DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report about Dreyfus Investment
Grade Bond Funds, Inc., Dreyfus Short-Term Income Fund. For its semi-annual
reporting period ended January 31, 1996, your Fund produced a total return of
4.98% per share.* Income dividends of approximately $.374 per share were
paid, which is equivalent to an annualized distribution rate per share of
6.13%.**
THE ECONOMY
Modest economic growth and low inflation have spurred a dramatic,
year-long rally in the bond market. In January the Federal Reserve Board
reduced the Fed Funds rate to 5.25%; this was the third reduction since the
Fed began its easing of monetary policy in July 1995.
The economic recovery of the 1990s was productivity-driven. Corporations
implemented extraordinary cost control measures that, while dramatically
improving bottom line earnings, now contribute to the slow rate of employment
growth. Job creation is another significant factor that affects overall
consumer spending, a major component of overall economic activity. The pace
of new job creation, currently running at its slowest since World War II, is
worrisome. Still, surveys indicate that consumers remain optimistic, despite
indications that their spending is being curtailed by the slow growth in
disposable income. Indeed, wages and salaries grew at under 3% over the past
year, barely keeping pace with inflation. A consumer-led weakening of the
economy could lead to further Federal Reserve easing of monetary policy.
It was the favorable low inflation environment that allowed the Federal
Reserve to ease the Federal Funds rate. The inflation outlook could be easily
seen in the retail sector, where consumers were waiting for deep discounts
before buying. The retail sales outlook was bleak at best; most retailers
turned in sales numbers that were similar to the weak 1991 season. A possible
reason for this weakness is the high debt load that consumers are carrying.
One bright area of the economy has been exports. Because of the new
competitiveness of American businesses abroad, the U.S. trade deficit
continues to shrink. Exports, while a relatively small component of overall
economic activity in this country, provide an important support for the job
market.
MARKET ENVIRONMENT
Bonds enjoyed a dramatic bull market for the past 12 months, until the
February downturn. Current business sluggishness may result in further Fed
easing, particularly if the Clinton Administration and Congress can arrive at
a meaningful budget agreement.
Overall, we remain confident in our optimistic view of the bond market.
Yet, we are also cognizant of the stimulatory effect of an easing monetary
policy, and are watchful for any signs of renewed inflationary pressures in
the economy.
THE PORTFOLIO
As you know from our previous letters, at the end of the Fund's annual
period in July 1995, we were optimistic about the potential for declining
interest rates. We positioned your Fund accordingly by extending
the average maturity out towards three years. Because in the past the Fund
has not used derivatives or any speculative trading techniques, positioning
the average maturity has become critical to overall performance. Currently
the average maturity of your Fund is at 3.0 years (that is the maximum for
this Fund). We are contemplating a slight shortening of this average, which
indicates our awareness of the potential for disappointing market action. In
1996 we anticipate that there will be increased Treasury supply, potentially
increased corporate supply, and some uncertainty as to the ability for the
market to absorb it. We feel it is prudent to target a more neutral stance,
hence the anticipated slight shortening from 3.0 years.
The last time we wrote to you, our portfolio allocation (excluding
Treasuries/Agencies which are AAA) was as follows: 17% AA, 48% A, 14% BBB, 1%
BB. The current allocation, excluding Treasuries/Agencies (which we may
change at any time depending on market conditions) is as follows: 3% AAA, 3%
AA, 26%A, 17% BBB, 6% BB, 4% B. As credit spreads have continued to narrow
relative to Treasuries, some securities have little more upside left. Issues
like Coca Cola and Disney have become expensive for the basis points an
investor gets paid to take on the additional risk. We have moved out of
securities paying little more than Treasuries in interest, and moved into
sectors with a greater spread. We allocated more to companies like Time
Warner, Viacom and the mortgage security sector. We felt that the
entertainment and mortgage sectors were priced much cheaper than other
sectors, and we believe they may provide the Fund with a higher yield.
The high level of volatility exhibited by the market in recent years
underscores the need to maintain a disciplined and long-term focus.
Our primary task-to earn as high a level of current income as is
consistent with preservation of capital-continues to guide our portfolio
management decisions.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Gerald E. Thunelius signature logo]
Gerald E. Thunelius
Portfolio Manager
February 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF INVESTMENTS JANUARY 31, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-95.8% AMOUNT VALUE
_______ _______
<S> <C> <C>
BANKING-4.3% Chemical Banking,
Sub. Notes, 10 3/8%, 1999............ $ 2,300,000 $2,615,836
KfW International Finance,
Gtd. Notes, 9 1/2%, 2000............. 5,000,000 5,821,560
______
8,437,396
______
CONSUMER-9.0% Federal Express,
Sr. Notes, 9 3/4%, 1996.............. 1,000,000 1,011,744
Nabisco,
Notes, 8%, 2000...................... 5,000,000 5,361,800
Safeway,
Sr. Medium-Term Notes, Ser. B, 8.07%, 1997 2,000,000 (a) 2,042,020
Service Co. International,
Notes, 6 3/8%, 2000.................. 4,000,000 4,099,292
SUPERVALU,
Medium-Term Notes, Ser. B, 6.09%, 1998........ 5,000,000 5,071,975
______
17,586,831
______
ENTERTAINMENT-15.4% News America Holdings (Gtd. by News),
Sr. Notes:
9 1/8%, 1999......................... 3,650,000 4,055,176
7 1/2%, 2000......................... 5,300,000 5,613,887
Tele-Communications,
Medium-Term Notes, 6.60%, 1998....... 5,000,000 5,084,805
Time Warner,
Notes, 7.95%, 2000................... 5,000,000 5,317,250
Viacom:
Gtd. Sr. Notes, 6 3/4%, 2003......... 5,000,000 5,032,745
Sr. Notes, 5 7/8%, 2000.............. 5,000,000 4,921,240
______
30,025,103
______
FINANCE-9.2% AT&T Capital:
Medium-Term Notes:
Ser. 3, 6.06%, 1997........................... 5,000,000 5,059,200
Ser. 2, 6.46%, 2000........................... 5,000,000 5,138,815
Bear Stearns Cos.,
Medium-Term Notes, Ser. B, 6.05%, 1997........ 5,000,000 5,034,030
Fleet Financial Group,
Sr. Notes, 7 1/8%, 2000.............. 2,500,000 2,630,843
______
17,862,888
______
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) JANUARY 31, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
_______ _______
INDUSTRIAL-4.3% Alco Capital Resource,
Medium-Term Notes, Ser. A, 8.04%, 1997........ $ 5,000,000 $5,163,170
Dual Drilling,
Gtd. Sr. Sub. Notes, 9 7/8%, 2004............. 2,900,000 3,193,625
______
8,356,795
______
INSURANCE-5.8% Associates Corp. of North America,
Sr. Medium-Term Notes, Ser. G, 7.05%, 1997.... 6,205,000 6,340,219
SunAmerica,
Medium-Term Notes, 6.26%, 2001................ 5,000,000 5,067,830
______
11,408,049
______
TELECOMMUNICATIONS-7.9% Cox Communications,
Notes, 6 3/8%, 2000.................. 10,000,000 10,252,000
MCI Communications,
Sr. Medium-Term Notes, 6 1/4%, 1998........... 5,000,000 5,080,100
______
15,332,100
______
TRANSPORTATION-3.4% FINOVA Capital,
Notes, 6 3/8%, 2000.................. 2,000,000 2,041,378
OMI,
Sr. Notes, 10 1/4%, 2003............. 5,000,000 4,675,000
______
6,716,378
______
U.S. GOVERNMENT
AND AGENCIES-36.5% Federal Home Loan Banks, Consolidated Bonds,
8.60%, 6/25/1999..................... 15,000,000 16,488,780
Federal National Mortgage Association:
7%, 9/1/2002......................... 1,842,283 1,883,145
7%, 11/1/2002........................ 488,545 499,382
7%, 12/1/2002........................ 2,451,455 2,505,830
7%, 1/1/2003......................... 117,718 120,256
Government National Mortgage Association I,
9%, 11/15/2017....................... 8,367,079 8,952,775
U.S. Treasury Notes:
7 1/2%, 1/31/1997.................... 16,700,000 17,105,543
8 1/2%, 4/15/1997.................... 9,300,000 9,678,333
8 3/4%, 10/15/1997................... 7,000,000 7,427,140
7 3/4%, 1/31/2000.................... 6,000,000 6,546,312
______
71,207,496
TOTAL BONDS AND NOTES
(cost $184,483,465).................. $186,933,036
=======
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED) JANUARY 31, 1996 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS-4.1% AMOUNT VALUE
_______ _______
TIME DEPOSIT; Chemical Bank (London),
5 3/4%, 2/1/1996
(cost $8,014,000).................... $ 8,014,000 $ 8,014,000
=======
TOTAL INVESTMENTS (cost $192,497,465)....................................... 99.9% $194,947,036
===== =======
CASH AND RECEIVABLES (NET).................................................. .1% $ 151,086
===== =======
NET ASSETS.................................................................. 100.0% $195,098,122
===== =======
NOTE TO STATEMENT OF INVESTMENTS;
(a) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in
transactions exempt from registration, normally to qualified institutional buyers. At January 31, 1996, this security
amounted to $2,042,020 or 1.0% of net assets.
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $192,497,465)-see statement..................................... $194,947,036
Cash.................................................................... 1,318,225
Interest receivable..................................................... 2,565,674
Receivable for subscriptions to Common Stock............................ 14,000
Prepaid expenses........................................................ 22,986
______
198,867,921
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 86,187
Due to Distributor...................................................... 2,170
Payable for investment securities purchased............................. 3,199,103
Payable for Common Stock redeemed....................................... 397,322
Accrued expenses........................................................ 85,017 3,769,799
______ _____
NET ASSETS.................................................................. $195,098,122
=======
REPRESENTED BY:
Paid-in capital......................................................... $206,627,418
Accumulated undistributed investment income-net......................... 161,427
Accumulated net realized (loss) on investments.......................... (14,140,294)
Accumulated net unrealized appreciation on investments-Note 3........... 2,449,571
______
NET ASSETS at value applicable to 16,129,818 outstanding shares of
Common Stock, equivalent to $12.10 per share
(500 million shares of $.001 par value authorized).......................... $195,098,122
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $7,208,403
EXPENSES:
Management fee-Note 2(a).............................................. $ 510,135
Shareholder servicing costs-Note 2(b)................................. 349,133
Professional fees..................................................... 26,704
Registration fees..................................................... 18,992
Directors' fees and expenses-Note 2(c)................................ 18,810
Custodian fees........................................................ 18,792
Prospectus and shareholders' reports-Note 2(b)........................ 16,132
Miscellaneous......................................................... 11,004
_____
TOTAL EXPENSES.................................................. 969,702
Less-reduction in management fee due to undertaking by
the Manager-Note 2(a)............................................. 153,707
_____
NET EXPENSES.................................................... 815,995
_____
INVESTMENT INCOME-NET........................................... 6,392,408
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-NOTE 3:
Net realized gain on investments........................................ $2,575,893
Net unrealized appreciation on investments.............................. 864,649
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 3,440,542
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $9,832,950
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
JULY 31, JANUARY 31, 1996
1995 (UNAUDITED)
________ _________
OPERATIONS:
<S> <C> <C>
Investment income-net................................................ $ 16,799,169 $ 6,392,408
Net realized gain (loss) on investments.............................. (11,193,340) 2,575,893
Net unrealized appreciation on investments for the period............ 9,381,794 864,649
_______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 14,987,623 9,832,950
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................ (16,781,257) (6,341,709)
_______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 79,943,038 22,733,681
Dividends reinvested................................................. 12,577,109 6,048,603
Cost of shares redeemed.............................................. (157,230,575) (47,699,445)
_______ ______
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........... (64,710,428) (18,917,161)
_______ ______
TOTAL (DECREASE) IN NET ASSETS................................. (66,504,062) (15,425,920)
NET ASSETS:
Beginning of period.................................................. 277,028,104 210,524,042
_______ ______
End of period (including undistributed investment income-net:
$110,728 in 1995 and $161,427 in 1996)............................. $ 210,524,042 $ 195,098,122
======= ======
SHARES SHARES
_______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 6,812,455 1,897,951
Shares issued for dividends reinvested............................... 1,071,488 505,136
Shares redeemed...................................................... (13,377,953) (3,983,881)
_______ ______
NET (DECREASE) IN SHARES OUTSTANDING............................... (5,494,010) (1,580,794)
======= ======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
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 period indicated. This
information has been derived from the Fund's financial statements.
SIX MONTHS ENDED
YEAR ENDED JULY 31, JANUARY 31, 1996
______________________________
PER SHARE DATA: 1993(1) 1994 1995 (UNAUDITED)
----- ---- ---- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $12.50 $12.47 $11.94 $11.89
---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net............................. .89 .84 .85 .38
Net realized and unrealized gain (loss) on investments (.01) (.54) (.05) .20
---- ---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS................ .88 .30 .80 .58
---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net.............. (.89) (.83) (.85) (.37)
Dividends from net realized gain on investments... (.02) -- -- --
---- ---- ---- ----
TOTAL DISTRIBUTIONS............................. (.91) (.83) (.85) (.37)
---- ---- ---- ----
Net asset value, end of period.................... $12.47 $11.94 $11.89 $12.10
==== ==== ==== ====
TOTAL INVESTMENT RETURN............................... 7.68%(2) 2.47% 7.05% 9.88%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... -- .24% .61% .80%(2)
Ratio of net investment income to average net assets 7.58%(2) 6.79% 7.26% 6.25%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager..................... 1.12%(2) .71% .34% .15%(2)
Portfolio Turnover Rate........................... 54.59%(3) 74.90% 511.62% 196.62%(3)
Net Assets, end of period (000's Omitted)......... $205,736 $277,028 $210,524 $195,098
_______________________________
(1) From August 18, 1992 (commencement of operations) to July 31, 1993.
(2) Annualized.
(3) Not Annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Investment Grade Bond Funds, Inc. (the "Company") is registered
under the Investment Company Act of 1940 ("Act") as an open-end management
investment company and operates as a series company currently offering one
Fund, Dreyfus Short Term Income Fund (the "Fund"). The Fund is a
non-diversified Series. The Fund's investment objective is to provide
investors with as high a level of current income as is consistent with the
preservation of capital. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge.
On August 24, 1995, the Company's Board of Directors approved a change of
the Company's name, effective November 8, 1995, from "Dreyfus Short Term
Income Fund, Inc." to "Dreyfus Investment Grade Bond Funds, Inc." and to
rename the existing Fund Dreyfus Short Term Income Fund.
(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.
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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
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 certain expenses as
described above) exceed 2 1\2% of the first $30 million, 2% of the next $70
million and 1 1\2% of the excess over $100 million of the average value of the
Fund's net assets in accordance with California "blue-sky" regulations. The
Manager has undertaken from August 1, 1995 through July 31, 1996, to reduce
the management fee paid by, or reimburse such excess expenses of the Fund, to
the extent that the Fund's aggregate expenses (exclusive of 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 undertaking, amounted to $153,707 for the six months ended January 31,
1996.
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.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $32,266 for the period from
December 1, 1995 through January 31, 1996.
(B) Effective December 1, 1995, the Fund adopted a Shareholder Services
Plan, 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 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. During the period December 1, 1995 through January 31, 1996, the Fund
was charged $67,425 pursuant to the Shareholder Services Plan.
Prior to December 1, 1995, the Fund's Service Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the Act, provided for the Fund to (a) reimburse
the Distributor for payments to certain Service Agents for distributing the
Fund's shares and servicing shareholder accounts ("Servicing") and (b) pay
the Manager,
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, or any
affiliate (collectively "Dreyfus") for advertising and marketing relating to
the Fund and for Servicing, 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 have paid 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 had a Servicing
relationship or for whom the Service Agent was the dealer or holder of
record. Each of the Distributor and Dreyfus determined the amounts to be paid
to Service Agents to which it made payments and the basis on which such
payments were made. The Plan also separately provided for the Fund to bear
the costs of preparing, printing and distributing certain of the Fund's
prospectuses and statements of additional information and costs associated
with implementing and operating the Plan, not to exceed the greater of
$100,000 or .005 of 1% of the Fund's average daily net assets for any full
fiscal year. During the period August 1, 1995 through November 30, 1995,
$142,479 was charged to the Fund pursuant to the Plan. Effective December 1,
1995, the Plan was terminated.
(C) Each director who is not an "affiliated person," as defined in the
Act receives from the Company 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 investment securities,
excluding short-term securities, during the six months ended January 31, 1996
amounted to $369,829,406 and $383,889,308, respectively.
At January 31, 1996, accumulated net unrealized appreciation on
investments was $2,449,571, consisting of $2,603,299 gross unrealized
appreciation and $153,728 gross unrealized depreciation.
At January 31, 1996, 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 INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS SHORT TERM INCOME FUND
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Short Term Income Fund (a
series of Dreyfus Investment Grade Bond Funds, Inc.) as of January 31, 1996,
and the related statements of operations and changes in net assets and
financial highlights for the six month period ended January 31, 1996. These
financial statements and financial highlights are the responsibility of the
Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
July 31, 1995 and financial highlights for each of the three years in the
period ended July 31, 1995 and in our report dated August 30, 1995, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst and Young LLP signature logo]
New York, New York
March 1, 1996
[Dreyfus lion "d" logo]
DREYFUS INVESTMENT GRADE BOND FUNDS, INC.
DREYFUS SHORT TERM INCOME FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 083SA961
[Dreyfus logo]
Investment Grade
Bond Funds, Inc.
Dreyfus Short Term Income Fund
Semi-Annual Report
January 31, 1996
