pools of mortgages
with different pre-payment histories than those sold. During
the period between the sale and repurchase, the Fund will not be
entitled to receive interest and principal payments on the
securities sold. Proceeds of the sale will be invested in
short-term instruments, particularly repurchase agreements, and
the income from these investments, together with any additional
fee income received on the sale will generate income for the
Fund exceeding the yield on the securities sold. Forward roll
transactions involve the risk that the market value of the
securities sold by the Fund may decline below the purchase price
of those securities. A segregated account of the Fund
consisting of cash, U.S. Government securities or other high
quality liquid debt securities at least equal to the amount of
the repurchase price (including accrued interest) will be
established and maintained at the Fund's custodian bank.
Certain Portfolio Securities
Mortgage-Related Securities--Mortgage-related securities are a
form of Derivative collateralized by pools of mortgages. The
mortgage-related securities which may be purchased include those
with fixed, floating and variable interest rates, those with
interest rates that change based on multiples of changes in
interest rates and those with interest rates that change
inversely to changes in interest rates, as well as stripped
mortgage-backed securities. Stripped mortgage-backed securities
usually are structured with two classes that receive different
proportions of interest and principal distributions on a pool of
mortgage-backed securities or whole loans. A common type of
stripped mortgage-backed security will have one class receiving
some of the interest and most of the principal from the mortgage
collateral, while the other class will receive most of the
interest and the remainder of the principal. Although certain
mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security,
which may fluctuate, is not secured. If a mortgage-related
security is purchased at a premium, all or part of the premium
may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or
prepayments on the underlying mortgage collateral. As with
other interest-bearing securities, the prices of certain of
these securities are inversely affected by changes in interest
rates. However, although the value of a mortgage-related
security may decline when interest rates rise, the converse is
not necessarily true, since in periods of declining interest
rates the mortgages underlying the security are more likely to
be prepaid. For this and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages, and, therefore, it is
not possible to predict accurately the security's return to a
Fund. Moreover, with respect to stripped mortgage-backed
securities, if the underlying mortgage securities experience
greater than anticipated prepayments of principal, a Fund may
fail to fully recoup its initial investment even if the
securities are rated in the highest rating category by a
nationally recognized statistical rating organization. For
further discussion concerning the investment considerations
involved, see "Description of the Funds--Investment
Considerations and Risks--Fixed-Income Securities" and "Illiquid
Securities" below.
Asset-Backed Securities--Asset-backed securities are a form of
Derivative. The securitization techniques used for asset-backed
securities are similar to those used for mortgage-related
securities. The collateral for these securities has included
home equity loans, automobile and credit card receivables, boat
loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables.
Each Fund may invest in these and other types of asset-backed
securities that may be developed in the future.
Asset-backed securities present certain risks that are
not presented by mortgage-backed securities. Primarily, these
securities may provide a Fund with a less effective security
interest in the related collateral than do mortgage-backed
securities. Therefore, there is the possibility that recoveries
on the underlying collateral may not, in some cases, be
available to support payments on these securities.
Convertible Securities--Convertible securities may be converted
at either a stated price or stated rate into underlying shares
of common stock. Convertible securities have characteristics
similar to both fixed-income and equity securities. Convertible
securities generally are subordinated to other similar but non-
convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right
of payment to all equity securities, and convertible preferred
stock is senior to common stock, of the same issuer. Because of
the subordination feature, however, convertible securities
typically have lower ratings than similar non-convertible
securities. Each Fund may invest in convertible preferred
stocks that offer enhanced yield features and higher dividend
income than is available on a company's common stock. The
Short-Term Income Fund intends to purchase only those
convertible securities trading below the stated conversion
price.
Warrants--A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified
amount of the corporation's capital stock at a set price for a
specified period of time. Each Fund may invest up to 5% of its
net assets in warrants, except that this limitation does not
apply to warrants purchased by the Fund that are sold in units
with, or attached to, other securities. Included in such
amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or
American Stock Exchange.
Municipal Obligations--Municipal obligations are debt
obligations issued by states, territories and possessions of the
United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or multistate
agencies or authorities. Municipal obligations bear fixed,
floating or variable rates of interest. Certain municipal
obligations are subject to redemption at a date earlier than
their stated maturity pursuant to call options, which may be
separated from the related municipal obligations and purchased
and sold separately. The Fund also may acquire call options on
specific municipal obligations. The Fund generally would
purchase these call options to protect the Fund from the issuer
of the related municipal obligation redeeming, or other holder
of the call option from calling away, the municipal obligation
before maturity.
While, in general, municipal obligations are tax exempt
securities having relatively low yields as compared to taxable,
non-municipal obligations of similar quality, certain municipal
obligations are taxable obligations, offering yields comparable
to, and in some cases greater than, the yields available on
other permissible Fund investments. Dividends received by
shareholders on Fund shares which are attributable to interest
income received by the Fund from municipal obligations generally
will be subject to Federal income tax. Each Fund may invest in
municipal obligations, the ratings of which correspond with the
ratings of other permissible Fund investments. Each Fund
currently intends to invest no more than 25% of its assets in
municipal obligations. However, this percentage may be varied
from time to time without shareholder approval.
Zero Coupon Securities--Each Fund may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that
have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. Zero
coupon securities also are issued by corporations and financial
institutions which constitute a proportionate ownership of the
issuer's pool of underlying U.S. Treasury securities. A zero
coupon security pays no interest to its holder during its life
and is sold at a discount to its face value at maturity. The
amount of the discount fluctuates with the market price of the
security. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay
interest periodically and are likely to respond to a greater
degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Money Market Instruments--Each Fund may invest in the following
types of money market instruments.
U.S. Government Securities. Securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities include U.S. Treasury securities that differ
in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of
the U.S. Treasury; others by the right of the issuer to borrow
from the Treasury; others by discretionary authority of the U.S.
Government to purchase certain obligations of the agency or
instrumentality; and others only by the credit of the agency or
instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides
financial support to such U.S. Government-sponsored agencies and
instrumentalities, no assurance can be given that it will always
do so since it is not so obligated by law.
Repurchase Agreements. In a repurchase agreement, a
Fund buys, and the seller agrees to repurchase, a security at a
mutually agreed upon time and price (usually within seven days).
The repurchase agreement thereby determines the yield during the
purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security.
Repurchase agreements could involve risks in the event of a
default or insolvency of the other party to the agreement,
including possible delays or restrictions upon a Fund's ability
to dispose of the underlying securities. Each Fund may enter
into repurchase agreements with certain banks or non-bank
dealers.
Bank Obligations. Each Fund may purchase certificates
of deposit, time deposits, bankers' acceptances and other short-
term obligations issued by domestic banks, foreign subsidiaries
or foreign branches of domestic banks, domestic and foreign
branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to
such securities issued by foreign subsidiaries or foreign
branches of domestic banks, and domestic and foreign branches of
foreign banks, a Fund may be subject to additional investment
risks that are different in some respects from those incurred by
a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Funds--Investment
Considerations and Risks--Foreign Securities."
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited
with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in
a banking institution for a specified period of time (in no
event longer than seven days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the
bank and the drawer to pay the face amount of the instrument
upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Commercial Paper. Commercial paper consists of short-
term, unsecured promissory notes issued to finance short-term
credit needs. The commercial paper purchased by a Fund will
consist only of direct obligations which, at the time of their
purchase, are (a) rated not lower than Prime-1 by Moody's, A-1
by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies
having an outstanding unsecured debt issue currently rated at
least A3 by Moody's or A- by S&P, Fitch or Duff, or (c) if
unrated, determined by The Dreyfus Corporation to be of
comparable quality to those rated obligations which may be
purchased by the Fund.
Illiquid Securities--Each 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, and certain
privately negotiated, non-exchange traded options and securities
used to cover such options. 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.
Ratings--Securities rated Ba by Moody's are judged to have
speculative elements; their future cannot be considered as well
assured and often the protection of interest and principal
payments may be very moderate. Securities rated BB by S&P,
Fitch or Duff are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they
face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal
payments. Securities rated Caa by Moody's are of poor standing
and may be in default or there may be present elements of danger
with respect to principal or interest. S&P, Fitch and Duff
typically assign a CCC rating to debt which has a current
identifiable vulnerability to default and is dependent upon
favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. Such
securities, though high yielding, are characterized by great
risk. See "Appendix" in the Statement of Additional Information
for a general description of securities ratings.
The ratings of Moody's, S&P, Fitch and Duff represent
their opinions as to the quality of the obligations which they
undertake to rate. Ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market
value risk of such obligations. Although these ratings may be
an initial criterion for selection of portfolio investments, The
Dreyfus Corporation also will evaluate these securities and the
ability of the issuers of such securities to pay interest and
principal. A Fund's ability to achieve its investment objective
may be more dependent on The Dreyfus Corporation's credit
analysis than might be the case for a fund that invested in
higher rated securities.
The average distribution of investments of the Short
Term Income Fund in corporate bonds by ratings for the fiscal
year ended July 31, 1995, calculated monthly on a dollar
weighted basis, was as follows:
Moody's or S&P, Fitch or Duff Percentage
Aaa AAA 27.9%
Aa AA 8.9%
A A 30.4%
Baa BBB 23.4%
Ba BB 4.9%
B B 3.1%
NR NR .9%*
99.5%**
The actual distribution of the Short Term Income Fund's
corporate bond investments by ratings on any given date will
vary. In addition, the distribution of the Short Term Income
Fund's investments by ratings as set forth above should not be
considered as representative of the Short Term Income Fund's
future portfolio composition.
* These unrated securities have been determined by The Dreyfus
Corporation to be of comparable quality to securities rated
B.
** Approximately .5% of the Fund's assets were invested in cash
or cash equivalents.
No person has been authorized to give any information or to
make any representations other than those contained in this
Prospectus and in the Funds' official sales literature in
connection with the offer of the Funds' shares, and, if given or
made, such other information or representations must not be
relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer in any State in which,
or to any person to whom, such offering may not lawfully be
made.
<PAGE>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
DREYFUS INTERMEDIATE TERM INCOME FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
_______________ __, 1996
This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction with
the current Prospectus of the series named above (each, a "Fund"
and, collectively, the "Funds") of Dreyfus Investment Grade Bond
Funds, Inc. (the "Company"), dated ________________, 1996, as it
may be revised from time to time. To obtain a copy of the
Funds'
Prospectus, please write to the Company at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call the following
numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as each
Fund's investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of each Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . B-2
Management of the Company . . . . . . . . . . . . . . B-15
Management Agreement. . . . . . . . . . . . . . . . . B-20
Purchase of Shares . . . . . . . . . . . . . . . . . B-22
Shareholder Services Plan . . . . . . . . . . . . . . B-23
Redemption of Shares. . . . . . . . . . . . . . . . . B-25
Shareholder Services. . . . . . . . . . . . . . . . . B-27
Determination of Net Asset Value. . . . . . . . . . . B-31
Dividends, Distributions and Taxes. . . . . . . . . . B-32
Portfolio Transactions. . . . . . . . . . . . . . . . B-34
Performance Information . . . . . . . . . . . . . . . B-36
Information About the Funds . . . . . . . . . . . . . B-37
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . B-37
Appendix. . . . . . . . . . . . . . . . . . . . . . . B-39
Financial Statements. . . . . . . . . . . . . . . . . B-47
Report of Independent Auditors. . . . . . . . . . . . B-
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be
read in conjunction with the sections in the Funds' Prospectus
entitled "Description of the Funds" and "Appendix."
Portfolio Securities
Municipal Obligations. Municipal obligations
generally
include debt obligations issued to obtain funds for various
public purposes as well as certain industrial development bonds
issued by or on behalf of public authorities. Municipal
obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds are payable
from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from the
general
taxing power. Industrial development bonds, in most cases, are
revenue bonds and generally do not carry the pledge of the
credit
of the issuing municipality, but generally are guaranteed by the
corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a
bond
sale, collection of taxes or receipt of other revenues.
Municipal obligations include municipal lease/purchase
agreements
which are similar to installment purchase contracts for property
or equipment issued by municipalities.
Mortgage Related Securities.
Government-Agency Securities--Mortgage-related securities issued
by the Government National Mortgage Association ("GNMA") include
GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of
principal
and interest by GNMA and such guarantee is backed by the full
faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and
Urban Development. GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Treasury to make
payments under its guarantee.
Government-Related Securities--Mortgage-related securities
issued
by the Federal National Mortgage Association ("FNMA") include
FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as
"Fannie Maes") which are solely the obligations of FNMA and are
not backed by or entitled to the full faith and credit of the
United States. FNMA is a government-sponsored organization
owned
entirely by private stockholders. Fannie Maes are guaranteed as
to timely payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home
Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or
"PCs"). FHLMC is a corporate instrumentality of the United
States created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States
or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by
FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage
loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than
one
year after it becomes payable.
Private Entity Securities--These mortgage-related securities are
issued by commercial banks, savings and loan institutions,
mortgage bankers, private mortgage insurance companies and other
non-governmental issuers. Timely payment of principal and
interest on mortgage-related securities backed by pools created
by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance. The insurance and
guarantees are issued by government entities, private insurers
and the mortgage poolers. There can be no assurance that the
private insurers or mortgage poolers can meet their obligations
under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss.
No
insurance or guarantee covers the Funds or the price of the
Funds' shares. Mortgage-related securities issued by non-
governmental issuers generally offer a higher rate of interest
than government-agency and government-related securities because
there are no direct or indirect government guarantees of
payment.
Neither Fund will invest more than 5% of its assets in such
private entity securities issued by any one issuer, including
any one bank or savings and loan institution.
Foreign Government Obligations; Securities of
Supranational Entities. A Fund may invest in obligations issued
or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities that are
determined by the Manager to be of comparable quality to the
other obligations in which the Fund may invest. Such securities
also include debt obligations of supranational entities.
Supranational entities include international organizations
designated or supported by governmental entities to promote
economic reconstruction or development and international banking
institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the
World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.
Repurchase Agreements. The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of
the Securities and Exchange Commission to be loans by the Fund.
In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, each Fund will enter into repurchase
agreements only with domestic banks with total assets in excess
of $1 billion, or primary government securities dealers
reporting
to the Federal Reserve Bank of New York, with respect to
securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the
value of the securities purchased should decrease below the
resale price.
Commercial Paper and Other Short-Term Corporate
Obligations. These instruments include variable amount master
demand notes, which are obligations that permit a Fund to invest
fluctuating amounts at varying rates of interest pursuant to
direct arrangements between the Fund, as lender, and the
borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus
accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit
rating agencies, and a Fund may invest in them only if at the
time of an investment the borrower meets the criteria set forth
in the Fund's Prospectus for other commercial paper issuers.
Convertible Securities. Although to a lesser extent
than with fixed-income securities, the market value of
convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the
market value of convertible securities tends to vary with
fluctuations in the market value of the underlying common stock.
A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so
may not experience market value declines to the same extent as
the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are
without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same
issuer.
Convertible securities are investments that provide for
a stable stream of income with generally higher yields than
common stocks. There can be no assurance of current income
because the issuers of the convertible securities may default on
their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the
holder to benefit from increases in the market price of the
underlying common stock. There can be no assurance of capital
appreciation, however, because securities prices fluctuate.
Convertible securities, however, generally offer lower interest
or dividend yields than non-convertible securities of similar
quality because of the potential for capital appreciation.
Each Fund may invest in convertible preferred stocks
that offer enhanced yield features, such as Preferred Equity
Redemption Cumulative Stock ("PERCS"), and higher dividend
income
than is available on a company's common stock. PERCS are
preferred stock which generally feature a mandatory conversion
date, as well as a capital appreciation limit that is usually
expressed in terms of a stated price. Each Fund also may invest
in other classes of enhanced convertible securities, such as
ACES
(Automatically Convertible Equity Securities), PEPS
(Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock
Appreciation Income Linked Securities), TECONS (Term Convertible
Notes), QICS (Quarterly Income Cumulative Securities) and DECS
(Dividend Enhanced Convertible Securities). These securities
are
company issued convertible preferred stock. Unlike PERCS, they
do not have a capital appreciation limit. They are designed to
provide the investor with high current income with some prospect
of future capital appreciation, issued with three or four-year
maturities, and typically have some built-in call protection.
Investors have the right to convert them into shares of common
stock at a preset conversion ratio or hold them until maturity.
Upon maturity they will convert mandatorily into either cash or
a specified number of shares of common stock.
Zero Coupon Securities. Zero coupon U.S. Treasury
securities are Treasury Notes and Bonds that have been stripped
of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped
debt obligations and coupons. Receipts include "Treasury
Receipts" ("TR's"), "Treasury Investment Growth Receipts"
("TIGR's"), "Liquid Yield Option Notes" ("LYON's"), and
"Certificates of Accrual on Treasury Securities" ("CATS").
TIGR's, LYON's and CATS are interests in private proprietary
accounts while TR's are interests in accounts sponsored by the
U.S. Treasury.
Illiquid Securities. Where a substantial market of
qualified institutional buyers has developed for certain
unregistered securities purchased by a Fund pursuant to Rule
144A
under the Securities Act of 1933, as amended, the Fund intends
to
treat such securities as liquid securities in accordance with
procedures approved by the Company's Board. Because it is not
possible to predict with assurance how the market for specific
restricted securities sold pursuant to Rule 144A will develop,
the Company's Board has directed the Manager to monitor
carefully
the relevant 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, a Fund's
investing in such securities may have the effect of increasing
the level of illiquidity in its investment portfolio during such
period.
Management Policies
Leverage. For borrowings for investment purposes, the
Investment Company Act of 1940, as amended (the "1940 Act"),
requires a Fund to maintain continuous asset coverage (that is,
total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the required
coverage should decline as a result of market fluctuations or
other reasons, the Fund may be required to sell some of its
portfolio securities within three days to reduce the amount of
its borrowings and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell
securities at that time. The Fund also may be required to
maintain minimum average balances in connection with such
borrowing or pay a commitment or other fee to maintain a line of
credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. To the extent the Fund
enters into a reverse repurchase agreement, the Fund will
maintain in a segregated custodial account cash or U.S.
Government securities or other high quality liquid debt
securities at least equal to the aggregate amount of its reverse
repurchase obligations, plus accrued interest, in certain cases,
in accordance with releases promulgated by the Securities and
Exchange Commission. The Securities and Exchange Commission
views reverse repurchase transactions as collateralized
borrowings by the Fund.
Short-Selling. (Intermediate Term Income Fund only)
Until the Fund closes its short position or replaces the
borrowed
security, it will: (a) maintain a segregated account,
containing
cash or U.S. Government securities, at such a level that the
amount deposited in the account plus the amount deposited with
the broker as collateral always equals the current value of the
security sold short; or (b) otherwise cover its short position.
Lending Portfolio Securities. In connection with its
securities lending transactions, each 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 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.
Derivatives. A Fund may invest in Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons,
including to hedge certain market risks, to provide a substitute
for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper,
quicker or more specifically focused way for the Fund to invest
than "traditional" securities would.
Derivatives may be purchased on established exchanges
or through privately negotiated transactions referred to as
over-
the-counter Derivatives. Exchange-traded Derivatives generally
are guaranteed by the clearing agency which is the issuer or
counterparty to such Derivatives. This guarantee usually is
supported by a daily payment system (i.e., margin requirements)
operated by the clearing agency in order to reduce overall
credit
risk. As a result, unless the clearing agency defaults, there
is relatively little counterparty credit risk associated with
Derivatives purchased on an exchange. By contrast, no clearing
agency guarantees over-the-counter Derivatives. Therefore, each
party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, the Manager will
consider the creditworthiness of counterparties to over-the-
counter Derivatives in the same manner as it would review the
credit quality of a security to be purchased by the Fund. Over-
the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the
only investor with sufficient understanding of the Derivative to
be interested in bidding for it.
Futures Transactions--In General. A Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of
Trade and the International Monetary Market of the Chicago
Mercantile Exchange, or, with respect to the Intermediate Term
Income Fund only, on exchanges located outside the United
States,
such as the London International Financial Futures Exchange and
the Sydney Futures Exchange Limited. Foreign markets may offer
advantages such as trading opportunities or arbitrage
possibilities not available in the United States. Foreign
markets, however, may have greater risk potential than domestic
markets. For example, some foreign exchanges are principal
markets so that no common clearing facility exists and an
investor may look only to the broker for performance of the
contract. In addition, any profits the Fund might realize in
trading could be eliminated by adverse changes in the exchange
rate, or the Fund could incur losses as a result of those
changes. Transactions on foreign exchanges may include both
commodities which are traded on domestic exchanges and those
which are not. Unlike trading on domestic commodity exchanges,
trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to
the Fund which could adversely affect the value of the Fund's
net assets. Although the Fund intends to purchase or sell
futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will
exist for any
particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading
day.
Once the daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond that limit or
trading may be suspended for specified periods during the
trading
day. Futures contract prices could move to the limit for
several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by a Fund also is subject to
the Manager's ability to predict correctly movements in the
direction of the relevant market and, to the extent the
transaction is entered into for hedging purposes, to ascertain
the appropriate correlation between the transaction being hedged
and the price movements of the futures contract. For example,
if
the Fund uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio
and the prices of such securities instead increase, the Fund
will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting
losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to
sell
securities to meet daily variation margin requirements. The
Fund
may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of
the Securities and Exchange Commission, each Fund may be
required
to segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting the
Fund's ability otherwise to invest those assets.
Specific Futures Transactions. Each Fund may purchase and sell
interest rate futures contracts. An interest rate future
obligates the Fund to purchase or sell an amount of a specific
debt security at a future date at a specific price.
The Intermediate Term Income Fund may purchase and sell
currency futures. A currency future obligates the Fund to
purchase or sell an amount of a specific currency at a future
date at a specific price.
Interest Rate Swaps. (Intermediate Term Income Fund only)
Interest rate swaps involve the exchange by the Fund with
another
party of their respective commitments to pay or receive interest
(for example, an exchange of floating rate payments for fixed-
rate payments). The exchange commitments can involve payments
to be made in the same currency or in different currencies. The
use
of interest rate swaps is a highly specialized activity which
involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If
the
Manager is incorrect in its forecasts of market values, interest
rates and other applicable factors, the investment performance
of
the Fund would diminish compared with what it would have been if
these investment techniques were not used. Moreover, even if
the
Manager is correct in its forecasts, there is a risk that the
swap position may correlate imperfectly with the price of the
asset or liability being hedged. There is no limit on the
amount
of interest rate swap transactions that may be entered into by
the Fund. These transactions do not involve the delivery of
securities or other underlying assets or principal.
Accordingly,
the risk of loss with respect to interest rate swaps is limited
to the net amount of interest payments that the Fund is
contractually obligated to make. If the other party to an
interest rate swap defaults, the Fund's risk of loss consists of
the net amount of interest payments that the Fund contractually
is entitled to receive.
Options--In General. (Intermediate Term Income Fund only) The
Intermediate Term Income Fund may purchase and write (i.e.,
sell)
call or put options with respect to specific securities. A call
option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security or
securities at the exercise price at any time during the option
period, or at a specific date. Conversely, a put option gives
the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the
exercise price at any time during the option period.
A covered call option written by the Fund is a call
option with respect to which the Fund owns the underlying
security
or otherwise covers the transaction by segregating cash or other
securities. A put option written by the Fund is covered when,
among other things, cash or liquid securities having a value
equal
to or greater than the exercise price of the option are placed
in a
segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered
call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the
underlying
securities alone. The Fund receives a premium from writing
covered
call or put options which it retains whether or not the option
is exercised.
There is no assurance that sufficient trading interest to
create a liquid secondary market on a securities exchange will
exist for any particular option or at any particular time, and
for
some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated
trading
activity or order flow, or other unforeseen events, at times
have rendered certain of the clearing facilities inadequate and
resulted
in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading
halts or suspensions in one or more options. There can be no
assurance
that similar events, or events that may otherwise interfere with
the timely execution of customers' orders, will not recur. In
such
event, it might not be possible to effect closing transactions
in particular options. If, as a covered call option writer, the
Fund
is unable to effect a closing purchase transaction in a
secondary
market, it will not be able to sell the underlying security
until
the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
Specific Options Transactions. (Intermediate Term Income Fund
only) The Intermediate Term Income Fund may purchase and sell
call
and put options on foreign currency. These options convey the
right to buy or sell the underlying currency at a price which is
expected to be lower or higher than the spot price of the
currency
at the time the option is exercised or expires.
The Intermediate Term Income Fund may purchase cash-
settled options on interest rate swaps and interest rate swaps
denominated in foreign currency in pursuit of its investment ob-
jective. A cash-settled option on a swap gives the purchaser
the
right, but not the obligation, in return for the premium paid,
to
receive an amount of cash equal to the value of the underlying
swap
as of the exercise date. These options typically are purchased
in privately negotiated transactions from financial
institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject
to the Manager's ability to predict correctly movements in
foreign currencies or interest rates. To the extent the
Manager's predictions are incorrect, the Fund may incur losses.
Future Developments. A Fund may take advantage of
opportunities in the area of options and futures contracts and
options on futures contracts and any other Derivatives which are
not presently contemplated for use by the Fund or which are not
currently available but which may be developed, to the extent
such opportunities are both consistent with the Fund's
investment
objective and legally permissible for the Fund. Before entering
into such transactions or making any such investment, the Fund
will provide appropriate disclosure in its Prospectus or
Statement of Additional Information.
Forward Commitments. Securities purchased on a forward
commitment or when-issued basis are subject to changes in value
(generally changing in the same way, i.e., appreciating when
interest rates decline and depreciating when interest rates
rise)
based upon the public's perception of the creditworthiness of
the issuer and changes, real or anticipated, in the level of
interest
rates. Securities purchased on a forward commitment or when-
issued basis may expose a Fund to risks because they may
experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained
in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Fund is fully or almost
fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per
share.
Investment Considerations and Risks
Lower Rated Securities. A Fund is permitted to invest
in debt securities rated Ba by Moody's Investors Service, Inc.
("Moody's") or BB by Standard & Poor's Ratings Group, a division
of The McGraw Hill Companies, Inc. ("S&P"), Fitch Investors
Service, L.P. ("Fitch") or Duff & Phelps Credit Ratings Co.
("Duff" and with Moody's, S&P and Fitch, the "Rating Agencies")
and as low as Caa by Moody's or CCC by S&P, Fitch or Duff. Such
securities, though higher yielding, are characterized by risk.
See in the Funds' Prospectus "Description of the Funds--
Investment Considerations and Risks--Lower Rated Securities" for
a discussion of certain risks and the "Appendix" for a general
description of the Rating Agencies' ratings. Although ratings
may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of these
securities. Each Fund will rely on the Manager's judgment,
analysis and experience in evaluating the creditworthiness of an
issuer.
Investors should be aware that the market values of
many of these securities tend to be more sensitive to economic
conditions than are higher rated securities. These securities
generally are considered by the Rating Agencies to be, on
balance, predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation and generally will involve more credit risk than
securities in the higher rating categories.
Companies that issue certain of these securities often
are highly leveraged and may not have available to them more
traditional methods of financing. Therefore, the risk
associated
with acquiring the securities of such issuers generally is
greater than is the case with the higher rated securities. For
example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of these
securities may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service
its debt obligations also may be affected adversely by specific
corporate developments, forecasts, or the unavailability of
additional financing. The risk of loss because of default by
the
issuer is significantly greater for the holders of these
securities because such securities generally are unsecured and
often are subordinated to other creditors of the issuer.
Because there is no established retail secondary market
for many of these securities, the Fund anticipates that such
securities could be sold only to a limited number of dealers or
institutional investors. To the extent a secondary trading
market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on
market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet the Fund's liquidity
needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack
of
a liquid secondary market for certain securities also may make
it
more difficult for the Fund to obtain accurate market quotations
for purposes of valuing the Fund's portfolio and calculating its
net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases,
judgment may play a greater role in valuation because less
reliable, objective data may be available.
These securities may be particularly susceptible to
economic downturns. It is likely that an economic recession
could disrupt severely the market for such securities and may
have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities
to repay principal and pay interest thereon and increase the
incidence of default for such securities.
A Fund may acquire these securities during an initial
offering. Such securities may involve special risks because
they
are new issues. The Fund has no arrangement with any persons
concerning the acquisition of such securities, and the Manager
will review carefully the credit and other characteristics
pertinent to such new issues.
The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon securities and
pay-in-kind bonds, in which the Fund may invest up to 5% of its
total assets. Pay-in-kind bonds pay interest through the
issuance of additional securities. Zero coupon securities and
pay-in-kind bonds carry an additional risk in that, unlike bonds
which pay interest throughout the period to maturity, the Fund
will realize no cash until the cash payment date unless a
portion
of such securities are sold and, if the issuer defaults, the
Fund may obtain no return at all on its investment.
Investment Restrictions
Each Fund has adopted investment restrictions numbered
1 through 7 as fundamental policies. In addition, Dreyfus
Intermediate Term Income Fund has adopted investment
restrictions
numbered 14 and 15 as fundamental policies. These restrictions
cannot be changed, as to a Fund, without approval by the holders
of a majority (as defined in the 1940 Act) of such Fund's
outstanding voting shares. Investment restrictions numbered 8
through 13 are not fundamental policies and may be changed by
vote of a majority of the Company's Board members at any time.
Neither Fund may:
1. 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.
2. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but the Fund may purchase and sell securities that are secured
by
real estate or issued by companies that invest or deal in real
estate. In particular, the Fund may purchase mortgage-backed
securities and real estate investment trust securities.
3. 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.
4. Make loans to others, except through the purchase
of debt obligations and 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 Company's Board.
5. 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.
6. Invest more than 25% of the value of its total
assets in the securities of issuers in any single industry,
provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
7. Issue any senior security (as such term is
defined
in Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 1, 3, and 9
may be deemed to give rise to a senior security.
8. 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.
9. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the
extent related to the purchase of securities on a when-issued or
forward commitment basis and the deposit of assets in escrow in
connection with writing covered put and call options and
collateral and initial or variation margin arrangements with
respect to options, futures contracts, including those relating
to indices, and options on futures contracts or indices.
10. Purchase, sell or write puts, calls or
combinations thereof, except as described in the Prospectus and
Statement of Additional Information.
11. 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.
12. Purchase securities of other investment
companies,
except to the extent permitted under the 1940 Act or as they may
be acquired as part of a merger, consolidation or acquisition of
assets.
13. Purchase securities on margin, but the Fund may
make margin deposits in connection with transactions in futures,
including those relating to indices, and options on futures or
indices.
The following investment restrictions numbered 14 and
15 apply only to Dreyfus Intermediate Term Income Fund. Dreyfus
Intermediate Term Income Fund may not:
14. Invest more than 5% of its assets in the
obligations of any single issuer, 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 any such
limitation.
15. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of the Fund's total assets.
If a percentage restriction is adhered to at the time
of investment, a later change in percentage resulting from a
change in values or assets will not constitute a violation of
such restriction.
The Company may make commitments more restrictive than
the restrictions listed above so as to permit the sale of Fund
shares in certain states. Should the Company determine that a
commitment is no longer in the best interest of the Fund and its
shareholders, the Company reserves the right to revoke the
commitment by terminating the sale of such Fund's shares in the
state involved.
MANAGEMENT OF THE COMPANY
Board members and officers of the Company, together
with information as to their principal business occupations
during at least the last five years, are shown below. Each
Board member who is deemed to be an "interested person" of the
Company,
as defined in the 1940 Act, is indicated by an asterisk.
Board Members of the Company
LUCY WILSON BENSON, Board Member. President of Benson and
Associates, consultants to business and government.
Mrs. Benson is a director of Communications Satellite
Corporation, General Re Corporation and Logistics
Management
Institute. She is also a trustee of the Alfred P. Sloan
Foundation, Vice Chairman of the Board of Trustees of
Lafayette College, Vice Chairman of the Citizens Network for
Foreign Affairs and a member of the Council on Foreign
Relations. From 1980 to 1994, Mrs. Benson was a director of
The Grumman Corporation. Mrs. Benson served as a
consultant
to the U.S. Department of State and to SRI International
from 1980 to 1981. From 1977 to 1980, she was Under
Secretary of State for Security Assistance, Science and
Technology. She is 68 years old and her address is 46
Sunset Avenue, Amherst, Massachusetts 01002.
*DAVID W. BURKE, Board Member. Chairman of the Broadcasting
Board of Governors, an independent board within the United
States Information Agency, since August 1995. From August
1994 to February 1995, Mr. Burke was a Consultant to the
Manager and, from October 1990 to August 1994, he was
Vice President and Chief Administrative Officer of the
Manager. From 1977 to 1990, Mr. Burke was involved in the
management of national television news, as Vice President
and Executive Vice President of ABC News, and subsequently
as President of CBS News. He is 59 years old and his
address is Box 654, Eastham, Massachusetts 02642.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January
1995, Chairman of the Board of various funds in the Dreyfus
Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief
Operating Officer of the Manager and Executive Vice
President and a director of Dreyfus Service Corporation, a
wholly-owned subsidiary of the Manager and, until August 24,
1994, the Company's distributor. From August 1994 until
December 31, 1994, he was a director of Mellon Bank
Corporation. He is also Chairman of the Board of Directors
of Noel Group, Inc., a venture capital company; a trustee of
Bucknell University; and a director of The Muscular
Dystrophy Association, HealthPlan Services Corporation,
Belding Heminway Company, Inc., a manufacturer and marketer
of industrial threads, specialty yarns, home furnishings and
fabrics, Curtis Industries, Inc., a national distributor of
security products, chemicals and automotive and other
hardware, and Staffing Resources, Inc. He is 52 years old
and his address is 200 Park Avenue, New York, New York
10166.
MARTIN D. FIFE, Board Member. Chairman of the Board of Magar,
Inc., a company specializing in financial products and
developing early stage companies, since ____ 1995. Mr. Fife
is also Chairman of the Board and Chief Executive Officer of
Skysat Communications Network Corporation, a company
developing telecommunications systems. From ________ to
__________ 1995, Mr. Fife was President of Fife Associates,
Inc. He also serves on the boards of various other
companies. He is 68 years old and his address is 405
Lexington Avenue, New York, New York 10174.
WHITNEY I. GERARD, Board Member. Partner of the New York City
law firm of Chadbourne & Parke. He is 61 years old and his
address is 30 Rockefeller Plaza, New York, New York 10112.
ROBERT R. GLAUBER, Board Member. Research Fellow, Center for
Business and Government at the John F. Kennedy School of
Government, Harvard University since January 1992.
Mr. Glauber was Under Secretary of the Treasury for Finance
at the U.S. Treasury Department from May 1989 to January
1992. For more than five years prior thereto, he was a
Professor of Finance at the Graduate School of Business
Administration of Harvard University and, from 1985 to 1989,
Chairman of its Advanced Management Program. He is also a
director of Mid Ocean Reinsurance Co. Ltd. and Cooke &
Bieler, Inc., investment counselors. He is 56 years old and
his address is 79 John F. Kennedy Street, Cambridge,
Massachusetts 02138.
ARTHUR A. HARTMAN, Board Member. Senior consultant with APCO
Associates Inc. From 1981 to 1987, he was United States
Ambassador to the former Soviet Union. He is a director of
the Hartford Insurance Group and a member of the advisory
councils of several other companies, research institutes and
foundations. He is Chairman of First NIS Regional Funds
(ING/Barings Management) and former President of the Harvard
Board of Overseers. He is 69 years old and his address is
2738 McKinley Street, N.W., Washington, D.C. 20015.
GEORGE L. PERRY, Board Member. An economist and Senior Fellow
at the Brookings Institution since 1969. He is co-director of
the Brookings Panel on Economic Activity and editor of its
journal, The Brookings Papers. He is also a director of the
State Farm Mutual Automobile Association and State Farm Life
Insurance Company. He is 61 years old and his address is
1775 Massachusetts Avenue, N.W., Washington, D.C. 20036.
PAUL D. WOLFOWITZ, Board Member. Dean of The Paul H. Nitze
School of Advanced International Studies at Johns Hopkins
University. From 1989 to 1993, he was Under Secretary of
Defense for Policy. From 1986 to 1989, he was the U.S.
Ambassador to the Republic of Indonesia. From 1982 to 1986,
he was Assistant Secretary of State of East Asian and
Pacific Affairs of the Department of State. He is 51 years
old and his address is 1740 Massachusetts Avenue, N.W.,
Washington, D.C. 20036.
For so long as the Company's plan described in the
section captioned "Shareholder Services Plan" remains in effect,
the Board members who are not "interested persons" of the
Company, as defined in the 1940 Act, will be selected and
nominated by the Board members who are not "interested persons"
of the Company.
The Company typically pays its Board members an annual
retainer and a per meeting fee and reimburses them for their
expenses. The Chairman of the Board receives an additional 25%
of such compensation. Emeritus Board members are entitled to
receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Company for the
fiscal year ended July 31, 1995, and by all other funds in the
Dreyfus Family of Funds for which such person is a Board member
(the number of which is set forth in parenthesis next to
each Board member's total compensation) for the year ended
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total Compensation
(2) Pension or (4) From Company and
(1) Aggregate Retirement Benefits Estimated Annual Fund Complex
Name of Board Compensation Accrued as Part of Benefits Upon Paid to Board
Member From Company* Company's Expenses Retirement Member
<S> <C> <C> <C> <C>
Lucy Wilson Benson $5,000 none none $_______(15)
David W. Burke $5,000 none none $_______(53)
Joseph S. DiMartino $6,250 none none $_______(93)
Martin D. Fife $5,000 none none $_______(12)
Whitney I. Gerard $5,000 none none $_______(12)
Robert R. Glauber $4,375 none none $_______(21)
Arthur A. Hartman $5,000 none none $_______(12)
George L. Perry $5,000 none none $_______(12)
Paul D. Wolfowitz $5,000 none none $_______(11)
- ---------------
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $ for all Board members
as a group.
</TABLE>
Officers of the Company
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Executive Officer of the Distributor and an officer of other
investment companies advised or administered by the Manager.
From December 1991 to July 1994, she was President and Chief
Compliance Officer of Funds Distributor, Inc., the ultimate
parent of which is Boston Institutional Group, Inc. Prior
to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice
President and General Counsel of the Distributor and an
officer of other investment companies advised or
administered by the Manager. From February 1992 to July
1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as
an Associate at Ropes & Gray. He is 31 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer.
Senior Vice President of the Distributor and an officer of
other investment companies advised or administered by the
Manager. From 1988 to August 1994, he was manager of the
High Performance Fabric Division of Springs Industries Inc.
He is 34 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary.
Associate General Counsel of the Distributor and an officer
of other investment companies advised or administered by the
Manager. From September 1992 to August 1994, he was an
attorney with the Board of Governors of the Federal Reserve
System. He is 31 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary.
Assistant Vice President of the Distributor and an officer
of other investment companies advised or administered by the
Manager. She is 26 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the
Distributor and an officer of other investment
companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company,
Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer
of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1984
to July 1994, he was Assistant Vice President in the Mutual
Fund Accounting Department of the Manager. He is 60 years
old.
MARGARET PARDO, Assistant Secretary. Legal Assistant with
the Distributor and an officer of other investment companies
advised or administered by the Manager. From June 1992 to
April 1995, she was a Medical Coordinator Officer at ORBIS
International. Prior to June 1992, she worked as Program
Coordinator at Physicians World Communications Group. She
is 27 years old.
The address of each officer of the Company is 200 Park
Avenue, New York, New York 10166.
The Company's Board members and officers, as a group,
owned less than 1% of each Fund's shares of common stock
outstanding on February 23, 1996.
MANAGEMENT AGREEMENT
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Management of the Funds."
Management Agreement. The Manager provides management
services pursuant to the Management Agreement (the "Agreement")
dated August 24, 1994, as amended August 24, 1995, with the
Company. As to each Fund, the Agreement is subject to annual
approval by (i) the Company's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting
securities
of such Fund, provided that in either event the continuance also
is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Company
or the Manager, by vote cast in person at a meeting called for
the purpose of voting on such approval. The Agreement was
approved by shareholders on August 5, 1994 in respect of Dreyfus
Short Term Income Fund, and was last approved by the Company's
Board, including a majority of the Board members who are not
"interested persons" of any party to the Agreement, at a meeting
held on August 24, 1995. As to each Fund, the Agreement is
terminable without penalty, on 60 days' notice, by the Company's
Board or by vote of the holders of a majority of such Fund's
shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically, as to the relevant
Fund, in the event of its assignment (as defined in the 1940
Act).
The following persons are officers and/or directors of
the Manager: Howard Stein, Chairman of the Board and Chief
Executive Officer; W. Keith Smith, Vice Chairman of the Board;
Christopher M. Condron, President, Chief Operating Officer and a
director; Stephen E. Canter, Vice Chairman, Chief Investment
Officer and a director; Lawrence S. Kash, Vice
Chairman--Distribution and a director; Philip L. Toia, Vice
Chairman--Operations and Administration and a director; William
T. Sandalls, Jr., Senior Vice President and Chief Financial
Officer; Barbara E. Casey, Vice President--Dreyfus Retirement
Services; Diane M. Coffey, Vice President--Corporate
Communications; Elie M. Genadry, Vice President--Institutional
Sales; William F. Glavin, Jr., Vice President--Corporate
Development; Mark N. Jacobs, Vice President--Legal, Secretary
and
General Counsel; Mary Beth Leibig, Vice President--Human
Resources; Jeffrey N. Nachman, Vice President--Mutual Fund
Accounting; Andrew S. Wasser, Vice President--Information
Services; Maurice Bendrihem, Controller; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling,
directors.
The Manager manages each Fund's investments in
accordance with the stated policies of such Fund, subject to the
approval of the Company's Board. The Manager is responsible for
investment decisions, and provides the Funds with portfolio
managers who are authorized by the Board to execute purchases
and sales of securities. Dreyfus Short Term Income Fund's
portfolio managers are Garitt Kono and Gerald Thunelius.
Dreyfus
Intermediate Term Income Fund's portfolio manager is Kevin
McClintock. The Manager also maintains research departments
with
a professional staff of portfolio managers and securities
analysts who provide research services for the Fund as well as
for other funds advised by the Manager. All purchases and sales
are reported for the Board's review at the meeting subsequent to
such transactions.
The Manager maintains office facilities on behalf of
the Funds, and furnishes statistical and research data, clerical
help, accounting, data processing, bookkeeping and internal
auditing and certain other required services to the Funds. The
Manager also may make such advertising and promotional
expenditures, using its own resources, as it from time to time
deems appropriate.
Expenses. All expenses incurred in the operation of
the Company are borne by the Company, except to the extent
specifically assumed by the Manager. The expenses borne by the
Company include: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of
Board
members who are not officers, directors, employees or holders of
5% or more of the outstanding voting securities of the Manager,
Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Company's existence, costs of
independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and
for distribution to existing shareholders, costs of
shareholders'
reports and meetings, and any extraordinary expenses. In
addition, Fund shares are subject to an annual service fee. See
"Shareholder Services Plan." Expenses attributable to a
particular Fund are charged against the assets of that Fund;
other expenses of the Company are allocated between the Funds on
the basis determined by the Board, including, but not limited
to,
proportionately in relation to the net assets of each Fund.
As compensation for the Manager's services to the
Company, the Company has agreed to pay the Manager a monthly
management fee at the annual rate of .50 of 1% of the value of
Dreyfus Short Term Income Fund's average daily net assets and
.75 of 1% of the value of Dreyfus Intermediate Term Income
Fund's average daily net assets. For the period August 18, 1992
(commencement of operations) through July 31, 1993 and for the
fiscal years ended July 31, 1994 and 1995, the management fees
payable with respect to Dreyfus Short Term Income Fund amounted
to $428,814, $1,431,860 and $1,156,674, respectively; however,
pursuant to an undertaking in effect, the Manager waived receipt
of $428,814, $1,431,860 and $682,003 for fiscal 1993, 1994 and
1995, respectively, resulting in no management fee being paid in
fiscal 1993 and 1994 and $474,671 being paid in fiscal 1995 with
respect to Dreyfus Short Term Income Fund.
As to each Fund, the Manager has agreed that if in any
fiscal year the aggregate expenses of the Fund, exclusive of
taxes, brokerage, interest on borrowings and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed
the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the
Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a
monthly
basis.
The aggregate of the fees payable to the Manager is not
subject to reduction as the value of a Fund's net assets
increases.
PURCHASE OF SHARES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Buy Shares."
The Distributor. The Distributor serves as each Fund's
distributor on a best efforts basis pursuant to an agreement
which is renewable annually. The Distributor also acts as
distributor for the other funds in the Dreyfus Family of Funds
and for certain other investment companies. In some states,
certain financial institutions effecting transactions in Fund
shares may be required to register as dealers pursuant to state
law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer
purchase orders may be made at any time. Purchase orders
received by 4:00 p.m., New York time, on any business day that
Dreyfus Transfer, Inc., the Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00
p.m., New York time, on any business day the Transfer Agent and
the New York Stock Exchange are open for business, or orders
made
on Saturday, Sunday or any Fund holiday (e.g., when the New York
Stock Exchange is not open for business), will be credited to
the
shareholder's Fund account on the second bank business day
following such purchase order. To qualify to use the Dreyfus
TeleTransfer Privilege, the initial payment for purchase of
shares must be drawn on, and redemption proceeds paid to, the
same bank and account as are designated on the Account
Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares--Dreyfus
TeleTransfer Privilege."
Reopening an Account. An investor may reopen an
account with a minimum investment of $100 without filing a new
Account Application during the calendar year the account is
closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Shareholder Services Plan."
The Company has adopted a Shareholder Services Plan,
pursuant to which the Company pays the Distributor for the
provision of certain services to each Fund's shareholders. The
services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries
regarding the Company and providing reports and other
information, and services related to the maintenance of such
shareholder accounts. Under the Shareholder Services Plan, the
Distributor may make payments to certain securities dealers,
financial institutions and other financial industry
professionals
(collectively, "Service Agents") in respect of these services.
A quarterly report of the amounts expended under the
Shareholder Services Plan, and the purposes for which such
expenditures were incurred, must be made to the Board for its
review. In addition, the Shareholder Services Plan provides
that
material amendments must be approved by the Company's Board and
by the Board members who are not "interested persons" (as
defined
in the 1940 Act) of the Company and have no direct or indirect
financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting
called for the purpose of considering such amendments. As to
each Fund, the Shareholder Services Plan is subject to annual
approval by such vote of the Board members cast in person at a
meeting called for the purpose of voting on the Shareholder
Services Plan. The Shareholder Services Plan was so approved on
August 24, 1995. The Shareholder Services Plan is terminable
with respect to each Fund at any time by vote of a majority of
the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the
Shareholder Services Plan or in any agreements entered into in
connection with the Shareholder Services Plan.
Prior Service Plan. As of October 1, 1995, the Company
terminated its then-existing Service Plan that had been in
effect
from August 24, 1994 with respect to Dreyfus Short Term Income
Fund only. The Service Plan, adopted pursuant to Rule 12b-1
under the 1940 Act, provided that the Company (i) reimburse the
Distributor for payments to Service Agents for distributing
shares and servicing shareholder accounts ("Servicing") and (ii)
pay the Manager, Dreyfus Service Corporation and any affiliate
of either of them (collectively, "Dreyfus") for advertising and
marketing relating to the Company and for Servicing, at an
aggregate annual rate of .20% of the value of Dreyfus Short Term
Income Fund's average daily net assets. Under such plan, for
the period August 24, 1994 through July 31, 1995, the total
amount
payable by the Company was $474,522, of which $103,526 was
waived
by Dreyfus and the remainder was paid to Dreyfus for advertising
and marketing Dreyfus Short Term Income Fund's shares and
Servicing. In addition, the Company paid $43,573 for preparing,
printing and distributing prospectuses and statements of
additional information and for costs associated with
implementing and operating such plan.
As of August 24, 1994, the Company terminated its
then-existing Service Plan, which provided for payments to be
made to Dreyfus Service Corporation, the Company's distributor
prior to
such date, for advertising, marketing and distributing Dreyfus
Short Term Income Fund's shares and for Servicing at an annual
rate of .20% of the value of such Fund's total assets. Under
such plan, for the period from August 1, 1994 through August 23,
1994, the total amount payable by the Company was $43,686, of
which $31,721 was payable for advertising, marketing and
distributing Fund shares and Servicing and $11,965 was payable
for preparing, printing and distributing prospectuses and
statements of additional information and operating such plan.
REDEMPTION OF SHARES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Redeem Shares."
Check Redemption Privilege. An investor may indicate
on the Account Application or by later written request that the
Company provide Redemption Checks ("Checks") drawn on the
investor's Fund account. Checks will be sent only to the
registered owner(s) of the account and only to the address of
record. The Account Application or later written request must
be manually signed by the registered owner(s). Checks may be
made payable to the order of any person in an amount of $500 or
more.
When a Check is presented to the Transfer Agent for payment, the
Transfer Agent, as the investor's agent, will cause the Fund to
redeem a sufficient number of shares in the investor's account
to
cover the amount of the Check. Dividends are earned until the
Check clears. After clearance, a copy of the Check will be
returned to the investor. Investors generally will be subject
to
the same rules and regulations that apply to checking accounts,
although election of this Privilege creates only a shareholder-
transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of
the shares in an investor's account, the Check will be returned
marked insufficient funds. Checks should not be used to close
an account.
Wire Redemption Privilege. By using this Privilege,
the investor authorizes the Transfer Agent to act on wire or
telephone redemption instructions from any person representing
himself or herself to be the investor and reasonably believed by
the Transfer Agent to be genuine. Ordinarily, the Company will
initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt by the Transfer Agent of
the redemption request in proper form. Redemption proceeds
($1,000 minimum) will be transferred by Federal Reserve wire
only
to the commercial bank account specified by the investor on the
Account Application or Shareholder Services Form, or to a
correspondent bank if the investor's bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such
bank
and usually are borne by the investor. Immediate notification
by the correspondent bank to the investor's bank is necessary to
avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the
following transmittal code which may be used for domestic or
overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT
Cables operator at 1-800-654-7171, toll free. Investors should
advise the operator that the above transmittal code must be used
and should also inform the operator of the Transfer Agent's
answer back sign.
To change the commercial bank or account designated to
receive redemption proceeds, a written request must be sent to
the Transfer Agent. This request must be signed by each
shareholder, with each signature guaranteed as described below
under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be
aware that if they have selected the Dreyfus TeleTransfer
Privilege, any request for a wire redemption will be effected as
a Dreyfus TeleTransfer transaction through the Automated
Clearing
House ("ACH") system unless more prompt transmittal specifically
is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business
days after receipt of the redemption request. See "Purchase of
Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with
the redemption request. Written redemption requests must be
signed by each shareholder, including each holder of a joint
account, and each signature must be guaranteed. Signatures on
endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers,
dealers,
credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges
Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must
appear
with the signature. The Transfer Agent may request additional
documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable
verification
arrangements from foreign investors, such as consular
verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers
listed on the cover.
Redemption Commitment. The Company has committed
itself to pay in cash all redemption requests by any shareholder
of record of a Fund, limited in amount during any 90-day period
to the lesser of $250,000 or 1% of the value of such Fund's net
assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in
excess of such amount, the Board reserves the right to make
payments in whole or in part in securities (which may include
non-marketable securities) or other assets in case of an
emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in
the same manner as the Fund's securities are valued. If the
recipient sold such securities, brokerage charges would be
incurred.
Suspension of Redemptions. The right of redemption may
be suspended or the date of payment postponed (a) during any
period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in the
markets the relevant Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments
or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's
shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Shareholder Services."
Fund Exchanges. Shares of funds purchased by exchange
will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered
without a sales load will be made without a sales
load.
B. Shares of funds purchased without a sales load may
be exchanged for shares of other funds sold with a
sales load, and the applicable sales load will be
deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other
funds sold without a sales load.
D. Shares of funds purchased with a sales load,
shares of funds acquired by a previous exchange
from shares purchased with a sales load and
additional shares acquired through reinvestment of
dividends or distributions of any such funds
(collectively referred to herein as "Purchased
Shares") may be exchanged for shares of other
funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time
the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference
will be deducted.
To accomplish an exchange under item D above,
shareholders must notify the Transfer Agent of their prior
ownership of fund shares and their account number.
To request an exchange, shareholders must give exchange
instructions to the Transfer Agent in writing or by telephone.
The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless the investor
checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this
Privilege.
By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions
from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be
genuine. Telephone exchanges may be subject to limitations as
to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible
for telephone exchange.
To establish a personal retirement plan by exchange,
shares of the fund being exchanged must have a value of at least
the minimum initial investment required for the fund into which
the exchange is being made. For Dreyfus-sponsored Keogh Plans,
IRAs and IRAs set up under a Simplified Employee Pension Plan
("SEP-IRAs") with only one participant, the minimum initial
investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the
minimum initial investment is $100 if the plan has at least
$2,500 invested among the funds in the Dreyfus Family of Funds.
To exchange shares held in a personal retirement plan account,
the shares exchanged must have a current value of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus
Auto-Exchange Privilege permits an investor to purchase, in
exchange for shares
of a Fund, shares of another fund in the Dreyfus Family of
Funds.
This Privilege is available only for existing accounts. Shares
will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective
three business days following notification by the investor. An
investor will be notified if the investor's account falls below
the amount designated to be exchanged under this Privilege. In
this case, an investor's account will fall to zero unless
additional investments are made in excess of the designated
amount prior to the next Auto-Exchange transaction. Shares held
under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from
IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege
are available to shareholders resident in any state in which
shares of the fund being acquired may legally be sold. Shares
may be exchanged only between accounts having identical names
and other identifying designations.
Shareholder Services Forms and prospectuses of the
other funds may be obtained by calling 1-800-645-6561. The
Company reserves the right to reject any exchange request in
whole or in part. The Fund Exchanges service or the Dreyfus
Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal
Plan permits an investor with a $5,000 minimum account to
request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis. Withdrawal payments are
the proceeds from sales of Fund shares, not the yield on the
shares.
If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and
eventually may be depleted. There is a service charge of $.50
for each withdrawal check. Automatic Withdrawal may be
terminated at any time by the investor, the Company or the
Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows
investors to invest on the payment date their dividends or
dividends and capital gain distributions, if any, from a Fund in
shares of another fund in the Dreyfus Family of Funds of which
the investor is a shareholder. Shares of other funds purchased
pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in
shares of other funds that are offered without a
sales load.
B. Dividends and distributions paid by a fund which
does not charge a sales load may be invested in
shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of
other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the
sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the fund
from which dividends or distributions are being
swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon
redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans.
The Company makes available to corporations a variety of
prototype pension and profit-sharing plans including a 401(k)
Salary Reduction Plan. In addition, the Company makes available
Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover
Accounts," and 403(b)(7) Plans. Plan support services also are
available.
Investors who wish to purchase Fund shares in
conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA,
including a SEP-IRA, may request from the Distributor forms for
adoption of such plans.
The entity acting as custodian for Keogh Plans,
403(b)(7) Plans or IRAs may charge a fee, payment of which could
require the liquidation of shares. All fees charged are
described in the appropriate form.
Shares may be purchased in connection with these plans
only by direct remittance to the entity acting as custodian.
Purchases for these plans may not be made in advance of receipt
of funds.
The minimum initial investment for corporate plans,
Salary Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more
than one participant, is $2,500 with no minimum for subsequent
purchases. The minimum initial investment for Dreyfus-sponsored
Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one
participant, is ordinarily $750, with no minimum for subsequent
purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
Each investor should read the prototype retirement plan
and the appropriate form of custodial agreement for further
details on eligibility, service fees and tax implications, and
should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Buy Shares."
Valuation of Portfolio Securities. Substantially all
of each Fund's investments (excluding short-term investments)
are
valued each business day by one or more independent pricing
services (the "Service") approved by the Board. Securities
valued by the Service 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 valued by the Service 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. Short-term investments
are not valued by the Service and are valued at the mean price
or
yield equivalent for such securities or for securities of
comparable maturity, quality and type as obtained from market
makers. Other investments that are not valued by the Service
are
valued at the average of the most recent bid and asked prices in
the market in which such investments are primarily traded, or at
the last sales price for securities traded primarily on an
exchange or the national securities market. In the absence of
reported sales of investments traded primarily on an exchange or
the national securities market, the average of the most recent
bid and asked prices is used. Bid price is used when no asked
price is available. Any assets or liabilities initially
expressed in terms of foreign currency will be translated into
U.S. dollars at the midpoint of the New York interbank market
spot exchange rate as quoted on the day of such translation by
the Federal Reserve Bank of New York or, if no such rate is
quoted on such date, at the exchange rate previously quoted by
the Federal Reserve Bank of New York or at such other quoted
market exchange rate as may be determined to be appropriate by
the Manager. Expenses and fees, including the management fee
(reduced by the expense limitation, if any), are accrued daily
and taken into account for the purpose of determining the net
asset value of a Fund's shares.
Restricted securities, as well as securities or other
assets for which recent market quotations are not readily
available, or are not valued by the Service, are valued at fair
value as determined in good faith by the Board. The Board will
review the method of valuation on a current basis. In making
their good faith valuation of restricted securities, the Board
members generally will take the following factors into
consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for
which a public market exists usually will be valued at market
value less the same percentage discount at which purchased.
This
discount will be revised periodically by the Board if the Board
members believe that it no longer reflects the value of the
restricted securities. Restricted securities not of the same
class as securities for which a public market exists usually
will be valued initially at cost. Any subsequent adjustment
from cost
will be based upon considerations deemed relevant by the Board.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Dividends, Distributions and Taxes."
Management of the Company believes that Dreyfus Short
Term Income Fund has qualified for the fiscal year ended
July 31, 1995 as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). It is
expected that Dreyfus Intermediate Term Income Fund will qualify
as a regulated investment company under the Code. Each Fund
intends to continue to so qualify if such qualification is in
the
best interests of its shareholders. As a regulated investment
company, each Fund will pay no Federal income tax on net
investment income and net realized securities gains to the
extent
that such income and gains are distributed to shareholders in
accordance with applicable provisions of the Code. To qualify
as a regulated investment company, the Fund must distribute at
least
90% of its net income (consisting of net investment income and
net short-term capital gain) to its shareholders, derive less
than 30% of its annual gross income from gain on the sale of
securities held for less than three months, and meet certain
asset diversification and other requirements. The term
"regulated investment company" does not imply the supervision of
management or investment practices or policies by any government
agency.
Any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the net
asset
value of the shares below the cost of the investment. Such a
dividend or distribution would be a return of investment in an
economic sense, although taxable as stated above. In addition,
the Code provides that if a shareholder holds shares of a Fund
for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on
the sale of such shares will be treated as long-term capital
loss to the extent of the capital gain distribution received.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gains and losses.
However, a portion of the gain or loss realized from the
disposition of foreign currencies (including foreign currency
denominated bank deposits) and non-U.S. dollar denominated
securities (including debt instruments and certain forward
contracts and options) may be treated as ordinary income or loss
under Section 988 of the Code. In addition, all or a portion of
any gains realized from the sale or other disposition of certain
market discount bonds will be treated as ordinary income under
Section 1276. Finally, all or a portion of the gain realized
from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258. "Conversion transactions"
are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations
to be issued in the future.
Under Section 1256 of the Code, any gain or loss
realized by a Fund from certain forward contracts and options
transactions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Gain or loss will
arise upon exercise or lapse of such contracts and options as
well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the
Fund's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to such Fund
characterized in the manner described above.
Offsetting positions held by a Fund involving certain
foreign currency forward contracts or options may constitute
"straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258
of the Code, which, in certain circumstances, overrides or
modifies
the provisions of Sections 1256 and 988 of the Code. As such,
all or a portion of any short or long-term capital gain from
certain "straddle" transactions may be recharacterized to
ordinary income.
If a Fund were treated as entering into "straddles" by
reason of its engaging in certain forward contracts or options
transactions, such "straddles" would be characterized as "mixed
straddles" if the forward contracts or options transactions
comprising a part of such "straddles" were governed by Section
1256 of the Code. A Fund may make one or more elections with
respect to "mixed straddles." Depending on which election is
made, if any, the results to the Fund may differ. If no
election
is made, to the extent the "straddle" and conversion transaction
rules apply to positions established by the Fund, losses
realized
by the Fund will be deferred to the extent of unrealized gain in
the offsetting position. Moreover, as a result of the
"straddle"
and conversion transaction rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital
loss, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
Investment by a Fund in securities issued or acquired
at a discount, or providing for deferred interest or for payment
of interest in the form of additional obligations could under
special tax rules affect the amount, timing and character of
distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the
Fund could be required to accrue a portion of the discount (or
deemed discount) at which the securities were issued each year
and to distribute such income in order to maintain its
qualification as a regulated investment company. In such case,
the Fund may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over placing
orders on behalf of the Company for the purchase or sale of
portfolio securities. Allocation of brokerage transactions,
including their frequency, is made in the best judgment of the
Manager and in a manner deemed fair and reasonable to
shareholders. The primary consideration is prompt execution of
orders at the most favorable net price. Subject to this
consideration, the brokers selected will include those that
supplement the Manager's research facilities with statistical
data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of
services required to be performed by the Manager and the
Manager's fees are not reduced as a consequence of the receipt
of such supplemental information. Such information may be
useful to
the Manager in serving both the Company and other funds which it
advises and, conversely, supplemental information obtained by
the placement of business of other clients may be useful to the
Manager in carrying out its obligations to the Company.
Sales of Fund shares by a broker may be taken into
consideration, and brokers also will be selected because of
their
ability to handle special executions such as are involved in
large block trades or broad distributions, provided the primary
consideration is met. Large block trades may, in certain cases,
result from two or more funds advised or administered by the
Manager being engaged simultaneously in the purchase or sale of
the same security. Certain of the Funds' transactions in
securities of foreign issuers may not benefit from the
negotiated
commission rates available to the Funds for transactions in
securities of domestic issuers. When transactions are executed
in the over-the-counter market, each Fund will deal with the
primary market makers unless a more favorable price or execution
otherwise is obtainable. Foreign exchange transactions are made
with banks or institutions in the interbank market at prices
reflecting a mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year as well
as within a year. High turnover rates are likely to result in
greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated by the Manager based
upon
its knowledge of available information as to the general level
of commissions paid by other institutional investors for
comparable services.
For the period August 18, 1992 (commencement of
operations) through July 31, 1993 and for the fiscal years ended
July 31, 1994 and 1995, no brokerage commissions were paid by
Dreyfus Short Term Income Fund. Gross spreads and concessions
on
principal transactions which were determinable amounted to
$72,750, $31,500 and $432,313 for the same periods, none of
which were paid to the Distributor.
The increase in the gross spreads and commissions on
principal transactions paid by Dreyfus Short Term Income Fund
and
the increase in such Fund's portfolio turnover rate from 75% to
512% for the fiscal year ended July 31, 1995 was caused
primarily
by the Manager's response to the increase in interest rates
during the fiscal year. The Manager sought to sell certain
portfolio securities and subsequently purchase similar
securities
at a lower price. As the spreads on the securities sold and
repurchased widened, the Fund's sale and repurchase of these
securities caused it to incur greater gross spreads and
commissions on principal transactions.
PERFORMANCE INFORMATION
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Performance Information."
Dreyfus Intermediate Term Income Fund had not
commenced operations as of the date of the financials.
Accordingly, no performance information is available for such
Fund.
Dreyfus Short Term Income Fund's current yield for the
30-day period ended July 31, 1995 was 5.65%, which reflects the
absorption of certain expenses pursuant to expense limitations
in
effect. See "Management of the Funds" in the Prospectus. Had
certain expenses not been absorbed, current yield for the same
period would have been 5.51%. Current yield is computed
pursuant
to a formula which operates as follows: the amount of the
Fund's
expenses accrued for the 30-day period (net of reimbursements)
is
subtracted from the amount of the dividends and interest earned
(computed in accordance with regulatory requirements) by the
Fund
during the period. That result is then divided by the product
of: (a) the average daily number of shares outstanding during
the
period that were entitled to receive dividends, and (b) the net
asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be
declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which
1 is subtracted. The current yield is then arrived at by
multiplying the result by 2.
Dreyfus Short Term Income Fund's average annual return
for the 1 and 2.953 year periods ended July 31, 1995 was 7.05%
and 5.68%, respectively. Average annual total return is
calculated by determining the ending redeemable value of an
investment purchased with a hypothetical $1,000 payment made at
the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the
initial investment, taking the "n"th root of the quotient (where
"n" is the number of years in the period) and subtracting 1 from
the result.
Dreyfus Short Term Income Fund's total return for the
period August 18, 1992 (commencement of operations) through
July 31, 1995 was 17.72%. Total return is calculated by
subtracting the amount of the Fund's net asset value per share
at
the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period),
and dividing the result by the net asset value per share at the
beginning of the period.
From time to time, the Company may compare a Fund's
performance with the performance of other instruments, such as
certificates of deposit and FDIC-insured bank money market
accounts.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "General Information."
Each Fund share has one vote and, when issued and paid
for in accordance with the terms of the offering, is fully paid
and non-assessable. Fund shares are of one class and have equal
rights as to dividends and in liquidation. Shares have no
preemptive, subscription or conversion rights and are freely
transferable.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Company, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule
18f-2 further provides that a series shall be deemed to be
affected by a matter unless it is clear that the interests of
each series in the matter are identical or that the matter does
not affect any interest of such series. The Rule exempts the
selection of independent accountants and the election of Board
members from the separate voting requirements of the Rule.
Each Fund will send annual and semi-annual financial
statements to all its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the Company's transfer and dividend disbursing agent. Under
a transfer agency agreement with the Company, the Transfer Agent
arranges for the maintenance of shareholder account records for
each Fund, the handling of certain communications between
shareholders and the Company and the payment of dividends and
distributions payable by a Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of
the number of shareholder accounts it maintains for the Company
during the month, and is reimbursed for certain out-of-pocket
expenses. The Bank of New York, 90 Washington Street, New York,
New York 10286, is the Company's custodian. Neither the
Transfer
Agent nor The Bank of New York has any part in determining the
investment policies of a Fund or which securities are to be
purchased or sold by a Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York,
New York 10004-2696, as counsel for the Company, has rendered
its opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares being sold
pursuant to the Funds' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York,
New York 10019, independent auditors, have been selected as
auditors of the Company.
<PAGE>
APPENDIX
Description of certain ratings assigned by S&P,
Moody's, Fitch and Duff:
S&P
Bond Ratings
AAA
Bonds rated AAA have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic
conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated
categories.
BB
Bonds rated BB have less near-term vulnerability to
default than other speculative grade debt. However, they face
major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default
but presently have the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic
conditions would likely impair capacity or willingness to pay
interest and repay principal.
CCC
Bonds rated CCC have a current identifiable
vulnerability to default, and are dependent upon favorable
business, financial and economic conditions to meet timely
payments of interest and repayment of principal. In the event
of
adverse business, financial or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
S&P's letter ratings may be modified by the addition of
a plus (+) or minus (-) sign designation, which is used to show
relative standing within the major rating categories, except in
the AAA (Prime Grade) category.
Commercial Paper Rating
The designation A-1 by S&P indicates that the degree of
safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus sign (+) designation.
Moody's
Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate, and therefore not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics
of the desirable investment. Assurance of interest and
principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Moody's applies the numerical modifiers 1, 2 and 3 to
show relative standing within the major rating categories,
except
in the Aaa category [and in the categories below B]. The
modifier 1 indicates a ranking for the security in the higher
end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial
paper rating assigned by Moody's. Issuers of P-1 paper must
have
a superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return
on
funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue
or class of debt. The ratings take into consideration special
features of the issue, its relationship to other obligations of
the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal,
which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds rated AA are considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite
as strong as bonds rated AAA. Because bonds rated in the AAA
and
AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and
of high credit quality. The obligor's ability to pay interest
and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these
bonds
and, therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The
obligor's ability to pay interest and repay principal may be
affected over time by adverse economic changes. However,
business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While
bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable
characteristics, which, if not remedied, may lead to default.
The ability to meet obligations requires an advantageous
business and economic environment.
Plus (+) and minus (-) signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations
that are payable on demand or have original maturities of up to
three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond
rating analysis, the short-term rating places greater emphasis
than bond ratings on the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated F-1+.
Duff
Bond Ratings
AAA
Bonds rated AAA are considered highest credit quality.
The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A
Bonds rated A have protection factors which are
average but adequate. However, risk factors are more variable
and greater in periods of economic stress.
BBB
Bonds rated BBB are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk exists during
economic cycles.
BB
Bonds rated BB are below investment grade but are
deemed by Duff as likely to meet obligations when due. Present
or prospective financial protection factors fluctuate according
to industry conditions or company fortunes. Overall quality may
move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess
the risk that obligations will not be met when due. Financial
protection factors will fluctuate widely according to economic
cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in quality rating within this
category or into a higher or lower quality rating grade.
CCC
Bond rated CCC are well below investment grade
securities. Such bonds may be in default or have considerable
uncertainty as to timely payment of interest, preferred
dividends
and/or principal. Protection factors are narrow and risk can be
substantial with unfavorable economic or industry conditions
and/or with unfavorable company developments.
Plus (+) and minus (-) signs are used with a rating
symbol (except AAA) to indicate the relative position of a
credit within the rating category.
Commercial Paper Rating
The rating Duff-1 is the highest commercial paper
rating assigned by Duff. Paper rated Duff-1 is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor.
<PAGE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS JULY 31, 1995
PRINCIPAL
BONDS AND NOTES-99.0% AMOUNT VALUE
------------------- ----------------
<S> <C> <C>
BANKING-3.7%............ Capital One Bank,
Notes, 8 1/8%, 2000......................... $ 5,000,000 $ 5,207,925
Chemical Banking,
Sub. Notes, 10 3/8%, 1999................... 2,300,000 2,564,068
--------------
7,771,993
--------------
BROKERAGE-1.4%.......... Bear Stearns Cos.,
Sr. Notes, 5 7/8%, 1996..................... 3,000,000 2,995,812
--------------
CONSUMER-9.6%........... Bass America,
Gtd. Notes, 6 3/4%, 1999.................... 1,000,000 1,006,224
Coca-Cola Enterprises,
Notes, 6 1/2%, 1997......................... 6,100,000 6,133,172
Federal Express,
Sr. Notes, 9 3/4%, 1996..................... 1,000,000 1,026,654
IBM,
Notes, 6 3/8%, 1997......................... 5,000,000 5,019,680
PepsiCo,
Notes, 7%, 1996............................. 5,000,000 5,052,015
Safeway,
Sr. Medium-Term Notes, Ser. B, 8.07%, 1997.. 2,000,000(a) 2,033,660
--------------
20,271,405
--------------
ENTERTAINMENT-4.9%...... Time Warner,
Notes, 7.95%, 2000.......................... 5,000,000 5,114,650
Walt Disney,
Notes, 8%, 1997............................. 5,000,000 5,250,000
--------------
10,364,650
--------------
FINANCE-21.7%........... Fleet Financial Group,
Sr. Notes, 7 1/8%, 2000..................... 5,000,000 5,081,720
GATX Capital,
Medium-Term Notes, Ser. C, 10%, 1996........ 5,000,000 5,071,340
General Electric Capital,
Medium-Term Notes, Ser. A, 7 1/2%, 1998..... 10,000,000 10,307,050
General Motors Acceptance,
Medium-Term Notes, 7.35%, 1997.............. 8,050,000 8,181,706
International Lease Finance,
Medium-Term Notes, Ser. E, 6.47%, 1997...... 4,000,000 4,016,456
SAFECO,
Notes, 10 3/4%, 1995......................... 3,500,000 3,518,438
USL Capital,
Sr. Notes, 8 1/8%, 2000...................... 5,000,000 5,264,655
U. S. Leasing International,
Sr. Notes, 8 3/4%, 2001..................... 3,800,000 4,149,091
--------------
45,590,456
--------------
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1995
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
--------------- ----------------
INDUSTRIAL-25.0% Alco Capital Resource, Medium-Term Notes:
Ser. A, 8.04%, 1997......................... $ 5,000,000 $ 5,141,390
Ser. A, 6.99%, 2000......................... 3,000,000 3,023,475
Caterpillar Financial Services,
Medium-Term Notes, Ser. E, 8.16%, 1999...... 10,000,000 10,484,820
Deere & Co.,
Notes, 8 1/4%, 1996......................... 3,600,000 3,663,976
Ingersoll-Rand, Medium-Term Notes:
Ser. A, 6.24%, 1997......................... 5,000,000 5,002,150
Ser. A, 6.42%, 1998.......................... 9,000,000 9,000,900
John Deere Capital, Medium-Term Notes:
Ser. B, 7.37%, 2000......................... 5,000,000 5,144,400
Ser. B, 7.91%, 2000.......................... 5,750,000 6,032,906
PACCAR Financial,
Medium-Term Notes, Ser. F, 7.20%, 1999...... 5,000,000 5,105,695
--------------
52,599,712
--------------
INSURANCE-7.9% Associates Corp. of North America,
Medium-Term Sr. Notes:
Ser. G, 7.05%, 1997......................... 6,205,000 6,289,220
Ser. G, 7 5/8%, 2000........................ 5,350,000 5,543,354
SunAmerica,
Medium-Term Notes, 6.26%, 2001............. 5,000,000 4,844,800
--------------
16,677,374
--------------
TRANSPORTATION-4.9%..... FINOVA Capital,
Notes, 8%, 2000............................. 5,000,000 5,225,285
Ryder System,
Medium-Term Notes, Ser. 10, 7 3/4%, 1996.... 5,000,000 5,068,960
--------------
10,294,245
--------------
FOREIGN/
GOVERNMENTAL-6.6%.... Canada Government Bonds,
6 1/2%, 2000................................ 10,000,000 10,052,000
Ford Motor Credit,
Medium-Term Notes, 10 3/8%, 1996............ 3,656,307(b) 3,759,780
--------------
13,811,780
--------------
U.S. GOVERNMENT Federal Home Loan Banks, Consolidated Bonds:
AND AGENCIES-13.3%...... Ser. PL, 5.84%, 6/22/1998................... 9,000,000 8,926,875
5.77%, 6/29/1998............................ 5,000,000 4,951,565
U.S. Treasury Notes:
9 1/4%, 1/15/1996........................... 10,750,000 10,916,292
8 7/8%, 11/15/1997.......................... 2,500,000 2,653,907
9 1/8%, 5/15/1999........................... 500,000 550,000
--------------
27,998,639
--------------
TOTAL BONDS AND NOTES
(cost $206,791,144)......................... $208,376,066
==============
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1995
PRINCIPAL
SHORT-TERM INVESTMENT-1.9% AMOUNT VALUE
---------------- ---------------
TIME DEPOSIT; Chemical Bank (London),
5 7/8%, 8/1/1995
(cost $4,062,000)............... $ 4,062,000 $ 4,062,000
==============
TOTAL INVESTMENTS (cost $210,853,144)........................................................... 100.9% $212,438,066
================ ==============
LIABILITIES, LESS CASH AND RECEIVABLES (.9%) $ (1,914,024)
================ ==============
NET ASSETS...................................................................................... 100.0% $210,524,042
================ ==============
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
July 31, 1995, these securities amounted to $2,033,660 or 1.0% of net
assets.
(b) Denominated in Canadian Dollars.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $210,853,144)-see statement..................................... $212,438,066
Cash.................................................................... 709,588
Interest receivable..................................................... 4,006,535
Receivable for subscriptions to Common Stock............................ 1,000
Prepaid expenses ....................................................... 43,383
---------------
217,198,572
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 98,841
Due to Distributor...................................................... 2,493
Payable for investment securities purchased............................. 5,000,000
Dividends Payable....................................................... 1,174,412
Payable for Common Stock redeemed....................................... 313,244
Accrued expenses........................................................ 85,540 6,674,530
--------------- ---------------
NET ASSETS.................................................................. $210,524,042
===============
REPRESENTED BY:
Paid-in capital......................................................... $225,544,579
Accumulated undistributed investment income-net......................... 110,728
Accumulated net realized (loss) on investments.......................... (16,716,187)
Accumulated net unrealized appreciation on investments-Note 3........... 1,584,922
---------------
NET ASSETS at value applicable to 17,710,612 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $210,524,042
===============
NET ASSET VALUE, offering and redemption price per share
($210,524,042 / 17,710,612 shares)...................................... $11.89
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 18,200,290
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,156,674
Shareholder servicing costs-Note 2(b)................................. 784,942
Prospectus and shareholders' reports-Note 2(b)........................ 62,336
Registration fees..................................................... 49,701
Custodian fees........................................................ 49,504
Professional fees..................................................... 29,808
Directors' fees and expenses-Note 2(c)................................ 29,610
Miscellaneous......................................................... 24,075
--------------
2,186,650
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 785,529
--------------
TOTAL EXPENSES.................................................. 1,401,121
--------------
INVESTMENT INCOME-NET........................................... 16,799,169
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(11,193,340)
Net unrealized appreciation on investments.............................. 9,381,794
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (1,811,546)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $14,987,623
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SHORT-TERM INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
---------------------------------
1994 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 19,445,054 $ 16,799,169
Net realized (loss) on investments...................................... (5,611,159) (11,193,340)
Net unrealized appreciation (depreciation) on investments for the year.. (8,144,668) 9,381,794
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 5,689,227 14,987,623
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (19,394,002) (16,781,257)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 340,428,554 79,943,038
Dividends reinvested.................................................... 16,377,882 12,577,109
Cost of shares redeemed................................................. (271,809,975) (157,230,575)
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 84,996,461 (64,710,428)
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 71,291,686 (66,504,062)
NET ASSETS:
Beginning of year....................................................... 205,736,418 277,028,104
--------------- ---------------
End of year (including undistributed investment income--net: $92,816 in 1994
and $110,728 in 1995).................................................... $ 277,028,104 $ 210,524,042
=============== ===============
SHARES SHARES
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 27,511,855 6,812,455
Shares issued for dividends reinvested.................................. 1,337,198 1,071,488
Shares redeemed......................................................... (22,144,923) (13,377,953)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 6,704,130 (5,494,010)
=============== ===============
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,
---------------------------------
PER SHARE DATA: 1993(1) 1994 1995
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of year...................................... $12.50 $12.47 $11.94
----------- -------- --------
INVESTMENT OPERATIONS:
Investment income-net................................................... .89 .84 .85
Net realized and unrealized (loss) on investments....................... (.01) (.54) (.05)
----------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS...................................... .88 .30 .80
----------- -------- --------
DISTRIBUTIONS:
Dividends from investment income-net.................................... (.89) (.83) (.85)
Dividends from net realized gain on investments......................... (.02) -- --
----------- -------- --------
TOTAL DISTRIBUTIONS................................................... (.91) (.83) (.85)
----------- -------- --------
Net asset value, end of year............................................ $12.47 $11.94 $11.89
=========== ======== ========
TOTAL INVESTMENT RETURN..................................................... 7.68%(2) 2.47% 7.05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. -- .24% .61%
Ratio of net investment income to average net assets.................... 7.58%(2) 6.79% 7.26%
Decrease reflected in above expense ratios due to undertakings
by the Manager........................................................ 1.12%(2) .71% .34%
Portfolio Turnover Rate................................................. 54.59%(3) 74.90% 511.62%
Net Assets, end of year (000's Omitted)................................. $205,736 $277,028 $210,524
__________________________
(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, until August 24, 1994, acted as the distributor of
the Fund's shares, 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. (the
"Distributor") was engaged as the Fund's distributor. The
Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned
subsidiary of FDI Holdings, Inc., 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 are readily available and
are representative of the bid side of the market
in the judgment of the Service 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. 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, 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
applicable provisions of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve
it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of
approximately $9,958,000 available for Federal income tax
purposes to be applied against future net
securities profits, if any, realized subsequent
to July 31, 1995. The carryover does not include net realized
securities losses from November 1, 1994 through
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
July 31, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the
carryover expires in fiscal 2003.
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. However, the Manager
had undertaken from August 1,
1994 through July 13, 1995, to reduce the
management fee paid by the Fund, to
the extent of the Fund's aggregate expenses (exclusive of
certain expenses as
described above) exceeded specified annual percentages of the
Fund's average
daily net assets. The Manager has currently
undertaken from July 14, 1995
through September 30, 1995, or until such time
as the net assets of the Fund
exceed $350 million, regardless of whether
they remain at that level, to
reduce the management fee paid by, or reimburse such excess
expenses of the Fund, to the extent that the Fund's
aggregate annual expenses (excluding
certain expenses as described above) exceed
an annual rate of .80 of 1% of
the average daily value of the Fund's net assets. The reduction
in management
fee, pursuant to the undertakings, amounted to $682,003 for the
year ended July 31, 1995.
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) On August 4, 1994, Fund shareholders approved a revised
Service Plan (the "Plan") pursuant to Rule 12b-1 under the Act.
Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the
Distributor for
payments to certain Service Agents for distributing
the Fund's shares and
servicing shareholder accounts and (b) pays
the Manager, Dreyfus Service
Corporation or any affiliate (collectively "Dreyfus") for
advertising and
marketing relating to the Fund and servicing shareholders
accounts, at an aggregate annual rate of .20 of 1% of the
value of the Fund's average daily
net assets. Each of the Distributor and Dreyfus
may pay Service Agents (a
securities dealer, financial institution or other industry
professional) a fee in respect of the Fund's shares owned by
shareholders with whom the
Service Agent has a servicing relationship or for whom the
Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus
determines the amounts to be paid to Service Agents
to which it will make
payments and the basis on which such payments
are made. 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.
Prior to August 24, 1994, the Fund's Service Plan ("prior
Service Plan") provided that the Fund pay Dreyfus Service
Corporation at an annual rate of .20 of 1% of the value of the
Fund's average daily net
DREYFUS SHORT-TERM INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
assets, for costs and expenses in connection with
advertising, marketing and distributing the Fund's shares and
for servicing shareholder accounts. Dreyfus Service Corporation
made payments to one or more Service Agents based
on the value of the Fund's shares owned by clients of the
Service Agent. The prior Service Plan also separately provided
for the Fund to bear the cost 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, 1995, $474,522
was chargeable to the Fund pursuant to the Plan, of which
$103,526 was waived by the Fund, and $43,686
was charged pursuant to the prior Service Plan.
(C) Prior to August 24, 1994, certain officers and directors
of the Fund were "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.
The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of securities,
other than short-term securities, during the year ended July 31,
1995 amounted to $1,104,174,462 and $1,172,464,010,
respectively.
At July 31, 1995, accumulated net unrealized
appreciation on investments
was $1,584,922 consisting of $2,853,893 gross unrealized
appreciation and $1,268,971 gross unrealized depreciation.
At July 31, 1995, 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.
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, 1995, 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 also 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, 1995 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 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, 1995, 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
August 30, 1995
<PAGE>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of the Registration Statement for the
Short Term Fund only:
Condensed Financial Information for the period from
August 18, 1992 (commencement of operations) to July 31,
1993 and for each of the two years in the period ended
July 31, 1995.
Included in Part B of the Registration Statement for the
Short Term Fund only:
Statement of Investments -- July 31, 1995.
Statement of Assets and Liabilities -- July 31, 1995.
Statement of Operations -- for the year ended
July 31, 1995.
Statement of Changes in Net Assets -- for each of the
two years ended July 31, 1995.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent Auditors,
dated August 30, 1995.
All schedules and other financial statement information, for
which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission, are either omitted
because they are not required under the related instructions,
they are inapplicable, or
the required information is presented in the financial
statements or notes thereto which are included in Part B of the
Registration Statement.
(b) Exhibits:
(1) Articles of Incorporation are incorporated by
reference to Exhibit (1) of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A,
filed December 1, 1995.
(2) By-Laws are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A, filed December 1, 1995.
(4) Speciment copy of Stock Certificate is
incorporated by reference to Exhibit (4) to the Registration
Statement on Form N-1A, filed on June 29, 1992.
(5) Management Agreement is incorporated by
reference to Exhibit (5) of Post-Effective Amendment No. 7 to
the Registration Statement on Form N-1A, filed
December 1, 1995.
(6)(a) Distribution Agreement is incorporated by
reference to Exhibit (6)(a) of Post-Effective Amendment No. 7
to the Registration Statement on Form N-1A, filed
December 1, 1995.
(6)(b) Form of Shareholder Services Agreement is
incorporated by reference to Exhibit (6)(b) of Post-
Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed September 28, 1994.
(8)(a) Custody Agreement is incorporated by reference to
Exhibit (8)(a) of Post-Effective Amendment No. 7 to
the Registration Statement on Form N-1A, filed on
December 1, 1995.
(8)(b) Sub-Custodian Agreements are incorporated by
reference to Exhibit (8)(b) of Post-Effective
Amendment No. 1 to the Registration Statement on Form
N-1A, filed on January 9, 1993.
(9) Shareholder Services Plan is incorporated by
reference to Exhibit (9) of Post-Effective Amendment
No. 7 to the Registration Statement on Form N-1A,
filed December 1, 1995.
(10) Opinion, including consent, of Stroock &
Stroock & Lavan is incorporated by reference to Exhibit (10) of
Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A, filed December 1, 1995.
(11) Consent of Independent Auditors.
(16) Schedules of Computation of Performance Data are
incorporated by reference to Exhibit (16) of Post-
Effective Amendment No. 3 to the Registration
Statement on Form N-1A, filed on October 19, 1993.
(17) Financial Data Schedule.
Other Exhibits:
(a) Powers of Attorney are incorporated by
reference to Other Exhibits of Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A, filed on
September 28, 1994.
(b) Assistant Secretary's Certificate is incorporated by
reference to Other Exhibits of Post-Effective
Amendment No. 5 to the Registration Statement on Form
N-1A, filed on September 28, 1994.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
(2)
Number of Record
(1) Holders as of
Title of Class December 2, 1995
Common Stock, par value
$.001 per share
Dreyfus Short Term Income Fund 11,376
Dreyfus Intermediate Term Income Fund -0-
Item 27. Indemnification
Reference is made to Article SEVENTH of the Registrant's
Articles of Incorporation filed as Exhibit 1 and to Section
2-418 of the Maryland General Corporation Law. The application
of these provisions is limited by Article VIII of the
Registrant's By-Laws filed
as Exhibit 2 and by the following undertaking set forth in the
rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference also is made to the Distribution Agreement
filed as Exhibit 6(a) to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A.
Item 28. Business and Other Connections of Investment Adviser
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies comprise a financial service organization whose
business consists primarily of providing investment management
services as the investment adviser, manager and distributor for
sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, is a
registered broker-dealer. Dreyfus
Management, Inc., another wholly-owned subsidiary, provides
investment management services to various pension plans,
institutions and individuals.
Officers and Directors of Dreyfus
Name and Position with
Dreyfus Other Businesses
MANDELL L. BERMAN Real estate consultant and private
Director investor
29100 Northwestern Highway--Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation;
Member of the Board of Vintners
International
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
HOWARD STEIN Chairman of the Board:
Chairman of the Board Dreyfus Acquisition Corporation*;
and Chief Executive The Dreyfus Consumer Credit
Officer Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
Dreyfus Partnership Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
World Balanced Fund+++;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Operating Officer and The Boston Company*****;
Director Deputy Director:
Mellon Trust****;
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Former Chairman and Chief Executive
Vice Chairman, Chief Officer:
Investment Officer and Kleinwort Benson Investment
Management
a Director Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman--Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit & Trust*****;
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund++++
JULIAN M. SMERLING None
Director
PHILIP L. TOIA Chairman of the Board and Trust
Vice Chairman-- Investment Officer:
Operations and The Dreyfus Trust Company++;
Administration Chairman of the Board and Chief
and a Director Executive Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank,
F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit
Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. None
Senior Vice President and
Chief Financial Officer
BARBARA E. CASEY President:
Vice President-- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****;
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President--
Corporate Communications
ELIE M. GENADRY President:
Vice President-- Institutional Services Division of
Institutional Sales Dreyfus Service Corporation*;
Broker-Dealer Division of Dreyfus
Service Corporation*;
Group Retirement Plans Division of
Dreyfus Service Corporation*;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and Dreyfus Precious Metals, Inc.*;
General Counsel Director and Vice President:
The Dreyfus Consumer Credit
Corporation*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President--Mutual
Fund Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President--Corporate The Boston Company Advisors, Inc.
Development 53 State Street
Exchange Place
Boston, Massachusetts 02109
ANDREW S. WASSER Vice President:
Vice President--Information Mellon Bank Corporation****
Services
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management,
Inc.***;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit
Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*;
Formerly, Vice President-Financial
Planning, Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-- Lion Management, Inc.*;
Legal and Secretary Secretary:
The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation*
* The address of the business so indicated is 200 Park
Avenue, New York, New York 10166.
** The address of the business so indicated is 80 Cutter
Mill Road, Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second
Street, Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston
Place, Boston, Massachusetts 02108.
+ The address of the business so indicated is Atrium
Building, 80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One
Rockefeller Plaza, New York, New York 10020.
++++ The address of the business so indicated is 2
Boulevard Royal, Luxembourg.
+++++ The address of the business so indicated is Nassau,
Bahamas Islands.
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as
principal underwriter or exclusive distributor:
1. Comstock Partners Strategy Fund, Inc.
2. Dreyfus A Bonds Plus, Inc.
3. Dreyfus Appreciation Fund, Inc.
4. Dreyfus Asset Allocation Fund, Inc.
5. Dreyfus Balanced Fund, Inc.
6. Dreyfus BASIC GNMA Fund
7. Dreyfus BASIC Money Market Fund, Inc.
8. Dreyfus BASIC Municipal Fund, Inc.
9. Dreyfus BASIC U.S. Government Money Market Fund
10. Dreyfus California Intermediate Municipal Bond Fund
11. Dreyfus California Tax Exempt Bond Fund, Inc.
12. Dreyfus California Tax Exempt Money Market Fund
13. Dreyfus Capital Value Fund (A Premier Fund)
14. Dreyfus Cash Management
15. Dreyfus Cash Management Plus, Inc.
16. Dreyfus Connecticut Intermediate Municipal Bond Fund
17. Dreyfus Connecticut Municipal Money Market Fund, Inc.
18. Dreyfus Edison Electric Index Fund, Inc.
19. Dreyfus Florida Intermediate Municipal Bond Fund
20. Dreyfus Florida Municipal Money Market Fund
21. The Dreyfus Fund Incorporated
22. Dreyfus Global Bond Fund, Inc.
23. Dreyfus Global Growth, L.P. (A Strategic Fund)
24. Dreyfus GNMA Fund, Inc.
25. Dreyfus Government Cash Management
26. Dreyfus Growth and Income Fund, Inc.
27. Dreyfus Growth and Value Fund, Inc.
28. Dreyfus Growth Opportunity Fund, Inc.
29. Dreyfus Institutional Money Market Fund
30. Dreyfus Institutional Short Term Treasury Fund
31. Dreyfus Insured Municipal Bond Fund, Inc.
32. Dreyfus Intermediate Municipal Bond Fund, Inc.
33. Dreyfus International Equity Fund, Inc.
34. Dreyfus International Recovery Fund, Inc.
35. The Dreyfus/Laurel Funds, Inc.
36. The Dreyfus/Laurel Funds Trust
37. The Dreyfus/Laurel Tax-Free Municipal Funds
38. The Dreyfus/Laurel Investment Series
39. Dreyfus Life and Annuity Index Fund, Inc.
40. Dreyfus LifeTime Portfolios, Inc.
41. Dreyfus Liquid Assets, Inc.
42. Dreyfus Massachusetts Intermediate Municipal Bond Fund
43. Dreyfus Massachusetts Municipal Money Market Fund
44. Dreyfus Massachusetts Tax Exempt Bond Fund
45. Dreyfus Michigan Municipal Money Market Fund, Inc.
46. Dreyfus Money Market Instruments, Inc.
47. Dreyfus Municipal Bond Fund, Inc.
48. Dreyfus Municipal Cash Management Plus
49. Dreyfus Municipal Money Market Fund, Inc.
50. Dreyfus New Jersey Intermediate Municipal Bond Fund
51. Dreyfus New Jersey Municipal Bond Fund, Inc.
52. Dreyfus New Jersey Municipal Money Market Fund, Inc.
53. Dreyfus New Leaders Fund, Inc.
54. Dreyfus New York Insured Tax Exempt Bond Fund
55. Dreyfus New York Municipal Cash Management
56. Dreyfus New York Tax Exempt Bond Fund, Inc.
57. Dreyfus New York Tax Exempt Intermediate Bond Fund
58. Dreyfus New York Tax Exempt Money Market Fund
59. Dreyfus Ohio Municipal Money Market Fund, Inc.
60. Dreyfus 100% U.S. Treasury Intermediate Term Fund
61. Dreyfus 100% U.S. Treasury Long Term Fund
62. Dreyfus 100% U.S. Treasury Money Market Fund
63. Dreyfus 100% U.S. Treasury Short Term Fund
64. Dreyfus Pennsylvania Intermediate Municipal
Bond Fund
65. Dreyfus Pennsylvania Municipal Money Market Fund
66. Dreyfus Short-Intermediate Government Fund
67. Dreyfus Short-Intermediate Municipal Bond Fund
68. Dreyfus Short-Term Income Fund, Inc.
69. The Dreyfus Socially Responsible Growth Fund, Inc.
70. Dreyfus Strategic Growth, L.P.
71. Dreyfus Strategic Income
72. Dreyfus Strategic Investing
73. Dreyfus Tax Exempt Cash Management
74. The Dreyfus Third Century Fund, Inc.
75. Dreyfus Treasury Cash Management
76. Dreyfus Treasury Prime Cash Management
77. Dreyfus Variable Investment Fund
78. Dreyfus-Wilshire Target Funds, Inc.
79. Dreyfus Worldwide Dollar Money Market Fund, Inc.
80. General California Municipal Bond Fund, Inc.
81. General California Municipal Money Market Fund
82. General Government Securities Money Market
Fund, Inc.
83. General Money Market Fund, Inc.
84. General Municipal Bond Fund, Inc.
85. General Municipal Money Market Fund, Inc.
86. General New York Municipal Bond Fund, Inc.
87. General New York Municipal Money Market Fund
88. Pacifica Funds Trust--Pacific American Money Market
Portfolio, Pacific American U.S. Treasury Portfolio
89. Peoples Index Fund, Inc.
90. Peoples S&P MidCap Index Fund, Inc.
91. Premier California Municipal Bond Fund
92. Premier Equity Funds, Inc.
93. Premier Global Investing, Inc.
94. Premier GNMA Fund
95. Premier Growth Fund, Inc.
96. Premier Insured Municipal Bond Fund
97. Premier Municipal Bond Fund
98. Premier New York Municipal Bond Fund
99. Premier State Municipal Bond Fund
(b)
<TABLE>
<CAPTION>
Name and principal Positions and offices with Premier Mutual Positions and
business address Fund Services, Inc. offices with
Registrant
<S> <C> <C>
Marie E. Connolly+ Director, President, Chief Executive President and Treasurer
Officer and Compliance Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer and Chief Assistant
Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Counsel, Vice President
Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Vice President
Associate General Counsel and Assistant
Secretary
Paul Prescott+ Vice President None
Elizabeth Bachman+ Assistant Vice President Vice President and
Assistant Secretary
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
+ Principal business address is One Exchange Place, Boston, Massa-
chusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
</TABLE>
Item 30. Location of Accounts and Records
1. First Data Investors Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant hereby undertakes
(1) to file a post-effective amendment, using
financial statements which need not be certified, within four to
six months from the effective date of Registrant's 1933
Act Registration Statement pertaining to its Dreyfus
Intermediate Term Income Fund.
(2) to call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or
directors when requested in writing to do so by the
holders of at least 10% of the Registrant's outstanding
shares of common stock and in connection with such
meeting to comply with the provisions of Section 16(c)
of the Investment Company Act of 1940 relating to
shareholder communications.
(3) to furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest Annual Report to
Shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Amendment to the Registration Statement to be signed
on its behalf
by the undersigned, thereunto duly authorized, in the City of
New York, and State of New York, on the 6th day of February,
1996.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
(Registrant)
By:/s/Marie E. Connolly*
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of
1933, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
/s/Marie E. Connolly* President and Treasurer February 6, 1996
Marie E. Connolly (Principal Executive,
Financial and Accounting
Officer)
/s/Joseph S. DiMartino* Director February 6, 1996
Joseph S. DiMartino
/s/Lucy Wilson Benson* Director February 6, 1996
Lucy Wilson Benson
/s/David W. Burke* Director February 6, 1996
David W. Burke
/s/Martin D. Fife* Director February 6, 1996
Martin D. Fife
/s/Whitney I. Gerard* Director February 6, 1996
Whitney I. Gerard
/s/Robert R. Glauber* Director February 6, 1996
Robert R. Glauber
/s/Arthur A. Hartman* Director February 6, 1996
Arthur A. Hartman
/s/George L. Perry* Director February 6, 1996
George L. Perry
/s/Paul D. Wolfowitz* Director February 6, 1996
Paul D. Wolfowitz
/s/Eric B. Fischman
* By: Eric B. Fischman,
Attorney-in-Fact
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
Post-Effective Amendment No. 8 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
Page
(11) Consent of Independent Auditors
(17) Financial Data Schedule
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Condensed Financial Information" and "Transfer and Dividend
Disbursing Agent, Custodian, Counsel and Independent Auditors"
and to the use of our report dated August 30, 1995, in this
Registration Statement (Form N-1A 33-48926) of Dreyfus
Investment Grade Bond Funds, Inc. (formerly Dreyfus Short-Term
Income Fund, Inc.)
ERNST & YOUNG LLP
New York, New York
February 9, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 210853
<INVESTMENTS-AT-VALUE> 212438
<RECEIVABLES> 4008
<ASSETS-OTHER> 753
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 217199
<PAYABLE-FOR-SECURITIES> 5000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1675
<TOTAL-LIABILITIES> 6675
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 225544
<SHARES-COMMON-STOCK> 17711
<SHARES-COMMON-PRIOR> 23205
<ACCUMULATED-NII-CURRENT> 111
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16716)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1585
<NET-ASSETS> 210524
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18200
<OTHER-INCOME> 0
<EXPENSES-NET> 1401
<NET-INVESTMENT-INCOME> 16799
<REALIZED-GAINS-CURRENT> (11193)
<APPREC-INCREASE-CURRENT> 9382
<NET-CHANGE-FROM-OPS> 14988
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16781
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6812
<NUMBER-OF-SHARES-REDEEMED> 13378
<SHARES-REINVESTED> 1071
<NET-CHANGE-IN-ASSETS> (66504)
<ACCUMULATED-NII-PRIOR> 93
<ACCUMULATED-GAINS-PRIOR> (5523)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2187
<AVERAGE-NET-ASSETS> 231335
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> .85
<PER-SHARE-GAIN-APPREC> (.05)
<PER-SHARE-DIVIDEND> .85
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.89
<EXPENSE-RATIO> .006
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
