DREYFUS INVESTMENT GRADE FUNDS, INC.
Form N-14
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
If the Agreement and Plan of Reorganization is approved and consummated for the Fund, you would no longer be a shareholder of the Fund, but would become a shareholder of the Acquiring Fund, which has the same investment objective and substantially similar investment management policies as the Fund.
Management of Dreyfus has reviewed the funds in the Dreyfus Family of Funds and has concluded that it would be appropriate to consolidate certain funds having similar investment objectives and management policies and that would otherwise benefit fund shareholders. As a result of the review, management recommended to the Fund's Board that the Fund be consolidated with the Acquiring Fund. Management believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that has a generally better performance record and a lower total expense ratio than the Fund. Management also believes that the reorganization should enable shareholders of the Fund to benefit from more efficient portfolio management and will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
Your vote is extremely important, no matter how large or small your Fund holdings. By voting now, you can help avoid additional costs that are incurred with follow-up letters and calls.
Further information about the proposed reorganization is contained in the enclosed materials, which you should review carefully before you vote. If you have any questions after considering the enclosed materials, please call 1-800-645-6561.
WHAT WILL HAPPEN TO MY DREYFUS A BONDS PLUS, INC. INVESTMENT IF THE PROPOSED REORGANIZATION IS APPROVED?
You will become a shareholder of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), an open-end investment company managed by The Dreyfus Corporation ("Dreyfus"), on or about March 28, 2008 (the "Closing Date"), and will no longer be a shareholder of Dreyfus A Bonds Plus, Inc. (the "Fund"). You will receive Class A shares of the Acquiring Fund with a value equal to the value of your investment in the Fund as of the Closing Date. The Fund will then cease operations.
The Fund's Board believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a larger fund that also is managed by Dreyfus. By combining the Fund with the Acquiring Fund, which has substantially more assets than the Fund, Fund shareholders should benefit from more efficient portfolio management. In addition, the Acquiring Fund has a generally better performance record and a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund. The reorganization also will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities. Other potential benefits are described in the enclosed Prospectus/Proxy Statement.
The reorganization will not be a taxable event for federal income tax purposes. Shareholders will not recognize any capital gain or loss as a direct result of the reorganization. A shareholder's tax basis in Fund shares will carry over to the shareholder's Acquiring Fund shares. The Fund will distribute any undistributed net investment income and net realized capital gains prior to the reorganization, which distribution will be taxable to shareholders.
WILL I ENJOY THE SAME PRIVILEGES AS A SHAREHOLDER OF THE ACQUIRING FUND THAT I CURRENTLY HAVE AS A SHAREHOLDER OF THE FUND?
WILL THE PROPOSED REORGANIZATION RESULT IN A HIGHER MANAGEMENT FEE OR HIGHER FUND EXPENSES?
No. The Fund has agreed to pay Dreyfus a management fee at the annual rate of 0.65% of the value of the Fund's average daily net assets, and the Acquiring Fund has agreed to pay Dreyfus a management fee at the annual rate of 0.45% of the value of the Acquiring Fund's average daily net assets. Dreyfus has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. In addition, the Acquiring Fund has a lower total expense ratio than the Fund based on expenses of the funds, as of July 31, 2007.
WILL I BE CHARGED A SALES CHARGE, REDEMPTION FEE OR CONTINGENT DEFERRED SALES CHARGE ("CDSC") AT THE TIME OF THE REORGANIZATION?
No. No sales charge, redemption fee or CDSC will be imposed at the time of the reorganization. In addition, the front-end sales load and the CDSC applicable to the Acquiring Fund's Class A shares will not be imposed on any subsequent purchases or redemptions of Class A shares of the Acquiring Fund by Fund shareholders who receive Class A shares of the Acquiring Fund as a result of the reorganization.
Because of the anticipated benefits to shareholders of the Fund as a result of the reorganization, expenses relating to the proposed reorganization will be borne by the Fund.
The Fund's Board of Directors has determined that reorganizing the Fund into the Acquiring Fund, which is managed by Dreyfus and has the same investment objective and substantially similar investment management policies as the Fund, offers potential benefits to shareholders of the Fund. These potential benefits include permitting Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that has a generally better performance record and a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund. By combining the Fund with the Acquiring Fund, shareholders of the Fund also should benefit from more efficient portfolio management.
The Fund's Board of Directors believes that the reorganization is in the best interests of the Fund and its shareholders. Therefore, the Directors recommend that you vote FOR the reorganization.
We encourage you to vote through the Internet or by telephone using the number that appears on your proxy card. These voting methods will save the Fund money because the Fund would not have to pay for return-mail postage. Whichever voting method you choose, please take the time to read the Prospectus/Proxy Statement before you vote.
Please note: if you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal. Thank you in advance for your vote.
A Special Meeting of Shareholders of Dreyfus A Bonds Plus, Inc. (the "Fund") will be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, on Wednesday, February 27, 2008, at 10:00 a.m., for the following purposes:
Shareholders of record at the close of business on December 21, 2007 will be entitled to receive notice of and to vote at the meeting.
This Prospectus/Proxy Statement is furnished in connection with a solicitation of proxies by the Board of Directors of Dreyfus A Bonds Plus, Inc. (the "Fund") to be used at the Special Meeting of Shareholders (the "Meeting") of the Fund to be held on Wednesday, February 27, 2008, at 10:00 a.m., at the offices of The Dreyfus Corporation ("Dreyfus"), 200 Park Avenue, 8th Floor, New York, New York 10166, for the purposes set forth in the accompanying Notice of Special Meeting of Shareholders. Shareholders of record at the close of business on December 21, 2007 are entitled to receive notice of and to vote at the Meeting.
It is proposed that the Fund transfer all of its assets to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities, all as more fully described in this Prospectus/Proxy Statement (the "Reorganization"). Upon consummation of the Reorganization, the Acquiring Fund Class A shares received by the Fund will be distributed to Fund shareholders, with each shareholder receiving a pro rata distribution of the Acquiring Fund's Class A shares (or fractions thereof) for Fund shares held prior to the Reorganization. It is contemplated that each shareholder will receive for his or her Fund shares a number of Class A shares (or fractions thereof) of the Acquiring Fund equal in value to the aggregate net asset value of the shareholder's Fund shares as of the date of the Reorganization.
This Prospectus/Proxy Statement, which should be retained for future reference, concisely sets forth information about the Acquiring Fund that Fund shareholders should know before voting on the proposal or investing in the Acquiring Fund.
A Statement of Additional Information ("SAI") dated December 17, 2007, relating to this Prospectus/Proxy Statement, has been filed with the Securities and Exchange Commission (the "Commission") and is incorporated by reference in its entirety. The Commission maintains a website (http://www.sec.gov) that contains the SAI, material incorporated in this Prospectus/Proxy Statement by reference, and other information regarding the Acquiring Fund and the Fund. A copy of the SAI is available without charge by calling 1-800-554-4611, or writing to the Acquiring Fund at its offices at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
The Fund and the Acquiring Fund are open-end management investment companies advised by Dreyfus. The funds have the same investment objective and substantially similar investment management policies. The Fund and the Acquiring Fund each invest primarily in fixed-income securities. However, the investment practices and limitations of each fund (and the related risks) are not identical. The Acquiring Fund is a series of Dreyfus Investment Grade Funds, Inc. (the "Company"). A comparison of the Fund and the Acquiring Fund is set forth in this Prospectus/Proxy Statement.
Shareholders of two other funds advised by Dreyfus—Dreyfus Premier Core Bond Fund and Dreyfus Premier Managed Income Fund (together, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund. The Acquiring Fund plans to change its multi-class structure to help facilitate these reorganizations. As a result, if shareholders of one or both Proposed Acquired Funds approve the reorganization of such fund, the Acquiring Fund would designate its current Investor shares and Institutional shares as Class A shares and Class I shares, respectively, and create Class B and Class C share classes. In addition, the Acquiring Fund would change its name from Dreyfus Intermediate Term Income Fund to Dreyfus Premier Intermediate Term Income Fund. However, if shareholders of neither Proposed Acquired Fund approve the reorganization of such fund, the Acquiring Fund would continue to offer its existing classes of shares—Investor shares and Institutional shares—and would not change its name. In such event, if Fund shareholders approve the Reorganization, they would receive Investor shares of the Acquiring Fund, rather than Class A shares of the Acquiring Fund.
Shareholders are entitled to one vote for each Fund share held and fractional votes for each fractional Fund share held. Fund shares represented by executed and unrevoked proxies will be voted in accordance with the specifications made thereon. If the enclosed proxy card is executed and returned, it nevertheless may be revoked by giving another proxy before the Meeting. Also, any shareholder who attends the Meeting in person may vote by ballot at the Meeting, thereby canceling any proxy previously given. If you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal.
As of October 31, 2007, there were 21,252,600.618 Fund shares issued and outstanding.
Proxy materials will be mailed to shareholders of record on or about December 28, 2007.
This Summary is qualified by reference to the more complete information contained elsewhere in this Prospectus/Proxy Statement, the Acquiring Fund's Prospectus, the Fund's Prospectus and the Agreement and Plan of Reorganization (the "Plan") attached to this Prospectus/Proxy Statement as Exhibit A.
As a result of the Reorganization, each Fund shareholder will cease to be a shareholder of the Fund and will become a shareholder of the Acquiring Fund as of the close of business on the date of the Reorganization. No sales charge, redemption fee or contingent deferred sales charge ("CDSC") will be imposed at the time of the Reorganization, nor will Fund shareholders be subject to a sales charge on any additional investments made in Class A shares of the Acquiring Fund, or a CDSC upon the redemption of such shares, for as long as the shareholder's account is open.
The Fund's Board has unanimously concluded that the Reorganization is in the best interests of the Fund and its shareholders and the interests of the Fund's existing shareholders will not be diluted as a result of the transactions contemplated thereby. See "Reasons for the Reorganization."
To pursue its goal, the Fund normally invests at least 80% of its assets in bonds, including corporate bonds, debentures, notes, mortgage-related securities, collateralized mortgage obligations ("CMOs"), asset-backed securities, convertible debt obligations, preferred stock, convertible preferred stock, municipal obligations and zero coupon bonds that, when purchased by the Fund, are rated A or better or are the unrated equivalent as determined by Dreyfus, and in securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, including Treasury inflation-protected securities.
To pursue its goal, the Acquiring Fund normally invests at least 80% of its assets in fixed-income securities of U.S. and foreign issuers rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. These securities include: U.S. government bonds and notes, corporate bonds, municipal bonds, convertible securities, preferred stocks, inflation-indexed securities, asset-backed securities, mortgage-related securities (including CMOs), and foreign bonds. The Acquiring Fund also may invest in collateralized debt obligations, which include collateralized loan obligations and other similarly structured securities. The Acquiring Fund's portfolio manager buys and sells fixed-income securities based on credit quality, financial outlook and yield potential. Fixed-income securities with deteriorating credit quality are potential sell candidates, while those offering higher yields are potential buy candidates.
The Fund may invest up to 20% of its assets in dollar-denominated and non-dollar-denominated securities of foreign issuers, including those of issuers in emerging markets, but currently limits its investment in non-dollar-denominated securities of foreign issuers to no more than 10% of its net assets. The Acquiring Fund focuses primarily on U.S. securities, but may invest up to 30% of its assets in fixed-income securities of foreign issuers, including those of issuers in emerging markets.
The Fund has no limitations with respect to its portfolio maturity or duration. The Acquiring Fund is required to generally maintain an average effective portfolio maturity of between 5 and 10 years and can be expected to have an effective portfolio duration between 3 and 8 years. The Fund and the Acquiring Fund may invest in individual securities of any maturity. As of September 30, 2007, the average effective maturity of the Fund's portfolio and the Acquiring Fund's portfolio was 12.14 years and 6.44 years, respectively. The average effective duration of the Fund's portfolio and the Acquiring Fund's portfolio as of such date was 4.75 years and 4.93 years, respectively. Duration is a measure of how sensitive a fund's portfolio may be to changes in interest rates — generally, the longer a fund's duration, the more likely its portfolio is to react to interest rate fluctuations and the greater its long-term risk/return potential. The primary portfolio managers of the Fund and the Acquiring Fund and management believe that, because of prevalent market conditions, the characteristics of the funds' portfolios are not significantly different.
Each fund may, but is not required to, use derivatives, such as futures, options and swap agreements, as a substitute for taking a position in an underlying asset, to increase returns, to manage interest rate risk, to manage the effective duration or maturity of the fund's portfolio, or as part of a hedging strategy. Each fund may enter into swap agreements, such as credit default swaps, which can be used to transfer the credit risk of a security without actually transferring ownership of the security or to customize exposure to particular corporate credit. To enhance current income, each fund also may engage in a series of purchase and sale contracts or forward roll transactions in which the fund sells a mortgage-related security, for example, to a financial institution and simultaneously agrees to purchase a similar security from the institution at a later date at an agreed-upon price. Each fund also may make forward commitments in which the fund agrees to buy or sell a security in the future at a price agreed upon today. Each fund also may engage in short-selling, typically for hedging purposes, such as to limit exposure to a possible market decline in the value of its portfolio securities.
Each fund may lend its portfolio securities to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. Loans of portfolio securities may not exceed 33-1/3% of the value of the fund's total assets.
Each fund is a "diversified" fund, which means that neither fund will, with respect to 75% of its total assets, invest more than 5% of its assets in the securities of any single issuer nor hold more than 10% of the outstanding voting securities of any single issuer (other than, in each case, securities of other investment companies, and securities issued or guaranteed by the U.S. government, its agencies or instrumentalities).
For more information on either the Fund's or the Acquiring Fund's investment management policies, see "Goal/Approach" in the relevant Prospectus and "Description of the [Company and] Fund[s]" in the relevant Statement of Additional Information.
The Acquiring Fund is a series of the Company, which, like the Fund, is a corporation organized under the laws of the State of Maryland.
The Fund and the Acquiring Fund may lend their respective portfolio securities to brokers, dealers and other financial institutions. In connection with such loans, the fund will receive collateral from the borrower equal to at least 100% of the value of the loaned securities. If the borrower of the securities fails financially, there could be delays in recovering the loaned securities or exercising rights to the collateral.
The Fund and the Acquiring Fund may engage in short-term trading, which could produce higher transaction costs and taxable distributions, and lower the respective fund's after-tax performance. A fund's forward roll transactions will increase its portfolio turnover rate.
Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations, such as those issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by a fund does not apply to the market value of such security or to shares of the fund itself. In addition, because many types of U.S. government securities trade actively outside the U.S., their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
Under adverse market conditions, the Fund and the Acquiring Fund each could invest some or all of its respective assets in U.S. Treasury securities and money market securities. Although the Fund or the Acquiring Fund would do this for temporary defensive purposes, this strategy could reduce the benefit from any upswing in the market. To the extent the Fund or the Acquiring Fund invests defensively in these securities, the fund might not achieve its investment objective. Each fund also may purchase money market instruments when it has cash reserves or in anticipation of taking a market position.
An investment in a fund is not a bank deposit. It is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
See "Main Risks" in the relevant Prospectus and "Description of the [Company and] Fund[s]" in the relevant Statement of Additional Information for a more complete description of investment risks.
The management fee payable to Dreyfus by the Fund (0.65%) is higher than that payable by the Acquiring Fund (0.45%). Dreyfus has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund's Class A shares, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. In addition, the Acquiring Fund has a lower total expense ratio than the Fund based on expenses of the funds, as of July 31, 2007.
Shareholders of two other funds advised by Dreyfus—Dreyfus Premier Core Bond Fund ("Core Bond") and Dreyfus Premier Managed Income Fund ("Managed Income" and, together with Core Bond, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such Proposed Acquired Fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganization of the respective Proposed Acquired Fund. The fees and expenses set forth below assume that shareholders of the Fund and of the Proposed Acquired Funds approve the reorganizations of their respective funds into the Acquiring Fund. The fees and expenses set forth below are based on net assets and accruals of the Fund, and Class A shares of the Proposed Acquired Funds and the Acquiring Fund, respectively, as of July 31, 2007, and are adjusted for the Fund and the Proposed Acquired Funds to include estimated costs of the reorganizations totaling $300,000. The "Pro Forma After Reorganization" operating expenses information is based on the net assets and accruals of the Fund, and Class A shares of the Proposed Acquired Funds and the Acquiring Fund, as of July 31, 2007, as adjusted showing the effect of the reorganizations had they occurred on such date.
The examples show what you could pay in expenses over time. Each example uses the same hypothetical conditions other funds use in their prospectuses: $10,000 initial investment, 5% total return each year and no changes in expenses. The first example shows the Reorganization of the Fund and the Acquiring Fund and the second example shows the reorganizations of the Fund, Core Bond, Managed Income and the Acquiring Fund (Class A shares only). The examples are based on net operating expenses, which reflect, for the applicable years, the expense waiver/reimbursement by Dreyfus. Because actual returns and expenses will be different, the examples are for comparison only.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
The Acquiring Fund's total net assets (attributable to Investor and Institutional shares (i.e., Class A and Class I shares)), as of September 30, 2007, were approximately $573.6 million. The Acquiring Fund currently does not offer Class B or Class C shares. Each share has one vote. Shares have no preemptive or subscription rights and are freely transferable. All share classes of the Acquiring Fund will invest in the same portfolio of securities, but the classes are subject to different charges and expenses and will likely have different share prices. Shareholders of the Proposed Acquired Funds also are being asked in proxy materials directed to them to approve a separate Agreement and Plan of Reorganization providing for the transfer of all of such funds' assets, subject to liabilities, to the Acquiring Fund in exchange for Acquiring Fund shares. As of September 30, 2007, the Proposed Acquired Funds had total aggregate net assets of approximately $674 million. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganizations of those funds.
After management of Dreyfus reviewed the funds in the Dreyfus Family of Funds to determine whether it would be appropriate to consolidate certain funds having similar investment objectives and investment management policies and that would otherwise benefit fund shareholders, management recommended to the Fund's Board that the Fund be consolidated with the Acquiring Fund. The Fund's Board and the Company's Board have concluded that the Reorganization is in the best interests of the Fund and its shareholders and the Acquiring Fund and its shareholders, respectively. The Fund's Board believes that the Reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund with a generally better performance record, without diluting such shareholders' interests. In addition, Class A shares of the Acquiring Fund have a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund. As of September 30, 2007, the Fund had net assets of approximately $284.3 million and the Acquiring Fund had net assets of approximately $573.6 million. If the Reorganization of the Fund and the reorganizations of the Proposed Acquired Funds are consummated, the Acquiring Fund would have net assets of approximately $1.5 billion, as of such date. By combining the Fund with the Acquiring Fund, Fund shareholders should benefit from more efficient portfolio management and Dreyfus should be able to eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
The Company's Board considered that the Reorganization presents an opportunity for the Acquiring Fund to acquire substantial investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to the Acquiring Fund.
In determining whether to recommend approval of the Reorganization, each Board considered the following factors, among others: (1) the compatibility of the Fund's and the Acquiring Fund's investment objectives, management policies and restrictions, as well as shareholder services offered by the Fund and the Acquiring Fund; (2) the terms and conditions of the Reorganization and whether the Reorganization would result in dilution of shareholder interests; (3) the expense ratios and information regarding the fees and expenses of the Fund and the Acquiring Fund, as well as the estimated expense ratio of the combined Acquiring Fund; (4) the relative performance of the Fund and the Acquiring Fund; (5) the tax consequences of the Reorganization; and (6) the costs to be incurred by the Fund in connection with the Reorganization.
For the reasons described above, the Boards of the Fund and the Company, each of which is comprised entirely of Independent Board Members, approved the Reorganization.
On or before the Closing Date, the Fund will declare a dividend or dividends which, together with all previous dividends, will have the effect of distributing to Fund shareholders all of the Fund's previously undistributed investment company taxable income, if any, for the tax periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), its net exempt interest income for the tax periods ending on or before the Closing Date, and all of its previously undistributed net capital gain, if any, realized in the tax periods ending on or before the Closing Date (after reduction for any capital loss carryforward). Any such distributions will be taxable to Fund shareholders.
As soon as conveniently practicable after the Closing Date, the Fund will liquidate and distribute pro rata to its shareholders of record as of the close of business on the Closing Date, Acquiring Fund Class A shares received by it in the Reorganization. Such liquidation and distribution will be accomplished by establishing accounts on the share records of the Acquiring Fund in the name of each Fund shareholder, each account being credited with the respective pro rata number of Acquiring Fund Class A shares due to the shareholder. After such distribution and the winding up of its affairs, the Fund will cease operations and will be terminated. After the Closing Date, any outstanding certificates representing Fund shares will be canceled and Class A shares of the Acquiring Fund distributed to the Fund's shareholders of record will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
The Plan may be amended at any time prior to the Reorganization. The Fund will provide its shareholders with information describing any material amendment to the Plan prior to shareholder consideration. The obligations of the Fund and the Company, on behalf of the Acquiring Fund, under the Plan are subject to various conditions, including approval by Fund shareholders holding the requisite number of Fund shares and the continuing accuracy of various representations and warranties of the Fund and the Company, on behalf of the Acquiring Fund.
The total expenses of the Reorganization are expected to be approximately $100,000, which will be borne by the Fund. In addition to use of the mails, proxies may be solicited personally or by telephone, and the Fund may pay persons holding Fund shares in their names or those of their nominees for their expenses in sending soliciting materials to their principals. In addition, an outside firm may be retained to solicit proxies on behalf of the Fund's Board. The cost of any such outside solicitation firm is estimated to be approximately $36,000, which amount is included in the estimated total expenses of the Reorganization listed above.
If the Reorganization is not approved by Fund shareholders, the Fund's Board will consider other appropriate courses of action with respect to the Fund.
The Fund's Board has approved the Plan and the Reorganization and has determined that (1) participation in the Reorganization is in the best interests of the Fund and its shareholders and (2) the interests of shareholders of the Fund will not be diluted as a result of the Reorganization. The affirmative vote of a majority of the Fund's shares outstanding and entitled to vote is required to approve the Plan and the Reorganization.
Information about the Acquiring Fund is incorporated by reference into this Prospectus/Proxy Statement from the Acquiring Fund's Prospectus forming a part of the Company's Registration Statement on Form N-1A (File No. 33-48926). Information about the Fund is incorporated by reference into this Prospectus/Proxy Statement from the Fund's Prospectus forming a part of the Fund's Registration Statement on Form N-1A (File No. 2-55614).
The Fund and the Acquiring Fund are subject to the requirements of the 1940 Act and file reports, proxy statements and other information with the Commission. Reports, proxy statements and other information filed by the Fund and the Acquiring Fund may be inspected and copied at the Public Reference Facilities of the Commission at 100 F Street, N.E., Washington, D.C. 20549. Text-only versions of fund documents can be viewed on-line or downloaded from www.sec.gov or www.dreyfus.com. Copies of such material also can be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
In addition to the use of the mails, proxies may be solicited personally or by telephone, and persons holding Fund shares in their names or in nominee name may be paid for their expenses in sending soliciting materials to their principals. An outside firm may be retained to assist in the solicitation of proxies, primarily by contacting shareholders by telephone.
Authorizations to execute proxies may be obtained by telephonic or electronically transmitted instructions in accordance with procedures designed to authenticate the shareholder's identity. In all cases where a telephonic proxy is solicited (as opposed to where the shareholder calls the toll-free number directly to vote), the shareholder will be asked to provide or confirm certain identifiable information and to confirm that the shareholder has received the Prospectus/Proxy Statement and proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic or electronically transmitted voting instructions, a confirmation will be sent to the shareholder to ensure that the vote has been taken in accordance with the shareholder's instructions and to provide a telephone number to call immediately if the shareholder's instructions are not correctly reflected in the confirmation. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting a new proxy to the Fund or by attending the Meeting and voting in person.
If a proxy is executed properly and returned accompanied by instructions to withhold authority to vote, represents a broker "non-vote" (that is, a proxy from a broker or nominee indicating that such person has not received instructions from the beneficial owner or other person entitled to vote Fund shares on a particular matter with respect to which the broker or nominee does not have discretionary power) or is marked with an abstention (collectively, "abstentions"), the Fund shares represented thereby will be considered to be present at the Meeting for purposes of determining the existence of a quorum for the transaction of business. Abstentions will have the effect of a "no" vote for the purpose of obtaining requisite approval for the proposal.
With respect to Dreyfus individual retirement accounts ("IRAs"), the Individual Retirement Custodial Account Agreement governing the IRAs requires The Dreyfus Trust Company ("DTC"), as the custodian of the IRAs, to vote Fund shares held in such IRAs in accordance with the IRA shareholder's instructions. However, if no voting instructions are received, DTC may vote Fund shares held in the IRA in the same proportions as the Fund shares for which voting instructions are received from other Dreyfus IRA shareholders. Therefore, if an IRA shareholder does not provide voting instructions prior to the Meeting, DTC will vote the IRA shares "FOR", "AGAINST" or "ABSTAIN" in the same proportions as it votes the shares for which properly conveyed instructions are timely received from other Dreyfus IRA shareholders.
In the event that a quorum is not present at the Meeting, or if a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. In determining whether to adjourn the Meeting, the following factors may be considered: the nature of the proposal, the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to Fund shareholders with respect to the reasons for the solicitation. Any adjournment will require the affirmative vote of a majority of those shares affected by the adjournment that are represented at the Meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote "FOR" the proposal in favor of such adjournment, and will vote those proxies required to be voted "AGAINST" the proposal against any adjournment. A quorum is constituted by the presence in person or by proxy of the holders of a majority of the Fund's outstanding shares entitled to vote at the Meeting.
The votes of the Acquiring Fund's shareholders are not being solicited since their approval or consent is not necessary for the Reorganization.
As of October 31, 2007, the following shareholders were known by the Fund to own of record or beneficially 5% or more of the outstanding voting shares of the Fund:
As of October 31, 2007, the following shareholders were known by the Acquiring Fund to own of record or beneficially 5% or more of the Acquiring Fund's Class A shares (i.e., Investor shares) outstanding voting shares:
As of October 31, 2007, Board members and officers of the Fund and the Company, as a group, owned less than 1% of the Fund's and the Acquiring Fund's outstanding shares, respectively.
The audited financial statements of the Fund for its fiscal year ended March 31, 2007 and the audited financial statements of the Acquiring Fund for its fiscal year ended July 31, 2007 have been incorporated herein by reference in reliance upon the reports of Ernst & Young LLP, the independent registered public accounting firm for the Fund and the Acquiring Fund, given on their authority as experts in accounting and auditing.
The Fund's Board members are not aware of any other matters that may come before the Meeting. However, should any such matters properly come before the Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters.
Please advise the Fund, in care of Dreyfus Transfer, Inc., P.O. Box 55263, Boston, Massachusetts 02205-8501, whether other persons are the beneficial owners of Fund shares for which proxies are being solicited from you, and, if so, the number of copies of the Prospectus/Proxy Statement and other soliciting material you wish to receive in order to supply copies to the beneficial owners of Fund shares.
AGREEMENT AND PLAN OF REORGANIZATION dated as of November 7, 2007 (the "Agreement"), between DREYFUS A BONDS PLUS, INC. (the "Fund"), a Maryland corporation, and DREYFUS INTERMEDIATE TERM INCOME FUND (the "Acquiring Fund"), a series of DREYFUS INVESTMENT GRADE FUNDS, INC. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a "plan of reorganization" within the meaning of the regulations under Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will consist of the transfer of all of the assets of the Fund to the Acquiring Fund in exchange solely for the Acquiring Fund's Class A shares ("Acquiring Fund Shares") of common stock, par value $.001 per share, and the assumption by the Acquiring Fund of certain liabilities of the Fund and the distribution, after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the Fund in liquidation of the Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement (the "Reorganization").
WHEREAS, the Fund is a registered, open-end management investment company, and the Acquiring Fund is a series of the Company, a registered, open-end management investment company, and the Fund owns securities which are assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Fund are authorized to issue their shares of common stock;
WHEREAS, the Fund's Board has determined that the Reorganization is in the best interests of the Fund and the Fund's shareholders and that the interests of the Fund's existing shareholders will not be diluted as a result of the Reorganization; and
WHEREAS, the Company's Board has determined that the Reorganization is in the best interests of the Acquiring Fund and the Acquiring Fund's shareholders and that the interests of the Acquiring Fund's existing shareholders will not be diluted as a result of the Reorganization:
NOW THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties agree as follows:
1. THE REORGANIZATION.
1.1 Subject to the terms and conditions contained herein, the Fund agrees to assign, transfer and convey to the Acquiring Fund all of the assets of the Fund, including all securities and cash (subject to liabilities), and the Acquiring Fund agrees in exchange therefor (a) to deliver to the Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined as set forth in paragraph 2.3; and (b) to assume certain liabilities of the Fund, as set forth in paragraph 1.2. Such transactions shall take place at the closing (the "Closing") as of the close of business on the closing date (the "Closing Date"), provided for in paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the Fund's account on the books of the Acquiring Fund and shall deliver a confirmation thereof to the Fund.
1.2 The Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all liabilities, expenses, costs, charges and reserves reflected on an unaudited statement of assets and liabilities of the Fund prepared by The Dreyfus Corporation ("Dreyfus"), as of the Valuation Date (as defined in paragraph 2.1), in accordance with U.S. generally accepted accounting principles consistently applied from the prior audited period. The Acquiring Fund shall assume only those liabilities of the Fund reflected in that unaudited statement of assets and liabilities and shall not assume any other liabilities, whether absolute or contingent.
1.3 Delivery of the assets of the Fund to be transferred shall be made on the Closing Date and shall be delivered to Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, the Acquiring Fund's custodian (the "Custodian"), for the account of the Acquiring Fund, with all securities not in bearer or book-entry form duly endorsed, or accompanied by duly executed separate assignments or stock powers, in proper form for transfer, with signatures guaranteed, and with all necessary stock transfer stamps, sufficient to transfer good and marketable title thereto (including all accrued interest and dividends and rights pertaining thereto) to the Custodian for the account of the Acquiring Fund free and clear of all liens, encumbrances, rights, restrictions and claims. All cash delivered shall be in the form of immediately available funds payable to the order of the Custodian for the account of the Acquiring Fund.
1.4 The Fund will pay or cause to be paid to the Acquiring Fund any interest received on or after the Closing Date with respect to assets transferred to the Acquiring Fund hereunder. The Fund will transfer to the Acquiring Fund any distributions, rights or other assets received by the Fund after the Closing Date as distributions on or with respect to the securities transferred. Such assets shall be deemed included in assets transferred to the Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the "Liquidation Date"), the Fund will liquidate and distribute pro rata to the Fund's shareholders of record, determined as of the close of business on the Closing Date ("Fund Shareholders"), Acquiring Fund Shares received by the Fund pursuant to paragraph 1.1. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Fund Shareholders and representing the respective pro rata number of the applicable Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Fund simultaneously will be canceled on the books of the Fund; Fund share certificates, if any, will be canceled and Acquiring Fund Shares distributed to Fund Shareholders will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will be issued in the manner described in the Acquiring Fund's current prospectus and statement of additional information; the Acquiring Fund, however, will not issue share certificates in the Reorganization.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the registered holder of the Acquiring Fund Shares on the books of the Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Fund is and shall remain the responsibility of the Fund up to and including the Closing Date and such later date on which the Fund's existence is terminated.
2. VALUATION.
2.1 The value of the Fund's assets to be acquired, and the amount of the Fund's liabilities to be assumed, by the Acquiring Fund hereunder shall be computed as of the close of trading on the floor of the New York Stock Exchange (usually 4:00 p.m., Eastern time) on the Closing Date (such time and date being hereinafter called the "Valuation Date"), using the valuation procedures set forth in the Company's Articles of Incorporation, as amended (the "Company's Charter"), and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset value per share computed as of the Valuation Date, using the valuation procedures set forth in the Company's Charter and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.3 The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Fund's net assets shall be determined by dividing the value of the net assets of the Fund determined using the same valuation procedures referred to in paragraph 2.1 by the net asset value of one Acquiring Fund Share, determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular practices of Dreyfus as fund accountant for the Fund and the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.2 The Custodian shall deliver at the Closing a certificate of an authorized officer stating that the Fund's portfolio securities, cash and any other assets have been delivered in proper form to the Acquiring Fund on the Closing Date.
3.3 If on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or the Fund shall be closed to trading or trading thereon shall be restricted, or (b) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
3.4 The transfer agent for the Fund shall deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Fund Shareholders and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund's transfer agent shall issue and deliver to the Fund's Secretary a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date, or provide evidence satisfactory to the Fund that such Acquiring Fund Shares have been credited to the Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, receipts or other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Fund represents and warrants to the Company, on behalf of the Acquiring Fund, as follows:
(a) The Fund is a corporation duly organized and validly existing under the laws of the State of Maryland, and has power to carry out its obligations under this Agreement.
(b) The Fund is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company, and the Fund's shares are registered under the Securities Act of 1933, as amended (the "1933 Act"), and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Fund's Articles of Incorporation, as amended (the " Fund's Charter"), or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Fund is a party or by which the Fund is bound.
(e) The Fund has no material contracts or other commitments outstanding (other than this Agreement) which will be terminated with liability to it on or prior to the Closing Date.
(f) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(g) The Statements of Assets and Liabilities of the Fund for each of its five fiscal years ended March 31, 2007 have been audited by Ernst & Young LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Fund as of such dates, and there are no known contingent liabilities of the Fund as of such dates not disclosed therein.
(h) Since March 31, 2007, there has not been any material adverse change in the Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraphs 1.2 and 4.1(g) hereof.
(i) At the Closing Date, all federal and other tax returns and reports of the Fund required by law then to be filed shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Fund's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(j) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Fund. All of the issued and outstanding shares of the Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of its transfer agent as provided in paragraph 3.4. The Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Fund's shares, nor is there outstanding any security convertible into any of the Fund's shares.
(l) On the Closing Date, the Fund will have full right, power and authority to sell, assign, transfer and deliver the assets to be transferred by it hereunder.
(m) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Fund's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(n) The proxy statement of the Fund (the "Proxy Statement") included in the Registration Statement referred to in paragraph 5.5 (other than information therein that has been furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
4.2 The Company, on behalf of the Acquiring Fund, represents and warrants to the Fund as follows:
(a) The Acquiring Fund is a duly established and designated series of the Company, a corporation duly organized and validly existing under the laws of the State of Maryland, and has power to carry out its obligations under this Agreement.
(b) The Company is registered under the 1940 Act as an open-end management investment company, and the Acquiring Fund's shares are registered under the 1933 Act, and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Acquiring Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Company's Charter or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Company is a party on behalf of the Acquiring Fund or by which the Acquiring Fund is bound.
(e) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Acquiring Fund for each of its five fiscal years ended July 31, 2007 have been audited by Ernst & Young LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Fund) fairly reflect the financial condition of the Acquiring Fund as of such dates.
(g) Since July 31, 2007, there has not been any material adverse change in the Acquiring Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraph 4.2(f) hereof.
(h) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law then to be filed shall have been filed, and all federal and other taxes shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(i) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are, and at the Closing Date (including the shares of the Acquiring Fund to be issued pursuant to paragraph 1.1 of this Agreement) will be, duly and validly issued and outstanding, fully paid and non-assessable by the Acquiring Fund. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Company's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Company, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(l) The Proxy Statement included in the Registration Statement (only insofar as it relates to the Acquiring Fund and is based on information furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
(m) No consideration other than the Acquiring Fund Shares (and the Acquiring Fund's assumption of the Fund's stated liabilities) will be issued in exchange for the Fund's assets in the Reorganization.
(n) The Acquiring Fund does not directly or indirectly own, nor on the Closing Date will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of the Fund.
5. COVENANTS OF THE COMPANY, ON BEHALF OF THE ACQUIRING FUND, AND THE FUND.
5.1 The Acquiring Fund and the Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include payment of customary dividends and other distributions.
5.2 The Fund will call a meeting of the Fund's shareholders to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Fund and the Acquiring Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after the Closing Date, the Fund shall furnish the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Fund for federal income tax purposes which will be carried over to the Acquiring Fund as a result of Section 381 of the Code and which will be certified by the Fund's President or its Vice President and Treasurer.
5.5 The Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus, which will include the Proxy Statement referred to in paragraph 4.1(n), all to be included in a Registration Statement on Form N-14 of the Company, on behalf of the Acquiring Fund (the "Registration Statement"), in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act in connection with the meeting of the Fund's shareholders to consider approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
5.7 The Fund covenants that the Fund is not acquiring the Acquiring Fund Shares to be issued hereunder for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement.
5.8 As soon as is reasonably practicable after the Closing, the Fund will make a liquidating distribution to the Fund's shareholders consisting of the Acquiring Fund Shares received at the Closing.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
6.2 The Fund shall have delivered to the Acquiring Fund a statement of the Fund's assets and liabilities, together with a list of the Fund's portfolio securities showing the tax basis of such securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Fund's Treasurer.
6.3 The Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in the Fund's name by the Fund's President or Vice President and the Fund's Treasurer, in form and substance satisfactory to the Acquiring Fund, to the effect that the representations and warranties of the Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND.
The obligations of the Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Company, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
7.2 The Company shall have delivered to the Fund on the Closing Date a certificate executed in the Company's name by the Company's President or Vice President and the Company's Treasurer, in form and substance reasonably satisfactory to the Fund, to the effect that the representations and warranties of the Company, on behalf of the Acquiring Fund, made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Fund shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE ACQUIRING FUND.
If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement.
8.1 This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Fund in accordance with the provisions of the Fund's Charter and the 1940 Act.
8.2 On the Closing Date, no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state Blue Sky and securities authorities) deemed necessary by the Fund or the Acquiring Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Fund or the Acquiring Fund, provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Fund shall have declared and paid a dividend or dividends which, together with all previous dividends, shall have the effect of distributing to Fund shareholders all of the Fund's investment company taxable income (within the meaning of Section 852(b)(2) of the Code) for all taxable years or periods ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid); the excess of its interest income excludable from gross income under Section 103(a) of the Code over its disallowed deductions under Sections 265 and 171(a)(2) of the Code, for all taxable years or periods; and all of its net capital gain (as defined in Section 1222(11) of the Code) realized in all taxable years or periods (after reduction for any capital loss carryforward).
8.6 The Fund and Acquiring Fund shall have received an opinion of Stroock & Stroock & Lavan LLP substantially to the effect that based on the facts and assumptions stated herein and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes:
(a) The transfer of all of the Fund's assets to the Acquiring Fund in exchange solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund, followed by the distribution by the Fund of those Acquiring Fund Shares to Fund Shareholders in complete liquidation of the Fund, will qualify as a "reorganization" within the meaning of Section 368(a) of the Code and each of the Fund and the Acquiring Fund will be "a party to a reorganization"; (b) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund pursuant to the Reorganization; (c) no gain or loss will be recognized by the Fund upon the transfer of the Fund's assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund or upon the distribution (whether actual or constructive) of those Acquiring Fund Shares to Fund Shareholders in exchange for their shares of the Fund in liquidation of the Fund pursuant to the Reorganization; (d) no gain or loss will be recognized by Fund Shareholders upon the exchange of their Fund shares for the Acquiring Fund Shares pursuant to the Reorganization; (e) the aggregate tax basis for the Acquiring Fund Shares received by each Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Fund shares held by such Shareholder immediately prior to the Reorganization, and the holding period of those Acquiring Fund Shares received by each Fund Shareholder will include the period during which the Fund shares exchanged therefor were held by such Shareholder (provided the Fund shares were held as capital assets on the date of the Reorganization); and (f) the tax basis of each Fund asset acquired by the Acquiring Fund will be the same as the tax basis of such asset to the Fund immediately prior to the Reorganization, and the holding period of each asset of the Fund in the hands of the Acquiring Fund will include the period during which that asset was held by the Fund.
In rendering its opinion, counsel may rely as to factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which counsel may treat as representations and warranties made to it, and in separate letters addressed to counsel and the certificates delivered pursuant to this Agreement.
No opinion will be expressed as to the effect of the Reorganization on (i) the Fund or the Acquiring Fund with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting, and (ii) any shareholder of the Fund that is required to recognize unrealized gains and losses for federal income tax purposes under a mark-to-market system of accounting.
9. TERMINATION OF AGREEMENT; EXPENSES.
9.1 This Agreement and the transactions contemplated hereby may be terminated and abandoned by resolution of the Board of the Fund or of the Company, as the case may be, at any time prior to the Closing Date (and notwithstanding any vote of the Fund's shareholders) if circumstances should develop that, in the opinion of the party's Board, make proceeding with the Reorganization inadvisable.
9.2 If this Agreement is terminated and the transactions contemplated hereby are abandoned pursuant to the provisions of this Section 9, this Agreement shall become void and have no effect, without any liability on the part of any party hereto or the Board members or officers of the Company or the Fund, or shareholders of the Acquiring Fund or of the Fund, as the case may be, in respect of this Agreement.
9.3 The Fund shall bear the aggregate expenses of the transactions contemplated hereby.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may be waived by the Board of the Fund or of the Company if, in the judgment of either, such waiver will not have a material adverse effect on the benefits intended under this Agreement to the shareholders of the Fund or of the Acquiring Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided for herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and merges and supersedes all prior discussions, agreements and understandings of every kind and nature between them relating to the subject matter hereof. Neither party shall be bound by any condition, definition, warranty or representation, other than as set forth or provided in this Agreement or as may be, on or subsequent to the date hereof, set forth in a writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws; provided, however, that the due authorization, execution and delivery of this Agreement by the Fund and the Company, on behalf of the Acquiring Fund, shall be governed and construed in accordance with the internal laws of the State of Maryland without giving effect to principles of conflict of laws; provided that, in the case of any conflict between those laws and federal securities laws, the latter shall govern.
11.4 This Agreement may be amended only by a signed writing between the parties.
11.5 This Agreement may be executed in counterparts, each of which, when executed and delivered, shall be deemed to be an original.
11.6 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
11.7 It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Board members or officers of the Fund or the Company, or shareholders, nominees, agents, or employees of the Fund or the Acquiring Fund personally, but shall bind only the property of the Fund or the Acquiring Fund, as the case may be, as provided in the Fund's Charter or the Company's Charter, respectively.
IN WITNESS WHEREOF, the Fund and the Company, on behalf of the Acquiring Fund, have caused this Agreement and Plan of Reorganization to be executed and attested on its behalf by its duly authorized representatives as of the date first above written.
The undersigned shareholder of Dreyfus A Bonds Plus, Inc. (the "Fund") hereby appoints Joseph M. Chioffi and Jeff Prusnofsky, and each of them, the attorneys and proxies of the undersigned, with full power of substitution, to vote, as indicated herein, all of the shares of common stock of the Fund standing in the name of the undersigned at the close of business on December 21, 2007, at a Special Meeting of Shareholders to be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, at 10:00 a.m., on Wednesday, February 27, 2008, and at any and all adjournments thereof, with all of the powers the undersigned would possess if then and there personally present and especially (but without limiting the general authorization and power hereby given) to vote as indicated on the proposal, as more fully described in the Prospectus/Proxy Statement for the meeting.
This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the Prospectus/Proxy Statement dated December 17, 2007 relating specifically to the proposed transfer of all of the assets and liabilities of Dreyfus A Bonds Plus, Inc. (the "Fund") in exchange for Class A shares of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"). The transfer is to occur pursuant to an Agreement and Plan of Reorganization. This Statement of Additional Information consists of this cover page and the following documents attached hereto:
The Acquiring Fund's Statement of Additional Information, and the financial statements included in the Acquiring Fund's Annual Report and the Fund's Annual Report and Semi-Annual Report, are incorporated herein by reference. The Prospectus/Proxy Statement dated December 17, 2007 may be obtained by writing to the Fund or the Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
The Acquiring Fund's Statement of Additional Information dated December 3, 2007 is incorporated herein by reference to the Acquiring Fund's Post-Effective Amendment No. 33 to its Registration Statement on Form N-1A, filed November 30, 2007 (File No. 33-48926). The financial statements of the Acquiring Fund are incorporated herein by reference to its Annual Report dated July 31, 2007, filed September 28, 2007.
The Fund's Statement of Additional Information dated August 1, 2007 is incorporated herein by reference to the Fund's Post-Effective Amendment No. 45 to its Registration Statement on Form N-1A, filed July 25, 2007 (File No. 2-55614). The financial statements of the Fund are incorporated herein by reference to its Annual Report dated March 31, 2007, filed May 30, 2007, and Semi-Annual Report dated September 30, 2007.
Pro Forma STATEMENT OF INVESTMENTS
Dreyfus Intermediate Term Income Fund
September 30, 2007 (Unaudited)
Dreyfus
Intermediate Dreyfus Dreyfus Premier Dreyfus Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Coupon Maturity
Bonds and Notes--90.1% Rate (%) Date Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 3.00 8/1/35 440,000 45,000 625,000 1,110,000
Raytheon,
Sr. Notes 5.50 11/15/12 375,000 375,000
Agricultural--.3%
Philip Morris,
Debs. 7.75 1/15/27 1,495,000 a 1,475,000 105,000 2,000,000 a 5,075,000
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 6.96 3/8/16 1,140,000 b 540,000 b 120,000 b 1,230,000 b 3,030,000
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 4.73 9/15/10 425,000 425,000
Capital Auto Receivables Asset
Trust, Ser. 2005-1, Cl. D 6.50 5/15/12 900,000 b 1,100,000 b 2,000,000
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 7.16 1/15/13 1,050,000 b 1,050,000
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 6.57 9/16/13 500,000 b 500,000 b 708,000 b 1,708,000
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 2.85 8/8/10 110,000 110,000
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 4.19 7/15/09 1,000,000 50,000 1,400,000 2,450,000
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 3.72 10/15/09 1,135,000 1,135,000
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 4.64 4/15/10 1,405,000 1,140,000 125,000 1,985,000 4,655,000
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 4.72 2/15/11 720,000 365,000 85,000 770,000 1,940,000
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 7.12 2/15/13 700,000 b 900,000 b 1,600,000
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 5.47 9/15/12 340,000 340,000
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 7.05 12/15/13 1,575,000 b 300,000 b 250,000 b 1,700,000 b 3,825,000
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 2.65 5/16/11 201,705 201,705
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 5.25 5/15/13 495,000 50,000 545,000
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 5.04 1/17/12 465,000 465,000
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 5.65 2/20/13 945,000 945,000
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 2.81 8/22/11 224,581 224,581
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 3.51 2/17/12 82,610 50,236 132,846
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 3.13 5/17/12 86,887 55,406 142,293
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 4.57 11/19/12 2,065,000 575,000 170,000 2,560,000 5,370,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 4.50 5/17/13 390,000 95,000 485,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 4.54 5/17/13 50,000 50,000
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 6.14 1/15/13 2,210,000 b,c 2,100,000 b,c 435,000 b.c 2,350,000 b,c 7,095,000
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 6.04 6/15/14 2,875,000 c 2,875,000
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 6.04 1/15/14 435,000 c 435,000
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 6.04 1/9/12 10,235,000 c 4,530,000 c 14,765,000
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 960,000 c 960,000
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 6.80 7/15/14 5,268,000 11,322,000 16,590,000
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 5.19 4/25/36 231,064 c 231,064
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 5.14 1/25/34 925,000 c 925,000
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 5.21 4/28/39 1,795,000 c 2,550,000 c 4,345,000
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 5.17 5/25/36 239,941 c 239,941
Centex Home Equity,
Ser. 2006-A, Cl. AV1 5.18 6/25/36 157,998 c 112,734 c 341,617 c 612,349
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 5.01 2/25/35 1,700,000 140,000 2,350,000 4,190,000
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 5.96 7/25/36 905,209 c 1,590,581 c 100,866 c 2,596,656
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 5.87 9/25/36 395,159 c 760,948 c 1,156,107
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 5.56 9/25/36 1,600,000 c 1,600,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 5.98 6/25/37 1,631,721 c 527,910 c 2,159,631
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 7.00 6/25/37 150,000 c 150,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 7.00 6/25/37 525,000 c 525,000
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.26 7/25/36 248,050 c 23,749 c 271,799
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 5.24 12/25/25 1,119,527 c 1,119,527
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 5.45 12/25/35 164,024 c 164,024
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 5.72 12/25/36 119,006 c 119,006
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 1,520,000 160,000 1,715,000 3,395,000
First NLC Trust,
Ser. 2005-3, Cl. AV2 5.36 12/25/35 312,260 c 312,260
GSAA Trust,
Ser. 2006-7, Cl. AV1 5.21 3/25/46 589,418 c 589,418
GSAMP Trust,
Ser. 2006-S4, Cl. A1 5.22 5/25/36 289,900 c 289,900
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 5.17 5/25/36 183,691 c 183,691
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 5.42 4/1/37 1,264,019 c 1,264,019
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 5.17 4/25/36 617,395 c 183,783 c 14,358 c 815,536
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 5.83 11/25/36 740,000 c 485,000 c 75,000 c 955,000 c 2,255,000
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 5.20 3/25/36 430,032 c 430,032
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.42 12/25/36 787,764 c 787,764
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 5.91 1/25/36 1,525,000 c 145,000 c 2,100,000 c 3,770,000
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 5.36 1/25/36 243,865 c 243,865
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 6.64 8/25/35 130,000 c 130,000
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 6.00 8/25/36 480,115 c 480,115
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 5.61 2/25/35 1,585,000 c 2,105,000 c 3,690,000
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 5.68 2/25/35 490,000 c 600,000 c 1,090,000
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 5.96 9/25/31 61,551 c 61,551
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 5.75 9/25/33 723,951 236,676 c 981,789 1,942,416
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 5.60 10/25/35 450,000 c 555,000 c 1,005,000
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 5.17 6/25/36 292,586 c 292,586
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 5.24 3/25/36 213,510 c 292,588 c 506,098
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 5.50 3/25/36 240,000 c 240,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 5.73 5/25/35 1,120,000 c 1,400,000 c 2,520,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 5.83 5/25/35 317,185 c 317,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 5.83 7/22/30 420,000 b,c 420,000
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 5.19 2/25/37 657,166 c 657,166
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 5.16 5/25/36 165,222 c 165,222
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 9.25 3/15/20 1,272,548 444,191 57,625 1,824,786 3,599,150
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 3.79 12/15/17 37,251 37,251
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 5.25 2/15/14 379,875 379,875
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 5.25 12/15/18 1,375,000 115,000 1,500,000 2,990,000
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 6.48 1/15/37 745,000 1,000,000 1,745,000
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 6.75 3/7/29 80,000 80,000
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 6.05 3/13/09 2,580,000 c 320,000 c 1,950,000 c 4,850,000
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 5.89 10/31/08 2,725,000 c 250,000 c 3,745,000 c 6,720,000
DaimlerChrysler N.A. Holding,
Gtd. Notes 6.13 3/13/09 1,375,000 c 135,000 c 1,925,000 c 3,435,000
DaimlerChrysler N.A. Holding,
Notes 4.88 6/15/10 295,000 65,000 360,000
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 965,000 b,c 965,000
ERAC USA Finance,
Notes 7.95 12/15/09 1,095,000 b 1,095,000
Goodyear Tire & Rubber,
Sr. Notes 9.13 12/1/09 295,000 b,c 30,000 b,c 380,000 b,c 705,000
Banks--6.4%
BAC Capital Trust XIV,
Bank Gtd. Notes 5.63 12/31/49 2,930,000 c 470,000 c 3,205,000 c 6,605,000
Barclays Bank,
Sub. Notes 5.93 9/29/49 265,000 a,b,c 265,000
Barclays Bank,
Jr. Sub. Bonds 7.43 12/15/49 120,000 b,c 120,000
Capital One Financial,
Sr. Unsub. Notes 6.00 9/10/09 5,275,000 c 540,000 c 2,500,000 c 8,315,000
Chevy Chase Bank,
Sub. Notes 6.88 12/1/13 1,220,000 480,000 145,000 1,710,000 3,555,000
Chuo Mitsui Trust & Banking,
Sub. Notes 5.51 12/29/49 385,000 b,c 385,000
Colonial Bank,
Sub. Notes 6.38 12/1/15 1,105,000 750,000 250,000 1,530,000 3,635,000
Colonial Bank,
Sub. Notes 8.00 3/15/09 385,000 250,000 540,000 1,175,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 335,000 335,000
Glitnir Banki,
Sub. Notes 6.69 6/15/16 450,000 b,c 450,000
Greater Bay Bancorp,
Sr. Notes, Ser. B 5.25 3/31/08 100,000 100,000
ICICI Bank,
Bonds 5.90 1/12/10 710,000 b,c 400,000 b,c 850,000 b,c 1,960,000
Industrial Bank of Korea,
Sub. Notes 4.00 5/19/14 2,630,000 b,c 275,000 b,c 3,305,000 b,c 6,210,000
Islandsbanki,
Notes 5.52 10/15/08 975,000 b,c 87,000 b,c 1,245,000 b,c 2,307,000
J.P. Morgan & Co.,
Sub. Notes 6.25 1/15/09 1,110,000 160,000 1,155,000 2,425,000
Landsbanki Islands,
Sr. Notes 6.21 8/25/09 2,450,000 b,c 250,000 b,c 3,225,000 b,c 5,925,000
M&T Bank,
Sr. Unscd. Bonds 5.38 5/24/12 245,000 245,000
Manufacturers & Traders Trust,
Sub. Notes 5.59 12/28/20 475,000 c 475,000
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 5.85 12/4/12 2,430,000 c 2,610,000 c 260,000 c 2,650,000 c 7,950,000
Marshall and Ilsley,
Sr. Unscd. Notes 5.63 8/17/09 2,765,000 1,395,000 325,000 2,945,000 7,430,000
Morgan Stanley,
Notes 3.88 1/15/09 690,000 690,000
NB Capital Trust IV,
Gtd. Cap. Secs. 8.25 4/15/27 1,000,000 180,000 1,180,000
Northern Rock,
Sub. Notes 5.60 4/29/49 975,000 b,c 975,000
Northern Rock,
Sub. Notes 5.60 4/30/49 350,000 b,c 350,000 b,c 700,000
Northern Rock,
Sub. Notes 6.59 6/28/49 1,130,000 b,c 1,175,000 b,c 2,305,000
Northern Rock,
Sub. Notes 6.59 6/29/49 215,000 b,c 215,000
Popular North America,
Notes 6.05 12/12/07 1,315,000 c 125,000 c 1,815,000 c 3,255,000
Regions Financial,
Sr. Notes 5.44 8/8/08 1,450,000 c 1,450,000
Resona Bank,
Notes 5.85 9/29/49 385,000 b,c 385,000
Royal Bank of Scotland,
Bonds 6.99 10/5/49 1,825,000 b,c 1,850,000b,c,g 3,675,000
Royal Bank of Scotland,
Bonds 6.99 10/29/49 1,045,000 b,c,g 290,000 b,c,g 1,335,000
Shinsei Finance Cayman,
Jr. Sub. Bonds 6.42 1/29/49 795,000 b,c 795,000
Societe Generale,
Sub. Notes 5.92 4/29/49 330,000 b,c 330,000
Sovereign Bancorp,
Sr. Notes 4.80 9/1/10 925,000 c 925,000
Sovereign Bancorp,
Sr. Unscd. Notes 5.44 3/23/10 2,105,000 c 585,000 c 250,000 c 1,850,000 c 4,790,000
Sovereign Bancorp,
Sr. Notes 5.90 3/1/09 2,145,000 c 195,000 c 2,965,000 c 5,305,000
SunTrust Preferred Capital I,
Bank Gtd. Notes 5.85 12/31/49 2,875,000 c 705,000 a,b,c 330,000 c 3,125,000 c 7,035,000
USB Capital IX,
Gtd. Notes 6.19 4/15/49 5,585,000 a,c 1,415,000 c 795,000 a,c 6,410,000 c 14,205,000
Wachovia,
Sr. Notes 3.63 2/17/09 155,000 155,000
Wachovia Bank,
Sub. Notes 5.00 8/15/15 850,000 850,000
Wachovia,
Sub. Notes 6.38 1/15/09 915,000 915,000
Washington Mutual,
Notes 5.66 1/15/10 810,000 c 810,000
Wells Fargo & Co.,
Notes 3.13 4/1/09 4,195,000 795,000 4,500,000 9,490,000
Wells Fargo Bank N.A.,
Sub. Notes 7.55 6/21/10 1,895,000 2,855,000 1,870,000 6,620,000
Wells Fargo & Co.,
Sub. Notes 6.38 8/1/11 540,000 540,000
Western Financial Bank,
Sub. Debs. 9.63 5/15/12 1,695,000 165,000 2,390,000 4,250,000
World Savings Bank,
Sr. Notes 4.50 6/15/09 4,065,000 330,000 4,280,000 8,675,000
Zions Bancorporation,
Sr. Unscd. Notes 5.48 4/15/08 2,350,000 c 620,000 c 105,000 c 3,075,000
Zions Bancorporation,
Sub. Notes 6.00 9/15/15 825,000 825,000
Building & Construction--.5%
American Standard,
Gtd. Notes 7.38 2/1/08 1,530,000 145,000 2,115,000 3,790,000
Centex,
Sr. Unscd. Notes 4.75 1/15/08 725,000 65,000 1,010,000 1,800,000
D.R. Horton,
Gtd. Notes 5.88 7/1/13 1,365,000 120,000 1,870,000 3,355,000
D.R. Horton,
Sr. Unsub. Notes 6.00 4/15/11 15,000
Masco,
Sr. Unscd. Notes 6.00 3/12/10 1,390,000 c 410,000 c 140,000 c 1,620,000 c 3,560,000
Owens Corning,
Gtd. Notes 6.50 12/1/16 210,000 210,000
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 10.13 9/1/08 309,000 206,000 29,000 420,000 964,000
ICI Wilmington,
Gtd. Notes 4.38 12/1/08 725,000 725,000
Lubrizol,
Sr. Notes 4.63 10/1/09 815,000 815,000
RPM International,
Sr. Notes 4.45 10/15/09 1,140,000 125,000 1,415,000 2,680,000
Rohm and Haas Holdings,
Unsub. Notes 5.60 3/15/13 220,000 220,000
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 700,000 b,c 200,000 b,c 70,000 b,c 970,000
ERAC USA Finance,
Notes 7.95 12/15/09 760,000 b 360,000 b 100,000 b 1,220,000
ERAC USA Finance,
Bonds 5.60 5/1/15 550,000 b 550,000
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 4.25 7/10/43 1,424,590 1,424,590
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 5.12 7/11/43 300,000 300,000
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 5.71 12/25/33 505,134 b,c 303,081 b,c 690,350 b,c 1,498,565
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 5.49 4/25/34 636,882 b,c 303,277 b,c 940,159
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 6.33 4/25/34 192,076 b,c 283,059 b,c 475,135
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 5.53 11/25/35 1,538,477 b,c 145,067 b,c 2,171,428 b,c 3,854,972
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 6.23 11/25/35 76,351 b,c 76,351
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 8.13 11/25/35 381,756 b,c 190,878 b,c 76,351 b,c 534,458 b,c 1,183,443
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 8.63 1/25/36 186,517 b,c 186,517
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 5.78 1/25/36 426,916 b,c 82,896 b,c 911,859 b,c 1,421,671
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 6.60 7/25/36 673,353 b,c 673,353
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 7.83 7/25/36 231,465 b,c 336,677 b,c 568,142
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 5.40 4/25/36 397,251 b,c 397,251
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 5.41 1/25/37 1,711,777 b,c 182,474 b,c 2,337,402 b,c 4,231,653
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 4.24 8/13/39 295,000 295,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 4.25 7/11/42 1,125,000 1,550,000 2,675,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 4.57 7/11/42 120,000 120,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 4.56 2/13/42 1,365,000 125,000 1,900,000 3,390,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 5.52 9/11/41 350,000 350,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 5.87 9/11/38 715,000 c 715,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 5.53 10/12/41 775,000 775,000
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 6.26 10/15/30 744,322 651,281 88,388 790,842 2,274,833
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 6.60 12/19/29 35,072 35,072
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 5.41 1/15/46 580,000 580,000
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 5.94 5/15/23 2,285,000 b,c 725,000 b,c 20,000 b,c 3,150,000 b,c 6,180,000
Crown Castle Towers,
Ser. 2005-1A, Cl. D 5.61 6/15/35 1,290,000 b 445,000 b 115,000 b 1,815,000 b 3,665,000
Crown Castle Towers,
Ser. 2006-1A, Cl. B 5.36 11/15/36 275,000 b 275,000
Crown Castle Towers,
Ser. 2006-1A, Cl. C 5.47 11/15/36 730,000 b 730,000
Crown Castle Towers,
Ser. 2006-1A, Cl. D 5.77 11/15/36 745,000 b 550,000 b 75,000 b 960,000 b 2,330,000
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 6.24 11/12/31 114,944 114,944
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 6.41 6/10/31 291,074 291,074
Global Signal Trust,
Ser. 2006-1, Cl. D 6.05 2/15/36 1,650,000 b 580,000 b 160,000 b 2,275,000 b 4,665,000
Global Signal Trust,
Ser. 2006-1, Cl. E 6.50 2/15/36 400,000 b 320,000 b 35,000 b 550,000 b 1,305,000
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 4.22 4/10/40 1,075,000 1,475,000 2,550,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 6.05 3/6/20 1,630,000 b,c 1,630,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 6.24 3/6/20 610,000 b,c 610,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 6.28 3/6/20 2,605,000 b,c 305,000 b,c 2,770,000 b,c 5,680,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 6.32 3/6/20 1,415,000 b,c 150,000 b,c 1,545,000 b,c 3,110,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 6.85 3/6/20 915,000 b,c 350,000 b,c 95,000 b,c 995,000 b,c 2,355,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 7.10 3/6/20 3,060,000 b,c 330,000 b,c 3,335,000 b,c 6,725,000
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 5.44 3/10/39 1,450,000 1,450,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 4.30 1/15/38 540,000 540,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 5.20 12/15/44 1,250,000 1,250,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 6.07 4/15/45 710,000 c 710,000
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 3.89 5/28/40 27,970 b 27,970
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 4.96 7/12/38 885,000 885,000
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 5.40 11/12/37 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 7.42 3/15/30 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 6.71 12/15/31 115,699 115,699
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 7.02 3/15/32 28,077 28,077
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 5.09 10/12/52 1,000,000 1,000,000
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 5.33 12/15/43 1,540,000 1,540,000
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 5.71 7/12/44 1,550,000 1,550,000
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 5.80 6/11/42 570,000 c 570,000
Morgan Stanley Dean Witter Capital I,
Ser. 2001-PPM, Cl. A3 6.54 2/15/31 102,547 102,547
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 6.48 8/20/30 952,391 404,440 107,633 1,014,362 2,478,826
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 5.85 11/15/36 695,000 b 235,000 b 70,000 b 890,000 b 1,890,000
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 6.10 8/15/39 495,000 c 495,000
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3.83 1/25/35 3,499,442 b 2,232,099 b 328,989 b 4,861,500 b 10,922,030
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 7.52 6/1/66 1,215,000 c 396,000 c 240,000 c 1,590,000 c 3,441,000
Amvescap,
Gtd. Notes 5.63 4/17/12 2,780,000 380,000 290,000 3,165,000 6,615,000
Bear Stearns,
Sr. Unscd. Notes 5.50 8/15/11 785,000 785,000
Boeing Capital,
Sr. Notes 7.38 9/27/10 890,000 890,000
Capmark Financial Group,
Gtd. Notes 5.88 5/10/12 3,245,000 b 860,000 b 340,000 b 4,095,000 b 8,540,000
CIT Group,
Sr. Notes 5.71 8/15/08 2,035,000 c 185,000 c 2,820,000 c 5,040,000
Countrywide Financial,
Gtd. Notes 5.50 1/5/09 260,000 c 260,000
Countrywide Financial,
Gtd. Notes 5.80 6/7/12 540,000 540,000
Countrywide Home Loans,
Gtd. Notes 3.25 5/21/08 375,000 375,000
Countrywide Home Loans,
Notes 4.13 9/15/09 1,445,000 2,010,000 3,455,000
Credit Suisse First Boston USA,
Notes 3.88 1/15/09 790,000 315,000 560,000 1,665,000
Credit Suisse Guernsey,
Jr. Sub. Notes 5.86 5/29/49 670,000 c 670,000
Credit Suisse USA,
Sr. Unsub. Notes 5.50 8/16/11 1,215,000 a 1,215,000
FCE Bank,
Notes EUR 5.72 9/30/09 2,155,000 c,d 2,155,000
FCE Bank,
Notes EUR 5.73 9/30/09 1,980,000 c,d 235,000 c,d 2,215,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 2,985,000 2,675,000 5,660,000
Ford Motor Credit,
Unscd. Notes 7.38 10/28/09 1,445,000 1,445,000
Fuji JGB Investment,
Sub. Bonds 9.87 12/29/49 1,175,000 b,c 750,000 b,c 100,000 b,c 1,620,000 b,c 3,645,000
General Electric Capital,
Sr. Unscd. Notes, Ser. A 4.13 9/1/09 1,053,000 148,000 1,111,000 2,312,000
General Electric Capital,
Notes, Ser. A 4.63 9/15/09 1,200,000 170,000 1,265,000 2,635,000
Glencore Funding,
Gtd. Notes 6.00 4/15/14 1,280,000 b 440,000 b 140,000 b 1,630,000 b 3,490,000
GMAC,
Unsub. Notes 6.81 5/15/09 1,700,000 c 200,000 c 1,810,000 c 3,710,000
Goldman Sachs Capital II,
Gtd. Bonds 5.79 12/29/49 1,640,000 c 495,000 c 170,000 c 1,825,000 c 4,130,000
Goldman Sachs Group,
Sub. Notes 5.63 1/15/17 330,000 330,000
HSBC Finance Capital Trust IX,
Gtd. Notes 5.91 11/30/35 400,000 c 400,000
HSBC Finance,
Notes 5.50 1/19/16 800,000
HSBC Finance,
Sr. Notes 6.04 9/14/12 3,060,000 c 280,000 c 4,195,000 c 7,535,000
International Lease Finance,
Sr. Unscd. Notes 5.72 5/24/10 125,000 c 125,000
Janus Capital Group,
Notes 6.25 6/15/12 1,955,000 545,000 345,000 2,125,000 4,970,000
Jefferies Group,
Sr. Unscd. Debs. 6.25 1/15/36 1,195,000 1,195,000
Jefferies Group,
Sr. Unscd. Notes 7.75 3/15/12 805,000 140,000 1,050,000 1,995,000
John Deere Capital,
Notes 5.66 9/1/09 770,000 c 555,000 a,b 80,000 c 1,405,000
JPMorgan Chase & Co.,
Sub. Notes 5.13 9/15/14 1,460,000 1,460,000
Kaupthing Bank,
Sr. Notes 6.06 1/15/10 2,295,000 b,c 235,000 b,c 2,960,000 b,c 5,490,000
Kaupthing Bank,
Sub. Notes 7.13 5/19/16 350,000 b 350,000
Lehman Brothers Holdings,
Sr. Notes 6.00 7/19/12 315,000 a 315,000
Leucadia National,
Sr. Unscd. Notes 7.00 8/15/13 1,100,000 115,000 1,520,000 2,735,000
MBNA,
Notes 6.13 3/1/13 1,345,000 1,345,000
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 8.28 12/1/26 905,000 80,000 1,300,000 2,285,000
Merrill Lynch,
Sub. Notes 5.70 5/2/17 1,025,000 1,025,000
Merrill Lynch & Co.,
Notes, Ser. C 4.25 2/8/10 4,302,000 793,000 4,522,000 9,617,000
Merrill Lynch & Co.,
Notes, Ser. C 5.58 2/5/10 755,000 c 80,000 c 887,000 c 1,722,000
Merrill Lynch & Co.,
Sr. Unscd. Notes 6.05 8/15/12 1,725,000 205,000 1,840,000 3,770,000
Morgan Stanley,
Notes 3.88 1/15/09 4,900,000 5,160,000 10,060,000
Morgan Stanley,
Sr. Unscd. Notes 5.75 8/31/12 1,175,000 950,000 165,000 1,235,000 3,525,000
Morgan Stanley,
Sub. Notes 4.75 4/1/14 1,919,000 1,919,000
MUFG Capital Finance 1,
Bank Gtd. Bonds 6.35 7/29/49 590,000 c 590,000
Nuveen Investments,
Sr. Unscd. Notes 5.00 9/15/10 93,000 93,000
NIPSCO Capital Markets,
Notes 7.86 3/27/17 75,000 75,000
Residential Capital,
Gtd. Notes 6.22 6/9/08 75,000 c 75,000
Residential Capital,
Gtd. Notes 7.80 11/21/08 1,155,000 c 120,000 c 865,000 c 2,140,000
Residential Capital,
Gtd. Notes 7.88 6/30/15 370,000 44,000 c 398,000 c 812,000
Residential Capital,
Gtd. Notes 9.19 4/17/09 2,070,000 b,c 205,000 b,c 2,855,000 b,c 5,130,000
SB Treasury,
Jr. Sub. Bonds 9.40 12/29/49 2,390,000 b,c 280,000 b,c 3,330,000 b,c 6,000,000
SLM,
Unscd. Notes, Ser. A 4.50 7/26/10 1,425,000 a 750,000 180,000 1,350,000 3,705,000
SLM,
Unscd. Notes, Ser. A 5.50 7/27/09 2,740,000 a,c 285,000 c 3,105,000 c 6,130,000
SMFG Preferred Capital,
Sub. Bonds 6.08 1/29/49 835,000 b,c 835,000
Tokai Preferred Capital,
Bonds 9.98 12/29/49 2,240,000 b,c 220,000 b,c 3,115,000 b,c 5,575,000
Wachovia,
Sr. Notes 3.63 2/17/09 1,100,000 1,160,000 2,260,000
Windsor Financing,
Gtd. Notes 5.88 7/15/17 580,515 b 181,952 b 801,457 b 1,563,924
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 5.38 6/1/15 154,000 15,000 218,000 387,000
Wellpoint,
Sr. Unsub. Notes 5.88 6/15/17 390,000 390,000
Electric Utilities--2.5%
AES,
Sr. Notes 9.38 9/15/10 395,000 20,000 460,000 875,000
Appalachian Power,
Sr. Unscd. Notes 5.65 8/15/12 920,000 110,000 1,075,000 2,105,000
Cinergy,
Debs. 6.53 12/16/08 1,015,000 1,405,000 2,420,000
Cleveland Electric Illumination,
Sr. Unscd. Notes 5.70 4/1/17 825,000 825,000
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 5.30 12/1/16 675,000 675,000
Consumers Energy,
First Mortgage Bonds, Ser. O 5.00 2/15/12 1,160,000 1,160,000
Dominion Resources,
Sr. Unscd. Notes, Ser. B 5.76 11/14/08 1,335,000 c 140,000 c 1,725,000 c 3,200,000
Enel Finance Internation,
Gtd. Notes 5.70 1/15/13 1,920,000 b 275,000 b 275,000 b 1,985,000 b 4,455,000
FirstEnergy,
Unsub. Notes, Ser. B 6.45 11/15/11 2,580,000 570,000 3,530,000 a 6,680,000
FPL Group Capital,
Gtd. Debs. 5.63 9/1/11 1,570,000 1,570,000
Gulf Power,
Sr. Unsub. Notes, Ser. M 5.30 12/1/16 800,000 800,000
IPALCO Enterprises,
Scd. Notes 8.63 11/14/11 75,000 c 75,000
National Grid,
Sr. Unscd. Notes 6.30 8/1/16 1,010,000 1,000,000 150,000 1,345,000 3,505,000
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 7.75 10/1/08 845,000 90,000 940,000 1,875,000
NiSource Finance,
Gtd. Notes 6.06 11/23/09 1,675,000 c 385,000 c 275,000 c 2,030,000 c 4,365,000
NiSource Finance,
Gtd. Notes 5.25 9/15/17 650,000 650,000
Nisource Finance,
Sr. Unscd. Notes 6.40 3/15/18 700,000 95,000 735,000 1,530,000
Ohio Power,
Unscd. Notes 5.54 4/5/10 1,400,000 c 615,000 c 145,000 c 1,605,000 c 3,765,000
Southern,
Sr. Unsub. Notes, Ser. A 5.30 1/15/12 475,000 475,000
TXU Electric Delivery,
Bonds 6.07 9/16/08 4,440,000 b,c 460,000 b,c 5,175,000 b,c 10,075,000
TXU,
Sr. Notes, Ser. O 4.80 11/15/09 2,335,000 145,000 3,420,000 5,900,000
TXU,
Unscd. Notes, Ser. C 6.38 1/1/08 65,000 65,000
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 5.75 2/15/11 475,000 300,000 45,000 565,000 1,385,000
Allied Waste North America,
Scd. Notes 6.38 4/15/11 445,000 240,000 50,000 515,000 1,250,000
Oakmont Asset Trust,
Notes 4.51 12/22/08 1,265,000 b 130,000 b 1,630,000 b 3,025,000
Republic Services,
Sr. Notes 6.75 8/15/11 610,000 610,000
USA Waste Services,
Sr. Unscd. Notes 7.00 7/15/28 355,000 355,000
Waste Management,
Sr. Unsub. Notes 6.50 11/15/08 950,000 1,280,000 2,230,000
Food & Beverages--.5%
H.J. Heinz,
Notes 6.43 12/1/20 1,625,000 b 425,000 b 150,000 b 2,250,000 b 4,450,000
Kraft Foods,
Sr. Unscd. Notes 6.00 2/11/13 1,210,000 150,000 200,000 1,290,000 2,850,000
Safeway,
Sr. Unscd. Notes 4.13 11/1/08 930,000 85,000 1,295,000 2,310,000
Tyson Foods,
Sr. Unscd. Notes 6.85 4/1/16 800,000 c 520,000 a,c 80,000 c 1,100,000 c 2,500,000
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 8.75 7/18/12 9,740,000 b,d 1,110,000 b,d 10,360,000 b,d 21,210,000
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 5.84 6/16/08 2,080,000 c 1,185,000 c 220,000 c 2,655,000 c 6,140,000
Export-Import Bank of Korea,
Sr. Notes 4.50 8/12/09 1,075,000 1,075,000
Federal Republic of Brazil,
Unscd. Bonds BRL 12.50 1/5/16 5,410,000 a,d 1,750,000 a,d 790,000 a,d 5,510,000 a,d 13,460,000
Mexican Bonos,
Bonds, Ser. M MXN 9.00 12/22/11 25,645,000 d 2,600,000 d 35,640,000 d 63,885,000
Mexican Bonos,
Bonds, Ser. M 30 MXN 10.00 11/20/36 11,615,000 d 1,220,000 d 12,840,000 d 25,675,000
Republic of Argentina,
Bonds 5.39 8/3/12 11,230,000 c 2,065,000 c 1,560,000 c 11,925,000 c 26,780,000
Republic of Argentina,
Bonds, Ser. VII 7.00 9/12/13 720,000 720,000
Republic of El Salvador,
Unscd. Notes 8.50 7/25/11 60,000 b 60,000
Russian Federation,
Unsub. Bonds 8.25 3/31/10 3,890,107 b 973,360 b 426,678 b 5,046,806 b 10,336,951
Health Care--.7%
American Home Products,
Unscd. Notes 6.95 3/15/11 580,000 c 580,000
Baxter International,
Sr. Unscd. Notes 5.20 2/16/08 1,528,000 140,000 1,668,000
Community Health Systems,
Sr. Notes 8.88 7/15/15 310,000 b 310,000
Coventry Health Care,
Sr. Unscd. Notes 5.95 3/15/17 400,000 400,000
HCA,
Sr. Unscd. Notes 7.88 2/1/11 1,140,000 115,000 1,470,000 2,725,000
HCA,
Sr. Unscd. Notes 8.75 9/1/10 1,395,000 150,000 1,470,000 3,015,000
Medco Health Solutions,
Sr. Unscd. Notes 7.25 8/15/13 3,276,000 275,000 60,000 3,611,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 220,000 b 220,000
Tenet Healthcare,
Sr. Notes 6.38 12/1/11 1,205,000 125,000 1,440,000 2,770,000
Teva Pharmaceutical Finance,
Gtd. Notes 6.15 2/1/36 565,000 565,000
UnitedHealth Group,
Sr. Unscd. Notes 5.38 3/15/16 385,000 385,000
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 9.75 3/15/14 200,000 e 15,000 e 260,000 e 475,000
MGM Mirage,
Gtd. Notes 8.38 2/1/11 350,000 a 350,000
MGM Mirage,
Gtd. Notes 8.50 9/15/10 1,575,000 155,000 2,055,000 3,785,000
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 6.13 2/15/13 1,000,000 20,000 1,355,000 2,375,000
Machinery--.2%
Atlas Copco,
Bonds 5.60 5/22/17 290,000 b 290,000
Case New Holland,
Gtd. Notes 7.13 3/1/14 650,000 320,000 65,000 780,000 1,815,000
Terex,
Gtd. Notes 7.38 1/15/14 1,110,000 115,000 1,540,000 2,765,000
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 6.88 1/15/29 530,000 60,000 650,000 1,240,000
Media--1.3%
AOL Time Warner,
Gtd. Notes 6.75 4/15/11 900,000 900,000
British Sky Broadcasting,
Gtd. Notes 6.88 2/23/09 900,000 900,000
Clear Channel Communications,
Sr. Unscd. Notes 4.50 1/15/10 1,700,000 2,300,000 4,000,000
Comcast,
Gtd. Notes 5.66 7/14/09 4,385,000 c 450,000 c 5,235,000 c 10,070,000
Comcast,
Gtd. Notes 5.50 3/15/11 990,000 990,000
Comcast,
Gtd. Notes 6.30 11/15/17 1,465,000 205,000 1,550,000 3,220,000
News America Holdings,
Gtd. Debs. 7.70 10/30/25 775,000 2,975,000 3,750,000
News America,
Gtd. Notes 6.15 3/1/37 2,800,000 435,000 3,235,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,613,000 b 1,613,000
Time Warner,
Gtd. Notes 5.73 11/13/09 290,000 c
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 6.65 8/15/11 810,000 810,000
Anadarko Petroleum,
Sr. Unscd. Notes 6.09 9/15/09 534,000 c 534,000
ANR Pipeline,
Sr. Notes 7.00 6/1/25 50,000 50,000
BJ Services,
Sr. Unscd. Notes 5.75 6/1/08 4,850,000 c 500,000 c 6,750,000 c 12,100,000
Chesapeake Energy,
Gtd. Notes 7.50 6/15/14 155,000 155,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 4.00 10/15/07 4,000,000 405,000 4,720,000 9,125,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 5.60 10/15/14 1,395,000 1,395,000
Gazprom,
Sr. Unscd. Notes 6.51 3/7/22 715,000 b 715,000
Northwest Pipeline,
Sr. Unscd. Notes 6.63 12/1/07 210,000 210,000
Packaging & Containers--.0%
Ball,
Gtd. Notes 6.88 12/15/12 205,000 205,000
Crown Americas/Capital,
Gtd. Notes 7.63 11/15/13 575,000 575,000
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 6.75 6/15/12 1,095,000 b 105,000 b 1,530,000 b 2,730,000
Temple-Inland,
Gtd. Notes 6.88 1/15/18 1,100,000 700,000 c 105,000 c 1,525,000 3,430,000
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 7.63 10/15/25 760,000 75,000 910,000 1,745,000
Allstate,
Jr. Sub. Debs. 6.50 5/15/57 270,000 a,c 270,000
American International Group,
Sr. Notes 5.05 10/1/15 470,000 470,000
Chubb,
Sr. Unscd. Notes 5.47 8/16/08 2,375,000 1,600,000 250,000 3,350,000 7,575,000
Hartford Financial Services
Group,
Sr. Unscd. Notes 5.55 8/16/08 875,000 730,000 1,190,000 2,795,000
Hartford Financial Services
Group,
Sr. Notes 5.66 11/16/08 1,950,000 250,000 2,200,000
Leucadia National,
Sr. Unscd. Notes 7.13 3/15/17 3,465,000 355,000 3,900,000 7,720,000
Lincoln National,
Sr. Unscd. Notes 5.78 3/12/10 720,000 c 240,000 c 960,000
Metlife,
Sr. Notes 5.50 6/15/14 2,195,000 2,195,000
Nippon Life Insurance,
Notes 4.88 8/9/10 1,350,000 b 850,000 b 1,900,000 b 4,100,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,545,000 b 1,545,000
Phoenix Cos.,
Sr. Unscd. Notes 6.68 2/16/08 735,000 355,000 70,000 1,025,000 2,185,000
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 3.00 6/15/08 1,000,000 85,000 1,085,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.25 5/1/15 180,000 a 900,000 230,000 a 1,310,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.63 8/15/14 340,000 455,000 795,000
Arden Realty,
Notes 5.25 3/1/15 675,000 675,000
Avalonbay Communities,
Sr. Unscd. Notes 6.63 9/15/11 370,000 370,000
Boston Properties,
Sr. Notes 5.63 4/15/15 810,000 85,000 1,120,000 2,015,000
Boston Properties,
Sr. Notes 5.00 6/1/15 810,000 810,000
Commercial Net Lease Realty,
Sr. Unscd. Notes 6.15 12/15/15 1,100,000 375,000 100,000 1,505,000 3,080,000
Duke Realty,
Notes 3.50 11/1/07 925,000 890,000 70,000 1,055,000 2,940,000
Duke Realty,
Sr. Unscd. Notes 5.63 8/15/11 350,000 350,000
Duke Realty,
Sr. Notes 5.88 8/15/12 2,210,000 255,000 2,465,000
Duke Realty,
Sr. Notes 6.95 3/15/11 170,000 170,000
ERP Operating,
Notes 4.75 6/15/09 560,000 55,000 1,000,000 1,615,000
ERP Operating,
Unscd. Notes 5.50 10/1/12 340,000 340,000
ERP Operating,
Notes 5.25 9/15/14 150,000 150,000
ERP Operating,
Notes 5.13 3/15/16 825,000 a 615,000 a 75,000 1,125,000 a 2,640,000
ERP Operating,
Unscd. Notes 5.38 8/1/16 255,000 255,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.40 12/1/13 650,000 50,000 825,000 1,525,000
Federal Realty Investment Trust,
Notes 6.00 7/15/12 570,000 155,000 55,000 760,000 1,540,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.65 6/1/16 550,000 550,000
Healthcare Realty Trust,
Sr. Unscd. Notes 5.13 4/1/14 2,820,000 875,000 3,800,000 7,495,000
Healthcare Realty Trust,
Unscd. Notes 8.13 5/1/11 225,000 225,000
HRPT Properties Trust,
Sr. Unscd. Notes 6.29 3/16/11 1,350,000 c 412,000 c 125,000 c 1,788,000 c 3,675,000
Istar Financial,
Sr. Unscd. Notes 6.07 3/9/10 2,935,000 c 1,100,000 c 300,000 c 3,435,000 c 7,770,000
Liberty Property,
Sr. Unscd. Notes 5.50 12/15/16 320,000 320,000
Mack-Cali Realty,
Bonds 5.80 1/15/16 690,000 690,000
Mack-Cali Realty,
Notes 5.25 1/15/12 580,000 675,000 55,000 800,000 2,110,000
Mack-Cali Realty,
Unscd. Notes 5.05 4/15/10 1,600,000 400,000 335,000 2,300,000 4,635,000
Mack-Cali Realty,
Sr. Unscd. Notes 5.13 1/15/15 75,000 75,000
Regency Centers,
Gtd. Notes 5.25 8/1/15 1,450,000 a 220,000 125,000 2,000,000 3,795,000
Regency Centers,
Sr. Unscd. Notes 5.88 6/15/17 185,000 185,000
Simon Property Group,
Notes 4.60 6/15/10 1,098,000 105,000 1,203,000
Simon Property Group,
Notes 4.88 8/15/10 850,000 75,000 1,180,000 2,105,000
Simon Property Group,
Unsub. Notes 5.00 3/1/12 1,000,000 1,000,000
Simon Property Group,
Unscd. Notes 5.75 5/1/12 200,000 200,000
Socgen Real Estate,
Bonds 7.64 12/29/49 1,590,000 b,c 1,590,000
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 5.75 12/25/35 598,112 b,c 55,210 b,c 653,322
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 6.75 4/20/31 154,643 154,643
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 4.15 7/25/34 270,857 c 270,857
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 6.83 4/25/36 187,960 b,c 187,960
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 8.08 4/25/36 388,451 b,c 522,112 b,c 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 5.77 4/25/36 375,921 b,c 425,208 b,c 801,129
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 5.59 9/25/36 390,766 303,929 c 43,418 c 738,113
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 5.99 9/25/36 1,200,000 120,000 c 1,600,000 c 2,920,000
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 4.92 8/25/35 96,192 c 138,517 c 9,619 c 130,822 c 375,150
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 5.25 8/25/35 1,650,000 c 1,650,000
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 5.70 3/25/36 45,828 c 45,828
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 5.85 10/25/32 329,460 c 329,460
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 5.00 5/25/18 230,943 b 230,943
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 5.50 1/25/36 922,845 c 922,845
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 6.00 11/25/36 1,912,021 c 74,536 c 1,986,557
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 6.25 10/25/34 5,518,007 3,705,877 3,358,118 12,582,002
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 5.88 2/25/36 1,291,836 c 121,956 c 1,788,695 c 3,202,487
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 6.63 2/25/36 1,038,889 c 90,338 c 1,460,768 c 2,589,995
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 5.48 5/25/36 704,489 c 474,356 c 65,752 c 962,802 c 2,207,399
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 6.05 6/25/36 399,271 c 498,997 c 898,268
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 6.05 6/25/36 119,759 c 119,759
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 6.14 9/25/36 1,087,488 c 1,268,736 c 90,624 c 1,449,984 c 3,896,832
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 5.71 12/25/36 890,000 c 105,000 c 1,000,000 c 1,995,000
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 4.49 2/25/35 744,909 c 65,521 c 1,036,578 c 1,847,008
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 5.89 10/25/36 695,000 c 70,000 c 890,000 c 1,655,000
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 4.86 2/25/35 200,000 c 200,000
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 4.98 5/25/35 1,725,000 c 775,000 c 150,000 c 2,355,000 c 5,005,000
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 5.16 3/25/35 1,195,000 c 779,000 c 115,000 c 1,630,000 c 3,719,000
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 6.73 4/28/24 3,287 b,c 3,287
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 4.75 3/25/19 1,126,404 1,126,404
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 5.86 4/30/30 1,691 c 1,691
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 5.21 10/25/37 697,702 b,c 697,702
Washington Mutual,
Ser. 2004-AR7, Cl. A6 3.94 7/25/34 135,000 c 135,000
Washington Mutual,
Ser. 2003-AR10, Cl. A6 4.06 10/25/33 203,000 c 203,000
Washington Mutual,
Ser. 2004-AR9, Cl. A7 4.15 8/25/34 165,000 c 165,000
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 4.67 4/25/35 3,325,000 c 1,025,000 c 4,525,000 c 8,875,000
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4.54 2/25/35 4,288,950 c 418,843 c 5,696,261 c 10,404,054
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 5.75 2/25/33 1,800,000 150,000 2,500,000 4,450,000
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 5.92 6/1/10 1,055,000 c 370,000 c 110,000 c 1,155,000 c 2,690,000
CVS Caremark,
Sr. Unscd. Notes 5.75 8/15/11 255,000 255,000
Delhaize Group,
Sr. Unscd. Notes 6.50 6/15/17 190,000 b 190,000
Federated Retail Holding,
Gtd. Bonds 5.35 3/15/12 155,000 155,000
Federated Retail Holding,
Gtd. Notes 5.90 12/1/16 265,000 265,000
Home Depot,
Sr. Unscd. Notes 5.82 12/16/09 815,000 c 85,000 c 1,015,000 c 1,915,000
Lowe's Companies,
Sr. Unscd. Notes 5.60 9/15/12 1,270,000 165,000 180,000 1,325,000 2,940,000
May Department Stores,
Unscd. Notes 4.80 7/15/09 45,000 45,000
May Department Stores,
Gtd. Notes 5.95 11/1/08 760,000 1,035,000 1,795,000
Saks,
Gtd. Notes 8.25 11/15/08 429 429
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 3.50 10/1/27 525,000 75,000 550,000 1,150,000
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 6.00 6/1/28 595,000 75,000 670,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.31 6/1/34 4,525,000 2,410,000 410,000 5,505,000 12,850,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.54 6/1/34 1,050,000 c 600,000 c 100,000 c 1,500,000 c 3,250,000
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 6.00 6/1/27 1,750,000 160,000 2,420,000 4,330,000
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 6.50 6/1/23 3,255,000 2,250,000 165,000 3,965,000 9,635,000
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 4.50 6/1/23 715,000 460,000 1,175,000
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 7.47 6/1/47 300,000 300,000
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 4.50 10/1/23 1,345,000 190,000 1,415,000 2,950,000
Steel--.0%
US Steel,
Sr. Unsub. Notes 5.65 6/1/13 320,000 320,000
Telecommunications--2.4%
America Movil,
Gtd. Notes 5.30 6/27/08 455,000 b,c 45,000 b,c 565,000 b,c 1,065,000
AT & T,
Notes 5.46 2/5/10 2,390,000 c 245,000 c 2,930,000 c 5,565,000
AT & T,
Sr. Notes 5.65 5/15/08 2,700,000 c 450,000 c 125,000 c 3,700,000 c 6,975,000
AT & T Wireless,
Sr. Unsub. Notes 8.75 3/1/31 440,000 440,000
AT & T,
Sr. Unscd. Notes 7.30 11/15/11 740,000 c 740,000
France Telecom,
Unsub. Notes 7.75 3/1/11 1,280,000 c 110,000 c 1,090,000 c 2,480,000
Intelsat,
Sr. Unscd. Notes 5.25 11/1/08 1,540,000 200,000 1,985,000 3,725,000
KPN,
Sr. Unsub. Bonds 8.38 10/1/30 330,000 330,000
Nextel Communications,
Gtd. Notes, Ser. F 5.95 3/15/14 1,035,000 500,000 95,000 1,405,000 3,035,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 464,000 c 464,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 1,858,000 c 1,858,000
Qwest,
Sr. Notes 7.88 9/1/11 710,000 65,000 1,965,000 2,740,000
Qwest,
Notes 8.88 3/15/12 50,000 c 50,000
Qwest,
Sr. Notes 8.94 6/15/13 100,000 c 1,600,000 c 1,700,000
Sprint Capital,
Gtd. Notes 8.75 3/15/32 1,235,000 190,000 1,315,000 2,740,000
Telefonica Emisiones,
Gtd. Notes 5.89 6/19/09 240,000 c 240,000
Telefonica Emisiones,
Gtd. Notes 5.98 6/20/11 2,425,000 625,000 470,000 3,205,000 6,725,000
Time Warner Cable,
Sr. Unscd. Notes 5.85 5/1/17 1,380,000 b 335,000 b 150,000 b 1,510,000 b 3,375,000
Time Warner,
Gtd. Notes 5.88 11/15/16 2,260,000 265,000 2,410,000 4,935,000
U.S. West Communications,
Notes 5.63 11/15/08 70,000 70,000
Verizon Global Funding,
Notes 7.75 6/15/32 245,000 245,000
Windstream,
Gtd. Notes 8.13 8/1/13 1,435,000 140,000 1,945,000 3,520,000
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 5.75 1/15/11 990,000 700,000 275,000 1,370,000 3,335,000
Transportation--.2%
Ryder System,
Notes 3.50 3/15/09 1,435,000 130,000 1,980,000 3,545,000
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 5.13 8/23/10 13,515,000 13,515,000
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 6.55 10/1/17 509,198 509,198
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 261,236 261,236
4.00%, 10/1/09 76,494 76,494
4.50%, 10/1/09 70,428 70,428
5.00% 1,670,000 f 1,670,000
5.00%, 10/1/18 414,636 414,636
5.50% 59,340,000 f 17,440,000 f 9,195,000 f 63,275,000 f 149,250,000
5.50%, 6/1/34 - 4/1/37 7,605,237 344,620 9,696,625 17,646,482
6.00%, 7/1/37 1,392,268 1,669,764 3,062,032
6.00%, 7/1/17 - 4/1/33 1,788,559 1,788,559
6.50%, 10/1/31 - 3/1/32 89,512 829,072 918,584
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 296,225 296,225
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,550,989 2,163,703 6,714,692
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 4,367,209 j 4,367,209
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 4,617,400 j 4,617,400
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 4,000,000 j 4,000,000
Federal National Mortgage
Association:
5.00% 26,720,000 f 25,365,000 f 1,795,000 f 32,000,000 f 85,880,000
5.50% 5,535,000 f 815,000 f 5,875,000 f 12,225,000
6.00% 100,380,000 f 29,955,000 f 12,150,000 f 100,380,000 f 242,865,000
6.50% 5,515,000 f 645,000 f 5,850,000 f 12,010,000
3.53%, 7/1/10 277,136 277,136
4.00%, 5/1/10 1,377,551 1,377,551
4.06%, 6/1/13 100,000 100,000
5.00%, 7/1/11 - 1/1/22 8,216,200 1,873,938 832,086 10,922,224
5.50%, 8/1/22 - 1/1/37 12,725,081 622,282 2,196,169 19,955,020 35,498,552
6.00%, 1/1/19 - 8/1/37 1,714,218 1,549,871 218,502 5,481,229 8,963,820
6.50%, 11/1/10 - 8/1/37 5,425,907 811,807 7,665,930 13,903,644
7.00%, 9/1/14 - 7/1/32 44,432 67,827 112,259
8.00%, 12/1/25 36,962 36,962
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 275,000
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,192,303 2,049,436 4,459,645 9,701,384
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 154,918 154,918
Government National Mortgage
Association I:
5.50%, 4/15/33 4,510,118 4,510,118
6.50%, 9/15/32 60,822 60,822
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,089 5,089
9.50%, 11/15/17 308,407 308,407
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 190,991 190,991
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,037 2,037
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 68,319 68,319
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 79,659 79,659
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,361,724 120,233 2,481,957
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 313,158 520,626 833,784
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 326,420 259,652 586,072
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 154,829 154,829
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,800,000 5,535,000 10,335,000
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 110,964 110,964
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 105,225 105,225
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 187,617 187,617
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 111,336 111,336
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 151,096 151,096
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 994,099 994,099
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 86,419 86,419
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 60,685 60,685
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,611,293 134,274 2,215,528 3,961,095
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 106,763 106,763
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 806,061 1,128,486 1,934,547
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,255,831 1,742,267 2,998,098
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,285,577 1,792,017 3,077,594
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,184,876 98,740 1,619,331 2,902,947
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,788,493 860,288 158,474 2,490,307 5,297,562
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,348,502 1,348,502
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,401,893 1,168,779 149,206 4,699,984 9,419,862
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,316,705 109,725 1,821,442 3,247,872
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 166,371 166,371
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,675,856 1,675,856
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,147,425 1,147,425
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,426,569 1,426,569
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,572,440 1,572,440
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,240,264 639,976 138,910 1,289,875 3,309,025
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,815,351 877,752 214,451 1,930,057 4,837,611
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 75,000 75,000
Government National Mortgage
Association II:
5.50%, 7/20/30 66,101 c 330,573 c 396,674
6.38%, 4/20/30 258,769 c 258,769
6.50%, 2/20/31 - 7/20/31 271,775 271,775
7.00%, 11/20/29 757 757
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,832,000 a 700,000 9,532,000
5.00%, 5/15/37 594,000 g 12,913,000 682,000 g 1,653,000 g 15,842,000
U.S. Treasury Notes:
3.88%, 9/15/10 11,535,000 4,720,000 a 230,000 a 16,485,000
4.13%, 8/31/12 7,730,000 7,730,000
4.25%, 1/15/11 25,505,000 a 1,540,000 a 27,045,000
4.38%, 12/31/07 8,160,000 h 8,160,000
4.50%, 5/15/10 730,000 a 730,000
4.50%, 9/30/11 4,580,000 a 4,580,000
4.50%, 4/30/12 14,310,000 a 12,590,000 a 14,555,000 a 41,455,000
4.50%, 5/15/17 4,625,000 a 510,000 a 5,260,000 a 10,395,000
4.63%, 12/31/11 6,410,000 a 6,410,000
4.63%, 11/15/16 25,790,000 a 7,045,000 a 3,925,000 a 12,425,000 a 49,185,000
4.75%, 8/15/17 5,350,000 g 16,064,000 2,210,000 g 21,021,000 g 44,645,000
5.13%, 6/30/08 8,442,000 a 8,442,000
Total Bonds and Notes
(cost $750,962,326, $390,304,526,
$110,300,634 and $793,545,334
respectively)
Dreyfus Dreyfus
Intermediate Dreyfus Dreyfus Premier Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Bonds and Notes--90.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 511,500 52,313 726,562 1,290,375
Raytheon,
Sr. Notes 379,610 379,610
511,500 379,610 52,313 726,562 1,669,985
Agricultural--.3%
Philip Morris,
Debs. 1,841,723 1,817,085 129,352 2,463,844 6,252,004
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 1,119,161 530,129 117,806 1,207,516 2,974,612
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 422,255 422,255
Capital Auto
Receivables Asset
Trust, Ser. 2005-1, Cl. D 893,812 1,092,437 1,986,249
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 1,072,742 1,072,742
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 477,521 477,521 676,170 1,631,212
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 109,939 109,939
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 997,778 49,889 1,396,889 2,444,556
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 1,126,090 1,126,090
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 1,398,250 1,134,523 124,400 1,975,464 4,632,637
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 713,789 361,852 84,267 763,358 1,923,266
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 681,056 875,644 1,556,700
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 335,620 335,620
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 1,513,955 288,372 240,310 1,634,110 3,676,747
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 201,478 201,478
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 490,403 49,536 539,939
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 464,978 464,978
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 915,563 915,563
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 223,414 223,414
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 81,549 49,590 131,139
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 85,672 54,631 140,303
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 2,051,371 571,205 168,878 2,543,104 5,334,558
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 386,764 94,212 480,976
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 49,330 49,330
11,577,059 6,115,096 2,092,564 12,589,584 32,374,303
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 2,131,810 2,025,702 419,610 2,266,857 6,843,979
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 2,733,047 2,733,047
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 417,155 417,155
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 9,975,770 4,415,265 14,391,035
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 957,200 957,200
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 5,426,033 11,661,644 17,087,677
17,533,613 10,131,214 836,765 13,928,501 42,430,093
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 230,706 230,706
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 900,844 900,844
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 1,595,217 2,266,185 3,861,402
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 239,066 239,066
Centex Home Equity,
Ser. 2006-A, Cl. AV1 157,803 112,595 341,196 611,594
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 1,656,089 136,384 2,289,299 4,081,772
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 901,453 1,583,983 100,448 2,585,884
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 393,295 757,358 1,150,653
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 1,586,741 1,586,741
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 1,624,920 525,709 2,150,629
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 86,768 86,768
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 330,519 330,519
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 247,847 23,730 271,577
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 784,162 784,162
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 163,381 163,381
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 118,564 118,564
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 1,515,566 159,533 1,709,997 3,385,096
First NLC Trust,
Ser. 2005-3, Cl. AV2 311,470 311,470
GSAA Trust,
Ser. 2006-7, Cl. AV1 588,677 588,677
GSAMP Trust,
Ser. 2006-S4, Cl. A1 276,853 276,853
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 183,158 183,158
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 1,254,726 1,254,726
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 615,473 183,211 14,313 812,997
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 749,695 491,354 75,983 967,512 2,284,544
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 428,295 428,295
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 779,583 779,583
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 1,480,711 140,789 2,039,012 3,660,512
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 242,693 242,693
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 87,476 87,476
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 478,518 478,518
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 1,554,088 2,063,946 3,618,034
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 474,908 581,521 1,056,429
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 48,633 48,633
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 536,582 175,421 727,688 1,439,691
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 431,837 532,599 964,436
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 291,529 291,529
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 212,445 291,128 503,573
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 237,842 237,842
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 896,000 1,120,000 2,016,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 312,185 312,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 363,699 363,699
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 653,185 653,185
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 165,036 165,036
13,419,009 15,937,042 1,312,998 14,930,083 45,599,132
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 1,320,343 460,874 59,789 1,893,321 3,734,327
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 36,820 36,820
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 378,996 378,996
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 1,381,597 115,552 1,507,197 3,004,346
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 750,809 1,007,797 1,758,606
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 79,419 79,419
3,452,749 839,870 291,580 4,408,315 8,992,514
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 2,563,945 318,009 1,937,865 4,819,819
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 2,722,676 249,787 3,741,806 6,714,269
DaimlerChrysler N.A. Holding,
Gtd. Notes 1,369,921 134,501 1,917,889 3,422,311
DaimlerChrysler N.A. Holding,
Notes 291,835 64,303 356,138
6,656,542 291,835 766,600 7,597,560 15,312,537
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 959,174 959,174
ERAC USA Finance,
Notes 1,158,526 1,158,526
Goodyear Tire & Rubber,
Sr. Notes 298,688 30,375 384,750 713,813
Banks--6.4% 298,688 30,375 2,502,450 2,831,513
BAC Capital Trust XIV,
Bank Gtd. Notes 2,790,213 447,577 3,052,093 6,289,883
Barclays Bank,
Sub. Notes 251,856 251,856
Barclays Bank,
Jr. Sub. Bonds 127,751 127,751
Capital One Financial,
Sr. Unsub. Notes 5,243,471 536,772 2,485,057 8,265,300
Chevy Chase Bank,
Sub. Notes 1,192,550 469,200 141,738 1,671,525 3,475,013
Chuo Mitsui Trust & Banking,
Sub. Notes 355,903 355,903
Colonial Bank,
Sub. Notes 1,093,312 742,067 247,356 1,513,817 3,596,552
Colonial Bank,
Sub. Notes 400,227 259,887 561,358 1,221,472
Ford Motor Credit,
Sr. Notes 323,661 323,661
Glitnir Banki,
Sub. Notes 460,277 460,277
Greater Bay Bancorp,
Sr. Notes, Ser. B 99,955 99,955
ICICI Bank,
Bonds 704,240 396,755 843,104 1,944,099
Industrial Bank of Korea,
Sub. Notes 2,585,027 270,298 3,248,484 6,103,809
Islandsbanki,
Notes 974,731 86,976 1,244,656 2,306,363
J.P. Morgan & Co.,
Sub. Notes 1,123,959 162,012 1,169,525 2,455,496
Landsbanki Islands,
Sr. Notes 2,465,518 251,584 3,245,427 5,962,529
M&T Bank,
Sr. Unscd. Bonds 248,066 248,066
Manufacturers & Traders Trust,
Sub. Notes 456,210 456,210
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 2,435,285 2,615,677 260,566 2,655,764 7,967,292
Marshall and Ilsley,
Sr. Unscd. Notes 2,779,635 1,402,384 326,720 2,960,588 7,469,327
Morgan Stanley,
Notes 679,786 679,786
NB Capital Trust IV,
Gtd. Cap. Secs. 1,040,740 187,333 1,228,073
Northern Rock,
Sub. Notes 683,362 683,362
Northern Rock,
Sub. Notes 245,309 245,309 490,618
Northern Rock,
Sub. Notes 792,270 823,821 1,616,091
Northern Rock,
Sub. Notes 150,742 150,742
Popular North America,
Notes 1,317,129 125,202 1,817,938 3,260,269
Regions Financial,
Sr. Notes 1,446,646 1,446,646
Resona Bank,
Notes 362,683 362,683
Royal Bank of Scotland,
Bonds 1,858,890 1,884,354 3,743,244
Royal Bank of Scotland,
Bonds 1,064,406 295,385 1,359,791
Shinsei Finance Cayman,
Jr. Sub. Bonds 738,347 738,347
Societe Generale,
Sub. Notes 313,164 313,164
Sovereign Bancorp,
Sr. Notes 904,312 904,312
Sovereign Bancorp,
Sr. Unscd. Notes 2,106,160 585,322 250,138 1,851,019 4,792,639
Sovereign Bancorp,
Sr. Notes 2,142,737 194,794 2,961,872 5,299,403
SunTrust Preferred Capital I,
Bank Gtd. Notes 2,823,612 692,399 324,102 3,069,144 6,909,257
USB Capital IX,
Gtd. Notes 5,593,081 1,417,048 796,150 6,419,275 14,225,554
Wachovia,
Sr. Notes 152,225 152,225
Wachovia Bank,
Sub. Notes 802,992 802,992
Wachovia,
Sub. Notes 929,997 929,997
Washington Mutual,
Notes 785,965 785,965
Wells Fargo & Co.,
Notes 4,085,141 774,181 4,382,154 9,241,476
Wells Fargo Bank N.A.,
Sub. Notes 2,011,709 3,030,834 1,985,170 7,027,713
Wells Fargo & Co.,
Sub. Notes 559,067 559,067
Western Financial Bank,
Sub. Debs. 1,820,242 177,192 2,566,595 4,564,029
World Savings Bank,
Sr. Notes 4,061,699 329,732 4,276,525 8,667,956
Zions Bancorporation,
Sr. Unscd. Notes 2,351,887 620,498 105,084 3,077,469
Zions Bancorporation,
Sub. Notes 829,936 829,936
54,998,034 24,593,751 7,697,261 56,934,574 144,223,620
Building & Construction--.5%
American Standard,
Gtd. Notes 1,537,385 145,700 2,125,209 3,808,294
Centex,
Sr. Unscd. Notes 718,858 64,449 1,001,443 1,784,750
D.R. Horton,
Gtd. Notes 1,224,359 107,636 1,677,326 3,009,321
D.R. Horton,
Sr. Unsub. Notes 13,940 13,940
Masco,
Sr. Unscd. Notes 1,372,454 404,825 138,233 1,599,551 3,515,063
Owens Corning,
Gtd. Notes 203,167 203,167
4,853,056 607,992 469,958 6,403,529 12,334,535
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 320,588 213,725 30,088 435,750 1,000,151
ICI Wilmington,
Gtd. Notes 721,638 721,638
Lubrizol,
Sr. Notes 808,723 808,723
RPM International,
Sr. Notes 1,134,562 124,404 1,408,250 2,667,216
Rohm and Haas Holdings,
Unsub. Notes 219,599 219,599
1,455,150 1,963,685 154,492 1,844,000 5,417,327
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 695,774 198,793 69,577 964,144
ERAC USA Finance,
Notes 804,091 380,885 105,802 1,290,778
ERAC USA Finance,
Bonds 532,711 532,711
1,499,865 1,112,389 175,379 2,787,633
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 1,418,000 1,418,000
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 299,925 299,925
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 497,361 298,417 679,727 1,475,505
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 635,118 302,437 937,555
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 194,878 287,188 482,066
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 1,501,876 141,616 2,119,770 3,763,262
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 76,487 76,487
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 386,342 193,171 77,268 540,878 1,197,659
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 170,644 170,644
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 397,544 77,193 849,123 1,323,860
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 672,791 672,791
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 206,399 300,217 506,616
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 391,209 391,209
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 1,673,874 178,433 2,285,645 4,137,952
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 290,047 290,047
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 1,109,523 1,528,676 2,638,199
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 117,850 117,850
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 1,352,238 123,831 1,882,236 3,358,305
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 350,913 350,913
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 725,088 725,088
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 774,525 774,525
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 749,862 656,129 89,046 796,728 2,291,765
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 34,986 34,986
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 584,474 584,474
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 2,277,353 722,574 19,933 3,139,459 6,159,319
Crown Castle Towers,
Ser. 2005-1A, Cl. D 1,267,141 437,115 112,962 1,782,838 3,600,056
Crown Castle Towers,
Ser. 2006-1A, Cl. B 272,665 272,665
Crown Castle Towers,
Ser. 2006-1A, Cl. C 724,781 724,781
Crown Castle Towers,
Ser. 2006-1A, Cl. D 731,381 539,946 73,629 942,451 2,287,407
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 115,795 115,795
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 291,765 291,765
Global Signal Trust,
Ser. 2006-1, Cl. D 1,638,698 576,027 158,904 2,259,416 4,633,045
Global Signal Trust,
Ser. 2006-1, Cl. E 393,760 315,008 34,454 541,420 1,284,642
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 1,062,635 1,458,034 2,520,669
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 1,618,992 1,618,992
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 600,230 600,230
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 2,561,253 299,878 2,723,482 5,584,613
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 1,391,980 147,560 1,519,865 3,059,405
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 877,317 335,586 91,088 954,023 2,258,014
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 2,952,900 318,450 3,218,275 6,489,625
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 1,436,024 1,436,024
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 526,255 526,255
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 1,253,845 1,253,845
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 726,841 726,841
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 27,821 27,821
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 883,344 883,344
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 301,987 301,987
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 301,196 301,196
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 117,004 117,004
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 28,504 28,504
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 999,951 999,951
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 1,522,603 1,522,603
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 1,570,310 1,570,310
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 579,291 579,291
Morgan Stanley Dean Witter Capital
I, Ser. 2001-PPM, Cl. A3 104,880 104,880
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 956,430 406,155 108,090 1,018,663 2,489,338
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 680,614 230,136 68,551 871,577 1,850,878
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 505,468 505,468
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3,428,013 2,186,538 322,274 4,762,269 10,699,094
29,225,686 26,109,395 3,648,299 36,461,960 95,445,340
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 1,246,951 406,414 246,311 1,631,812 3,531,488
Amvescap,
Gtd. Notes 2,800,903 376,124 292,181 3,188,798 6,658,006
Bear Stearns,
Sr. Unscd. Notes 776,878 776,878
Boeing Capital,
Sr. Notes 950,573 950,573
Capmark Financial Group,
Gtd. Notes 2,958,191 783,989 309,949 3,733,063 7,785,192
CIT Group,
Sr. Notes 2,004,697 182,245 2,778,007 4,964,949
Countrywide Financial,
Gtd. Notes 246,530 246,530
Countrywide Financial,
Gtd. Notes 506,639 506,639
Countrywide Home Loans,
Gtd. Notes 361,461 361,461
Countrywide Home Loans,
Notes 1,328,679 1,848,197 3,176,876
Credit Suisse First Boston USA,
Notes 780,210 311,096 553,060 1,644,366
Credit Suisse Guernsey,
Jr. Sub. Notes 634,880 634,880
Credit Suisse USA,
Sr. Unsub. Notes 1,228,406 1,228,406
FCE Bank,
Notes EUR 2,893,098 2,893,098
FCE Bank,
Notes EUR 2,658,160 315,489 2,973,649
Ford Motor Credit,
Sr. Notes 2,883,967 2,584,459 5,468,426
Ford Motor Credit,
Unscd. Notes 1,417,570 1,417,570
Fuji JGB Investment,
Sub. Bonds 1,206,138 769,875 102,650 1,662,930 3,741,593
General Electric Capital,
Sr. Unscd. Notes, Ser. A 1,038,691 145,989 1,095,903 2,280,583
General Electric Capital,
Notes, Ser. A 1,192,784 168,978 1,257,394 2,619,156
Glencore Funding,
Gtd. Notes 1,262,422 433,957 138,077 1,607,615 3,442,071
GMAC,
Unsub. Notes 1,637,936 192,698 1,743,921 3,574,555
Goldman Sachs Capital II,
Gtd. Bonds 1,553,398 468,861 161,023 1,728,629 3,911,911
Goldman Sachs Group,
Sub. Notes 320,752 320,752
HSBC Finance Capital Trust IX,
Gtd. Notes 380,272 380,272
HSBC Finance,
Notes 778,114 778,114
HSBC Finance,
Sr. Notes 3,020,456 276,382 4,140,788 7,437,626
International Lease Finance,
Sr. Unscd. Notes 123,959 123,959
Janus Capital Group,
Notes 1,983,944 553,069 350,108 2,156,461 5,043,582
Jefferies Group,
Sr. Unscd. Debs. 1,073,661 1,073,661
Jefferies Group,
Sr. Unscd. Notes 867,402 150,853 1,131,394 2,149,649
John Deere Capital,
Notes 771,500 556,081 80,156 1,407,737
JPMorgan Chase & Co.,
Sub. Notes 1,426,092 1,426,092
Kaupthing Bank,
Sr. Notes 2,286,279 234,107 2,948,752 5,469,138
Kaupthing Bank,
Sub. Notes 353,794 353,794
Lehman Brothers Holdings,
Sr. Notes 320,213 320,213
Leucadia National,
Sr. Unscd. Notes 1,061,500 110,975 1,466,800 2,639,275
MBNA,
Notes 1,387,140 1,387,140
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 942,005 83,271 1,353,157 2,378,433
Merrill Lynch,
Sub. Notes 998,350 998,350
Merrill Lynch & Co.,
Notes, Ser. C 4,228,552 779,461 4,444,796 9,452,809
Merrill Lynch & Co.,
Notes, Ser. C 749,433 79,410 880,459 1,709,302
Merrill Lynch & Co.,
Sr. Unscd. Notes 1,770,526 210,410 1,888,561 3,869,497
Morgan Stanley,
Notes 4,827,465 5,083,617 9,911,082
Morgan Stanley,
Sr. Unscd. Notes 1,178,232 952,613 165,454 1,238,397 3,534,696
Morgan Stanley,
Sub. Notes 1,805,025 1,805,025
MUFG Capital Finance 1,
Bank Gtd. Bonds 561,685 561,685
Nuveen Investments,
Sr. Unscd. Notes 87,920 87,920
NIPSCO Capital Markets,
Notes 83,202 83,202
Residential Capital,
Gtd. Notes 69,094 69,094
Residential Capital,
Gtd. Notes 1,038,056 107,850 777,419 1,923,325
Residential Capital,
Gtd. Notes 299,178 35,578 321,819 656,575
Residential Capital,
Gtd. Notes 1,451,588 143,756 2,002,069 3,597,413
SB Treasury,
Jr. Sub. Bonds 2,445,329 286,482 3,407,090 6,138,901
SLM,
Unscd. Notes, Ser. A 1,334,845 702,550 168,612 1,264,590 3,470,597
SLM,
Unscd. Notes, Ser. A 2,634,973 274,076 2,985,982 5,895,031
SMFG Preferred Capital,
Sub. Bonds 776,291 776,291
Tokai Preferred Capital,
Bonds 2,320,145 227,871 3,226,452 5,774,468
Wachovia,
Sr. Notes 1,080,303 1,139,229 2,219,532
Windsor Financing,
Gtd. Notes 591,207 185,304 816,219 1,592,730
61,436,045 22,334,553 6,854,283 70,980,937 161,605,818
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 149,855 14,596 212,132 376,583
Wellpoint,
Sr. Unsub. Notes 387,964 387,964
149,855 387,964 14,596 212,132 764,547
Electric Utilities--2.5%
AES,
Sr. Notes 418,700 21,200 487,600 927,500
Appalachian Power,
Sr. Unscd. Notes 927,237 110,865 1,083,456 2,121,558
Cinergy,
Debs. 1,028,846 1,424,166 2,453,012
Cleveland Electric Illumination,
Sr. Unscd. Notes 804,139 804,139
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 655,695 655,695
Consumers Energy,
First Mortgage Bonds, Ser. O 1,144,654 1,144,654
Dominion Resources,
Sr. Unscd. Notes, Ser. B 1,335,814 140,085 1,726,052 3,201,951
Enel Finance Internation,
Gtd. Notes 1,937,067 277,444 277,444 2,002,645 4,494,600
FirstEnergy,
Unsub. Notes, Ser. B 2,669,769 589,833 3,652,823 6,912,425
FPL Group Capital,
Gtd. Debs. 1,591,487 1,591,487
Gulf Power,
Sr. Unsub. Notes, Ser. M 777,120 777,120
IPALCO Enterprises,
Scd. Notes 79,688 79,688
National Grid,
Sr. Unscd. Notes 1,023,249 1,013,118 151,968 1,362,644 3,550,979
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 862,046 91,816 958,963 1,912,825
NiSource Finance,
Gtd. Notes 1,662,456 382,117 272,941 2,014,797 4,332,311
NiSource Finance,
Gtd. Notes 604,417 604,417
Nisource Finance,
Sr. Unscd. Notes 706,473 95,878 741,797 1,544,148
Ohio Power,
Unscd. Notes 1,386,158 608,920 143,566 1,589,131 3,727,775
Southern,
Sr. Unsub. Notes, Ser. A 475,104 475,104
TXU Electric Delivery,
Bonds 4,395,858 455,427 5,123,550 9,974,835
TXU,
Sr. Notes, Ser. O 2,367,127 146,995 3,467,056 5,981,178
TXU,
Unscd. Notes, Ser. C 65,362 65,362
20,720,800 8,334,215 2,643,068 25,634,680 57,332,763
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 469,063 296,250 44,438 557,938 1,367,689
Allied Waste North America,
Scd. Notes 448,338 241,800 50,375 518,863 1,259,376
Oakmont Asset Trust,
Notes 1,257,014 129,179 1,619,710 3,005,903
Republic Services,
Sr. Notes 638,634 638,634
USA Waste Services,
Sr. Unscd. Notes 367,413 367,413
Waste Management,
Sr. Unsub. Notes 962,577 1,296,946 2,259,523
3,136,992 1,544,097 223,992 3,993,457 8,898,538
Food & Beverages--.5%
H.J. Heinz,
Notes 1,651,166 431,843 152,415 2,286,229 4,521,653
Kraft Foods,
Sr. Unscd. Notes 1,247,041 154,592 206,122 1,329,489 2,937,244
Safeway,
Sr. Unscd. Notes 923,111 84,370 1,285,407 2,292,888
Tyson Foods,
Sr. Unscd. Notes 828,414 538,469 82,841 1,139,069 2,588,793
4,649,732 1,124,904 525,748 6,040,194 12,340,578
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 1,786,756 203,624 1,900,492 3,890,872
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 2,070,640 1,179,668 219,010 2,643,053 6,112,371
Export-Import Bank of Korea,
Sr. Notes 1,063,920 1,063,920
Federal Republic of Brazil,
Unscd. Bonds BRL 3,444,337 1,114,157 502,962 3,508,003 8,569,459
Mexican Bonos,
Bonds, Ser. M MXN 2,459,506 249,355 3,418,086 6,126,947
Mexican Bonos,
Bonds, Ser. M 30 MXN 1,307,314 137,316 1,445,193 2,889,823
Republic of Argentina,
Bonds 6,381,448 1,173,436 886,470 6,776,381 15,217,735
Republic of Argentina,
Bonds, Ser. VII 630,000 630,000
Republic of El Salvador,
Unscd. Notes 65,910 65,910
Russian Federation,
Unsub. Bonds 4,057,771 1,015,312 445,068 5,264,323 10,782,474
21,507,772 6,176,493 2,709,715 24,955,531 55,349,511
Health Care--.7%
American Home Products,
Unscd. Notes 608,334 608,334
Baxter International,
Sr. Unscd. Notes 1,527,245 139,931 1,667,176
Community Health Systems,
Sr. Notes 320,075 320,075
Coventry Health Care,
Sr. Unscd. Notes 387,503 387,503
HCA,
Sr. Unscd. Notes 1,122,923 113,277 1,447,979 2,684,179
HCA,
Sr. Unscd. Notes 1,415,925 152,250 1,492,050 3,060,225
Medco Health Solutions,
Sr. Unscd. Notes 3,455,993 290,109 63,297 3,809,399
Pacific Life Global Funding,
Notes 216,621 216,621
Tenet Healthcare,
Sr. Notes 1,060,400 110,000 1,267,200 2,437,600
Teva Pharmaceutical Finance,
Gtd. Notes 538,572 538,572
UnitedHealth Group,
Sr. Unscd. Notes 375,305 375,305
8,582,486 2,519,898 795,376 4,207,229 16,104,989
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 190,000 14,250 247,000 451,250
MGM Mirage,
Gtd. Notes 366,625 366,625
MGM Mirage,
Gtd. Notes 1,653,750 162,750 2,157,750 3,974,250
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 957,500 19,150 1,297,413 2,274,063
2,801,250 366,625 196,150 3,702,163 7,066,188
Machinery--.2%
Atlas Copco,
Bonds 286,709 286,709
Case New Holland,
Gtd. Notes 669,500 329,600 66,950 803,400 1,869,450
Terex,
Gtd. Notes 1,132,200 117,300 1,570,800 2,820,300
1,801,700 616,309 184,250 2,374,200 4,976,459
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 533,470 60,393 654,256 1,248,119
Media--1.3%
AOL Time Warner,
Gtd. Notes 936,184 936,184
British Sky Broadcasting,
Gtd. Notes 921,275 921,275
Clear Channel Communications,
Sr. Unscd. Notes 1,577,586 2,134,382 3,711,968
Comcast,
Gtd. Notes 4,365,123 447,960 5,211,270 10,024,353
Comcast,
Gtd. Notes 992,676 992,676
Comcast,
Gtd. Notes 1,491,846 208,757 1,578,404 3,279,007
News America Holdings,
Gtd. Debs. 854,550 2,783,484 3,638,034
News America,
Gtd. Notes 2,619,750 406,997 3,026,747
Pacific Life Global Funding,
Notes 1,588,226 1,588,226
Time Warner,
Gtd. Notes 286,733 286,733
10,054,305 3,704,685 1,350,447 13,295,766 28,405,203
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 847,527 847,527
Anadarko Petroleum,
Sr. Unscd. Notes 531,159 531,159
ANR Pipeline,
Sr. Notes 54,460 54,460
BJ Services,
Sr. Unscd. Notes 4,858,143 500,840 6,761,333 12,120,316
Chesapeake Energy,
Gtd. Notes 159,650 159,650
Enterprise Products Operating,
Gtd. Notes, Ser. B 3,997,968 404,794 4,717,602 9,120,364
Enterprise Products Operating,
Gtd. Notes, Ser. B 1,368,415 1,368,415
Gazprom,
Sr. Unscd. Notes 709,566 709,566
Northwest Pipeline,
Sr. Unscd. Notes 211,050 211,050
8,856,111 3,085,158 1,702,303 11,478,935 25,122,507
Packaging & Containers--.0%
Ball,
Gtd. Notes 208,587 208,587
Crown Americas/Capital,
Gtd. Notes 592,969 592,969
801,556 801,556
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 1,075,827 103,161 1,503,210 2,682,198
Temple-Inland,
Gtd. Notes 1,073,731 683,283 102,493 1,488,581 3,348,088
2,149,558 683,283 205,654 2,991,791 6,030,286
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 792,351 78,193 948,736 1,819,280
Allstate,
Jr. Sub. Debs. 260,939 260,939
American International Group,
Sr. Notes 449,283 449,283
Chubb,
Sr. Unscd. Notes 2,373,126 1,598,737 249,803 3,347,357 7,569,023
Hartford Financial Services
Group,
Sr. Unscd. Notes 877,222 731,853 1,193,021 2,802,096
Hartford Financial Services
Group,
Sr. Notes 1,969,555 252,507 2,222,062
Leucadia National,
Sr. Unscd. Notes 3,317,738 339,913 3,734,250 7,391,901
Lincoln National,
Sr. Unscd. Notes 722,030 240,677 962,707
Metlife,
Sr. Notes 2,206,805 2,206,805
Nippon Life Insurance,
Notes 1,338,709 842,891 1,884,108 4,065,708
Pacific Life Global Funding,
Notes 1,521,270 1,521,270
Phoenix Cos.,
Sr. Unscd. Notes 736,466 355,708 70,140 1,027,045 2,189,359
12,926,437 7,168,246 1,231,233 12,134,517 33,460,433
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 981,480 83,426 1,064,906
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 173,197 865,986 221,308 1,260,491
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 339,582 454,441 794,023
Arden Realty,
Notes 666,324 666,324
Avalonbay Communities,
Sr. Unscd. Notes 385,012 385,012
Boston Properties,
Sr. Notes 786,044 82,486 1,086,876 1,955,406
Boston Properties,
Sr. Notes 755,963 755,963
Commercial Net Lease Realty,
Sr. Unscd. Notes 1,060,973 361,695 96,452 1,451,604 2,970,724
Duke Realty,
Notes 924,081 889,116 69,930 1,053,952 2,937,079
Duke Realty,
Sr. Unscd. Notes 349,302 349,302
Duke Realty,
Sr. Notes 2,217,456 255,860 2,473,316
Duke Realty,
Sr. Notes 177,214 177,214
ERP Operating,
Notes 556,466 54,653 993,690 1,604,809
ERP Operating,
Unscd. Notes 334,642 334,642
ERP Operating,
Notes 143,306 143,306
ERP Operating,
Notes 765,872 570,923 69,625 1,044,371 2,450,791
ERP Operating,
Unscd. Notes 239,235 239,235
Federal Realty Investment Trust,
Sr. Unscd. Notes 634,407 48,801 805,208 1,488,416
Federal Realty Investment Trust,
Notes 577,611 157,070 55,734 770,148 1,560,563
Federal Realty Investment Trust,
Sr. Unscd. Notes 531,264 531,264
Healthcare Realty Trust,
Sr. Unscd. Notes 2,710,652 841,071 3,652,651 7,204,374
Healthcare Realty Trust,
Unscd. Notes 241,208 241,208
HRPT Properties Trust,
Sr. Unscd. Notes 1,352,017 412,616 125,187 1,790,671 3,680,491
Istar Financial,
Sr. Unscd. Notes 2,738,123 1,026,213 279,876 3,204,584 7,248,796
Liberty Property,
Sr. Unscd. Notes 300,005 300,005
Mack-Cali Realty,
Bonds 666,413 666,413
Mack-Cali Realty,
Notes 572,009 665,701 54,242 788,978 2,080,930
Mack-Cali Realty,
Unscd. Notes 1,590,310 397,578 332,971 2,286,071 4,606,930
Mack-Cali Realty,
Sr. Unscd. Notes 70,812 70,812
Regency Centers,
Gtd. Notes 1,373,656 208,417 118,419 1,894,698 3,595,190
Regency Centers,
Sr. Unscd. Notes 178,860 178,860
Simon Property Group,
Notes 1,077,644 103,053 1,180,697
Simon Property Group,
Notes 840,007 74,118 1,166,128 2,080,253
Simon Property Group,
Unsub. Notes 971,279 971,279
Simon Property Group,
Unscd. Notes 199,950 199,950
Socgen Real Estate,
Bonds 1,590,000 1,590,000
19,403,433 15,576,095 2,394,067 22,665,379 60,038,974
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 595,339 54,954 650,293
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 154,294 154,294
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 266,892 266,892
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 173,149 173,149
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 388,451 522,112 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 323,292 365,679 688,971
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 391,840 304,765 43,538 740,143
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 1,205,229 120,523 1,606,972 2,932,724
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 95,983 138,215 9,598 130,536 374,332
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 1,639,940 1,639,940
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 45,735 45,735
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 303,468 303,468
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 200,548 200,548
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 920,332 920,332
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 1,913,707 74,602 1,988,309
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 5,592,774 3,756,090 3,403,620 12,752,484
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 1,096,157 103,483 1,517,756 2,717,396
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 818,545 71,178 1,150,946 2,040,669
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 693,685 467,081 64,744 948,036 2,173,546
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 381,741 477,089 858,830
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 94,797 94,797
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 1,094,010 1,276,346 91,168 1,458,681 3,920,205
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 904,887 106,756 1,016,727 2,028,370
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 730,251 64,232 1,016,181 1,810,664
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 704,351 70,942 901,975 1,677,268
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 194,651 194,651
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 1,667,727 749,269 145,020 2,276,810 4,838,826
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 1,165,591 759,829 112,170 1,589,886 3,627,476
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 3,262 3,262
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 1,069,041 1,069,041
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 1,683 1,683
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 697,576 697,576
Washington Mutual,
Ser. 2004-AR7, Cl. A6 131,897 131,897
Washington Mutual,
Ser. 2003-AR10, Cl. A6 200,936 200,936
Washington Mutual,
Ser. 2004-AR9, Cl. A7 162,432 162,432
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 3,290,848 1,014,472 4,478,522 8,783,842
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4,240,377 414,099 5,631,751 10,286,227
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 1,785,483 148,790 2,479,837 4,414,110
29,139,311 13,402,436 2,654,288 31,279,846 76,475,881
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 1,052,156 369,002 109,703 1,151,886 2,682,747
CVS Caremark,
Sr. Unscd. Notes 258,533 258,533
Delhaize Group,
Sr. Unscd. Notes 191,963 191,963
Federated Retail Holding,
Gtd. Bonds 152,144 152,144
Federated Retail Holding,
Gtd. Notes 254,037 254,037
Home Depot,
Sr. Unscd. Notes 804,817 83,938 1,002,319 1,891,074
Lowe's Companies,
Sr. Unscd. Notes 1,283,826 166,796 181,960 1,339,425 2,972,007
May Department Stores,
Unscd. Notes 44,725 44,725
May Department Stores,
Gtd. Notes 760,990 1,036,349 1,797,339
Saks,
Gtd. Notes 433 433
3,902,222 1,392,475 420,326 4,529,979 10,245,002
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 443,903 63,415 465,042 972,360
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 554,415 69,884 624,299
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 4,471,515 2,381,514 405,154 5,439,931 12,698,114
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 1,000,871 571,926 95,321 1,429,815 3,097,933
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 1,690,570 154,566 2,337,817 4,182,953
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 3,100,550 2,143,238 157,171 3,776,861 9,177,820
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 676,798 435,422 1,112,220
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 295,347 295,347
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 1,331,389 188,077 1,400,680 2,920,146
12,715,596 5,651,093 1,864,357 14,850,146 35,081,192
Steel--.0%
US Steel,
Sr. Unsub. Notes 314,225 314,225
Telecommunications--2.4%
America Movil,
Gtd. Notes 455,091 45,009 565,113 1,065,213
AT & T,
Notes 2,382,885 244,271 2,921,277 5,548,433
AT & T,
Sr. Notes 2,700,459 450,076 125,021 3,700,629 6,976,185
AT & T Wireless,
Sr. Unsub. Notes 558,635 558,635
AT & T,
Sr. Unscd. Notes 795,676 795,676
France Telecom,
Unsub. Notes 1,376,932 118,330 1,172,544 2,667,806
Intelsat,
Sr. Unscd. Notes 1,509,200 196,000 1,945,300 3,650,500
KPN,
Sr. Unsub. Bonds 380,952 380,952
Nextel Communications,
Gtd. Notes, Ser. F 989,421 477,981 90,816 1,343,127 2,901,345
Qwest,
Bank Note, Ser. B 475,600 475,600
Qwest,
Bank Note, Ser. B 1,904,450 1,904,450
Qwest,
Sr. Notes 749,050 68,575 2,073,075 2,890,700
Qwest,
Notes 54,813 54,813
Qwest,
Sr. Notes 107,250 1,716,000 1,823,250
Sprint Capital,
Gtd. Notes 1,420,081 218,474 1,512,070 3,150,625
Telefonica Emisiones,
Gtd. Notes 239,842 239,842
Telefonica Emisiones,
Gtd. Notes 2,469,239 636,402 478,574 3,263,469 6,847,684
Time Warner Cable,
Sr. Unscd. Notes 1,344,066 326,277 146,094 1,470,681 3,287,118
Time Warner,
Gtd. Notes 2,214,782 259,698 2,361,781 4,836,261
U.S. West Communications,
Notes 70,263 70,263
Verizon Global Funding,
Notes 283,613 283,613
Windstream,
Gtd. Notes 1,517,513 148,050 2,056,838 3,722,401
21,508,769 3,964,425 2,556,267 26,101,904 54,131,365
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 999,709 706,865 277,697 1,383,436 3,367,707
Transportation--.2%
Ryder System,
Notes 1,408,506 127,600 1,943,443 3,479,549
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 13,775,853 13,775,853
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 523,708 523,708
14,299,561 14,299,561
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 250,920 250,920
4.00%, 10/1/09 75,201 75,201
4.50%, 10/1/09 69,717 69,717
5.00% 1,636,333 1,636,333
5.00%, 10/1/18 407,650 407,650
5.50% 58,294,479 17,072,016 9,006,379 62,206,295 146,579,169
5.50%, 6/1/34 - 4/1/37 7,451,718 337,913 9,501,174 17,290,805
6.00%, 7/1/37 1,394,133 1,672,000 3,066,133
6.00%, 7/1/17 - 4/1/33 1,810,908 1,810,908
6.50%, 10/1/31 - 3/1/32 91,660 848,941 940,601
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 295,950 295,950
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,263,853 2,027,188 6,291,041
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 464,979 464,979
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 515,309 515,309
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 452,622 452,622
Federal National Mortgage
Association:
5.00% 25,877,395 24,365,364 1,716,873 30,966,400 82,926,032
5.50% 5,520,277 812,832 5,859,373 12,192,482
6.00% 100,751,854 30,063,118 12,170,544 100,759,631 243,745,147
6.50% 5,615,814 656,791 5,956,938 12,229,543
3.53%, 7/1/10 267,051 267,051
4.00%, 5/1/10 1,345,964 1,345,964
4.06%, 6/1/13 94,294 94,294
5.00%, 7/1/11 - 1/1/22 8,059,392 1,840,287 818,805 10,718,484
5.50%, 8/1/22 - 1/1/37 12,484,046 610,863 2,171,807 19,579,280 34,845,996
6.00%, 1/1/19 - 8/1/37 1,717,050 1,568,471 219,821 5,501,642 9,006,984
6.50%, 11/1/10 - 8/1/37 5,525,767 827,805 7,808,439 14,162,011
7.00%, 9/1/14 - 7/1/32 46,244 70,205 116,449
8.00%, 12/1/25 39,057 39,057
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 284,606 284,606
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,202,359 2,055,892 4,473,693 9,731,944
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 170,047 170,047
Government National Mortgage
Association I:
5.50%, 4/15/33 4,454,192 4,454,192
6.50%, 9/15/32 62,317 62,317
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,416 5,416
9.50%, 11/15/17 329,992 329,992
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 186,932 186,932
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,030 2,030
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 67,514 67,514
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 77,547 77,547
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,288,464 116,504 2,404,968
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 303,452 504,488 807,940
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 318,229 253,136 571,365
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 150,648 150,648
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,823,049 5,561,579 10,384,628
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 109,140 109,140
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 103,323 103,323
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 182,787 182,787
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 108,859 108,859
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 148,956 148,956
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 982,079 982,079
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 85,029 85,029
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 59,712 59,712
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,587,289 132,274 2,182,523 3,902,086
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 105,266 105,266
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 797,293 1,116,211 1,913,504
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,237,315 1,716,579 2,953,894
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,270,163 1,770,530 3,040,693
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,165,496 97,125 1,592,845 2,855,466
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,749,969 841,757 155,061 2,436,666 5,183,453
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,315,022 1,315,022
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,359,199 1,154,111 147,333 4,640,999 9,301,642
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,292,990 107,749 1,788,636 3,189,375
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 163,829 163,829
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,647,991 1,647,991
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,128,723 1,128,723
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,401,015 1,401,015
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,541,607 1,541,607
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,210,588 624,664 135,586 1,259,012 3,229,850
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,768,833 855,260 208,956 1,880,600 4,713,649
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 76,418 76,418
Government National Mortgage
Association II:
5.50%, 7/20/30 66,830 334,216 401,046
6.38%, 4/20/30 261,199 261,199
6.50%, 2/20/31 - 7/20/31 278,244 278,244
7.00%, 11/20/29 791 791
261,176,075 100,745,630 36,005,793 283,986,500 681,913,998
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,375,916 663,852 9,039,768
5.00%, 5/15/37 609,500 13,249,952 699,796 1,696,133 16,255,381
U.S. Treasury Notes:
3.88%, 9/15/10 11,493,555 4,703,041 229,174 16,425,770
4.13%, 8/31/12 7,701,020 7,701,020
4.25%, 1/15/11 25,670,400 1,549,987 27,220,387
4.38%, 12/31/07 8,169,564 8,169,564
4.50%, 5/15/10 739,410 739,410
4.50%, 9/30/11 4,642,618 4,642,618
4.50%, 4/30/12 14,490,005 12,748,370 14,738,087 41,976,462
4.50%, 5/15/17 4,600,432 507,291 5,232,059 10,339,782
4.63%, 12/31/11 6,524,181 6,524,181
4.63%, 11/15/16 25,925,011 7,081,881 3,945,547 12,490,045 49,442,484
4.75%, 8/15/17 5,423,568 16,284,896 2,240,390 21,310,060 45,258,914
5.13%, 6/30/08 8,504,657 8,504,657
88,212,471 81,274,095 27,058,274 55,695,558 252,240,398
Total Bonds and Notes
(cost $750,962,326,
$390,304,526,
$110,300,634 and
$793,545,334
respectively) 745,095,279 386,073,850 109,713,813 785,882,941 2,026,765,883
Preferred Stocks--.3% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 15,500 1,400 22,050 38,950
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 44,450 3,450 50,950 98,850
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 664,950 60,060 945,945 1,670,955
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 2,194,719 170,344 2,515,656 4,880,719
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively) 2,859,669 230,404 3,461,601 6,551,674
Options--.1% Face Amount Covered by Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 49,400,000 15,500,000 5,090,000 63,570,000 133,560,000
3-Month USD Libor-BBA,
Swaption 2,770,000 390,000 2,910,000 6,070,000
CDX Option DB
December 2007 @.450 58,320,000 58,320,000
Dow Jones CDX.DB
December 2007 @ .45 5,600,000 5,600,000
Dow Jones CDX.IG8
December 2007 @ .45 54,820,000 6,330,000 61,150,000
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 63,100,000 9,100,000 65,400,000 137,600,000
U.S. Treasury 5 Year Notes
October 2007 @ 107 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively)
Options--.1% Value ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 168,415 21,463 17,353 216,723 423,954
3-Month USD Libor-BBA,
Swaption 264,258 37,206 267,720 569,184
CDX Option DB
December 2007 @.450 55,404 55,404
Dow Jones CDX.DB
December 2007 @ .45 5,320 5,320
Dow Jones CDX.IG8
December 2007 @ .45 52,079 6,014 58,093
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 39,438 5,688 40,875 86,001
U.S. Treasury 5 Year Notes
October 2007 @ 107 172,814 43,204 25,156 179,377 420,551
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively) 697,004 69,987 91,417 760,099 1,618,507
Short-Term Investments--.9% Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 b,c 820,000 b,c 6,030,000 b,c 12,495,000
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,420,000 h 3,420,000
4.10%, 12/6/07 3,399,000 h 3,399,000
4.13%, 12/6/07 355,000 h 98,000 h 453,000
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively)
Short-Term Investments--.9% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 818,135 6,030,000 12,493,135
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,396,983 3,396,983
4.10%, 12/6/07 3,376,125 3,376,125
4.13%, 12/6/07 352,611 97,340 449,951
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively) 9,041,983 352,611 915,475 9,406,125 19,716,194
Other Investment--1.1% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 i 6,178,000 i 3,647,000 i 6,066,000 I 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Other Investment--1.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 6,178,000 3,647,000 6,066,000 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 i 32,557,177 I 67,484,785
(cost $0, $34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 i 24,190,518 i 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 32,557,177 67,484,785
(cost $0,,$34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 24,190,518 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively) 77,933,659 34,927,608 24,190,518 32,557,177 169,608,962
Total Investments-100.0%
(cost $850,306,723, $431,846,285,
$139,390,553 and $845,957,426
respectively) 844,310,594 427,602,056 138,788,627 838,133,943 2,248,835,220
| * | Management does not anticipate having to sell any securities as a result of the exchange. |
| a | All or a portion of these securities are on loan. At September 30, 2007, the total market value of the fund's securities on loan is $188,728,839 and the total market value of the collateral held by the fund is $193,466,218 consisting of cash collateral of $169,608,962 and U.S. Government and agency securities valued as $23,857,256. |
| b | Securities 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 September 30, 2007, these securities amounted to $227,731,914 or 10.1% market value. |
| c | Variable rate security--interest rate subject to periodic change. |
| d | Principal amount stated in U.S. Dollars unless otherwise noted.
BRL--Brazilian Real
EGP--Egyptian Pound
EUR--Euro
MXN--Mexican Peso |
| e | Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity. |
| f | Purchased on a forward commitment basis. |
| g | Purchased on a delayed delivery basis. |
| h | All or partially held by a broker as collateral for open financial futures positions. |
| i | Investment in affiliated money market mutual fund. |
| j | Notional face amount shown. |
STATEMENT OF FINANCIAL FUTURES
September 30, 2007 (Unaudited)
Contracts Expiration Market Value Covered by Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 261 December 2007 27,935,156
U.S. Treasury 5 Year Notes 84 December 2007 8,990,625
U.S. Treasury 5 Year Notes 12 December 2007 1,284,375
U.S. Treasury 5 Year Notes 425 December 2007 45,488,281
U.S. Treasury 10 Year Notes 599 December 2007 65,459,469
U.S. Treasury 10 Year Notes 85 December 2007 9,288,906
U.S. Treasury 10 Year Notes 524 December 2007 57,263,375
Financial Futures Short
U.S. Treasury 2 Year Notes 436 December 2007 (90,272,440)
U.S. Treasury 2 Year Notes 89 December 2007 (18,427,172)
U.S. Treasury 2 Year Notes 52 December 2007 (10,766,438)
U.S. Treasury 2 Year Notes 546 December 2007 (113,047,596)
U.S. Treasury 10 Year Notes 236 December 2007 (25,790,375)
U.S. Treasury 30 Year Bonds 135 December 2007 (15,031,406)
U.S. Treasury 30 Year Bonds 4 December 2007 (445,375)
Unrealized Appreciation (Depreciation) at 9/30/2007 ($)
- ---------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 27,935,156 (3,328) (3,328)
U.S. Treasury 5 Year Notes 8,990,625 64,719 64,719
U.S. Treasury 5 Year Notes 1,284,375 5,473 5,473
U.S. Treasury 5 Year Notes 45,488,281 54,930 54,930
U.S. Treasury 10 Year Notes 65,459,469 121,844 121,844
U.S. Treasury 10 Year Notes 9,288,906 20,149 20,149
U.S. Treasury 10 Year Notes 57,263,375 138,625 138,625
Financial Futures Short
U.S. Treasury 2 Year Notes (90,272,440) (333,815) (333,815)
U.S. Treasury 2 Year Notes (18,427,172) (37,547) (37,547)
U.S. Treasury 2 Year Notes (10,766,438) (39,911) (39,911)
U.S. Treasury 2 Year Notes (113,047,596) (418,034) (418,034)
U.S. Treasury 10 Year Notes (25,790,375) 57,156 57,156
U.S. Treasury 30 Year Bonds (15,031,406) 97,031 97,031
U.S. Treasury 30 Year Bonds (445,375) 117 117
(215,299) 181,359 (14,170) (224,479) (272,589)
STATEMENT OF OPTIONS WRITTEN
September 30, 2007 (Unaudited)
Face Amount
Covered by
Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 11,200,000 12,660,000 116,640,000 140,500,000
Dow Jones CDX.IG8
December 2007 @ .395 109,640,000 109,640,000
U.S. Treasury 5 Year Notes
October 2007 @ 108 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
(Premiums received $306,789, $59,234, $41,679 and $321,062 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 (5,320) (6,014) (55,404) (66,738)
Dow Jones CDX.IG8
December 2007 @ .395 (52,079) (52,079)
U.S. Treasury 5 Year Notes
October 2007 @ 108 (64,189) (16,047) (9,344) (66,627) (156,207)
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 (54,314) (13,579) (7,906) (56,377) (132,176)
(Premiums received $306,789, $59,234, (170,582) (34,946) (23,264) (178,407) (407,200)
$41,679 and $321,062 respectively)
Pro Forma Statement of Assets and Liabilities
September 30, 2007 (Unaudited) Dreyfus
Premier
Intermediate
Term
Dreyfus Dreyfus Income Fund
Intermediate Premier Dreyfus Dreyfus A Pro Forma
Term Income Managed Premier Bond Combined
Fund Income Fund Core Bond Plus, Inc. Adjustments (Note 1)
------------ ----------- ---------- ---------------- ------------ --------------
ASSETS:
Investments in securities,
at value - See Statement
of Investments (including
securities on loan, valued
at $188,728,839)
Unaffiliated issuers $ 757,693,935 $ 110,951,109 $ 799,510,766 $ 386,496,448 $ 2,054,652,258
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
Cash 10,358 10,358
Cash denominated in foreign
currencies 393,276 38,277 846,420 21,977 1,299,950
Receivable for investment
securities sold 173,350,932 25,171,177 185,439,728 43,966,620 427,928,457
Dividends and interest
receivable 6,229,325 994,265 6,589,490 3,608,232 17,421,312
Receivable for futures
variation margin 27,359 27,359
Receivable from broker for
swap transaction 1,038,010 104,986 1,377,623 2,520,619
Swap premium paid 2,013,869 226,752 2,471,723 248,776 4,961,120
Receivable for shares of
Beneficial Interest
subscribed 1,072,180 549,582 126,499 23,471 1,771,732
Prepaid expenses 34,389 6,927 22,889 64,205
--------------- ------------- -------------- ------------ ------------- -------------
Total Assets 1,028,442,575 165,873,666 1,034,992,353 475,531,738 2,704,840,332
--------------- ------------- -------------- ------------ ------------- -------------
LIABILITIES: Due to The Dreyfus Corporation
and affiliates 349,267 68,697 551,087 170,683 1,139,734
Cash overdraft due to Custodian 2,097,837 290,280 2,177,697 4,565,814
Outstanding options written,
at value (premiums received
$728,764) - see statement 170,582 23,268 178,407 34,946 407,203
Liability for securities loaned 77,933,659 24,190,518 32,557,177 34,927,608 169,608,962
Net unrealized depreciation on
forward currency exchange
contracts-Note 3(a) 38,909 4,553 49,523 92,985
Payable for investment
securities
purchased 372,907,207 53,629,063 410,722,756 155,527,763 992,786,789
Payable to broker for swap
transactions 750 54,810 55,560
Payable for shares of Beneficial
Interest redeemed 3,091 42,545 412,825 458,461
Unrealized depreciation on swaps 1,075,287 150,160 1,160,543 265,382 2,651,372
Payable for futures variation
margin 35,717 5,531 23,529 64,777
Accrued Interest payable 197 197
Merger costs 90,000 (a) 110,000 (a) 100,000 (a) 300,000
Accrued expenses 230,383 376,973 168,451 775,807
-------------- --------------- --------------- -------------- ------------- --------------
Total Liabilities 454,841,939 78,495,365 448,320,714 191,249,643 1,172,907,661
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
REPRESENTED BY: Paid-in capital 596,461,047 $ 95,504,465 $ 618,764,827 $ 329,276,172 $ 1,640,006,511
Accumulated undistributed
investment income-net 3,024,657 (130,982) 319,644 3,862,872 7,076,191
Accumulated net realized gain
(loss) on investments (18,796,225) (7,251,512) (23,371,769) (44,634,175) (94,053,681)
Accumulated net unrealized
appreciation
(depreciation) on
investments (7,088,843) (743,670) (9,041,063) (4,222,774) (21,096,350)
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS $ 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
Class A Shares (500 million, $.001 par
value shares authorized) (b)
Net Assets $ 538,484,842 $ 74,021,438 $ 433,278,945 $ 284,282,095 $ 1,330,067,320
Shares outstanding 43,433,975 7,000,995 30,809,721 21,404,884 4,610,372 (c) 107,259,947
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.57 $ 14.06 $ 13.28 $ 12.40
=============== =============== =============== ============== ============ ===============
Maximum offering price per share
(net asset value plus maximum sales
charge) $ 12.40 $ 11.07 $ 14.73 $ 12.98
=============== =============== =============== ============== ============ ===============
Class B Shares (500 million, $.001
par value shares authorized)
Net Assets $ 2,488,214 $ 94,585,171 $ 97,073,385
Shares outstanding 235,360 6,714,459 880,381 (c) 7,830,200
Net asset value, offering price and
redemption price per share $ 10.57 $ 14.09 $ 12.40
================ =============== =============== =============== ============ ===============
Class C Shares (500 million, $.001 par
value shares authorized)
Net Assets $ 8,833,042 $ 39,030,280 $ 47,863,322
Shares outstanding 834,740 2,780,181 245,183 (c) 3,860,104
Net asset value, offering price and
redemption price per share $ 10.58 $ 14.04 $ 12.40
=============== =============== =============== =============== ============ ==============
Class I Shares (500 million, $.001
par value shares authorized) (b)
Net Assets $ 35,115,794 $ 2,035,607 $ 19,777,243 $ 56,928,644
Shares outstanding 2,832,734 192,724 1,407,253 158,658 (c) 4,591,369
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.56 $ 14.05 $ 12.40
================ =============== ================ =============== =========== ==============
* Investments at cost
Unaffiliated issuers $ 763,690,064 $ 111,553,035 $ 807,334,249 $ 390,740,677 $2,073,318,025
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
(a) Includes expenses incurred as a result of the merger.
(b) Reflects redesignation of Dreyfus Intermediate Term Income Fund Investor Shares to Class A Shares and Institutional Shares to
Class I Shares.
(c) Reflects adjustment of shares as a result of the Exchange.
See notes to pro forma financial statements.
Pro Forma Statement of Operations
For the Twelve Months Ended September 30, 2007 (Unaudited)
Dreyfus Dreyfus
Intermediate Premier
Term Managed Dreyfus Dreyfus A Pro Forma
Income Income Premier Bond Combined
Fund Fund Core Bond Plus, Inc. Adjustments (Note 1)
-------------- ------------ ------------- -------------- -------------- -------------
INVESTMENT INCOME:
INCOME: Interest Income $ 31,416,543 $ 3,367,031 $37,012,268 $ 16,102,907 $ 87,898,749
Dividends 152,200 80,151 188,847 618,920 1,040,118
Securities lending income 76,954 14,272 42,534 34,616 168,376
-------------- ------------ ------------- -------------- -------------- --------------
Total Income 31,645,697 3,461,454 37,243,649 16,756,443 89,107,243
-------------- ------------ ------------- -------------- -------------- --------------
EXPENSES: Management fee $ 2,407,911 $ 420,241 $ 3,698,141 $ 1,938,292 $ (1,738,932)(a) $ 6,725,653
Shareholder servicing costs 1,987,228 2,422,765 629,004 536,757 (b) 5,575,754
Professional fees 54,053 66,872 53,004 (75,000)(a) 98,929
Prospectus and shareholders' reports 45,650 58,715 42,604 (15,000)(a) 131,969
Custodian fees 166,627 188,174 56,697 (50,000)(a) 361,498
Directors' fees and expenses 7,909 78,870 15,584 (60,000)(a) 42,363
Registration fees 37,787 68,495 37,429 (25,000)(a) 118,711
Interest 6,907 6,907
Distribution and service fees 188,932 1,027,205 1,216,137
Loan commitment fees 844 (844)(a) -
Merger cost - - - -
Miscellaneous 44,748 165,248 57,166 267,162
-------------- ------------ ------------- -------------- -------------- --------------
Total Expenses 4,751,913 610,017 7,781,392 2,829,780 (1,428,019) 14,545,083
-------------- ------------ ------------- -------------- -------------- --------------
Less- reduction in management fee due to
undertaking (586,776) (723,514) 237,936 (1,072,354)
-------------- ------------ ------------- -------------- -------------- --------------
Net Expenses 4,165,137 610,017 7,057,878 2,829,780 (1,190,083) 13,472,729
-
-------------- ------------ ------------- -------------- -------------- --------------
INVESTMENT GAIN 27,480,560 2,851,437 30,185,771 13,926,663 1,190,083 75,634,514
-------------- ------------ ------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments and
foreign currency transactions $ 2,460,530 $ 535,481 $ 1,507,249 $ (2,239,627) $ 2,263,633
Net realized gain (loss) on forward currency
exchange contracts (591,903) (70,953) (747,773) 87,615 (1,323,014)
Net realized gain (loss) on financial futures (1,931,470) (177,608) (1,157,908) (1,013,480) (4,280,466)
Net realized gain (loss) on options transactions 10,322 4,420 (364) (106,988) (92,610)
Net realized gain (loss) on swap transactions (2,419,831) (157,119) (2,393,828) (971,553) (5,942,331)
-------------- ------------- ------------- ------------- ---------------
Net Realized Gain (Loss) (2,472,352) 134,221 (2,792,624) (4,244,033) (9,374,788)
-------------- ------------ ------------- -------------- -------------- --------------
Net unrealized appreciation (depreciation) on
investments, foreign currency transactions,
option transactions, and swap transactions
(including $1,642,649 net unrealized
appreciation on financial futures) (4,201,364) (17,895) (5,770,332) (2,742,836) (12,732,427)
-------------- ------------ ------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,673,716) 116,326 (8,562,956) (6,986,869) (22,107,215)
-------------- ------------ ------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 20,806,844 $ 2,967,763 $21,622,815 $ 6,939,794 $ 1,190,083 53,527,299
============== ============ ============= ============== ============ ===============
(a) Reflects the anticipated savings as a result of the Merger.
(b) Reflects an anticipated expense increase as a result of the Merger.
See notes to pro forma financial statements.
Dreyfus Intermediate Term Income Fund
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
NOTE 1 — Basis of Combination:
At meetings of the Boards held on October 18, 2007, October 25, 2007, November 6, 2007 and November 7, 2007, the Boards of Directors/Trustees of Dreyfus Investment Grade Funds, Inc., on behalf of Dreyfus Intermediate Term Income Fund (the "Acquiring Fund"), The Dreyfus/Laurels Funds Trust, on behalf of Dreyfus Premier Managed Income Fund, Dreyfus Premier Fixed Income Funds, on behalf of Dreyfus Premier Core Bond Fund, and Dreyfus A Bonds Plus, Inc. (collectively, the "Funds"), respectively, each approved an Agreement and Plan of Reorganization pursuant to which, subject to approval by the respective Fund's shareholders, each Fund will transfer all of its assets, subject to its liabilities, to the Acquiring Fund, in exchange for a number of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares only with respect to Dreyfus A Bonds Plus, Inc.) equal in value to the assets less liabilities of the Fund (the "Exchange"). The Acquiring Fund shares will then be distributed to the respective Fund's shareholders on a pro rata basis in liquidation of the Fund. Fund shareholders will receive shares of the corresponding class of shares of the Acquiring Fund in the Exchange with holders of shares of Dreyfus A Bonds Plus, Inc. receiving Class A shares of the Acquiring Fund. The Acquiring Fund will redesignate Investor shares to Class A shares and Institutional shares to Class I shares, will create Class B and Class C shares and will change its name to Dreyfus Premier Intermediate Term Income Fund prior to the Exchange. If the Exchange is consummated only for Dreyfus A Bonds Plus, Inc., holders of shares of Dreyfus A Bonds Plus, Inc. will receive Investor shares of the Acquiring Fund and the Acquiring Fund will not change its name.
Each Exchange will be accounted for as a tax-free merger of investment companies. The unaudited pro forma statement of investments and statement of assets and liabilities reflect the financial position of the Acquiring Fund and the Funds on September 30, 2007. The unaudited pro forma statement of operations reflects the results of operations of the Acquiring Fund and the Funds for the twelve months ended September 30, 2007. These statements have been derived from the Fund's and the Acquiring Fund's respective books and records utilized in calculating daily net asset value at the dates indicated above under accounting principles generally accepted in the United States. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. The historical cost of investment securities will be carried forward to the surviving entity and results of operations of the Acquiring Fund for pre-combination periods will not be restated. The fiscal year end is July 31 for the Acquiring Fund, December 31 for Dreyfus Premier Managed Income Fund, October 31 for Dreyfus Premier Core Bond Fund and March 31 for Dreyfus A Bonds Plus. Inc.
The pro forma statements of investments, assets and liabilities and operations should be read in conjunction with the historical financial statements of the Funds and the Acquiring Fund included or incorporated by reference in the Statement of Additional Information of which the pro forma combined financial statements form a part. The pro forma combined financial statements are presented for information only and may not necessarily be representative of what the actual combined financial statements would have been had the Exchange, occurred on September 30, 2007. The pro forma financial statements were prepared in accordance with accounting principles generally accepted in the United States, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. Following the relevant Exchange, the Acquiring Fund will be the accounting survivor.
All costs with respect to each Exchange will be borne by the respective Fund.
The funds enter into contracts that contain a variety of indemnifications. The funds' maximum exposure under these arrangements is unknown. The funds do not anticipate recognizing any loss related to these arrangements.
NOTE 2 — Portfolio Valuation:
Investments in securities (excluding short-term investments other than U.S. Treasury Bills, options and financial futures) are valued each business day by an independent pricing service ("Service") approved by the respective fund's Board members. 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. Securities for which there are no such valuations are valued at fair value as determined in good faith under the direction of the respective Board. Short-term investments, excluding U.S. Treasury Bills, are carried at amortized cost, which approximates market value. Financial futures and options are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
NOTE 3 — Capital Shares:
The pro forma number of shares that would be issued was calculated by dividing the net assets of the respective Fund's Class A, Class B, Class C and Class I shares (fund shares only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007 by the net asset value per share of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares of the Acquiring Fund only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007.
NOTE 4 — Pro Forma Operating Expenses:
The accompanying pro forma statement of operations reflects changes in fund expenses as if the respective Exchange had taken place on October 1, 2006. Each Fund will bear the expense of the respective Exchange.
NOTE 5 — Federal Income Taxes:
Each fund has qualified as a "regulated investment company" under the Internal Revenue Code. After the relevant Exchange, the Acquiring Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, federal income taxes.
The identified cost of investments for the funds is substantially the same for both financial accounting and federal income tax purposes. The tax cost of investments will remain unchanged for the combined entity.
DREYFUS PREMIER MANAGED INCOME FUND
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Shareholder:
As a shareholder of Dreyfus Premier Managed Income Fund (the "Fund"), you are being asked to vote on an Agreement and Plan of Reorganization to allow the Fund to transfer all of its assets in a tax-free reorganization to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities. The Acquiring Fund, like the Fund, normally invests primarily in fixed-income securities. The Acquiring Fund has substantially more assets and is expected to have a lower total expense ratio than the Fund. In addition, the Acquiring Fund's performance record is comparable to the Fund's performance record. The Fund is a series of The Dreyfus/Laurel Funds Trust (the "Trust"). The Dreyfus Corporation ("Dreyfus") is the investment adviser to the Acquiring Fund and the Fund.
If the Agreement and Plan of Reorganization is approved and consummated for the Fund, you would no longer be a shareholder of the Fund, but would become a shareholder of the Acquiring Fund, which has a substantially similar investment objective and substantially similar investment management policies as the Fund.
Management of Dreyfus has reviewed the funds in the Dreyfus Family of Funds and has concluded that it would be appropriate to consolidate certain funds having similar investment objectives and management policies and that would otherwise benefit fund shareholders. As a result of the review, management recommended to the Trust's Board that the Fund be consolidated with the Acquiring Fund. Management believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that has a comparable performance record to the Fund's performance record and is expected to have a lower total expense ratio than the Fund. Management also believes that the reorganization should enable shareholders of the Fund to benefit from more efficient portfolio management and will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
After careful review, the Trust's Board of Trustees has approved the proposed reorganization. The Trustees believe that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that has a comparable performance record to the Fund's performance record and is expected to have a lower total expense ratio than the Fund. The Board of Trustees recommends that you read the enclosed materials carefully and then vote FOR the proposal.
Your vote is extremely important, no matter how large or small your Fund holdings. By voting now, you can help avoid additional costs that are incurred with follow-up letters and calls.
To vote, you may use any of the following methods:
| • | By Mail. Please complete, date and sign the enclosed proxy card and mail it in the enclosed, postage-paid envelope. |
| • | By Internet. Have your proxy card available. Go to the website listed on the proxy card. Enter your control number from your proxy card. Follow the instructions on the website. |
| • | By Telephone. Have your proxy card available. Call the toll-free number listed on the proxy card. Enter your control number from your proxy card. Follow the recorded instructions. |
| • | In Person. Any shareholder who attends the meeting in person may vote by ballot at the meeting. |
Further information about the proposed reorganization is contained in the enclosed materials, which you should review carefully before you vote. If you have any questions after considering the enclosed materials, please call 1-800-554-4611.
| Sincerely,
J. David Officer
President |
December 21, 2007
TRANSFER OF THE ASSETS OF
DREYFUS PREMIER MANAGED INCOME FUND
TO AND IN EXCHANGE FOR SHARES OF
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
QUESTIONS AND ANSWERS
The enclosed materials include a Prospectus/Proxy Statement containing information you need to make an informed decision. However, we thought it also would be helpful to begin by answering some of the important questions you might have about the proposed reorganization.
WHAT WILL HAPPEN TO MY DREYFUS PREMIER MANAGED INCOME FUND INVESTMENT IF THE PROPOSED REORGANIZATION IS APPROVED?
You will become a shareholder of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), an open-end investment company managed by The Dreyfus Corporation ("Dreyfus"), on or about March 27, 2008 (the "Closing Date"), and will no longer be a shareholder of Dreyfus Premier Managed Income Fund (the "Fund"), a series of The Dreyfus/Laurel Funds Trust (the "Trust"). You will receive Class A, Class B, Class C or Class I shares of the Acquiring Fund corresponding to your Class A, Class B, Class C or Class I shares of the Fund with a value equal to the value of your investment in the Fund as of the Closing Date. The Fund will then cease operations and will be terminated as a series of the Trust.
WHAT ARE THE BENEFITS OF THE PROPOSED REORGANIZATION FOR ME?
The Trust's Board believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that also is managed by Dreyfus. By combining the Fund with the Acquiring Fund, which has substantially more assets than the Fund, Fund shareholders should benefit from more efficient portfolio management. In addition, the Acquiring Fund is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund and has a comparable performance record to the Fund's performance record. The reorganization also will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities. Other potential benefits are described in the enclosed Prospectus/Proxy Statement.
DO THE FUNDS HAVE SIMILAR INVESTMENT GOALS AND STRATEGIES?
Yes. The Acquiring Fund has a substantially similar investment objective and substantially similar investment management policies as the Fund. The Acquiring Fund seeks to maximize total return, consisting of capital appreciation and current income. The Fund seeks high current income consistent with what is believed to be prudent risk of capital. To pursue its goal, the Acquiring Fund normally invests at least 80% of its assets in fixed-income securities of U.S. and foreign issuers, which are rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. To pursue its goal, the Fund normally invests at least 65% of its assets in various types of U.S. government obligations and corporate debt obligations, which are rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. The Acquiring Fund may invest up to 20% and the Fund may invest up to 35% of their respective assets in fixed-income securities rated below investment grade ("high yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. The Acquiring Fund may invest up to 30% and the Fund may invest up to 20% of their respective assets in fixed-income securities of foreign issuers, including those of issuers in emerging markets. The fixed-income securities in which the Acquiring Fund and Fund may invest include: U.S. government bonds and notes, corporate bonds, municipal bonds, convertible securities, preferred stocks, inflation-indexed securities, asset-backed securities, mortgage-related securities (including collateralized mortgage obligations), and foreign bonds. The Fund normally invests at least 65% of its assets in debt obligations having effective maturities of 10 years or less. Although the Fund may invest in individual bonds with different remaining maturities, the Fund's average effective portfolio maturity generally will be no more than 10 years. The Fund has no limitations with respect to its portfolio duration. The Acquiring Fund is required to generally maintain an average effective portfolio maturity of between 5 and 10 years and can be expected to have an effective portfolio duration between 3 and 8 years. The Acquiring Fund may invest in individual securities of any maturity. As of September 30, 2007, the average effective maturity of the Fund's portfolio and the Acquiring Fund's portfolio was 7.02 years and 6.44 years, respectively. The average effective duration of the Fund's portfolio and the Acquiring Fund's portfolio as of such date was 4.97 years and 4.93 years, respectively. The primary portfolio manager of the Fund and the Acquiring Fund and management believe that, because of prevalent market conditions, the characteristics of the funds' portfolios are not significantly different. Dreyfus is the investment adviser to the Acquiring Fund and the Fund and provides day-to-day management of each fund's investments. MBSC Securities Corporation, a wholly-owned subsidiary of Dreyfus, distributes each fund's shares. For additional information regarding the Fund and the Acquiring Fund, please refer to the enclosed Prospectus/Proxy Statement.
WHAT ARE THE TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION?
The reorganization will not be a taxable event for federal income tax purposes. Shareholders will not recognize any capital gain or loss as a direct result of the reorganization. A shareholder's tax basis in Fund shares will carry over to the shareholder's Acquiring Fund shares. The Fund will distribute any undistributed net investment income and net realized capital gains prior to the reorganization, which distribution will be taxable to shareholders.
WILL I ENJOY THE SAME PRIVILEGES AS A SHAREHOLDER OF THE ACQUIRING FUND THAT I CURRENTLY HAVE AS A SHAREHOLDER OF THE FUND?
Yes. You will continue to enjoy the same shareholder privileges such as the Fund Exchanges service, Dreyfus TeleTransfer Privilege, Dreyfus-Automatic Asset Builder®, Dreyfus Payroll Savings Plan, Dreyfus Government Direct Deposit Privilege, Dreyfus Dividend Options, Dreyfus Auto-Exchange Privilege and Dreyfus Automatic Withdrawal Plan. In addition, if you hold Class A shares, you also will have the ability to write redemption checks against your account through the Checkwriting Privilege.
WILL THE PROPOSED REORGANIZATION RESULT IN A HIGHER MANAGEMENT FEE OR HIGHER FUND EXPENSES?
No. Under its agreement with Dreyfus, the Fund has agreed to pay Dreyfus a "unitary" management fee at the annual rate of 0.70% of the value of the Fund's average daily net assets. Unlike the arrangements between most investment advisers and the funds they manage, under the unitary fee structure, Dreyfus pays all of the Fund's expenses, except for the Fund's management fee, Rule 12b-1 plan fees, taxes, brokerage commissions, interest expenses and extraordinary expenses. The Acquiring Fund has agreed to pay Dreyfus a management fee at the annual rate of 0.45% of the value of the Acquiring Fund's average daily net assets. Unlike the Fund, the Acquiring Fund pays for other fund expenses directly. Dreyfus has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A and Class I shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. It currently is anticipated that each class of shares of the Acquiring Fund will have a lower total expense ratio than the corresponding class of shares of the Fund based on expenses of the funds, as of July 31, 2007.
WILL I BE CHARGED A SALES CHARGE, REDEMPTION FEE OR CONTINGENT DEFERRED SALES CHARGE ("CDSC") AT THE TIME OF THE REORGANIZATION?
No. No sales charge, redemption fee or CDSC will be imposed at the time of the reorganization. Any subsequent investment in the Acquiring Fund will be subject to any applicable sales charges and any redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Acquiring Fund received in the reorganization will be subject to the same CDSC as redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Fund (calculated from the date of original purchase of Fund shares).
WHO WILL PAY THE EXPENSES OF THE PROPOSED REORGANIZATION?
Because of the anticipated benefits to shareholders of the Fund as a result of the reorganization, expenses relating to the proposed reorganization will be borne by the Fund.
HOW DOES THE BOARD OF TRUSTEES OF THE TRUST RECOMMEND I VOTE?
The Trust's Board of Trustees has determined that reorganizing the Fund into the Acquiring Fund, which is managed by Dreyfus and has a substantially similar investment objective and substantially similar investment management policies as the Fund, offers potential benefits to shareholders of the Fund. These potential benefits include permitting Fund shareholders to pursue substantially similar investment goals in a substantially larger fund that is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund and has a comparable performance record to the Fund's performance record. By combining the Fund with the Acquiring Fund, shareholders of the Fund also should benefit from more efficient portfolio management.
The Trust's Board of Trustees believes that the reorganization is in the best interests of the Fund and its shareholders. Therefore, the Trustees recommend that you vote FOR the reorganization.
HOW CAN I VOTE MY SHARES?
You can vote in any one of the following ways:
| • | By mail, with the enclosed proxy card and postage-paid envelope; |
| • | By telephone, with a toll-free call to the number listed on your proxy card; |
| • | Through the Internet, at the website address listed on your proxy card; or |
| • | In person at the meeting. |
We encourage you to vote through the Internet or by telephone using the number that appears on your proxy card. These voting methods will save the Fund money because the Fund would not have to pay for return-mail postage. Whichever voting method you choose, please take the time to read the Prospectus/Proxy Statement before you vote.
Please note: if you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal. Thank you in advance for your vote.
DREYFUS PREMIER MANAGED INCOME FUND
_________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
_________________
To the Shareholders:
A Special Meeting of Shareholders of Dreyfus Premier Managed Income Fund (the "Fund"), a series of The Dreyfus/Laurel Funds Trust (the "Trust"), will be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, on Wednesday, February 27, 2008, at 9:00 a.m., for the following purposes:
| 1. | To approve an Agreement and Plan of Reorganization providing for the transfer of all of the assets of the Fund to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets and the assumption by the Acquiring Fund of the Fund's stated liabilities (the "Reorganization"). Class A, Class B, Class C and Class I shares of the Acquiring Fund received by the Fund in the Reorganization will be distributed by the Fund to its Class A, Class B, Class C and Class I shareholders, respectively, in liquidation of the Fund, after which the Fund will cease operations and will be terminated as a series of the Trust; and |
| 2. | To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. |
Shareholders of record at the close of business on December 21, 2007 will be entitled to receive notice of and to vote at the meeting.
| By Order of the Board of Directors
Michael A. Rosenberg
Secretary |
New York, New York
December 21, 2007
WE NEED YOUR PROXY VOTE
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY LAW, THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A QUORUM OF FUND SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE FUND, AT SHAREHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE FUND TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD OR OTHERWISE VOTE PROMPTLY. YOU AND ALL OTHER SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
|
Transfer of the Assets of
DREYFUS PREMIER MANAGED INCOME FUND
(A Series of The Dreyfus/Laurel Funds Trust)
To and in Exchange for Class A, Class B, Class C and Class I Shares of
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
(A Series of Dreyfus Investment Grade Funds, Inc.)
_________________
PROSPECTUS/PROXY STATEMENT
December 17, 2007
_________________
Special Meeting of Shareholders
To Be Held on Wednesday, February 27, 2008
This Prospectus/Proxy Statement is furnished in connection with a solicitation of proxies by the Board of Trustees of The Dreyfus/Laurel Funds Trust (the "Trust"), on behalf of Dreyfus Premier Managed Income Fund (the "Fund"), to be used at the Special Meeting of Shareholders (the "Meeting") of the Fund to be held on Wednesday, February 27, 2008, at 9:00 a.m., at the offices of The Dreyfus Corporation ("Dreyfus"), 200 Park Avenue, 8th Floor, New York, New York 10166, for the purposes set forth in the accompanying Notice of Special Meeting of Shareholders. Shareholders of record at the close of business on December 21, 2007 are entitled to receive notice of and to vote at the Meeting.
It is proposed that the Fund transfer all of its assets to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities, all as more fully described in this Prospectus/Proxy Statement (the "Reorganization"). Upon consummation of the Reorganization, the Acquiring Fund shares received by the Fund will be distributed to Fund shareholders, with each shareholder receiving a pro rata distribution of the Acquiring Fund's shares (or fractions thereof) for Fund shares held prior to the Reorganization. It is contemplated that each shareholder will receive for his or her Fund shares a number of Class A, Class B, Class C or Class I shares (or fractions thereof) of the Acquiring Fund equal in value to the aggregate net asset value of the shareholder's Class A, Class B, Class C or Class I Fund shares, respectively, as of the date of the Reorganization.
This Prospectus/Proxy Statement, which should be retained for future reference, concisely sets forth information about the Acquiring Fund that Fund shareholders should know before voting on the proposal or investing in the Acquiring Fund.
A Statement of Additional Information ("SAI") dated December 17, 2007, relating to this Prospectus/Proxy Statement, has been filed with the Securities and Exchange Commission (the "Commission") and is incorporated by reference in its entirety. The Commission maintains a website (http://www.sec.gov) that contains the SAI, material incorporated in this Prospectus/Proxy Statement by reference, and other information regarding the Acquiring Fund and the Fund. A copy of the SAI is available without charge by calling 1-800-554-4611, or writing to the Acquiring Fund at its offices at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Shares of the Acquiring Fund and the Fund are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Investing in the Acquiring Fund, as in the Fund, involves certain risks, including the possible loss of principal.
The Securities and Exchange Commission has not approved or disapproved the Acquiring Fund's shares or passed upon the adequacy of this Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
The Fund and the Acquiring Fund are open-end management investment companies advised by Dreyfus. The funds have a substantially similar investment objective and substantially similar investment management policies. The Fund and the Acquiring Fund each invest primarily in fixed-income securities and have the same primary portfolio manager. However, the investment practices and limitations of each fund (and the related risks) are not identical. The Acquiring Fund is a series of Dreyfus Investment Grade Funds, Inc. (the "Company"). To help facilitate the Reorganization, the Acquiring Fund plans to change its multi-class structure by designating its current Investor shares and Institutional shares as Class A shares and Class I shares, respectively, and creating Class B and Class C share classes. In addition, the Acquiring Fund intends to change its name from Dreyfus Intermediate Term Income Fund to Dreyfus Premier Intermediate Term Income Fund. A comparison of the Fund and the Acquiring Fund is set forth in this Prospectus/Proxy Statement.
The Acquiring Fund's Prospectus dated December 3, 2007 and Annual Report for its fiscal year ended July 31, 2007 (including its audited financial statements for the fiscal year) accompany this Prospectus/Proxy Statement. The Acquiring Fund's Prospectus and the financial statements contained in its Annual Report are incorporated into this Prospectus/Proxy Statement by reference. For a free copy of the Fund's most-recent Prospectus, its Annual Report for the fiscal year ended December 31, 2006 and its Semi-Annual Report for the six-month period ended June 30, 2007, please call your financial adviser, call 1-800-554-4611, visit www.dreyfus.com, or write to the Fund at its offices located at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Shareholders are entitled to one vote for each Fund share held and fractional votes for each fractional Fund share held. Class A, Class B, Class C and Class I shareholders will vote together on the proposal. Fund shares represented by executed and unrevoked proxies will be voted in accordance with the specifications made thereon. If the enclosed proxy card is executed and returned, it nevertheless may be revoked by giving another proxy before the Meeting. Also, any shareholder who attends the Meeting in person may vote by ballot at the Meeting, thereby canceling any proxy previously given. If you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal.
As of October 31, 2007, the following numbers of Fund shares were issued and outstanding:
Class A Shares
Outstanding
7,168,741.431 | Class B Shares
Outstanding
233,133.734 | Class C Shares
Outstanding
978,854.896 | Class I Shares
Outstanding
193,398.865 |
Proxy materials will be mailed to shareholders of record on or about December 28, 2007.
TABLE OF CONTENTS
Summary
Reasons for the Reorganization
Information about the Reorganization
Additional Information about the Acquiring Fund and the Fund
Voting Information
Financial Statements and Experts
Other Matters
Notice To Banks, Broker/Dealers and Voting Trustees and Their Nominees
Exhibit A: Agreement and Plan of Reorganization
Exhibit B: Pro Forma Fees and Expenses
Exhibit C: Description of the Company's Board Members |
A-1
B-1
C-1 |
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION PROVIDING
FOR THE TRANSFER OF ALL OF THE ASSETS OF THE FUND TO THE
ACQUIRING FUND
SUMMARY
This Summary is qualified by reference to the more complete information contained elsewhere in this Prospectus/Proxy Statement, the Acquiring Fund's Prospectus, the Fund's Prospectus and the Agreement and Plan of Reorganization (the "Plan") attached to this Prospectus/Proxy Statement as Exhibit A.
Proposed Transaction. The Trust's Board, all of whose members are not "interested persons" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund or the Acquiring Fund, has approved the Plan for the Fund. The Plan provides that, subject to the requisite approval of the Fund's shareholders, on the date of the Reorganization the Fund will assign, transfer and convey to the Acquiring Fund all of the assets of the Fund, including all securities and cash, in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets, and the Acquiring Fund will assume the Fund's stated liabilities. The Fund will distribute all Acquiring Fund shares received by it among its shareholders so that each Class A, Class B, Class C and Class I shareholder of the Fund will receive a pro rata distribution of the Acquiring Fund's Class A, Class B, Class C and Class I shares (or fractions thereof), respectively, having an aggregate net asset value equal to the aggregate net asset value of the shareholder's Fund shares as of the date of the Reorganization. Thereafter, the Fund will cease operations and will be terminated as a series of the Trust.
As a result of the Reorganization, each Fund shareholder will cease to be a shareholder of the Fund and will become a shareholder of the Acquiring Fund as of the close of business on the date of the Reorganization. No sales charge, redemption fee or contingent deferred sales charge ("CDSC") will be imposed at the time of the Reorganization. Any subsequent investment in the Acquiring Fund after the Reorganization will be subject to any applicable sales charges, and any redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Acquiring Fund received in the Reorganization will be subject to the same CDSC as the redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Fund and would be calculated from the date of original purchase of Fund shares.
The Trust's Board has concluded that the Reorganization is in the best interests of the Fund and its shareholders and the interests of the Fund's existing shareholders will not be diluted as a result of the transactions contemplated thereby. See "Reasons for the Reorganization."
Tax Consequences. As a condition to the closing of the Reorganization, the Fund and the Acquiring Fund will receive an opinion of counsel to the effect that, for federal income tax purposes, the Reorganization will qualify as a tax-free reorganization and, thus, no gain or loss will be recognized by the Fund, the Fund's shareholders, or the Acquiring Fund as a result of the Reorganization. Certain tax attributes of the Fund will carry over to the Acquiring Fund, including the ability of the Acquiring Fund to utilize the Fund's capital loss carryforwards. See "Information about the Reorganization—Federal Income Tax Consequences."
Comparison of the Fund and the Acquiring Fund. The following discussion is primarily a summary of certain parts of the Fund's Prospectus and the Acquiring Fund's Prospectus. Information contained in this Prospectus/Proxy Statement is qualified by the more complete information set forth in such Prospectuses, which are incorporated herein by reference.
Goal/Approach. The Acquiring Fund has a substantially similar investment objective and substantially similar investment management policies as the Fund. The Acquiring Fund seeks to maximize total return, consisting of capital appreciation and current income. The Fund seeks high current income consistent with what is believed to be prudent risk of capital. The Fund's investment objective may be changed without shareholder approval. The Acquiring Fund's investment objective is a fundamental policy which cannot be changed without the approval of a majority of the Acquiring Fund's outstanding voting shares.
To pursue its goal, the Fund normally invests at least 65% of its assets in various types of U.S. government obligations and corporate debt obligations rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. The Fund may invest up to 25% of its assets in convertible debt obligations and preferred stock. The Fund also may invest in inflation-indexed securities. These are fixed-income securities designed to protect investors from a loss of value due to inflation by periodically adjusting their principal and/or coupon according to the rate of inflation. In addition to obligations issued by the U.S. government, its agencies or instrumentalities, the Fund may invest in asset-backed securities, including mortgage-backed securities, that are not issued by such entities. The Fund's portfolio manager performs a "top down" quantitative and macroeconomic analysis that guides asset allocation among sectors, industries and positioning of the yield curve. Using fundamental analysis, the portfolio manager seeks to identify individual securities with appreciation potential based on relative value, credit upgrade probability and other metrics.
To pursue its goal, the Acquiring Fund normally invests at least 80% of its assets in fixed-income securities of U.S. and foreign issuers rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. These securities include: U.S. government bonds and notes, corporate bonds, municipal bonds, convertible securities, preferred stocks, inflation-indexed securities, asset-backed securities, mortgage-related securities (including collateralized mortgage obligations), and foreign bonds. The Acquiring Fund's portfolio manager buys and sells fixed-income securities based on credit quality, financial outlook and yield potential. Fixed-income securities with deteriorating credit quality are potential sell candidates, while those offering higher yields are potential buy candidates.
The Fund may invest up to 35% of its assets in debt obligations rated below investment grade ("high yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. For additional yield, the Acquiring Fund may invest up to 20% of its assets in fixed-income securities rated below investment grade to as low as Caa/CCC or the unrated equivalent as determined by Dreyfus.
The Fund may invest up to 20% of its assets in fixed-income securities of foreign issuers, including those of issuers in emerging markets. The Acquiring Fund focuses primarily on U.S. securities, but may invest up to 30% of its assets in fixed-income securities of foreign issuers, including those of issuers in emerging markets.
The Fund normally invests at least 65% of its assets in debt obligations having effective maturities of 10 years or less. Although the Fund may invest in individual bonds with different remaining maturities, the Fund's average effective portfolio maturity generally will be no more than 10 years. The Fund has no limitations with respect to its portfolio duration. The Acquiring Fund is required to generally maintain an average effective portfolio maturity of between 5 and 10 years and can be expected to have an effective portfolio duration between 3 and 8 years. The Acquiring Fund may invest in individual securities of any maturity. As of September 30, 2007, the average effective maturity of the Fund's portfolio and the Acquiring Fund's portfolio was 7.02 years and 6.44 years, respectively. The average effective duration of the Fund's portfolio and the Acquiring Fund's portfolio as of such date was 4.97 years and 4.93 years, respectively. Duration is a measure of how sensitive a fund's portfolio may be to changes in interest rates — generally, the longer a fund's duration, the more likely its portfolio is to react to interest rate fluctuations and the greater its long-term risk/return potential. The primary portfolio manager of the Fund and the Acquiring Fund and management believe that, because of prevalent market conditions, the characteristics of the funds' portfolios are not significantly different.
Each fund may, but is not required to, use derivatives, such as futures, options and swap agreements, as a substitute for taking a position in an underlying asset, to increase returns, to manage interest rate risk, to manage the effective duration or maturity of the fund's portfolio, or as part of a hedging strategy. Each fund may enter into swap agreements, such as credit default swaps, which can be used to transfer the credit risk of a security without actually transferring ownership of the security or to customize exposure to particular corporate credit. Each fund also may invest in collateralized debt obligations, which include collateralized loan obligations and other similarly structured securities. To enhance current income, each fund also may engage in a series of purchase and sale contracts or forward roll transactions in which the fund sells a mortgage-related security, for example, to a financial institution and simultaneously agrees to purchase a similar security from the institution at a later date at an agreed-upon price. Each fund also may make forward commitments in which the fund agrees to buy or sell a security in the future at a price agreed upon today.
The Acquiring Fund also may engage in short-selling, typically for hedging purposes, such as to limit exposure to a possible market decline in the value of its portfolio securities. The Fund is not permitted to engage in short-selling.
Each fund may lend its portfolio securities to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. Loans of portfolio securities may not exceed 33-1/3% of the value of the fund's total assets.
Each fund is a "diversified" fund, which means that neither fund will, with respect to 75% of its total assets, invest more than 5% of its assets in the securities of any single issuer nor hold more than 10% of the outstanding voting securities of any single issuer (other than, in each case, securities of other investment companies, and securities issued or guaranteed by the U.S. government, its agencies or instrumentalities).
For more information on either the Fund's or the Acquiring Fund's investment management policies, see "Goal/Approach" in the relevant Prospectus and "Description of the [Trust/Company] and Fund[s]" in the relevant Statement of Additional Information.
The Fund is a series of the Trust, which is an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts. The Acquiring Fund is a series of the Company, which is a corporation organized under the laws of the State of Maryland. See "Certain Organizational Differences Between the Trust and the Company" below.
Main Risks. The principal risks associated with an investment in the Fund and the Acquiring Fund are substantially similar. These risks are discussed below. As a result, the value of your investment in the Acquiring Fund, as in the Fund, will fluctuate, sometimes dramatically, which means you could lose money.
| | • | Interest rate risk. Prices of bonds tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect bond prices and, accordingly, a fund's share price. The longer the effective maturity and duration of a fund's portfolio, the more the fund's share price is likely to react to interest rates. |
| | • | Call risk. Some bonds give the issuer the option to call, or redeem, the bonds before their maturity date. If an issuer "calls" its bond during a time of declining interest rates, the funds might have to reinvest the proceeds in an investment offering a lower yield. During periods of market illiquidity or rising interest rates, prices of a fund's "callable" issues are subject to increased price fluctuation. |
| | • | Credit risk. Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a bond, can cause a bond's price to fall, potentially lowering the Fund's or the Acquiring Fund's share price. Although each fund invests primarily in investment grade bonds, the Fund and the Acquiring Fund may invest to a limited extent in high yield ("junk") bonds, which involve greater credit risk, including the risk of default, than investment grade bonds, and are considered predominantly speculative with respect to the issuer's continuing ability to make principal and interest payments. The prices of high yield bonds can fall dramatically in response to bad news about the issuer or its industry, or the economy in general. |
| | • | Market risk. The market value of a security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. A security's market value also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. |
| | • | Market sector risk. Each fund's overall risk level will depend on the market sectors in which the fund is invested and the current interest rate, liquidity and credit quality of such sectors. Each fund may significantly overweight or underweight certain companies, industries or market sectors, which may cause the fund's performance to be more or less sensitive to developments affecting those companies, industries or sectors. |
| | • | Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the fund's share price may fall dramatically. Investments in foreign securities tend to have greater exposure to liquidity risk than domestic securities. |
| | • | Prepayment and extension risk. When interest rates fall, the principal on mortgage-backed and certain asset-backed securities may be prepaid. The loss of higher yielding, underlying mortgages and the reinvestment of proceeds at lower interest rates can reduce a fund's potential price gain in response to falling interest rates, reduce the fund's yield, or cause the fund's share price to fall. When interest rates rise, the effective duration of certain mortgage-related and other asset-backed securities may lengthen due to a drop in prepayments of the underlying mortgages or other assets. This is known as extension risk and would increase the fund's sensitivity to rising rates and its potential for price declines. |
| | • | Derivatives risk. In addition to investing in mortgage-related and asset-backed securities, each fund may use derivative instruments such as options, futures and options on futures (including those relating to securities, indexes, foreign currencies and interest rates), swaps (including credit default swaps on corporate bonds and asset-backed securities), options on swaps, and other credit derivatives. A small investment in derivatives could have a potentially large impact on a fund's performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult to value, and there is the risk that changes in the value of a derivative held by a fund will not correlate with the underlying instruments or the fund's other investments. Derivative instruments also involve the risk that a loss may be sustained as a result of the failure of the counterparty to the derivative instruments to make required payments or otherwise comply with the derivative instruments' terms. Credit default swaps and similar instruments involve greater risks than if the fund had invested in the reference obligation directly, since, in addition to general market risks, they are subject to illiquidity risk, counterparty risk and credit risks. |
| | Additionally, some derivatives the funds may use may involve economic leverage, which could increase the volatility of these instruments, as they may increase or decrease in value more quickly than the underlying security, index, futures contract, or other economic variable. Each fund may be required to segregate permissible liquid assets to cover its obligations relating to its purchase of derivative instruments. |
| | • | Foreign investment risk. The prices and yields of foreign bonds can be affected by political and economic instability or changes in currency exchange rates. The bonds of issuers located in emerging markets can be more volatile and less liquid than those of issuers in more mature economies. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by a fund and denominated in those currencies. |
| | • | Inflation-indexed security risk. Interest payments on inflation-indexed securities can be unpredictable and will vary as the principal and/or interest is periodically adjusted based on the rate of inflation. If the index measuring inflation falls, the interest payable on these securities will be reduced. In the case of U.S. Treasury inflation-indexed bonds, the U.S. Treasury has guaranteed that in the event of a drop in prices, it would repay the par amount of its inflation-indexed securities. Inflation-indexed securities issued by corporations generally do not guarantee repayment of principal. Any increase in the principal amount of an inflation-indexed security will be considered taxable ordinary income, even though investors do not receive their principal until maturity. As a result, a fund may be required to make annual distributions to shareholders that exceed the cash the fund received, which may cause the fund to liquidate certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-indexed bond is adjusted downward due to deflation, amounts previously distributed may be characterized in some circumstances as a return of capital. |
| | • | Short sale risk. (Acquiring Fund only) The Acquiring Fund may make short sales, which involves selling a security it does not own in anticipation that the security's price will decline. Short sales expose the Acquiring Fund to the risk that it will be required to buy the security sold short (also known as "covering" the short position) at a time when the security has appreciated in value, thus resulting in a loss to the Acquiring Fund. |
| | • | Leveraging risk. The use of leverage, such as borrowing money to purchase securities, engaging in reverse repurchase agreements, lending portfolio securities, entering into futures contracts, and engaging in forward commitment transactions, may magnify the fund's gains or losses. |
The Fund and the Acquiring Fund may lend their respective portfolio securities to brokers, dealers and other financial institutions. In connection with such loans, the fund will receive collateral from the borrower equal to at least 100% of the value of the loaned securities. If the borrower of the securities fails financially, there could be delays in recovering the loaned securities or exercising rights to the collateral.
The Fund and the Acquiring Fund may engage in short-term trading, which could produce higher transaction costs and taxable distributions, and lower the respective fund's after-tax performance. A fund's forward roll transactions will increase its portfolio turnover rate.
Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations, such as those issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by a fund does not apply to the market value of such security or to shares of the fund itself. In addition, because many types of U.S. government securities trade actively outside the U.S., their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
Under adverse market conditions, the Fund and the Acquiring Fund each could invest some or all of its respective assets in U.S. Treasury securities and money market securities. Although the Fund or the Acquiring Fund would do this for temporary defensive purposes, this strategy could reduce the benefit from any upswing in the market. To the extent the Fund or the Acquiring Fund invests defensively in these securities, the fund might not achieve its investment objective. Each fund also may purchase money market instruments when it has cash reserves or in anticipation of taking a market position.
An investment in a fund is not a bank deposit. It is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
See "Main Risks" in the relevant Prospectus and "Description of the [Trust/Company] and Fund[s]" in the relevant Statement of Additional Information for a more complete description of investment risks.
Sales Charges. The schedules of sales charges imposed at the time of purchase of Class A shares of the Fund and the Acquiring Fund are identical. The maximum sales charge imposed on the purchase of Class A shares of the Fund and the Acquiring Fund is 4.50%. In addition, Fund and Acquiring Fund Class A shares purchased without an initial sales charge as part of an investment of at least $1,000,000 and redeemed within one year of purchase are subject to the same 1.00% CDSC. The CDSCs imposed at the time of redemption on Class B and Class C shares for the Fund and the Acquiring Fund are identical. See in the relevant Prospectus "Shareholder Guide" for a discussion of sales charges and the CDSC. No sales charge or CDSC will be imposed at the time of the Reorganization. Shares of the Fund and the Acquiring Fund currently are not subject to any exchange or redemption fees.
Fees and Expenses. The fees and expenses set forth below are based on net assets and accruals of the Fund and the Acquiring Fund, respectively, as of July 31, 2007, and are adjusted for the Fund to include estimated costs of the Reorganization totaling $90,000. The "Pro Forma After Reorganization" operating expenses information is based on the net assets and accruals of the Fund and the Acquiring Fund, as of July 31, 2007, as adjusted showing the effect of the Reorganization had it occurred on such date. Annual fund operating expenses are paid out of fund assets, so their effect is reflected in the share prices.
The Fund and the Acquiring Fund each pay Dreyfus a management fee. The management fee structures of the Fund and the Acquiring Fund differ. Under its agreement with Dreyfus, the Fund has agreed to pay Dreyfus a "unitary" management fee at the annual rate of 0.70% of the value of the Fund's average daily net assets. Unlike the arrangements between most investment advisers and the funds they manage, under the unitary fee structure, Dreyfus pays all of the Fund's expenses, except for the Fund's management fee, Rule 12b-1 plan fees, taxes, brokerage commissions, interest expenses, fees and expenses of the Trust's non-interested Trustees (including counsel fees) and extraordinary expenses (which include the expenses of the Reorganization). Although Dreyfus does not pay for the fees and expenses of the Trust's non-interested Trustees (including counsel fees), Dreyfus is contractually required to reduce its fee by an amount equal to the Fund's allocable share of such fees and expenses. The Acquiring Fund pays Dreyfus a separate management fee at the annual rate of 0.45% of the value of the Acquiring Fund's average daily net assets. Unlike the Fund, the Acquiring Fund pays for other fund expenses directly. Dreyfus has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A and Class I shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. It currently is anticipated that each class of shares of the Acquiring Fund will have a lower total expense ratio than the corresponding class of shares of the Fund based on expenses of the funds, as of July 31, 2007, and the estimated expenses for the Acquiring Fund's Class B and C shares if the Reorganization is consummated.
Annual Fund Operating Expenses
(expenses paid from fund assets)
(percentage of average daily net assets):
| Fund
Class A
| Acquiring Fund
Class A
| Pro Forma After
Reorganization
Acquiring Fund
Class A
|
|---|
| Management fees | .70% | .45% | .45% |
| Rule 12b-1 fee | .25% | none | none |
| Shareholder services fee | none | .25% | .25% |
| Other expenses | .14%* | .22% | .21% |
| Total | 1.09% | .92% | .91% |
Fee Waiver and/or expense
reimbursement | N/A | (.12)% | (.11)% |
|
|
|
|
| Net operating expenses | 1.09% | .80% | .80% |
| Fund
Class B
| Acquiring Fund
Class B
| Pro Forma After
Reorganization
Acquiring Fund
Class B
|
|---|
| Management fees | .70% | .45% | .45% |
| Rule 12b-1 fee | 1.00% | .50% | .50% |
| Shareholder services fee | none | .25% | .25% |
| Other expenses | .14%* | .22%** | .22%** |
| Total | 1.84% | 1.42% | 1.42% |
Fee Waiver and/or expense
reimbursement | N/A | N/A | N/A |
|
|
|
|
| Net operating expenses | 1.84% | 1.42% | 1.42% |
| Fund
Class C
| Acquiring Fund
Class C
| Pro Forma After
Reorganization
Acquiring Fund
Class C
|
|---|
| Management fees | .70% | .45% | .45% |
| Rule 12b-1 fee | 1.00% | .75% | .75% |
| Shareholder services fee | none | .25% | .25% |
| Other expenses | .14%* | .18%** | .18%** |
| Total | 1.84% | 1.63% | 1.63% |
Fee Waiver and/or expense
reimbursement | N/A | N/A | N/A |
|
|
|
|
| Net operating expenses | 1.84% | 1.63% | 1.63% |
| Fund
Class I
| Acquiring Fund
Class I
| Pro Forma After
Reorganization
Acquiring Fund
Class I
|
|---|
| Management fees | .70% | .45% | .45% |
| Rule 12b-1 fee | none | none | none |
| Shareholder services fee | none | none | none |
| Other expenses | .14%* | .09% | .09% |
| Total | .84% | .54% | .54% |
Fee Waiver and/or expense
reimbursement | N/A | (.00)% | (.00)% |
|
|
|
|
| Net operating expenses | .84% | .54% | .54% |
| * | "Other expenses" for the Fund reflect the costs of the Reorganization, which are estimated to be $90,000 or .14% of the Fund's average daily net assets. |
| ** | "Other expenses" for the Acquiring Fund's Class B and Class C shares are based on estimated amounts for the current fiscal year. Actual expenses may be greater or less than the amounts listed in the table. |
Expense example
This example shows what you could pay in expenses over time. It uses the same hypothetical conditions other funds use in their prospectuses: $10,000 initial investment, 5% total return each year and no changes in expenses. This example is based on net operating expenses, which reflect, for the applicable years, the expense waiver/reimbursement by Dreyfus. Because actual returns and expenses will be different, the example is for comparison only.
Fund
| Class A
Shares
| Class B
Shares*
| Class C
Shares*
| Class I
Shares
|
|---|
| 1 Year | $556 | $587/$187 | $287/$187 | $86 |
| 3 Years | $781 | $879/$579 | $579/$579 | $268 |
| 5 Years | $1,024 | $1,195/$995 | $995/$995 | $466 |
| 10 Years | $1,719 | $1,782**/$1,782** | $2,159/$2,159 | $1,037 |
Acquiring Fund
| Class A
Shares
| Class B
Shares*
| Class C
Shares*
| Class I
Shares
|
|---|
| 1 Year | $528 | $545/$145 | $266/$166 | $55 |
| 3 Years | $719 | $749/$449 | $514/$514 | $173 |
| 5 Years | $925 | $976/$776 | $887/$887 | $302 |
| 10 Years | $1,520 | $1,442**/$1,442** | $1,993/$1,993 | $677 |
Pro Forma After Reorganization
Acquiring Fund
| Class A
Shares
| Class B
Shares*
| Class C
Shares*
| Class I
Shares
|
|---|
| 1 Year | $528 | $545/$145 | $266/$166 | $55 |
| 3 Years | $717 | $749/$449 | $514/$514 | $173 |
| 5 Years | $921 | $976/$976 | $887/$887 | $302 |
| 10 Years | $1,510 | $1,436**/$1,436** | $1,993/$1,993 | $677 |
| * | With redemption/without redemption. |
| ** | Assumes conversion of Class B to Class A at end of sixth year following the date of purchase. |
Shareholders of two other funds advised by Dreyfus—Dreyfus A Bonds Plus, Inc. and Dreyfus Premier Core Bond Fund (together, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such Proposed Acquired Fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganization of the respective Proposed Acquired Fund. Set forth in Exhibit B is information with respect to the fees and expenses of the funds, including the total annual operating expenses of the Acquiring Fund assuming that shareholders of the Fund and of the Proposed Acquired Funds approve the reorganization of their respective fund into the Acquiring Fund.
Past Performance. The bar charts and tables below illustrate the risks of investing in the Acquiring Fund and the Fund. The bar chart for the Acquiring Fund shows the changes in the performance of the Acquiring Fund's Class A shares from year to year and the bar chart for the Fund shows the changes in the performance of the Fund's Class A shares from year to year. Sales loads are not reflected in the bar charts; if they were, the returns shown would have been lower. The table for the Acquiring Fund compares the average annual total returns of each of the Acquiring Fund's share classes to those of the Lehman Brothers U.S. Aggregate Index, a widely recognized, unmanaged index of U.S. dollar-denominated, investment grade, fixed-rate taxable bond performance. The historical performance of the Acquiring Fund's Class A shares is used to calculate the performance shown for Class B and Class C shares of the Acquiring Fund in the table. Such performance figures have been adjusted to reflect applicable sales charges, but do not reflect applicable class fees and expenses; if these fees and expenses had been reflected, the performance shown for Class B and Class C shares of the Acquiring Fund would have been lower. The table for the Fund compares the average annual total returns of each of the Fund's share classes also to those of the Lehman Brothers U.S. Aggregate Index. The returns in the tables reflect applicable sales loads. All returns assume reinvestment of dividends and distributions. Of course, past performance (before and after taxes) is no guarantee of future results. With respect to each fund, performance for each share class will vary from the performance of the respective fund's other share classes due to differences in charges and expenses.
After-tax performance is shown only for Class A shares. After-tax performance of each fund's other share classes will vary. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
Acquiring Fund--Class A Shares
Year-by-year total returns as of 12/31 each year (%)
| +14.62 | +7.83 | +5.40 | +12.34 | +6.20 | +6.81 | +7.57 | +4.36 | +1.88 | +4.89 |
| '97 | '98 | '99 | '00 | '01 | '02 | '03 | '04 | '05 | '06 |
Best Quarter:
Worst Quarter: | Q3 '97
Q2 '04 | +5.40%
- -3.25% |
The year-to-date total return of the Acquiring Fund's Class A shares as of 9/30/07 was 2.62%.
Acquiring Fund
Average annual total returns as of 12/31/06
Share class
| 1 Year
| 5 Years
| 10 Years
|
|---|
Class A
returns before taxes | 0.18% | 4.12% | 6.64% |
| | | |
Class A
returns after taxes on distributions | -1.47% | 2.22% | 3.95% |
| | | |
Class A
returns after taxes on distributions
and sale of fund shares | 0.09% | 2.38% | 4.00% |
| | | |
Class B*
returns before taxes | 0.89% | 4.76% | 7.13%** |
| | | |
Class C*
returns before taxes | 3.89% | 5.09% | 7.13% |
| | | |
Class I
returns before taxes | 5.20% | 5.38% | 5.10%† |
| | | |
Lehman Brothers U.S. Aggregate Index
reflects no deduction for fees
expenses or taxes | 4.33% | 5.06% | 6.24%†† |
|
|
|
|
| * | Based on the performance of Class A shares, adjusted to reflect applicable sales charges. |
| ** | Assumes conversion of Class B shares to Class A shares at end of the sixth year following the date of purchase. |
| † | Since inception on 5/31/01. |
| †† | Reflects 10 year period. For the period 5/31/01 through 12/31/06, the average annual total return of the Lehman Brothers U.S. Aggregate Index was 5.45%. |
Fund-- Class A Shares
Year-by-year total returns as of 12/31 each year (%)
+9.80
| +4.90
| -1.75
| +9.53
| +6.09
| +7.87
| +5.51
| +5.15
| +2.50
| +4.67
|
| '97 | '98 | '99 | '00 | '01 | '02 | '03 | '04 | '05 | '06 |
| Best Quarter: | Q4 '00 | +4.13% |
| Worst Quarter: | Q2 '04 | -2.48% |
The year-to-date total return of the Fund's Class A shares as of 9/30/07 was 3.10%.
Fund
Average annual total returns as of 12/31/06
Share class
| 1 Year
| 5 Years
| 10 Years
|
|---|
Class A
returns before taxes | -0.03% | 4.16% | 4.89% |
| | | |
Class A
returns after taxes on distributions | -1.63% | 2.52% | 2.80% |
| | | |
Class A
returns after taxes on
distributions and sale of fund shares | -0.04% | 2.58% | 2.86% |
| | | |
Class B
returns before taxes | -0.10% | 4.01% | 4.90%* |
| | | |
Class C
returns before taxes | 2.89% | 4.34% | 4.60% |
| | | |
Class I
returns before taxes | 4.93% | 5.40% | 5.64% |
| | | |
Lehman Brothers U.S. Aggregate Index
reflects no deduction for fees
expenses or taxes | 4.33% | 5.06% | 6.24% |
|
|
|
|
| * | Assumes conversion of Class B shares to Class A shares at end of the sixth year following the date of purchase. |
Investment Adviser. The investment adviser for the Fund and the Acquiring Fund is Dreyfus, located at 200 Park Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages approximately $247 billion in approximately 180 mutual fund portfolios. A discussion regarding the basis for the Company's Board approving the Acquiring Fund's management agreement with Dreyfus is available in the Acquiring Fund's Annual Report for its fiscal year ended July 31, 2007. Dreyfus is the primary mutual fund business of The Bank of New York Mellon Corporation ("BNY Mellon"), a global financial services company focused on helping clients move and manage their financial assets, operating in 37 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing asset and wealth management, asset servicing, issuer services, and treasury services through a worldwide client-focused team. BNY Mellon has more than $18 trillion in assets under custody and administration and $1 trillion in assets under management, and it services more than $11 trillion in outstanding debt. Additional information is available at www.bnymellon.com.
Primary Portfolio Manager. Kent Wosepka is each fund's primary portfolio manager. Mr. Wosepka has served in this capacity for the Fund since April 2006 and for the Acquiring Fund since January 2005. He has been employed by Dreyfus since September 2001. Mr. Wosepka also is a senior portfolio manager for active core strategies with Standish Mellon Asset Management Company, LLC ("Standish Mellon"), a subsidiary of BNY Mellon and an affiliate of Dreyfus. Mr. Wosepka joined Standish Mellon in 1998.
Board Members. Other than Joseph S. DiMartino, who is Chairman of the Board of the Trust and the Company, the Trust and the Company have different Board members. None of the Board members of the Trust or the Company is an "interested person" (as defined in the 1940 Act) of the Fund or the Acquiring Fund ("Independent Board Members"). For a description of the Company's Board members, see Exhibit C.
Independent Registered Public Accounting Firm. Ernst & Young LLP is the independent registered public accounting firm for the Acquiring Fund. KPMG LLP is the independent registered public accounting firm for the Fund.
Capitalization. Each fund has classified its shares into four classes — Class A, Class B, Class C and Class I. Class B and Class C shares of the Acquiring Fund are new and have been authorized by the Company's Board to be issued to Fund shareholders in connection with the Reorganization. The following table sets forth, as of September 30, 2007, (1) the capitalization of each class of the Fund's shares*; (2) the capitalization of each class of the Acquiring Fund's shares and (3) the pro forma capitalization of each class of the Acquiring Fund's shares, as adjusted showing the effect of the Reorganization had it occurred on such date.
| | Fund
Class A
| Acquiring Fund
Class A
| Adjustments
Class A
| Pro Forma After
Reorganization
Acquiring Fund
Class A
|
|---|
| Total net assets | $74,021,438 | $538,484,842 | | $612,506,280 |
| Net asset value per share | $10.57 | $12.40 | | $12.40 |
| Shares outstanding | 7,000,995 | 43,433,975 | (1,033,211) | 49,401,759 |
| | Fund
Class B
| Acquiring Fund
Class B
| Adjustments
Class B
| Pro Forma After
Reorganization
Acquiring Fund
Class B
|
|---|
| Total net assets | $2,488,214 | $0 | | $2,488,214 |
| Net asset value per share | $10.57 | N/A | | $12.40 |
| Shares outstanding | 235,360 | None | (34,734) | 200,626 |
| | Fund
Class C
| Acquiring Fund
Class C
| Adjustments
Class C
| Pro Forma After
Reorganization
Acquiring Fund
Class C
|
|---|
| Total net assets | $8,833,042 | $0 | | $8,833,042 |
| Net asset value per share | $10.58 | N/A | | $12.40 |
| Shares outstanding | 834,740 | None | (122,518) | 712,222 |
| | Fund
Class I
| Acquiring Fund
Class I
| Adjustments
Class I
| Pro Forma After
Reorganization
Acquiring Fund
Class I
|
|---|
| Total net assets | $2,035,607 | $35,115,794 | | $37,151,401 |
| Net asset value per share | $10.56 | $12.40 | | $12.40 |
| Shares outstanding | 192,724 | 2,832,734 | (28,597) | 2,996,861 |
_________________
* Reflects the estimated costs of the Reorganization to be paid by the Fund.
The Acquiring Fund's total net assets (attributable to Class A and Class I shares) and the Fund's total net assets (attributable to Class A, Class B, Class C and Class I shares), as of September 30, 2007, were approximately $573.6 million and $87.4 million, respectively. The Acquiring Fund currently does not offer Class B or Class C shares. Each share has one vote. Shares have no preemptive or subscription rights and are freely transferable. All share classes of a fund will invest in the same portfolio of securities, but the classes are subject to different charges and expenses and will likely have different share prices. Shareholders of the Proposed Acquired Funds also are being asked in proxy materials directed to them to approve a separate Agreement and Plan of Reorganization providing for the transfer of all of such funds' assets, subject to liabilities, to the Acquiring Fund in exchange for Acquiring Fund shares. As of September 30, 2007, the Proposed Acquired Funds had total aggregate net assets of approximately $870.9 million. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganizations of those funds.
Purchase Procedures. The purchase procedures of the Fund and the Acquiring Fund and the automatic investment services they offer are substantially similar. See "Shareholder Guide — Buying shares," "Services for Fund Investors," "Instructions for Regular Accounts" and "Instructions for IRAs" in the relevant Prospectus and "How to Buy Shares" and "Shareholder Services" in the relevant Statement of Additional Information for a discussion of purchase procedures.
Distribution and Service Plans. Class A, Class B and Class C shares of the Fund are subject to plans adopted pursuant to Rule 12b-1 under the 1940 Act (each, a "Rule 12b-1 Plan"). Under the Rule 12b-1 Plans, the Fund pays MBSC Securities Corporation ("MBSC") (formerly, Dreyfus Service Corporation), the Fund's distributor, fees at an aggregate annual rate of 0.25% of the value of the average daily net assets of Class A shares and 1.00% of the value of the average daily net assets of Class B and Class C shares, respectively, to finance the sale and distribution of such shares and for shareholder servicing. Class B and Class C shares of the Acquiring Fund also are subject to a Rule 12b-1 Plan. Under the Acquiring Fund's Rule 12b-1 Plan, the Acquiring Fund pays MBSC, the Acquiring Fund's distributor, a fee at an annual rate of 0.50% of the value of the average daily net assets of Class B shares and 0.75% of the value of the average daily net assets of Class C shares (there is no Rule 12b-1 Plan fee for Class A shares of the Acquiring Fund or Class I shares of each fund) to finance the sale and distribution of such shares. Because the Rule 12b-1 Plan fees are paid out of the assets attributable to the relevant class of shares on an ongoing basis, over time they will increase the cost of your investment in such class of shares and may cost you more than paying other types of sales charges. See "Distribution and Service Plans" in the Fund's Statement of Additional Information and "Distribution and Servicing Arrangements—Distribution Plan" in the Acquiring Fund's Statement of Additional Information.
Shareholder Services Plan. Class A, Class B and Class C shares of the Acquiring Fund are subject to a Shareholder Services Plan pursuant to which the Acquiring Fund pays MBSC a fee at an annual rate of 0.25% of the value of the average daily net assets of the relevant class for providing shareholder services (there is no Shareholder Services Plan fee for Class I shares of each fund). The Fund has no shareholder services plan, but has adopted plans pursuant to Rule 12b-1 under the 1940 Act, described above, which provide for payments for shareholder servicing. See "Distribution and Servicing Arrangements—Shareholder Services Plan" in the Acquiring Fund's Statement of Additional Information for a discussion of the Shareholder Services Plan.
Redemption Procedures. The redemption procedures of the Fund and the Acquiring Fund are substantially similar. See "Shareholder Guide—Selling shares," "Instructions for Regular Accounts" and "Instructions for IRAs" in the relevant Prospectus and "How to Redeem Shares" in the relevant Statement of Additional Information for a discussion of redemption procedures.
Distributions. The Fund normally declares dividends daily and pays dividends monthly. The Acquiring Fund normally declares and pays dividends monthly. Otherwise, the dividends and distributions policies of the Fund and the Acquiring Fund are the same. Although they may do so more frequently, each fund anticipates paying its shareholders dividends once a month and any capital gain distribution annually. The actual amount of dividends paid per share by the Fund and the Acquiring Fund is different. See "Distributions and Taxes" in the relevant Prospectus for a discussion of such policies.
Shareholder Services. The shareholder services offered by the Fund and the Acquiring Fund are substantially similar. The privileges you currently have on your Fund account will transfer automatically to your account with the Acquiring Fund. See "Services for Fund Investors" in the relevant Prospectus and "Shareholder Services" in the relevant Statement of Additional Information for a further discussion of the shareholder services offered.
Certain Organizational Differences Between the Trust and the Company. The Acquiring Fund is a series of the Company, which is a Maryland corporation, and the rights of its shareholders are governed by the Company's Articles of Incorporation (the "Charter"), the Company's By-Laws and the Maryland General Corporation Law (the "Maryland Code"). The Fund is a series of the Trust, which is a Massachusetts business trust, and the rights of its shareholders are governed by the Trust's Agreement and Declaration of Trust (the "Trust Agreement"), the Trust's By-Laws and applicable Massachusetts law. Certain relevant differences between the two forms of organization are summarized below.
Shareholder Meetings and Voting Rights. Generally, neither the Acquiring Fund nor the Fund is required to hold annual meetings of its shareholders. The relevant Board is required to call a special meeting of shareholders for the purpose of removing a Board member when requested in writing to do so by the holders of at least 10% of its outstanding shares entitled to vote. Shareholders may remove a Board member by the affirmative vote of two-thirds, in the case of the Fund, or a majority, in the case of the Acquiring Fund, of the respective fund's outstanding voting shares. Moreover, 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 the shareholders.
Shares of the Fund and the Acquiring Fund are entitled to one vote for each full share held and a proportionate fractional vote for each fractional share held. Generally, on matters submitted to a vote of shareholders, all shares then entitled to vote will be voted in the aggregate as a single class. The Trust Agreement provides that a majority of the Fund's shares entitled to vote shall constitute a quorum for the transaction of business at a Fund shareholders' meeting. The Company's Charter provides that 33-1/3% of the Acquiring Fund's shares entitled to vote shall constitute a quorum for the transaction of business at an Acquiring Fund's stockholders' meeting. Matters requiring a larger vote by law or under the organizational documents for the Company or the Trust are not affected by such quorum requirements.
Shareholder Liability. Under the Maryland Code, Acquiring Fund stockholders have no personal liability as such for the Acquiring Fund's acts or obligations.
Under Massachusetts law, shareholders of a Massachusetts business trust, under certain circumstances, could be held personally liable for the obligations of the business trust. However, the Trust Agreement disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in every note, bond, contract or other undertaking issued or entered into by or on behalf of the Fund, or the Trust's Trustees. The Trust Agreement provides for indemnification out of the Fund's property of all losses and expenses of any shareholder held personally liable for the obligations of the Fund solely by reason of being or having been a Fund shareholder and not because of such shareholder's acts or omissions or some other reason. Thus, the Fund considers the risk of a Fund shareholder incurring financial loss on account of shareholder liability to be remote because it is limited to circumstances in which a disclaimer is inoperative or the Fund itself would be unable to meet its obligations. The Trust Agreement also provides that the Fund, upon request, will assume the defense of any claim made against any shareholder for any act or obligation of the Fund and satisfy any judgment thereon.
Liability and Indemnification of Board Members. Under the Maryland Code, the Charter and By-Laws of the Company, and subject to the 1940 Act, a Director or officer of the Company is not liable to the Acquiring Fund or its stockholders for monetary damages except to the extent he or she receives an improper personal benefit or his or her action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated. In addition, a Director is entitled to indemnification against judgments, penalties, fines, settlements and reasonable expenses unless his or her act or omission was material to the cause of action and was committed in bad faith or was the result of active and deliberate dishonesty or the individual received an improper personal benefit (or, in a criminal case, had reasonable cause to believe that his or her act or omission was unlawful). Indemnification may be made against amounts recovered by settlement of suits brought by or in the right of the Acquiring Fund except where the individual is adjudged liable to the Acquiring Fund. The termination of a civil proceeding by judgment, order or settlement does not create a presumption that the requisite standard of conduct was not met. A Director or officer is entitled to advances of expenses in the course of litigation if (i) such Director or officer undertakes to repay such sums if indemnification ultimately is denied and provides acceptable security, (ii) the Acquiring Fund is insured against losses arising from the advances, or (iii) the disinterested non-party Directors or independent legal counsel determine there is a reason to believe the Director or officer ultimately will be found to be entitled to indemnification. Officers, employees and agents also are indemnified to the same extent as Directors and to such further extent as is consistent with law.
If these provisions of the Maryland Code are amended, the Directors and officers will be entitled to limited liability and to indemnification to the fullest extent of Maryland law as amended. No amendment or repeal of the provisions of the Charter relating to limited liability and indemnification will apply to any event, omission or proceeding that precedes the amendment or repeal.
Under Massachusetts law, the Trust Agreement and By-Laws of the Trust, and subject to the 1940 Act, a Trustee is entitled to indemnification against all liability and expenses reasonably incurred by such Trustee in connection with the defense or disposition of any threatened or actual proceeding by reason of his or her being or having been a Trustee, unless such Trustee is adjudicated to have acted with bad faith, willful misfeasance, gross negligence or in reckless disregard of his or her duties. A Trustee is entitled to advances of expenses in the course of litigation if (i) such Trustee undertakes to repay such sums if indemnification ultimately is denied and (ii) any of the following has occurred: (x) the Trustee provides acceptable security, (y) the Fund is insured against losses arising from the advances, or (z) the disinterested non-party Trustees or independent legal counsel determine there is a reason to believe the Trustee ultimately will be found to be entitled to indemnification. Officers, employees and agents of the Fund may be indemnified to the same extent as Trustees.
Under the 1940 Act, a director or trustee may not be protected against liability to a fund and its security holders to which he or she would otherwise be subject as a result of his or her willful misfeasance, bad faith or gross negligence in the performance of his or her duties, or by reason of reckless disregard of his or her obligations and duties.
* * * * * * * * * * * * * *
The foregoing is only a summary of certain differences between the Acquiring Fund, the Company's Charter and By-Laws and the Maryland Code, and the Fund, the Trust's Trust Agreement and By-Laws and Massachusetts law. It is not a complete description of the differences, but only of material differences. Shareholders desiring copies of the Company's Charter and By-Laws or the Trust's Trust Agreement and By-Laws should write to the relevant fund at 200 Park Avenue, New York, New York 10166, Attention: Legal Department.
REASONS FOR THE REORGANIZATION
After management of Dreyfus reviewed the funds in the Dreyfus Family of Funds to determine whether it would be appropriate to consolidate certain funds having similar investment objectives and investment management policies and that would otherwise benefit fund shareholders, management recommended to the Trust's Board that the Fund be consolidated with the Acquiring Fund. The Trust's Board and the Company's Board have concluded that the Reorganization is in the best interests of the Fund and its shareholders and the Acquiring Fund and its shareholders, respectively. The Trust's Board believes that the Reorganization will permit Fund shareholders to pursue substantially similar investment goals in a substantially larger fund with a comparable performance record, without diluting such shareholders' interests. In addition, each class of shares of the Acquiring Fund is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the corresponding class of Fund shares. As of September 30, 2007, the Fund had net assets of approximately $87.4 million and the Acquiring Fund had net assets of approximately $573.6 million. If the Reorganization of the Fund and the reorganizations of the Proposed Acquired Funds are consummated, the Acquiring Fund would have net assets of approximately $1.5 billion, as of such date. By combining the Fund with the Acquiring Fund, Fund shareholders should benefit from more efficient portfolio management and Dreyfus should be able to eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
The Company's Board considered that the Reorganization presents an opportunity for the Acquiring Fund to acquire investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to the Acquiring Fund.
In determining whether to recommend approval of the Reorganization, each Board considered the following factors, among others: (1) the compatibility of the Fund's and the Acquiring Fund's investment objectives, management policies and restrictions, as well as shareholder services offered by the Fund and the Acquiring Fund; (2) the terms and conditions of the Reorganization and whether the Reorganization would result in dilution of shareholder interests; (3) the expense ratios and information regarding the fees and expenses of the Fund and the Acquiring Fund, as well as the estimated expense ratio of the combined Acquiring Fund; (4) the relative performance of the Fund and the Acquiring Fund; (5) the tax consequences of the Reorganization; and (6) the costs to be incurred by the Fund in connection with the Reorganization.
For the reasons described above, the Boards of the Trust and the Company, each of which is comprised entirely of Independent Board Members, approved the Reorganization.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The following summary of the Plan is qualified in its entirety by reference to the Plan attached to this Prospectus/Proxy Statement as Exhibit A. The Plan provides that, subject to the requisite approval of the Fund's shareholders, the Acquiring Fund will acquire all of the assets of the Fund in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities on March 27, 2008 or such other date as may be agreed upon by the parties (the "Closing Date"). The number of Acquiring Fund Class A, Class B, Class C and Class I shares to be issued to the Fund will be determined on the basis of the relative net asset values per share and aggregate net assets of the corresponding class of the Fund and the Acquiring Fund, generally computed as of the close of trading on the floor of the New York Stock Exchange (usually at 4:00 p.m., Eastern time) on the Closing Date. Portfolio securities of the Fund and the Acquiring Fund will be valued in accordance with the valuation practices of the Acquiring Fund, which are described under the caption "Shareholder Guide—Buying shares" in the Acquiring Fund's Prospectus and under the caption "Determination of Net Asset Value" in the Acquiring Fund's Statement of Additional Information.
On or before the Closing Date, the Fund will declare a dividend or dividends which, together with all previous dividends, will have the effect of distributing to Fund shareholders all of the Fund's previously undistributed investment company taxable income, if any, for the tax periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), its net exempt interest income for the tax periods ending on or before the Closing Date, and all of its previously undistributed net capital gain, if any, realized in the tax periods ending on or before the Closing Date (after reduction for any capital loss carryforward). Any such distributions will be taxable to Fund shareholders.
As soon as conveniently practicable after the Closing Date, the Fund will liquidate and distribute pro rata to its Class A, Class B, Class C and Class I shareholders of record as of the close of business on the Closing Date, Acquiring Fund Class A, Class B, Class C and Class I shares, respectively, received by it in the Reorganization. Such liquidation and distribution will be accomplished by establishing accounts on the share records of the Acquiring Fund in the name of each Fund shareholder, each account being credited with the respective pro rata number of Acquiring Fund shares due to the shareholder. After such distribution and the winding up of its affairs, the Fund will cease operations and will be terminated as a series of the Trust. After the Closing Date, any outstanding certificates representing Fund shares will be canceled and Acquiring Fund shares distributed to the Fund's shareholders of record will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
The Plan may be amended at any time prior to the Reorganization. The Fund will provide its shareholders with information describing any material amendment to the Plan prior to shareholder consideration. The obligations of the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, under the Plan are subject to various conditions, including approval by Fund shareholders holding the requisite number of Fund shares and the continuing accuracy of various representations and warranties of the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund.
The total expenses of the Reorganization are expected to be approximately $90,000, which will be borne by the Fund. In addition to use of the mails, proxies may be solicited personally or by telephone, and the Fund may pay persons holding Fund shares in their names or those of their nominees for their expenses in sending soliciting materials to their principals. In addition, an outside firm may be retained to solicit proxies on behalf of the Trust's Board. The cost of any such outside solicitation firm is estimated to be approximately $31,000, which amount is included in the estimated total expenses of the Reorganization listed above.
If the Reorganization is not approved by Fund shareholders, the Trust's Board will consider other appropriate courses of action with respect to the Fund, including liquidating the Fund and distributing its assets to Fund shareholders. Such liquidation of the Fund may result in shareholders realizing taxable gains.
Temporary Suspension of Certain of the Fund's Investment Restrictions. Since certain of the Fund's existing investment restrictions could preclude the Fund from consummating the Reorganization in the manner contemplated in the Plan, Fund shareholders are requested to authorize the temporary suspension of any investment restriction of the Fund to the extent necessary to permit the consummation of the Reorganization. The temporary suspension of any of the Fund's investment restrictions will not affect the investment restrictions of the Acquiring Fund. A vote in favor of the proposal is deemed to be a vote in favor of the temporary suspension.
Federal Income Tax Consequences. The exchange of Fund assets for Acquiring Fund Class A, Class B, Class C and Class I shares, the Acquiring Fund's assumption of the Fund's stated liabilities and the Fund's distribution of those shares to Fund shareholders are intended to qualify for federal income tax purposes as a tax-free reorganization under Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). As a condition to the closing of the Reorganization, the Fund and the Acquiring Fund will receive the opinion of Stroock & Stroock & Lavan LLP, counsel to the Acquiring Fund and the Independent Board Members, to the effect that, on the basis of the existing provisions of the Code, Treasury regulations issued thereunder, current administrative regulations and pronouncements and court decisions, and certain facts, assumptions and representations, for federal income tax purposes: (1) the transfer of all of the Fund's assets to the Acquiring Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of the Fund's stated liabilities, followed by the distribution by the Fund of those Acquiring Fund Class A, Class B, Class C and Class I shares pro rata to Fund shareholders in complete liquidation of the Fund, will qualify as a "reorganization" within the meaning of Section 368(a) of the Code, and each of the Fund and the Acquiring Fund will be "a party to a reorganization"; (2) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of stated liabilities of the Fund pursuant to the Reorganization; (3) no gain or loss will be recognized by the Fund upon the transfer of its assets to the Acquiring Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of stated liabilities of the Fund or upon the distribution (whether actual or constructive) of those Acquiring Fund Class A, Class B, Class C and Class I shares to Fund shareholders in exchange for their shares of the Fund in liquidation of the Fund pursuant to the Reorganization; (4) no gain or loss will be recognized by Fund shareholders upon the exchange of their Fund Class A, Class B, Class C and Class I shares for Acquiring Fund Class A, Class B, Class C and Class I shares , respectively, pursuant to the Reorganization; (5) the aggregate tax basis for the Acquiring Fund Class A, Class B, Class C and Class I shares received by each Fund shareholder pursuant to the Reorganization will be the same as the aggregate tax basis for the Fund shares held by such shareholder immediately prior to the Reorganization, and the holding period of those Acquiring Fund Class A, Class B, Class C and Class I shares received by each Fund shareholder will include the period during which the Fund shares exchanged therefor were held by such shareholder (provided the Fund shares were held as capital assets on the date of the Reorganization); and (6) the tax basis of each Fund asset acquired by the Acquiring Fund will be the same as the tax basis of such asset to the Fund immediately prior to the Reorganization, and the holding period of each Fund asset in the hands of the Acquiring Fund will include the period during which that asset was held by the Fund.
Neither the Fund nor the Acquiring Fund has sought a tax ruling from the Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the IRS, nor does it preclude the IRS from adopting a contrary position. Fund shareholders should consult their tax advisers regarding the effect, if any, of the Reorganization in light of their individual circumstances. Because the foregoing discussion relates only to the federal income tax consequences of the Reorganization, Fund shareholders also should consult their tax advisers as to state and local tax consequences, if any, of the Reorganization.
Required Vote and Board's Recommendation
The Trust's Board has approved the Plan and the Reorganization and has determined that (1) participation in the Reorganization is in the best interests of the Fund and its shareholders and (2) the interests of shareholders of the Fund will not be diluted as a result of the Reorganization. The affirmative vote of a majority of the Fund's shares outstanding and entitled to vote is required to approve the Plan and the Reorganization.
THE TRUST'S BOARD, ALL OF WHOSE MEMBERS ARE INDEPENDENT
BOARD MEMBERS, RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE PLAN AND THE REORGANIZATION.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND AND THE FUND
Information about the Acquiring Fund is incorporated by reference into this Prospectus/Proxy Statement from the Acquiring Fund's Prospectus forming a part of the Company's Registration Statement on Form N-1A (File No. 33-48926). Information about the Fund is incorporated by reference into this Prospectus/Proxy Statement from the Fund's Prospectus forming a part of the Trust's Registration Statement on Form N-1A (File No. 33-43846).
The Fund and the Acquiring Fund are subject to the requirements of the 1940 Act and file reports, proxy statements and other information with the Commission. Reports, proxy statements and other information filed by the Fund and the Acquiring Fund may be inspected and copied at the Public Reference Facilities of the Commission at 100 F Street, N.E., Washington, D.C. 20549. Text-only versions of fund documents can be viewed on-line or downloaded from www.sec.gov or www.dreyfus.com. Copies of such material also can be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
VOTING INFORMATION
In addition to the use of the mails, proxies may be solicited personally or by telephone, and persons holding Fund shares in their names or in nominee name may be paid for their expenses in sending soliciting materials to their principals. An outside firm may be retained to assist in the solicitation of proxies, primarily by contacting shareholders by telephone.
Authorizations to execute proxies may be obtained by telephonic or electronically transmitted instructions in accordance with procedures designed to authenticate the shareholder's identity. In all cases where a telephonic proxy is solicited (as opposed to where the shareholder calls the toll-free number directly to vote), the shareholder will be asked to provide or confirm certain identifiable information and to confirm that the shareholder has received the Prospectus/Proxy Statement and proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic or electronically transmitted voting instructions, a confirmation will be sent to the shareholder to ensure that the vote has been taken in accordance with the shareholder's instructions and to provide a telephone number to call immediately if the shareholder's instructions are not correctly reflected in the confirmation. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting a new proxy to the Fund or by attending the Meeting and voting in person.
If a proxy is executed properly and returned accompanied by instructions to withhold authority to vote, represents a broker "non-vote" (that is, a proxy from a broker or nominee indicating that such person has not received instructions from the beneficial owner or other person entitled to vote Fund shares on a particular matter with respect to which the broker or nominee does not have discretionary power) or is marked with an abstention (collectively, "abstentions"), the Fund shares represented thereby will be considered to be present at the Meeting for purposes of determining the existence of a quorum for the transaction of business. Abstentions will have the effect of a "no" vote for the purpose of obtaining requisite approval for the proposal.
With respect to Dreyfus individual retirement accounts ("IRAs"), the Individual Retirement Custodial Account Agreement governing the IRAs requires The Dreyfus Trust Company ("DTC"), as the custodian of the IRAs, to vote Fund shares held in such IRAs in accordance with the IRA shareholder's instructions. However, if no voting instructions are received, DTC may vote Fund shares held in the IRA in the same proportions as the Fund shares for which voting instructions are received from other Dreyfus IRA shareholders. Therefore, if an IRA shareholder does not provide voting instructions prior to the Meeting, DTC will vote the IRA shares "FOR", "AGAINST" or "ABSTAIN" in the same proportions as it votes the shares for which properly conveyed instructions are timely received from other Dreyfus IRA shareholders.
In the event that a quorum is not present at the Meeting, or if a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. In determining whether to adjourn the Meeting, the following factors may be considered: the nature of the proposal, the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to Fund shareholders with respect to the reasons for the solicitation. Any adjournment will require the affirmative vote of a majority of those shares affected by the adjournment that are represented at the Meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote "FOR" the proposal in favor of such adjournment, and will vote those proxies required to be voted "AGAINST" the proposal against any adjournment. A quorum is constituted by the presence in person or by proxy of the holders of a majority of the outstanding shares of the Fund entitled to vote at the Meeting.
The votes of the Acquiring Fund's shareholders are not being solicited since their approval or consent is not necessary for the Reorganization.
As of October 31, 2007, the following shareholders were known by the Fund to own of record or beneficially 5% or more of the indicated class of outstanding voting shares of the Fund:
Name and Address | Percentage of
Outstanding Shares |
| Before
Reorganization | After
Reorganization |
Class A
Charles Schwab & Co., Inc.
Reinvest Account
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4151 |
24.5508% |
28.9177% |
Merrill Lynch, Pierce, Fenner & Smith
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484 | 15.9449% | 1.9296% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 7.2946% | 7.7976% |
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 | 5.5939% | 0.6769% |
Class B
Merill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of Its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484 |
21.5104% |
21.5104% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 11.8956% | 11.8956% |
First Clearing, LLC
10750 Wheat First Drive
Glen Allen, VA 23060-9245 | 6.7961% | 6.7961% |
UBS Financial Services Inc.
20388 Bonnie Bank Boulevard
Rocky River, OH 44116-4123 | 6.4749% | 6.4749% |
Class C
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 |
64.8389% |
64.8389% |
Merill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of Its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484 | 15.4687% | 15.4687% |
Citigroup Global Markets Inc.
333 West 34th Street, 3rd Floor
New York, NY 10001-2402 | 7.2765% | 7.2765% |
Class I
SEI Private Trust
Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456 |
91.7039% |
90.2089% |
As of October 31, 2007, the following shareholders were known by the Acquiring Fund to own of record or beneficially 5% or more of the indicated class of outstanding voting shares of the Acquiring Fund:
Name and Address | Percentage of
Outstanding Shares |
| Before
Reorganization | After
Reorganization |
Investor Shares
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104-4151 |
29.519% |
28.9177% |
Wells Fargo Bank of Minnesota
NPF Coordinator
Wells Fargo Center
6th & Marquette
P.O. Box 9131
Minneapolis, MN 55480 | 18.2891% | 16.0757% |
Union Bank of California
Select Benefit Omnibus Account
P.O. Box 85484
San Diego, CA 92186-5484 | 10.6142% | 9.3296% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 7.8669% | 7.7976% |
Institutional Shares
SEI Private Trust
Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456 |
90.1224% |
90.2089% |
As of October 31, 2007, Board members and officers of the Trust and the Company, as a group, owned less than 1% of the Fund's and the Acquiring Fund's outstanding shares, respectively.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of the Fund for its fiscal year ended December 31, 2006 and the audited financial statements of the Acquiring Fund for its fiscal year ended July 31, 2007 have been incorporated herein by reference in reliance upon the report of KPMG LLP, the Fund's independent registered public accounting firm, and the report of Ernst & Young LLP, the Acquiring Fund's independent registered public accounting firm, respectively, given on their authority as experts in accounting and auditing.
OTHER MATTERS
The Trust's Board members are not aware of any other matters that may come before the Meeting. However, should any such matters properly come before the Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, in care of Dreyfus Transfer, Inc., P.O. Box 55263, Boston, Massachusetts 02205-8501, whether other persons are the beneficial owners of Fund shares for which proxies are being solicited from you, and, if so, the number of copies of the Prospectus/Proxy Statement and other soliciting material you wish to receive in order to supply copies to the beneficial owners of Fund shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of October 25, 2007 (the "Agreement"), between DREYFUS PREMIER MANAGED INCOME FUND (the "Fund"), a series of THE DREYFUS/LAUREL FUNDS TRUST (the "Trust"), a Massachusetts business trust, and DREYFUS INTERMEDIATE TERM INCOME FUND (the "Acquiring Fund"), a series of DREYFUS INVESTMENT GRADE FUNDS, INC. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a "plan of reorganization" within the meaning of the regulations under Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will consist of the transfer of all of the assets of the Fund to the Acquiring Fund in exchange solely for the Acquiring Fund's Class A, Class B, Class C and Class I shares ("Acquiring Fund Shares") of common stock, par value $.001 per share, and the assumption by the Acquiring Fund of certain liabilities of the Fund and the distribution, after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the Fund in liquidation of the Fund as a series of the Trust as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement (the "Reorganization").
WHEREAS, the Fund is a series of the Trust, a registered, open-end management investment company, and the Acquiring Fund is a series of the Company, a registered, open-end management investment company, and the Fund owns securities which are assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Fund are authorized to issue their shares of common stock and beneficial interest, respectively;
WHEREAS, the Trust's Board has determined that the Reorganization is in the best interests of the Fund and the Fund's shareholders and that the interests of the Fund's existing shareholders will not be diluted as a result of the Reorganization; and
WHEREAS, the Company's Board has determined that the Reorganization is in the best interests of the Acquiring Fund and the Acquiring Fund's shareholders and that the interests of the Acquiring Fund's existing shareholders will not be diluted as a result of the Reorganization:
NOW THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties agree as follows:
1. THE REORGANIZATION.
1.1 Subject to the terms and conditions contained herein, the Fund agrees to assign, transfer and convey to the Acquiring Fund all of the assets of the Fund, including all securities and cash (subject to liabilities), and the Acquiring Fund agrees in exchange therefor (a) to deliver to the Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined as set forth in paragraph 2.3; and (b) to assume certain liabilities of the Fund, as set forth in paragraph 1.2. Such transactions shall take place at the closing (the "Closing") as of the close of business on the closing date (the "Closing Date"), provided for in paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the Fund's account on the books of the Acquiring Fund and shall deliver a confirmation thereof to the Fund.
1.2 The Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all liabilities, expenses, costs, charges and reserves reflected on an unaudited statement of assets and liabilities of the Fund prepared by The Dreyfus Corporation ("Dreyfus"), as of the Valuation Date (as defined in paragraph 2.1), in accordance with U.S. generally accepted accounting principles consistently applied from the prior audited period. The Acquiring Fund shall assume only those liabilities of the Fund reflected in that unaudited statement of assets and liabilities and shall not assume any other liabilities, whether absolute or contingent.
1.3 Delivery of the assets of the Fund to be transferred shall be made on the Closing Date and shall be delivered to Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, the Acquiring Fund's custodian (the "Custodian"), for the account of the Acquiring Fund, with all securities not in bearer or book-entry form duly endorsed, or accompanied by duly executed separate assignments or stock powers, in proper form for transfer, with signatures guaranteed, and with all necessary stock transfer stamps, sufficient to transfer good and marketable title thereto (including all accrued interest and dividends and rights pertaining thereto) to the Custodian for the account of the Acquiring Fund free and clear of all liens, encumbrances, rights, restrictions and claims. All cash delivered shall be in the form of immediately available funds payable to the order of the Custodian for the account of the Acquiring Fund.
1.4 The Fund will pay or cause to be paid to the Acquiring Fund any interest received on or after the Closing Date with respect to assets transferred to the Acquiring Fund hereunder. The Fund will transfer to the Acquiring Fund any distributions, rights or other assets received by the Fund after the Closing Date as distributions on or with respect to the securities transferred. Such assets shall be deemed included in assets transferred to the Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the "Liquidation Date"), the Fund will liquidate as a series of the Trust and distribute pro rata to the Fund's Class A, Class B, Class C and Class I shareholders of record, determined as of the close of business on the Closing Date ("Fund Shareholders"), the corresponding class of Acquiring Fund Shares received by the Fund pursuant to paragraph 1.1. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Fund Shareholders and representing the respective pro rata number of the applicable Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Fund simultaneously will be canceled on the books of the Fund; Fund share certificates, if any, will be canceled and Acquiring Fund Shares distributed to Fund Shareholders will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will be issued in the manner described in the Acquiring Fund's current prospectus and statement of additional information; the Acquiring Fund, however, will not issue share certificates in the Reorganization.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the registered holder of the Acquiring Fund Shares on the books of the Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Fund is and shall remain the responsibility of the Fund up to and including the Closing Date and such later date on which the Fund's existence is terminated.
2. VALUATION.
2.1 The value of the Fund's assets to be acquired, and the amount of the Fund's liabilities to be assumed, by the Acquiring Fund hereunder shall be computed as of the close of trading on the floor of the New York Stock Exchange (usually 4:00 p.m., Eastern time) on the Closing Date (such time and date being hereinafter called the "Valuation Date"), using the valuation procedures set forth in the Company's Articles of Incorporation, as amended (the "Company's Charter"), and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset value per share computed as of the Valuation Date, using the valuation procedures set forth in the Company's Charter and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.3 The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Fund's net assets shall be determined by dividing the value of the net assets of the applicable class of the Fund determined using the same valuation procedures referred to in paragraph 2.1 by the net asset value of one Acquiring Fund Share of the corresponding class, determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular practices of Dreyfus as fund accountant for the Fund and the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be March 27, 2008, or such other date as the parties, through their duly authorized officers, may mutually agree. All acts taking place at the Closing shall be deemed to take place simultaneously on the Closing Date unless otherwise provided. The Closing shall be held at 5:00 p.m., Eastern time, at the offices of Dreyfus, 200 Park Avenue, 7th Floor, New York, New York, or such other time and/or place as the parties may mutually agree.
3.2 The Custodian shall deliver at the Closing a certificate of an authorized officer stating that the Fund's portfolio securities, cash and any other assets have been delivered in proper form to the Acquiring Fund on the Closing Date.
3.3 If on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or the Fund shall be closed to trading or trading thereon shall be restricted, or (b) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
3.4 The transfer agent for the Fund shall deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Fund Shareholders and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund's transfer agent shall issue and deliver to the Trust's Secretary a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date, or provide evidence satisfactory to the Trust that such Acquiring Fund Shares have been credited to the Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, receipts or other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust, on behalf of the Fund, represents and warrants to the Company, on behalf of the Acquiring Fund, as follows:
(a) The Fund is a duly established and designated series of the Trust, a business trust duly organized and validly existing under the laws of the Commonwealth of Massachusetts, and has power to carry out its obligations under this Agreement.
(b) The Trust is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company, and the Fund's shares are registered under the Securities Act of 1933, as amended (the "1933 Act"), and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Trust's Agreement and Declaration of Trust, as amended (the "Trust's Declaration of Trust"), or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust is a party on behalf of the Fund or by which the Fund is bound.
(e) The Fund has no material contracts or other commitments outstanding (other than this Agreement) which will be terminated with liability to it on or prior to the Closing Date.
(f) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(g) The Statements of Assets and Liabilities of the Fund for each of its five fiscal years ended December 31, 2006 have been audited by KPMG LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Fund as of such dates, and there are no known contingent liabilities of the Fund as of such dates not disclosed therein.
(h) Since December 31, 2006, there has not been any material adverse change in the Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraphs 1.2 and 4.1(g) hereof.
(i) At the Closing Date, all federal and other tax returns and reports of the Fund required by law then to be filed shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Trust's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(j) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Fund. All of the issued and outstanding shares of the Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of its transfer agent as provided in paragraph 3.4. The Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Fund's shares, nor is there outstanding any security convertible into any of the Fund's shares.
(l) On the Closing Date, the Fund will have full right, power and authority to sell, assign, transfer and deliver the assets to be transferred by it hereunder.
(m) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Trust's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Trust, on behalf of the Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(n) The proxy statement of the Fund (the "Proxy Statement") included in the Registration Statement referred to in paragraph 5.5 (other than information therein that has been furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
4.2 The Company, on behalf of the Acquiring Fund, represents and warrants to the Trust, on behalf of the Fund, as follows:
(a) The Acquiring Fund is a duly established and designated series of the Company, a corporation duly organized and validly existing under the laws of the State of Maryland, and has power to carry out its obligations under this Agreement.
(b) The Company is registered under the 1940 Act as an open-end management investment company, and the Acquiring Fund's shares are registered under the 1933 Act, and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Acquiring Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Company's Charter or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Company is a party on behalf of the Acquiring Fund or by which the Acquiring Fund is bound.
(e) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Acquiring Fund for each of its five fiscal years ended July 31, 2007 have been audited by Ernst & Young LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Fund) fairly reflect the financial condition of the Acquiring Fund as of such dates.
(g) Since July 31, 2007, there has not been any material adverse change in the Acquiring Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraph 4.2(f) hereof.
(h) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law then to be filed shall have been filed, and all federal and other taxes shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(i) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are, and at the Closing Date (including the shares of the Acquiring Fund to be issued pursuant to paragraph 1.1 of this Agreement) will be, duly and validly issued and outstanding, fully paid and non-assessable by the Acquiring Fund. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Company's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Company, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(l) The Proxy Statement included in the Registration Statement (only insofar as it relates to the Acquiring Fund and is based on information furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
(m) No consideration other than the Acquiring Fund Shares (and the Acquiring Fund's assumption of the Fund's stated liabilities) will be issued in exchange for the Fund's assets in the Reorganization.
(n) The Acquiring Fund does not directly or indirectly own, nor on the Closing Date will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of the Fund.
| 5. | COVENANTS OF THE TRUST AND THE COMPANY, ON BEHALF OF THE FUND AND THE ACQUIRING FUND, RESPECTIVELY. |
5.1 The Acquiring Fund and the Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include payment of customary dividends and other distributions.
5.2 The Trust will call a meeting of the Fund's shareholders to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Fund and the Acquiring Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after the Closing Date, the Trust shall furnish the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Fund for federal income tax purposes which will be carried over to the Acquiring Fund as a result of Section 381 of the Code and which will be certified by the Trust's President or its Vice President and Treasurer.
5.5 The Trust, on behalf of the Fund, will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus, which will include the Proxy Statement referred to in paragraph 4.1(n), all to be included in a Registration Statement on Form N-14 of the Company, on behalf of the Acquiring Fund (the "Registration Statement"), in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act in connection with the meeting of the Fund's shareholders to consider approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
5.7 The Trust, on behalf of the Fund, covenants that the Fund is not acquiring the Acquiring Fund Shares to be issued hereunder for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement.
5.8 As soon as is reasonably practicable after the Closing, the Fund will make a liquidating distribution to the Fund's shareholders consisting of the Acquiring Fund Shares received at the Closing.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Trust, on behalf of the Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
6.2 The Trust shall have delivered to the Acquiring Fund a statement of the Fund's assets and liabilities, together with a list of the Fund's portfolio securities showing the tax basis of such securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Trust's Treasurer.
6.3 The Trust shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in the Trust's name by the Trust's President or Vice President and the Trust's Treasurer, in form and substance satisfactory to the Acquiring Fund, to the effect that the representations and warranties of the Trust, on behalf of the Fund, made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND.
The obligations of the Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Company, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
7.2 The Company shall have delivered to the Fund on the Closing Date a certificate executed in the Company's name by the Company's President or Vice President and the Company's Treasurer, in form and substance reasonably satisfactory to the Fund, to the effect that the representations and warranties of the Company, on behalf of the Acquiring Fund, made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Fund shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE ACQUIRING FUND.
If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement.
8.1 This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Fund in accordance with the provisions of the Trust's Declaration of Trust and the 1940 Act.
8.2 On the Closing Date, no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state Blue Sky and securities authorities) deemed necessary by the Fund or the Acquiring Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Fund or the Acquiring Fund, provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Fund shall have declared and paid a dividend or dividends which, together with all previous dividends, shall have the effect of distributing to Fund shareholders all of the Fund's investment company taxable income (within the meaning of Section 852(b)(2) of the Code) for all taxable years or periods ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid); the excess of its interest income excludable from gross income under Section 103(a) of the Code over its disallowed deductions under Sections 265 and 171(a)(2) of the Code, for all taxable years or periods; and all of its net capital gain (as defined in Section 1222(11) of the Code) realized in all taxable years or periods (after reduction for any capital loss carryforward).
8.6 The Fund and Acquiring Fund shall have received an opinion of Stroock & Stroock & Lavan LLP substantially to the effect that based on the facts and assumptions stated herein and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes:
(a) The transfer of all of the Fund's assets to the Acquiring Fund in exchange solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund, followed by the distribution by the Fund of those Acquiring Fund Shares to Fund Shareholders in complete liquidation of the Fund, will qualify as a "reorganization" within the meaning of Section 368(a) of the Code and each of the Fund and the Acquiring Fund will be "a party to a reorganization"; (b) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund pursuant to the Reorganization; (c) no gain or loss will be recognized by the Fund upon the transfer of the Fund's assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund or upon the distribution (whether actual or constructive) of those Acquiring Fund Shares to Fund Shareholders in exchange for their shares of the Fund in liquidation of the Fund pursuant to the Reorganization; (d) no gain or loss will be recognized by Fund Shareholders upon the exchange of their Fund shares for the Acquiring Fund Shares pursuant to the Reorganization; (e) the aggregate tax basis for the Acquiring Fund Shares received by each Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Fund shares held by such Shareholder immediately prior to the Reorganization, and the holding period of those Acquiring Fund Shares received by each Fund Shareholder will include the period during which the Fund shares exchanged therefor were held by such Shareholder (provided the Fund shares were held as capital assets on the date of the Reorganization); and (f) the tax basis of each Fund asset acquired by the Acquiring Fund will be the same as the tax basis of such asset to the Fund immediately prior to the Reorganization, and the holding period of each asset of the Fund in the hands of the Acquiring Fund will include the period during which that asset was held by the Fund.
In rendering its opinion, counsel may rely as to factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which counsel may treat as representations and warranties made to it, and in separate letters addressed to counsel and the certificates delivered pursuant to this Agreement.
No opinion will be expressed as to the effect of the Reorganization on (i) the Fund or the Acquiring Fund with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting, and (ii) any shareholder of the Fund that is required to recognize unrealized gains and losses for federal income tax purposes under a mark-to-market system of accounting.
9. TERMINATION OF AGREEMENT; EXPENSES.
9.1 This Agreement and the transactions contemplated hereby may be terminated and abandoned by resolution of the Board of the Trust or of the Company, as the case may be, at any time prior to the Closing Date (and notwithstanding any vote of the Fund's shareholders) if circumstances should develop that, in the opinion of the party's Board, make proceeding with the Reorganization inadvisable.
9.2 If this Agreement is terminated and the transactions contemplated hereby are abandoned pursuant to the provisions of this Section 9, this Agreement shall become void and have no effect, without any liability on the part of any party hereto or the Board members or officers of the Company or the Trust, or shareholders of the Acquiring Fund or of the Fund, as the case may be, in respect of this Agreement.
9.3 The Fund shall bear the aggregate expenses of the transactions contemplated hereby.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may be waived by the Board of the Trust or of the Company if, in the judgment of either, such waiver will not have a material adverse effect on the benefits intended under this Agreement to the shareholders of the Fund or of the Acquiring Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided for herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and merges and supersedes all prior discussions, agreements and understandings of every kind and nature between them relating to the subject matter hereof. Neither party shall be bound by any condition, definition, warranty or representation, other than as set forth or provided in this Agreement or as may be, on or subsequent to the date hereof, set forth in a writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws; provided, however, that the due authorization, execution and delivery of this Agreement by the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, shall be governed and construed in accordance with the internal laws of the Commonwealth of Massachusetts and the State of Maryland, respectively, without giving effect to principles of conflict of laws; provided that, in the case of any conflict between those laws and federal securities laws, the latter shall govern.
11.4 This Agreement may be amended only by a signed writing between the parties.
11.5 This Agreement may be executed in counterparts, each of which, when executed and delivered, shall be deemed to be an original.
11.6 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
11.7 It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Board members or officers of the Trust or the Company, or shareholders, nominees, agents, or employees of the Fund or the Acquiring Fund personally, but shall bind only the property of the Fund or the Acquiring Fund, as the case may be, as provided in the Trust's Declaration of Trust or the Company's Charter, respectively; a copy of the Trust's Declaration of Trust is on file at the office of the Secretary of the Commonwealth of Massachusetts and at the Trust's principal offices. The execution and delivery of this Agreement by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of the Fund or the Acquiring Fund, as the case may be.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, have caused this Agreement and Plan of Reorganization to be executed and attested on its behalf by its duly authorized representatives as of the date first above written.
| THE DREYFUS/LAUREL FUNDS TRUST,
on behalf of Dreyfus Premier Managed Income Fund
By: /s/ J. David Officer
J. David Officer,
President |
| ATTEST: | /s/ Jeff Prusnofsky
Jeff Prusnofsky,
Assistant Secretary |
| DREYFUS INVESTMENT GRADE FUNDS, INC.,
on behalf of Dreyfus Intermediate Term Income Fund
By: /s/ J. David Officer
J. David Officer,
President |
| ATTEST: | /s/ Jeff Prusnofsky
Jeff Prusnofsky,
Assistant Secretary |
Exhibit B
PRO FORMA FEES AND EXPENSES
Shareholders of two other funds advised by Dreyfus—Dreyfus A Bonds Plus, Inc. ("A Bonds") and Dreyfus Premier Core Bond Fund ("Core Bond" and, together with A Bonds, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such Proposed Acquired Fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund (Class A shares only of the Acquiring Fund will be exchanged in the A Bonds reorganization). If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganization of the respective Proposed Acquired Fund. The fees and expenses set forth below assume that shareholders of the Fund and of the Proposed Acquired Funds approve the reorganizations of their respective funds into the Acquiring Fund. The fees and expenses set forth below are based on net assets and accruals of the Fund, the Proposed Acquired Funds and the Acquiring Fund, respectively, as of July 31, 2007, and are adjusted for the Fund and the Proposed Acquired Funds to include estimated costs of the reorganizations totaling $300,000. The "Pro Forma After Reorganization" operating expenses information is based on the net assets and accruals of the Fund, the Proposed Acquired Funds and the Acquiring Fund, as of July 31, 2007, as adjusted showing the effect of the reorganizations had they occurred on such date.
Annual Fund Operating Expenses
(expenses paid from fund assets)
(percentage of average daily net assets):
| Fund
Class A
| Core Bond
Class A
| A Bonds
| Acquiring
Fund
Class A
| Pro Forma
After
Reorganizations
Acquiring
Fund
Class A
|
|---|
| Management fees | .70% | .60% | .65% | .45% | .45% |
| Rule 12b-1 fee | .25% | none | none | none | none |
| Shareholder services fee | none | .25% | .07% | .25% | .25% |
Other expenses
| .14%
| .26%
| .28%
| .22%
| .19%
|
| Total | 1.09% | 1.11% | 1.00% | .92% | .89% |
Fee waiver and/or expense reimbursement
| N/A
| (.11)%
| N/A
| (.12)%
| (.09)%
|
| Net operating expenses | 1.09% | 1.00% | 1.00% | .80% | .80% |
| Fund
Class B
| Core Bond
Class B
| Acquiring
Fund
Class B
| Pro Forma
After
Reorganizations
Acquiring
Fund
Class B
|
|---|
| Management fees | .70% | .60% | .45% | .45% |
| Rule 12b-1 fee | 1.00% | .50% | .50% | .50% |
| Shareholder services fee | none | .25% | .25% | .25% |
Other expenses
| .14%
| .23%
| .17%*
| .17%*
|
| Total | 1.84% | 1.58% | 1.37% | 1.37% |
Fee waiver and/or expense reimbursement
| N/A
| (.08)%
| N/A
| N/A
|
| Net operating expenses | 1.84% | 1.50% | 1.37% | 1.37% |
| Fund
Class C
| Core Bond
Class C
| Acquiring
Fund
Class C
| Pro Forma
After
Reorganizations
Acquiring
Fund
Class C
|
|---|
| Management fees | .70% | .60% | .45% | .45% |
| Rule 12b-1 fee | 1.00% | .75% | .75% | .75% |
| Shareholder services fee | none | .25% | .25% | .25% |
Other expenses
| .14%
| .24%
| .18%*
| .17%*
|
| Total | 1.84% | 1.84% | 1.63% | 1.62% |
Fee waiver and/or expense reimbursement
| N/A
| (.09)%
| N/A
| N/A
|
| Net operating expenses | 1.84% | 1.75% | 1.63% | 1.62% |
| Fund
Class I
| Core Bond
Class I
| Acquiring
Fund
Class I
| Pro Forma
After
Reorganizations
Acquiring
Fund
Class I
|
|---|
| Management fees | .70% | .60% | .45% | .45% |
| Rule 12b-1 fee | none | none | none | none |
| Shareholder services fee | none | none | none | none |
Other expenses
| .14%
| .19%
| .09%
| .08%
|
| Total | .84% | .79% | .54% | .53% |
Fee waiver and/or expense reimbursement
| N/A
| (.04)%
| (.00)%
| (.00)%
|
| Net operating expenses | .84% | .75% | .54% | .53% |
| * | "Other expenses" for the Acquiring Fund's Class B and Class C shares are based on estimated amounts for the current fiscal year. Actual expenses may be greater or less than the amounts listed in the table. |
Expense example
This example shows what you could pay in expenses over time. It uses the same hypothetical conditions other funds use in their prospectuses: $10,000 initial investment, 5% total return each year and no changes in expenses. The example shows the reorganizations of the Fund, Core Bond, A Bonds and the Acquiring Fund. The example is based on net operating expenses, which reflect, for the applicable years, the expense waiver/reimbursement by Dreyfus. Because actual returns and expenses will be different, the example is for comparison only.
Class A
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class A Shares | $556 | $781 | $1,024 | $1,719 |
Core Bond Class A Shares | $547 | $777 | $1,024 | $1,731 |
A Bonds Shares | $102 | $318 | $552 | $1,225 |
Acquiring Fund Class A Shares | $528 | $719 | $925 | $1,520 |
Pro Forma After Reorganizations—Acquiring Fund Class A Shares | $528 | $712 | $912 | $1,489 |
Class B*
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class B Shares | $587/$187 | $879/$579 | $1,195/$995 | $1,782**/$1,782** |
Core Bond Class B Shares | $553/$153 | $791/$491 | $1,053/$853 | $1,631**/$1,631** |
Acquiring Fund Class B Shares | $539/$139 | $734/$434 | $950/$750 | $1,411**/$1,411** |
Pro Forma After Reorganizations—Acquiring Fund Class B Shares | $539/$139 | $734/$434 | $950/$750 | $1,395**/$1,395** |
| * | With redemption/without redemption. |
| ** | Assumes conversion of Class B to Class A at end of sixth year following the date of purchase. |
Class C*
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class C Shares | $287/$187 | $579/$579 | $995/$995 | $2,159/$2,159 |
Core Bond Class C Shares | $278/$178 | $570/$570 | $987/$987 | $2,151/$2,151 |
Acquiring Fund Class C Shares | $266/$166 | $514/$514 | $887/$887 | $1,933/$1,933 |
Pro Forma After Reorganizations—Acquiring Fund Class C Shares | $265/$165 | $511/$511 | $881/$881 | $1,922/$1,922 |
| * | With redemption/without redemption. |
Class I
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class I Shares | $86 | $268 | $466 | $1,037 |
Core Bond Class I Shares | $77 | $248 | $435 | $974 |
Acquiring Fund Class I Shares | $55 | $173 | $302 | $677 |
Pro Forma After Reorganizations—Acquiring Fund Class I Shares | $54 | $170 | $296 | $665 |
Exhibit C
DESCRIPTION OF THE COMPANY'S BOARD MEMBERS
Board members of the Company, together with information as to their positions with the Company, principal occupations and other board memberships and affiliations, are shown below.(1)
Name (Age)
Position with Company (Since) | Principal Occupation
During Past 5 Years |
Other Board Memberships and Affiliations |
Joseph S. DiMartino (64)
Chairman of the Board
(1995) | Corporate Director and Trustee | The Muscular Dystrophy Association, Director
Century Business Services, Inc., a provider of
outsourcing functions for small and medium
size companies, Director
The Newark Group, a provider of a national
market of paper recovery facilities, paperboard
mills and paperboard converting plants,
Director
Sunair Services Corporation, a provider of a
certain outdoor-related services to homes
and businesses, Director |
Clifford L. Alexander, Jr. (74)
Board Member (2003) | President of Alexander &
Associates, Inc., a
management consulting
firm (January 1981-present)
Chairman of the Board of
Moody's Corporation
(October 2000 - October 2003) | Mutual of America Life Insurance
Company, Director |
David W. Burke (71)
Board Member (1994) | Corporate Director and Trustee | John F. Kennedy Library Foundation,
Director |
Whitney I. Gerard (73)
Board Member (1993) | Partner of Chadbourne & Parke LLP | None |
George L. Perry (73)
Board Member (1992) | Economist and Senior Fellow at
Brookings Institution | None |
_________________________
1 None of the Board members are "interested persons" of the Company, as defined in the 1940 Act.
DREYFUS PREMIER MANAGED INCOME FUND
(A Series of The Dreyfus/Laurel Funds Trust)
The undersigned shareholder of Dreyfus Premier Managed Income Fund (the "Fund"), a series of The Dreyfus/Laurel Funds Trust (the "Trust"), hereby appoints Joseph M. Chioffi and Jeff Prusnofsky, and each of them, the attorneys and proxies of the undersigned, with full power of substitution, to vote, as indicated herein, all of the shares of beneficial interest of the Fund standing in the name of the undersigned at the close of business on December 21, 2007, at a Special Meeting of Shareholders to be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, at 9:00 a.m., on Wednesday, February 27, 2008, and at any and all adjournments thereof, with all of the powers the undersigned would possess if then and there personally present and especially (but without limiting the general authorization and power hereby given) to vote as indicated on the proposal, as more fully described in the Prospectus/Proxy Statement for the meeting.
THIS PROXY IS SOLICITED BY THE TRUST'S BOARD OF TRUSTEES AND WILL BE VOTED FOR THE PROPOSAL SHOWN ON THE REVERSE SIDE UNLESS OTHERWISE INDICATED.
THREE EASY WAYS TO VOTE YOUR PROXY
3. TELEPHONE: Call 1-888-221-0697 and follow the simple instructions.
4. INTERNET: Go to www.proxyweb.com, and follow the on-line directions.
5. MAIL: Vote, sign and date, and return in the enclosed postage-paid envelope.
If you are NOT voting by Telephone or Internet, Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
| Dated: ________________________
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope |
| ______________________________
Signature(s) (Sign in the Box)
Signature(s) should be exactly as name or names appearing on this proxy. If shares are held jointly, each holder should sign. If signing is by attorney, executor, administrator, trustee or guardian, please give full title. By signing this proxy card, receipt of the accompanying Notice of Special Meeting of Shareholders and Prospectus/Proxy Statement is acknowledged. |
Please fill in box as shown using black or blue ink or number 2 pencil.
Please do not use fine point pens.
| 1. | To approve an Agreement and Plan of Reorganization providing for the transfer of all of the assets of the Fund to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), a series of Dreyfus Investment Grade Funds, Inc., in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets and the assumption by the Acquiring Fund of the Fund's stated liabilities, and the pro rata distribution of those shares to the Fund's shareholders and subsequent termination of the Fund as a series of the Trust. |
| FOR
/_/ | AGAINST
/_/ | ABSTAIN
/_/ | |
| 2. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournment(s) thereof. |
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
STATEMENT OF ADDITIONAL INFORMATION
December 17, 2007
Acquisition of the Assets of
DREYFUS PREMIER MANAGED INCOME FUND
(A Series of The Dreyfus/Laurel Funds Trust)
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611
By and in Exchange for Class A, Class B, Class C and
Class I Shares of
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
(A Series of Dreyfus Investment Grade Funds, Inc.)
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611
This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the Prospectus/Proxy Statement dated December 17, 2007 relating specifically to the proposed transfer of all of the assets and liabilities of Dreyfus Premier Managed Income Fund (the "Fund") in exchange for Class A, Class B, Class C and Class I shares of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"). The transfer is to occur pursuant to an Agreement and Plan of Reorganization. This Statement of Additional Information consists of this cover page and the following documents attached hereto:
| 1. | The Acquiring Fund's Statement of Additional Information dated December 3, 2007. |
| 2. | The Acquiring Fund's Annual Report for the fiscal year ended July 31, 2007. |
| 3. | The Fund's Annual Report for the fiscal year ended December 31, 2006. |
| 4. | The Fund's Semi-Annual Report for the six-month period ended June 30, 2007. |
| 5. | Pro forma financials for the combined Fund and Acquiring Fund as of September 30, 2007. |
The Acquiring Fund's Statement of Additional Information, and the financial statements included in the Acquiring Fund's Annual Report and Semi-Annual Report and the Fund's Annual Report and Semi-Annual Report, are incorporated herein by reference. The Prospectus/Proxy Statement dated December 17, 2007 may be obtained by writing to the Fund or the Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
DOCUMENTS INCORPORATED BY REFERENCE
The Acquiring Fund's Statement of Additional Information dated December 3, 2007 is incorporated herein by reference to the Acquiring Fund's Post-Effective Amendment No. 33 to its Registration Statement on Form N-1A, filed November 30, 2007 (File No. 33-48926). The financial statements of the Acquiring Fund are incorporated herein by reference to its Annual Report dated July 31, 2007, filed September 28, 2007.
The Fund's Statement of Additional Information dated May 1, 2007 is incorporated herein by reference to the Fund's Post-Effective Amendment No. 132 to its Registration Statement on Form N-1A, filed April 30, 2007 (File No. 33-43846). The financial statements of the Fund are incorporated herein by reference to its Annual Report dated December 31, 2006 and Semi-Annual Report dated June 30, 2007.
Pro Forma STATEMENT OF INVESTMENTS
Dreyfus Intermediate Term Income Fund
September 30, 2007 (Unaudited)
Dreyfus
Intermediate Dreyfus Dreyfus Premier Dreyfus Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Coupon Maturity
Bonds and Notes--90.1% Rate (%) Date Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 3.00 8/1/35 440,000 45,000 625,000 1,110,000
Raytheon,
Sr. Notes 5.50 11/15/12 375,000 375,000
Agricultural--.3%
Philip Morris,
Debs. 7.75 1/15/27 1,495,000 a 1,475,000 105,000 2,000,000 a 5,075,000
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 6.96 3/8/16 1,140,000 b 540,000 b 120,000 b 1,230,000 b 3,030,000
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 4.73 9/15/10 425,000 425,000
Capital Auto Receivables Asset
Trust, Ser. 2005-1, Cl. D 6.50 5/15/12 900,000 b 1,100,000 b 2,000,000
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 7.16 1/15/13 1,050,000 b 1,050,000
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 6.57 9/16/13 500,000 b 500,000 b 708,000 b 1,708,000
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 2.85 8/8/10 110,000 110,000
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 4.19 7/15/09 1,000,000 50,000 1,400,000 2,450,000
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 3.72 10/15/09 1,135,000 1,135,000
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 4.64 4/15/10 1,405,000 1,140,000 125,000 1,985,000 4,655,000
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 4.72 2/15/11 720,000 365,000 85,000 770,000 1,940,000
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 7.12 2/15/13 700,000 b 900,000 b 1,600,000
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 5.47 9/15/12 340,000 340,000
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 7.05 12/15/13 1,575,000 b 300,000 b 250,000 b 1,700,000 b 3,825,000
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 2.65 5/16/11 201,705 201,705
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 5.25 5/15/13 495,000 50,000 545,000
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 5.04 1/17/12 465,000 465,000
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 5.65 2/20/13 945,000 945,000
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 2.81 8/22/11 224,581 224,581
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 3.51 2/17/12 82,610 50,236 132,846
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 3.13 5/17/12 86,887 55,406 142,293
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 4.57 11/19/12 2,065,000 575,000 170,000 2,560,000 5,370,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 4.50 5/17/13 390,000 95,000 485,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 4.54 5/17/13 50,000 50,000
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 6.14 1/15/13 2,210,000 b,c 2,100,000 b,c 435,000 b.c 2,350,000 b,c 7,095,000
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 6.04 6/15/14 2,875,000 c 2,875,000
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 6.04 1/15/14 435,000 c 435,000
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 6.04 1/9/12 10,235,000 c 4,530,000 c 14,765,000
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 960,000 c 960,000
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 6.80 7/15/14 5,268,000 11,322,000 16,590,000
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 5.19 4/25/36 231,064 c 231,064
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 5.14 1/25/34 925,000 c 925,000
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 5.21 4/28/39 1,795,000 c 2,550,000 c 4,345,000
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 5.17 5/25/36 239,941 c 239,941
Centex Home Equity,
Ser. 2006-A, Cl. AV1 5.18 6/25/36 157,998 c 112,734 c 341,617 c 612,349
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 5.01 2/25/35 1,700,000 140,000 2,350,000 4,190,000
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 5.96 7/25/36 905,209 c 1,590,581 c 100,866 c 2,596,656
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 5.87 9/25/36 395,159 c 760,948 c 1,156,107
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 5.56 9/25/36 1,600,000 c 1,600,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 5.98 6/25/37 1,631,721 c 527,910 c 2,159,631
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 7.00 6/25/37 150,000 c 150,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 7.00 6/25/37 525,000 c 525,000
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.26 7/25/36 248,050 c 23,749 c 271,799
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 5.24 12/25/25 1,119,527 c 1,119,527
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 5.45 12/25/35 164,024 c 164,024
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 5.72 12/25/36 119,006 c 119,006
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 1,520,000 160,000 1,715,000 3,395,000
First NLC Trust,
Ser. 2005-3, Cl. AV2 5.36 12/25/35 312,260 c 312,260
GSAA Trust,
Ser. 2006-7, Cl. AV1 5.21 3/25/46 589,418 c 589,418
GSAMP Trust,
Ser. 2006-S4, Cl. A1 5.22 5/25/36 289,900 c 289,900
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 5.17 5/25/36 183,691 c 183,691
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 5.42 4/1/37 1,264,019 c 1,264,019
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 5.17 4/25/36 617,395 c 183,783 c 14,358 c 815,536
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 5.83 11/25/36 740,000 c 485,000 c 75,000 c 955,000 c 2,255,000
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 5.20 3/25/36 430,032 c 430,032
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.42 12/25/36 787,764 c 787,764
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 5.91 1/25/36 1,525,000 c 145,000 c 2,100,000 c 3,770,000
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 5.36 1/25/36 243,865 c 243,865
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 6.64 8/25/35 130,000 c 130,000
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 6.00 8/25/36 480,115 c 480,115
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 5.61 2/25/35 1,585,000 c 2,105,000 c 3,690,000
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 5.68 2/25/35 490,000 c 600,000 c 1,090,000
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 5.96 9/25/31 61,551 c 61,551
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 5.75 9/25/33 723,951 236,676 c 981,789 1,942,416
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 5.60 10/25/35 450,000 c 555,000 c 1,005,000
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 5.17 6/25/36 292,586 c 292,586
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 5.24 3/25/36 213,510 c 292,588 c 506,098
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 5.50 3/25/36 240,000 c 240,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 5.73 5/25/35 1,120,000 c 1,400,000 c 2,520,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 5.83 5/25/35 317,185 c 317,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 5.83 7/22/30 420,000 b,c 420,000
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 5.19 2/25/37 657,166 c 657,166
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 5.16 5/25/36 165,222 c 165,222
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 9.25 3/15/20 1,272,548 444,191 57,625 1,824,786 3,599,150
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 3.79 12/15/17 37,251 37,251
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 5.25 2/15/14 379,875 379,875
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 5.25 12/15/18 1,375,000 115,000 1,500,000 2,990,000
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 6.48 1/15/37 745,000 1,000,000 1,745,000
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 6.75 3/7/29 80,000 80,000
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 6.05 3/13/09 2,580,000 c 320,000 c 1,950,000 c 4,850,000
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 5.89 10/31/08 2,725,000 c 250,000 c 3,745,000 c 6,720,000
DaimlerChrysler N.A. Holding,
Gtd. Notes 6.13 3/13/09 1,375,000 c 135,000 c 1,925,000 c 3,435,000
DaimlerChrysler N.A. Holding,
Notes 4.88 6/15/10 295,000 65,000 360,000
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 965,000 b,c 965,000
ERAC USA Finance,
Notes 7.95 12/15/09 1,095,000 b 1,095,000
Goodyear Tire & Rubber,
Sr. Notes 9.13 12/1/09 295,000 b,c 30,000 b,c 380,000 b,c 705,000
Banks--6.4%
BAC Capital Trust XIV,
Bank Gtd. Notes 5.63 12/31/49 2,930,000 c 470,000 c 3,205,000 c 6,605,000
Barclays Bank,
Sub. Notes 5.93 9/29/49 265,000 a,b,c 265,000
Barclays Bank,
Jr. Sub. Bonds 7.43 12/15/49 120,000 b,c 120,000
Capital One Financial,
Sr. Unsub. Notes 6.00 9/10/09 5,275,000 c 540,000 c 2,500,000 c 8,315,000
Chevy Chase Bank,
Sub. Notes 6.88 12/1/13 1,220,000 480,000 145,000 1,710,000 3,555,000
Chuo Mitsui Trust & Banking,
Sub. Notes 5.51 12/29/49 385,000 b,c 385,000
Colonial Bank,
Sub. Notes 6.38 12/1/15 1,105,000 750,000 250,000 1,530,000 3,635,000
Colonial Bank,
Sub. Notes 8.00 3/15/09 385,000 250,000 540,000 1,175,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 335,000 335,000
Glitnir Banki,
Sub. Notes 6.69 6/15/16 450,000 b,c 450,000
Greater Bay Bancorp,
Sr. Notes, Ser. B 5.25 3/31/08 100,000 100,000
ICICI Bank,
Bonds 5.90 1/12/10 710,000 b,c 400,000 b,c 850,000 b,c 1,960,000
Industrial Bank of Korea,
Sub. Notes 4.00 5/19/14 2,630,000 b,c 275,000 b,c 3,305,000 b,c 6,210,000
Islandsbanki,
Notes 5.52 10/15/08 975,000 b,c 87,000 b,c 1,245,000 b,c 2,307,000
J.P. Morgan & Co.,
Sub. Notes 6.25 1/15/09 1,110,000 160,000 1,155,000 2,425,000
Landsbanki Islands,
Sr. Notes 6.21 8/25/09 2,450,000 b,c 250,000 b,c 3,225,000 b,c 5,925,000
M&T Bank,
Sr. Unscd. Bonds 5.38 5/24/12 245,000 245,000
Manufacturers & Traders Trust,
Sub. Notes 5.59 12/28/20 475,000 c 475,000
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 5.85 12/4/12 2,430,000 c 2,610,000 c 260,000 c 2,650,000 c 7,950,000
Marshall and Ilsley,
Sr. Unscd. Notes 5.63 8/17/09 2,765,000 1,395,000 325,000 2,945,000 7,430,000
Morgan Stanley,
Notes 3.88 1/15/09 690,000 690,000
NB Capital Trust IV,
Gtd. Cap. Secs. 8.25 4/15/27 1,000,000 180,000 1,180,000
Northern Rock,
Sub. Notes 5.60 4/29/49 975,000 b,c 975,000
Northern Rock,
Sub. Notes 5.60 4/30/49 350,000 b,c 350,000 b,c 700,000
Northern Rock,
Sub. Notes 6.59 6/28/49 1,130,000 b,c 1,175,000 b,c 2,305,000
Northern Rock,
Sub. Notes 6.59 6/29/49 215,000 b,c 215,000
Popular North America,
Notes 6.05 12/12/07 1,315,000 c 125,000 c 1,815,000 c 3,255,000
Regions Financial,
Sr. Notes 5.44 8/8/08 1,450,000 c 1,450,000
Resona Bank,
Notes 5.85 9/29/49 385,000 b,c 385,000
Royal Bank of Scotland,
Bonds 6.99 10/5/49 1,825,000 b,c 1,850,000b,c,g 3,675,000
Royal Bank of Scotland,
Bonds 6.99 10/29/49 1,045,000 b,c,g 290,000 b,c,g 1,335,000
Shinsei Finance Cayman,
Jr. Sub. Bonds 6.42 1/29/49 795,000 b,c 795,000
Societe Generale,
Sub. Notes 5.92 4/29/49 330,000 b,c 330,000
Sovereign Bancorp,
Sr. Notes 4.80 9/1/10 925,000 c 925,000
Sovereign Bancorp,
Sr. Unscd. Notes 5.44 3/23/10 2,105,000 c 585,000 c 250,000 c 1,850,000 c 4,790,000
Sovereign Bancorp,
Sr. Notes 5.90 3/1/09 2,145,000 c 195,000 c 2,965,000 c 5,305,000
SunTrust Preferred Capital I,
Bank Gtd. Notes 5.85 12/31/49 2,875,000 c 705,000 a,b,c 330,000 c 3,125,000 c 7,035,000
USB Capital IX,
Gtd. Notes 6.19 4/15/49 5,585,000 a,c 1,415,000 c 795,000 a,c 6,410,000 c 14,205,000
Wachovia,
Sr. Notes 3.63 2/17/09 155,000 155,000
Wachovia Bank,
Sub. Notes 5.00 8/15/15 850,000 850,000
Wachovia,
Sub. Notes 6.38 1/15/09 915,000 915,000
Washington Mutual,
Notes 5.66 1/15/10 810,000 c 810,000
Wells Fargo & Co.,
Notes 3.13 4/1/09 4,195,000 795,000 4,500,000 9,490,000
Wells Fargo Bank N.A.,
Sub. Notes 7.55 6/21/10 1,895,000 2,855,000 1,870,000 6,620,000
Wells Fargo & Co.,
Sub. Notes 6.38 8/1/11 540,000 540,000
Western Financial Bank,
Sub. Debs. 9.63 5/15/12 1,695,000 165,000 2,390,000 4,250,000
World Savings Bank,
Sr. Notes 4.50 6/15/09 4,065,000 330,000 4,280,000 8,675,000
Zions Bancorporation,
Sr. Unscd. Notes 5.48 4/15/08 2,350,000 c 620,000 c 105,000 c 3,075,000
Zions Bancorporation,
Sub. Notes 6.00 9/15/15 825,000 825,000
Building & Construction--.5%
American Standard,
Gtd. Notes 7.38 2/1/08 1,530,000 145,000 2,115,000 3,790,000
Centex,
Sr. Unscd. Notes 4.75 1/15/08 725,000 65,000 1,010,000 1,800,000
D.R. Horton,
Gtd. Notes 5.88 7/1/13 1,365,000 120,000 1,870,000 3,355,000
D.R. Horton,
Sr. Unsub. Notes 6.00 4/15/11 15,000
Masco,
Sr. Unscd. Notes 6.00 3/12/10 1,390,000 c 410,000 c 140,000 c 1,620,000 c 3,560,000
Owens Corning,
Gtd. Notes 6.50 12/1/16 210,000 210,000
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 10.13 9/1/08 309,000 206,000 29,000 420,000 964,000
ICI Wilmington,
Gtd. Notes 4.38 12/1/08 725,000 725,000
Lubrizol,
Sr. Notes 4.63 10/1/09 815,000 815,000
RPM International,
Sr. Notes 4.45 10/15/09 1,140,000 125,000 1,415,000 2,680,000
Rohm and Haas Holdings,
Unsub. Notes 5.60 3/15/13 220,000 220,000
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 700,000 b,c 200,000 b,c 70,000 b,c 970,000
ERAC USA Finance,
Notes 7.95 12/15/09 760,000 b 360,000 b 100,000 b 1,220,000
ERAC USA Finance,
Bonds 5.60 5/1/15 550,000 b 550,000
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 4.25 7/10/43 1,424,590 1,424,590
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 5.12 7/11/43 300,000 300,000
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 5.71 12/25/33 505,134 b,c 303,081 b,c 690,350 b,c 1,498,565
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 5.49 4/25/34 636,882 b,c 303,277 b,c 940,159
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 6.33 4/25/34 192,076 b,c 283,059 b,c 475,135
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 5.53 11/25/35 1,538,477 b,c 145,067 b,c 2,171,428 b,c 3,854,972
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 6.23 11/25/35 76,351 b,c 76,351
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 8.13 11/25/35 381,756 b,c 190,878 b,c 76,351 b,c 534,458 b,c 1,183,443
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 8.63 1/25/36 186,517 b,c 186,517
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 5.78 1/25/36 426,916 b,c 82,896 b,c 911,859 b,c 1,421,671
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 6.60 7/25/36 673,353 b,c 673,353
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 7.83 7/25/36 231,465 b,c 336,677 b,c 568,142
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 5.40 4/25/36 397,251 b,c 397,251
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 5.41 1/25/37 1,711,777 b,c 182,474 b,c 2,337,402 b,c 4,231,653
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 4.24 8/13/39 295,000 295,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 4.25 7/11/42 1,125,000 1,550,000 2,675,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 4.57 7/11/42 120,000 120,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 4.56 2/13/42 1,365,000 125,000 1,900,000 3,390,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 5.52 9/11/41 350,000 350,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 5.87 9/11/38 715,000 c 715,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 5.53 10/12/41 775,000 775,000
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 6.26 10/15/30 744,322 651,281 88,388 790,842 2,274,833
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 6.60 12/19/29 35,072 35,072
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 5.41 1/15/46 580,000 580,000
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 5.94 5/15/23 2,285,000 b,c 725,000 b,c 20,000 b,c 3,150,000 b,c 6,180,000
Crown Castle Towers,
Ser. 2005-1A, Cl. D 5.61 6/15/35 1,290,000 b 445,000 b 115,000 b 1,815,000 b 3,665,000
Crown Castle Towers,
Ser. 2006-1A, Cl. B 5.36 11/15/36 275,000 b 275,000
Crown Castle Towers,
Ser. 2006-1A, Cl. C 5.47 11/15/36 730,000 b 730,000
Crown Castle Towers,
Ser. 2006-1A, Cl. D 5.77 11/15/36 745,000 b 550,000 b 75,000 b 960,000 b 2,330,000
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 6.24 11/12/31 114,944 114,944
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 6.41 6/10/31 291,074 291,074
Global Signal Trust,
Ser. 2006-1, Cl. D 6.05 2/15/36 1,650,000 b 580,000 b 160,000 b 2,275,000 b 4,665,000
Global Signal Trust,
Ser. 2006-1, Cl. E 6.50 2/15/36 400,000 b 320,000 b 35,000 b 550,000 b 1,305,000
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 4.22 4/10/40 1,075,000 1,475,000 2,550,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 6.05 3/6/20 1,630,000 b,c 1,630,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 6.24 3/6/20 610,000 b,c 610,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 6.28 3/6/20 2,605,000 b,c 305,000 b,c 2,770,000 b,c 5,680,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 6.32 3/6/20 1,415,000 b,c 150,000 b,c 1,545,000 b,c 3,110,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 6.85 3/6/20 915,000 b,c 350,000 b,c 95,000 b,c 995,000 b,c 2,355,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 7.10 3/6/20 3,060,000 b,c 330,000 b,c 3,335,000 b,c 6,725,000
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 5.44 3/10/39 1,450,000 1,450,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 4.30 1/15/38 540,000 540,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 5.20 12/15/44 1,250,000 1,250,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 6.07 4/15/45 710,000 c 710,000
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 3.89 5/28/40 27,970 b 27,970
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 4.96 7/12/38 885,000 885,000
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 5.40 11/12/37 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 7.42 3/15/30 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 6.71 12/15/31 115,699 115,699
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 7.02 3/15/32 28,077 28,077
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 5.09 10/12/52 1,000,000 1,000,000
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 5.33 12/15/43 1,540,000 1,540,000
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 5.71 7/12/44 1,550,000 1,550,000
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 5.80 6/11/42 570,000 c 570,000
Morgan Stanley Dean Witter Capital I,
Ser. 2001-PPM, Cl. A3 6.54 2/15/31 102,547 102,547
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 6.48 8/20/30 952,391 404,440 107,633 1,014,362 2,478,826
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 5.85 11/15/36 695,000 b 235,000 b 70,000 b 890,000 b 1,890,000
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 6.10 8/15/39 495,000 c 495,000
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3.83 1/25/35 3,499,442 b 2,232,099 b 328,989 b 4,861,500 b 10,922,030
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 7.52 6/1/66 1,215,000 c 396,000 c 240,000 c 1,590,000 c 3,441,000
Amvescap,
Gtd. Notes 5.63 4/17/12 2,780,000 380,000 290,000 3,165,000 6,615,000
Bear Stearns,
Sr. Unscd. Notes 5.50 8/15/11 785,000 785,000
Boeing Capital,
Sr. Notes 7.38 9/27/10 890,000 890,000
Capmark Financial Group,
Gtd. Notes 5.88 5/10/12 3,245,000 b 860,000 b 340,000 b 4,095,000 b 8,540,000
CIT Group,
Sr. Notes 5.71 8/15/08 2,035,000 c 185,000 c 2,820,000 c 5,040,000
Countrywide Financial,
Gtd. Notes 5.50 1/5/09 260,000 c 260,000
Countrywide Financial,
Gtd. Notes 5.80 6/7/12 540,000 540,000
Countrywide Home Loans,
Gtd. Notes 3.25 5/21/08 375,000 375,000
Countrywide Home Loans,
Notes 4.13 9/15/09 1,445,000 2,010,000 3,455,000
Credit Suisse First Boston USA,
Notes 3.88 1/15/09 790,000 315,000 560,000 1,665,000
Credit Suisse Guernsey,
Jr. Sub. Notes 5.86 5/29/49 670,000 c 670,000
Credit Suisse USA,
Sr. Unsub. Notes 5.50 8/16/11 1,215,000 a 1,215,000
FCE Bank,
Notes EUR 5.72 9/30/09 2,155,000 c,d 2,155,000
FCE Bank,
Notes EUR 5.73 9/30/09 1,980,000 c,d 235,000 c,d 2,215,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 2,985,000 2,675,000 5,660,000
Ford Motor Credit,
Unscd. Notes 7.38 10/28/09 1,445,000 1,445,000
Fuji JGB Investment,
Sub. Bonds 9.87 12/29/49 1,175,000 b,c 750,000 b,c 100,000 b,c 1,620,000 b,c 3,645,000
General Electric Capital,
Sr. Unscd. Notes, Ser. A 4.13 9/1/09 1,053,000 148,000 1,111,000 2,312,000
General Electric Capital,
Notes, Ser. A 4.63 9/15/09 1,200,000 170,000 1,265,000 2,635,000
Glencore Funding,
Gtd. Notes 6.00 4/15/14 1,280,000 b 440,000 b 140,000 b 1,630,000 b 3,490,000
GMAC,
Unsub. Notes 6.81 5/15/09 1,700,000 c 200,000 c 1,810,000 c 3,710,000
Goldman Sachs Capital II,
Gtd. Bonds 5.79 12/29/49 1,640,000 c 495,000 c 170,000 c 1,825,000 c 4,130,000
Goldman Sachs Group,
Sub. Notes 5.63 1/15/17 330,000 330,000
HSBC Finance Capital Trust IX,
Gtd. Notes 5.91 11/30/35 400,000 c 400,000
HSBC Finance,
Notes 5.50 1/19/16 800,000
HSBC Finance,
Sr. Notes 6.04 9/14/12 3,060,000 c 280,000 c 4,195,000 c 7,535,000
International Lease Finance,
Sr. Unscd. Notes 5.72 5/24/10 125,000 c 125,000
Janus Capital Group,
Notes 6.25 6/15/12 1,955,000 545,000 345,000 2,125,000 4,970,000
Jefferies Group,
Sr. Unscd. Debs. 6.25 1/15/36 1,195,000 1,195,000
Jefferies Group,
Sr. Unscd. Notes 7.75 3/15/12 805,000 140,000 1,050,000 1,995,000
John Deere Capital,
Notes 5.66 9/1/09 770,000 c 555,000 a,b 80,000 c 1,405,000
JPMorgan Chase & Co.,
Sub. Notes 5.13 9/15/14 1,460,000 1,460,000
Kaupthing Bank,
Sr. Notes 6.06 1/15/10 2,295,000 b,c 235,000 b,c 2,960,000 b,c 5,490,000
Kaupthing Bank,
Sub. Notes 7.13 5/19/16 350,000 b 350,000
Lehman Brothers Holdings,
Sr. Notes 6.00 7/19/12 315,000 a 315,000
Leucadia National,
Sr. Unscd. Notes 7.00 8/15/13 1,100,000 115,000 1,520,000 2,735,000
MBNA,
Notes 6.13 3/1/13 1,345,000 1,345,000
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 8.28 12/1/26 905,000 80,000 1,300,000 2,285,000
Merrill Lynch,
Sub. Notes 5.70 5/2/17 1,025,000 1,025,000
Merrill Lynch & Co.,
Notes, Ser. C 4.25 2/8/10 4,302,000 793,000 4,522,000 9,617,000
Merrill Lynch & Co.,
Notes, Ser. C 5.58 2/5/10 755,000 c 80,000 c 887,000 c 1,722,000
Merrill Lynch & Co.,
Sr. Unscd. Notes 6.05 8/15/12 1,725,000 205,000 1,840,000 3,770,000
Morgan Stanley,
Notes 3.88 1/15/09 4,900,000 5,160,000 10,060,000
Morgan Stanley,
Sr. Unscd. Notes 5.75 8/31/12 1,175,000 950,000 165,000 1,235,000 3,525,000
Morgan Stanley,
Sub. Notes 4.75 4/1/14 1,919,000 1,919,000
MUFG Capital Finance 1,
Bank Gtd. Bonds 6.35 7/29/49 590,000 c 590,000
Nuveen Investments,
Sr. Unscd. Notes 5.00 9/15/10 93,000 93,000
NIPSCO Capital Markets,
Notes 7.86 3/27/17 75,000 75,000
Residential Capital,
Gtd. Notes 6.22 6/9/08 75,000 c 75,000
Residential Capital,
Gtd. Notes 7.80 11/21/08 1,155,000 c 120,000 c 865,000 c 2,140,000
Residential Capital,
Gtd. Notes 7.88 6/30/15 370,000 44,000 c 398,000 c 812,000
Residential Capital,
Gtd. Notes 9.19 4/17/09 2,070,000 b,c 205,000 b,c 2,855,000 b,c 5,130,000
SB Treasury,
Jr. Sub. Bonds 9.40 12/29/49 2,390,000 b,c 280,000 b,c 3,330,000 b,c 6,000,000
SLM,
Unscd. Notes, Ser. A 4.50 7/26/10 1,425,000 a 750,000 180,000 1,350,000 3,705,000
SLM,
Unscd. Notes, Ser. A 5.50 7/27/09 2,740,000 a,c 285,000 c 3,105,000 c 6,130,000
SMFG Preferred Capital,
Sub. Bonds 6.08 1/29/49 835,000 b,c 835,000
Tokai Preferred Capital,
Bonds 9.98 12/29/49 2,240,000 b,c 220,000 b,c 3,115,000 b,c 5,575,000
Wachovia,
Sr. Notes 3.63 2/17/09 1,100,000 1,160,000 2,260,000
Windsor Financing,
Gtd. Notes 5.88 7/15/17 580,515 b 181,952 b 801,457 b 1,563,924
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 5.38 6/1/15 154,000 15,000 218,000 387,000
Wellpoint,
Sr. Unsub. Notes 5.88 6/15/17 390,000 390,000
Electric Utilities--2.5%
AES,
Sr. Notes 9.38 9/15/10 395,000 20,000 460,000 875,000
Appalachian Power,
Sr. Unscd. Notes 5.65 8/15/12 920,000 110,000 1,075,000 2,105,000
Cinergy,
Debs. 6.53 12/16/08 1,015,000 1,405,000 2,420,000
Cleveland Electric Illumination,
Sr. Unscd. Notes 5.70 4/1/17 825,000 825,000
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 5.30 12/1/16 675,000 675,000
Consumers Energy,
First Mortgage Bonds, Ser. O 5.00 2/15/12 1,160,000 1,160,000
Dominion Resources,
Sr. Unscd. Notes, Ser. B 5.76 11/14/08 1,335,000 c 140,000 c 1,725,000 c 3,200,000
Enel Finance Internation,
Gtd. Notes 5.70 1/15/13 1,920,000 b 275,000 b 275,000 b 1,985,000 b 4,455,000
FirstEnergy,
Unsub. Notes, Ser. B 6.45 11/15/11 2,580,000 570,000 3,530,000 a 6,680,000
FPL Group Capital,
Gtd. Debs. 5.63 9/1/11 1,570,000 1,570,000
Gulf Power,
Sr. Unsub. Notes, Ser. M 5.30 12/1/16 800,000 800,000
IPALCO Enterprises,
Scd. Notes 8.63 11/14/11 75,000 c 75,000
National Grid,
Sr. Unscd. Notes 6.30 8/1/16 1,010,000 1,000,000 150,000 1,345,000 3,505,000
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 7.75 10/1/08 845,000 90,000 940,000 1,875,000
NiSource Finance,
Gtd. Notes 6.06 11/23/09 1,675,000 c 385,000 c 275,000 c 2,030,000 c 4,365,000
NiSource Finance,
Gtd. Notes 5.25 9/15/17 650,000 650,000
Nisource Finance,
Sr. Unscd. Notes 6.40 3/15/18 700,000 95,000 735,000 1,530,000
Ohio Power,
Unscd. Notes 5.54 4/5/10 1,400,000 c 615,000 c 145,000 c 1,605,000 c 3,765,000
Southern,
Sr. Unsub. Notes, Ser. A 5.30 1/15/12 475,000 475,000
TXU Electric Delivery,
Bonds 6.07 9/16/08 4,440,000 b,c 460,000 b,c 5,175,000 b,c 10,075,000
TXU,
Sr. Notes, Ser. O 4.80 11/15/09 2,335,000 145,000 3,420,000 5,900,000
TXU,
Unscd. Notes, Ser. C 6.38 1/1/08 65,000 65,000
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 5.75 2/15/11 475,000 300,000 45,000 565,000 1,385,000
Allied Waste North America,
Scd. Notes 6.38 4/15/11 445,000 240,000 50,000 515,000 1,250,000
Oakmont Asset Trust,
Notes 4.51 12/22/08 1,265,000 b 130,000 b 1,630,000 b 3,025,000
Republic Services,
Sr. Notes 6.75 8/15/11 610,000 610,000
USA Waste Services,
Sr. Unscd. Notes 7.00 7/15/28 355,000 355,000
Waste Management,
Sr. Unsub. Notes 6.50 11/15/08 950,000 1,280,000 2,230,000
Food & Beverages--.5%
H.J. Heinz,
Notes 6.43 12/1/20 1,625,000 b 425,000 b 150,000 b 2,250,000 b 4,450,000
Kraft Foods,
Sr. Unscd. Notes 6.00 2/11/13 1,210,000 150,000 200,000 1,290,000 2,850,000
Safeway,
Sr. Unscd. Notes 4.13 11/1/08 930,000 85,000 1,295,000 2,310,000
Tyson Foods,
Sr. Unscd. Notes 6.85 4/1/16 800,000 c 520,000 a,c 80,000 c 1,100,000 c 2,500,000
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 8.75 7/18/12 9,740,000 b,d 1,110,000 b,d 10,360,000 b,d 21,210,000
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 5.84 6/16/08 2,080,000 c 1,185,000 c 220,000 c 2,655,000 c 6,140,000
Export-Import Bank of Korea,
Sr. Notes 4.50 8/12/09 1,075,000 1,075,000
Federal Republic of Brazil,
Unscd. Bonds BRL 12.50 1/5/16 5,410,000 a,d 1,750,000 a,d 790,000 a,d 5,510,000 a,d 13,460,000
Mexican Bonos,
Bonds, Ser. M MXN 9.00 12/22/11 25,645,000 d 2,600,000 d 35,640,000 d 63,885,000
Mexican Bonos,
Bonds, Ser. M 30 MXN 10.00 11/20/36 11,615,000 d 1,220,000 d 12,840,000 d 25,675,000
Republic of Argentina,
Bonds 5.39 8/3/12 11,230,000 c 2,065,000 c 1,560,000 c 11,925,000 c 26,780,000
Republic of Argentina,
Bonds, Ser. VII 7.00 9/12/13 720,000 720,000
Republic of El Salvador,
Unscd. Notes 8.50 7/25/11 60,000 b 60,000
Russian Federation,
Unsub. Bonds 8.25 3/31/10 3,890,107 b 973,360 b 426,678 b 5,046,806 b 10,336,951
Health Care--.7%
American Home Products,
Unscd. Notes 6.95 3/15/11 580,000 c 580,000
Baxter International,
Sr. Unscd. Notes 5.20 2/16/08 1,528,000 140,000 1,668,000
Community Health Systems,
Sr. Notes 8.88 7/15/15 310,000 b 310,000
Coventry Health Care,
Sr. Unscd. Notes 5.95 3/15/17 400,000 400,000
HCA,
Sr. Unscd. Notes 7.88 2/1/11 1,140,000 115,000 1,470,000 2,725,000
HCA,
Sr. Unscd. Notes 8.75 9/1/10 1,395,000 150,000 1,470,000 3,015,000
Medco Health Solutions,
Sr. Unscd. Notes 7.25 8/15/13 3,276,000 275,000 60,000 3,611,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 220,000 b 220,000
Tenet Healthcare,
Sr. Notes 6.38 12/1/11 1,205,000 125,000 1,440,000 2,770,000
Teva Pharmaceutical Finance,
Gtd. Notes 6.15 2/1/36 565,000 565,000
UnitedHealth Group,
Sr. Unscd. Notes 5.38 3/15/16 385,000 385,000
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 9.75 3/15/14 200,000 e 15,000 e 260,000 e 475,000
MGM Mirage,
Gtd. Notes 8.38 2/1/11 350,000 a 350,000
MGM Mirage,
Gtd. Notes 8.50 9/15/10 1,575,000 155,000 2,055,000 3,785,000
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 6.13 2/15/13 1,000,000 20,000 1,355,000 2,375,000
Machinery--.2%
Atlas Copco,
Bonds 5.60 5/22/17 290,000 b 290,000
Case New Holland,
Gtd. Notes 7.13 3/1/14 650,000 320,000 65,000 780,000 1,815,000
Terex,
Gtd. Notes 7.38 1/15/14 1,110,000 115,000 1,540,000 2,765,000
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 6.88 1/15/29 530,000 60,000 650,000 1,240,000
Media--1.3%
AOL Time Warner,
Gtd. Notes 6.75 4/15/11 900,000 900,000
British Sky Broadcasting,
Gtd. Notes 6.88 2/23/09 900,000 900,000
Clear Channel Communications,
Sr. Unscd. Notes 4.50 1/15/10 1,700,000 2,300,000 4,000,000
Comcast,
Gtd. Notes 5.66 7/14/09 4,385,000 c 450,000 c 5,235,000 c 10,070,000
Comcast,
Gtd. Notes 5.50 3/15/11 990,000 990,000
Comcast,
Gtd. Notes 6.30 11/15/17 1,465,000 205,000 1,550,000 3,220,000
News America Holdings,
Gtd. Debs. 7.70 10/30/25 775,000 2,975,000 3,750,000
News America,
Gtd. Notes 6.15 3/1/37 2,800,000 435,000 3,235,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,613,000 b 1,613,000
Time Warner,
Gtd. Notes 5.73 11/13/09 290,000 c
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 6.65 8/15/11 810,000 810,000
Anadarko Petroleum,
Sr. Unscd. Notes 6.09 9/15/09 534,000 c 534,000
ANR Pipeline,
Sr. Notes 7.00 6/1/25 50,000 50,000
BJ Services,
Sr. Unscd. Notes 5.75 6/1/08 4,850,000 c 500,000 c 6,750,000 c 12,100,000
Chesapeake Energy,
Gtd. Notes 7.50 6/15/14 155,000 155,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 4.00 10/15/07 4,000,000 405,000 4,720,000 9,125,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 5.60 10/15/14 1,395,000 1,395,000
Gazprom,
Sr. Unscd. Notes 6.51 3/7/22 715,000 b 715,000
Northwest Pipeline,
Sr. Unscd. Notes 6.63 12/1/07 210,000 210,000
Packaging & Containers--.0%
Ball,
Gtd. Notes 6.88 12/15/12 205,000 205,000
Crown Americas/Capital,
Gtd. Notes 7.63 11/15/13 575,000 575,000
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 6.75 6/15/12 1,095,000 b 105,000 b 1,530,000 b 2,730,000
Temple-Inland,
Gtd. Notes 6.88 1/15/18 1,100,000 700,000 c 105,000 c 1,525,000 3,430,000
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 7.63 10/15/25 760,000 75,000 910,000 1,745,000
Allstate,
Jr. Sub. Debs. 6.50 5/15/57 270,000 a,c 270,000
American International Group,
Sr. Notes 5.05 10/1/15 470,000 470,000
Chubb,
Sr. Unscd. Notes 5.47 8/16/08 2,375,000 1,600,000 250,000 3,350,000 7,575,000
Hartford Financial Services
Group,
Sr. Unscd. Notes 5.55 8/16/08 875,000 730,000 1,190,000 2,795,000
Hartford Financial Services
Group,
Sr. Notes 5.66 11/16/08 1,950,000 250,000 2,200,000
Leucadia National,
Sr. Unscd. Notes 7.13 3/15/17 3,465,000 355,000 3,900,000 7,720,000
Lincoln National,
Sr. Unscd. Notes 5.78 3/12/10 720,000 c 240,000 c 960,000
Metlife,
Sr. Notes 5.50 6/15/14 2,195,000 2,195,000
Nippon Life Insurance,
Notes 4.88 8/9/10 1,350,000 b 850,000 b 1,900,000 b 4,100,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,545,000 b 1,545,000
Phoenix Cos.,
Sr. Unscd. Notes 6.68 2/16/08 735,000 355,000 70,000 1,025,000 2,185,000
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 3.00 6/15/08 1,000,000 85,000 1,085,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.25 5/1/15 180,000 a 900,000 230,000 a 1,310,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.63 8/15/14 340,000 455,000 795,000
Arden Realty,
Notes 5.25 3/1/15 675,000 675,000
Avalonbay Communities,
Sr. Unscd. Notes 6.63 9/15/11 370,000 370,000
Boston Properties,
Sr. Notes 5.63 4/15/15 810,000 85,000 1,120,000 2,015,000
Boston Properties,
Sr. Notes 5.00 6/1/15 810,000 810,000
Commercial Net Lease Realty,
Sr. Unscd. Notes 6.15 12/15/15 1,100,000 375,000 100,000 1,505,000 3,080,000
Duke Realty,
Notes 3.50 11/1/07 925,000 890,000 70,000 1,055,000 2,940,000
Duke Realty,
Sr. Unscd. Notes 5.63 8/15/11 350,000 350,000
Duke Realty,
Sr. Notes 5.88 8/15/12 2,210,000 255,000 2,465,000
Duke Realty,
Sr. Notes 6.95 3/15/11 170,000 170,000
ERP Operating,
Notes 4.75 6/15/09 560,000 55,000 1,000,000 1,615,000
ERP Operating,
Unscd. Notes 5.50 10/1/12 340,000 340,000
ERP Operating,
Notes 5.25 9/15/14 150,000 150,000
ERP Operating,
Notes 5.13 3/15/16 825,000 a 615,000 a 75,000 1,125,000 a 2,640,000
ERP Operating,
Unscd. Notes 5.38 8/1/16 255,000 255,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.40 12/1/13 650,000 50,000 825,000 1,525,000
Federal Realty Investment Trust,
Notes 6.00 7/15/12 570,000 155,000 55,000 760,000 1,540,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.65 6/1/16 550,000 550,000
Healthcare Realty Trust,
Sr. Unscd. Notes 5.13 4/1/14 2,820,000 875,000 3,800,000 7,495,000
Healthcare Realty Trust,
Unscd. Notes 8.13 5/1/11 225,000 225,000
HRPT Properties Trust,
Sr. Unscd. Notes 6.29 3/16/11 1,350,000 c 412,000 c 125,000 c 1,788,000 c 3,675,000
Istar Financial,
Sr. Unscd. Notes 6.07 3/9/10 2,935,000 c 1,100,000 c 300,000 c 3,435,000 c 7,770,000
Liberty Property,
Sr. Unscd. Notes 5.50 12/15/16 320,000 320,000
Mack-Cali Realty,
Bonds 5.80 1/15/16 690,000 690,000
Mack-Cali Realty,
Notes 5.25 1/15/12 580,000 675,000 55,000 800,000 2,110,000
Mack-Cali Realty,
Unscd. Notes 5.05 4/15/10 1,600,000 400,000 335,000 2,300,000 4,635,000
Mack-Cali Realty,
Sr. Unscd. Notes 5.13 1/15/15 75,000 75,000
Regency Centers,
Gtd. Notes 5.25 8/1/15 1,450,000 a 220,000 125,000 2,000,000 3,795,000
Regency Centers,
Sr. Unscd. Notes 5.88 6/15/17 185,000 185,000
Simon Property Group,
Notes 4.60 6/15/10 1,098,000 105,000 1,203,000
Simon Property Group,
Notes 4.88 8/15/10 850,000 75,000 1,180,000 2,105,000
Simon Property Group,
Unsub. Notes 5.00 3/1/12 1,000,000 1,000,000
Simon Property Group,
Unscd. Notes 5.75 5/1/12 200,000 200,000
Socgen Real Estate,
Bonds 7.64 12/29/49 1,590,000 b,c 1,590,000
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 5.75 12/25/35 598,112 b,c 55,210 b,c 653,322
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 6.75 4/20/31 154,643 154,643
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 4.15 7/25/34 270,857 c 270,857
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 6.83 4/25/36 187,960 b,c 187,960
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 8.08 4/25/36 388,451 b,c 522,112 b,c 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 5.77 4/25/36 375,921 b,c 425,208 b,c 801,129
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 5.59 9/25/36 390,766 303,929 c 43,418 c 738,113
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 5.99 9/25/36 1,200,000 120,000 c 1,600,000 c 2,920,000
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 4.92 8/25/35 96,192 c 138,517 c 9,619 c 130,822 c 375,150
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 5.25 8/25/35 1,650,000 c 1,650,000
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 5.70 3/25/36 45,828 c 45,828
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 5.85 10/25/32 329,460 c 329,460
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 5.00 5/25/18 230,943 b 230,943
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 5.50 1/25/36 922,845 c 922,845
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 6.00 11/25/36 1,912,021 c 74,536 c 1,986,557
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 6.25 10/25/34 5,518,007 3,705,877 3,358,118 12,582,002
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 5.88 2/25/36 1,291,836 c 121,956 c 1,788,695 c 3,202,487
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 6.63 2/25/36 1,038,889 c 90,338 c 1,460,768 c 2,589,995
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 5.48 5/25/36 704,489 c 474,356 c 65,752 c 962,802 c 2,207,399
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 6.05 6/25/36 399,271 c 498,997 c 898,268
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 6.05 6/25/36 119,759 c 119,759
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 6.14 9/25/36 1,087,488 c 1,268,736 c 90,624 c 1,449,984 c 3,896,832
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 5.71 12/25/36 890,000 c 105,000 c 1,000,000 c 1,995,000
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 4.49 2/25/35 744,909 c 65,521 c 1,036,578 c 1,847,008
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 5.89 10/25/36 695,000 c 70,000 c 890,000 c 1,655,000
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 4.86 2/25/35 200,000 c 200,000
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 4.98 5/25/35 1,725,000 c 775,000 c 150,000 c 2,355,000 c 5,005,000
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 5.16 3/25/35 1,195,000 c 779,000 c 115,000 c 1,630,000 c 3,719,000
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 6.73 4/28/24 3,287 b,c 3,287
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 4.75 3/25/19 1,126,404 1,126,404
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 5.86 4/30/30 1,691 c 1,691
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 5.21 10/25/37 697,702 b,c 697,702
Washington Mutual,
Ser. 2004-AR7, Cl. A6 3.94 7/25/34 135,000 c 135,000
Washington Mutual,
Ser. 2003-AR10, Cl. A6 4.06 10/25/33 203,000 c 203,000
Washington Mutual,
Ser. 2004-AR9, Cl. A7 4.15 8/25/34 165,000 c 165,000
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 4.67 4/25/35 3,325,000 c 1,025,000 c 4,525,000 c 8,875,000
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4.54 2/25/35 4,288,950 c 418,843 c 5,696,261 c 10,404,054
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 5.75 2/25/33 1,800,000 150,000 2,500,000 4,450,000
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 5.92 6/1/10 1,055,000 c 370,000 c 110,000 c 1,155,000 c 2,690,000
CVS Caremark,
Sr. Unscd. Notes 5.75 8/15/11 255,000 255,000
Delhaize Group,
Sr. Unscd. Notes 6.50 6/15/17 190,000 b 190,000
Federated Retail Holding,
Gtd. Bonds 5.35 3/15/12 155,000 155,000
Federated Retail Holding,
Gtd. Notes 5.90 12/1/16 265,000 265,000
Home Depot,
Sr. Unscd. Notes 5.82 12/16/09 815,000 c 85,000 c 1,015,000 c 1,915,000
Lowe's Companies,
Sr. Unscd. Notes 5.60 9/15/12 1,270,000 165,000 180,000 1,325,000 2,940,000
May Department Stores,
Unscd. Notes 4.80 7/15/09 45,000 45,000
May Department Stores,
Gtd. Notes 5.95 11/1/08 760,000 1,035,000 1,795,000
Saks,
Gtd. Notes 8.25 11/15/08 429 429
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 3.50 10/1/27 525,000 75,000 550,000 1,150,000
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 6.00 6/1/28 595,000 75,000 670,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.31 6/1/34 4,525,000 2,410,000 410,000 5,505,000 12,850,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.54 6/1/34 1,050,000 c 600,000 c 100,000 c 1,500,000 c 3,250,000
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 6.00 6/1/27 1,750,000 160,000 2,420,000 4,330,000
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 6.50 6/1/23 3,255,000 2,250,000 165,000 3,965,000 9,635,000
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 4.50 6/1/23 715,000 460,000 1,175,000
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 7.47 6/1/47 300,000 300,000
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 4.50 10/1/23 1,345,000 190,000 1,415,000 2,950,000
Steel--.0%
US Steel,
Sr. Unsub. Notes 5.65 6/1/13 320,000 320,000
Telecommunications--2.4%
America Movil,
Gtd. Notes 5.30 6/27/08 455,000 b,c 45,000 b,c 565,000 b,c 1,065,000
AT & T,
Notes 5.46 2/5/10 2,390,000 c 245,000 c 2,930,000 c 5,565,000
AT & T,
Sr. Notes 5.65 5/15/08 2,700,000 c 450,000 c 125,000 c 3,700,000 c 6,975,000
AT & T Wireless,
Sr. Unsub. Notes 8.75 3/1/31 440,000 440,000
AT & T,
Sr. Unscd. Notes 7.30 11/15/11 740,000 c 740,000
France Telecom,
Unsub. Notes 7.75 3/1/11 1,280,000 c 110,000 c 1,090,000 c 2,480,000
Intelsat,
Sr. Unscd. Notes 5.25 11/1/08 1,540,000 200,000 1,985,000 3,725,000
KPN,
Sr. Unsub. Bonds 8.38 10/1/30 330,000 330,000
Nextel Communications,
Gtd. Notes, Ser. F 5.95 3/15/14 1,035,000 500,000 95,000 1,405,000 3,035,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 464,000 c 464,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 1,858,000 c 1,858,000
Qwest,
Sr. Notes 7.88 9/1/11 710,000 65,000 1,965,000 2,740,000
Qwest,
Notes 8.88 3/15/12 50,000 c 50,000
Qwest,
Sr. Notes 8.94 6/15/13 100,000 c 1,600,000 c 1,700,000
Sprint Capital,
Gtd. Notes 8.75 3/15/32 1,235,000 190,000 1,315,000 2,740,000
Telefonica Emisiones,
Gtd. Notes 5.89 6/19/09 240,000 c 240,000
Telefonica Emisiones,
Gtd. Notes 5.98 6/20/11 2,425,000 625,000 470,000 3,205,000 6,725,000
Time Warner Cable,
Sr. Unscd. Notes 5.85 5/1/17 1,380,000 b 335,000 b 150,000 b 1,510,000 b 3,375,000
Time Warner,
Gtd. Notes 5.88 11/15/16 2,260,000 265,000 2,410,000 4,935,000
U.S. West Communications,
Notes 5.63 11/15/08 70,000 70,000
Verizon Global Funding,
Notes 7.75 6/15/32 245,000 245,000
Windstream,
Gtd. Notes 8.13 8/1/13 1,435,000 140,000 1,945,000 3,520,000
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 5.75 1/15/11 990,000 700,000 275,000 1,370,000 3,335,000
Transportation--.2%
Ryder System,
Notes 3.50 3/15/09 1,435,000 130,000 1,980,000 3,545,000
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 5.13 8/23/10 13,515,000 13,515,000
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 6.55 10/1/17 509,198 509,198
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 261,236 261,236
4.00%, 10/1/09 76,494 76,494
4.50%, 10/1/09 70,428 70,428
5.00% 1,670,000 f 1,670,000
5.00%, 10/1/18 414,636 414,636
5.50% 59,340,000 f 17,440,000 f 9,195,000 f 63,275,000 f 149,250,000
5.50%, 6/1/34 - 4/1/37 7,605,237 344,620 9,696,625 17,646,482
6.00%, 7/1/37 1,392,268 1,669,764 3,062,032
6.00%, 7/1/17 - 4/1/33 1,788,559 1,788,559
6.50%, 10/1/31 - 3/1/32 89,512 829,072 918,584
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 296,225 296,225
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,550,989 2,163,703 6,714,692
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 4,367,209 j 4,367,209
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 4,617,400 j 4,617,400
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 4,000,000 j 4,000,000
Federal National Mortgage
Association:
5.00% 26,720,000 f 25,365,000 f 1,795,000 f 32,000,000 f 85,880,000
5.50% 5,535,000 f 815,000 f 5,875,000 f 12,225,000
6.00% 100,380,000 f 29,955,000 f 12,150,000 f 100,380,000 f 242,865,000
6.50% 5,515,000 f 645,000 f 5,850,000 f 12,010,000
3.53%, 7/1/10 277,136 277,136
4.00%, 5/1/10 1,377,551 1,377,551
4.06%, 6/1/13 100,000 100,000
5.00%, 7/1/11 - 1/1/22 8,216,200 1,873,938 832,086 10,922,224
5.50%, 8/1/22 - 1/1/37 12,725,081 622,282 2,196,169 19,955,020 35,498,552
6.00%, 1/1/19 - 8/1/37 1,714,218 1,549,871 218,502 5,481,229 8,963,820
6.50%, 11/1/10 - 8/1/37 5,425,907 811,807 7,665,930 13,903,644
7.00%, 9/1/14 - 7/1/32 44,432 67,827 112,259
8.00%, 12/1/25 36,962 36,962
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 275,000
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,192,303 2,049,436 4,459,645 9,701,384
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 154,918 154,918
Government National Mortgage
Association I:
5.50%, 4/15/33 4,510,118 4,510,118
6.50%, 9/15/32 60,822 60,822
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,089 5,089
9.50%, 11/15/17 308,407 308,407
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 190,991 190,991
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,037 2,037
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 68,319 68,319
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 79,659 79,659
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,361,724 120,233 2,481,957
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 313,158 520,626 833,784
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 326,420 259,652 586,072
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 154,829 154,829
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,800,000 5,535,000 10,335,000
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 110,964 110,964
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 105,225 105,225
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 187,617 187,617
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 111,336 111,336
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 151,096 151,096
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 994,099 994,099
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 86,419 86,419
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 60,685 60,685
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,611,293 134,274 2,215,528 3,961,095
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 106,763 106,763
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 806,061 1,128,486 1,934,547
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,255,831 1,742,267 2,998,098
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,285,577 1,792,017 3,077,594
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,184,876 98,740 1,619,331 2,902,947
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,788,493 860,288 158,474 2,490,307 5,297,562
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,348,502 1,348,502
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,401,893 1,168,779 149,206 4,699,984 9,419,862
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,316,705 109,725 1,821,442 3,247,872
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 166,371 166,371
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,675,856 1,675,856
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,147,425 1,147,425
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,426,569 1,426,569
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,572,440 1,572,440
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,240,264 639,976 138,910 1,289,875 3,309,025
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,815,351 877,752 214,451 1,930,057 4,837,611
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 75,000 75,000
Government National Mortgage
Association II:
5.50%, 7/20/30 66,101 c 330,573 c 396,674
6.38%, 4/20/30 258,769 c 258,769
6.50%, 2/20/31 - 7/20/31 271,775 271,775
7.00%, 11/20/29 757 757
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,832,000 a 700,000 9,532,000
5.00%, 5/15/37 594,000 g 12,913,000 682,000 g 1,653,000 g 15,842,000
U.S. Treasury Notes:
3.88%, 9/15/10 11,535,000 4,720,000 a 230,000 a 16,485,000
4.13%, 8/31/12 7,730,000 7,730,000
4.25%, 1/15/11 25,505,000 a 1,540,000 a 27,045,000
4.38%, 12/31/07 8,160,000 h 8,160,000
4.50%, 5/15/10 730,000 a 730,000
4.50%, 9/30/11 4,580,000 a 4,580,000
4.50%, 4/30/12 14,310,000 a 12,590,000 a 14,555,000 a 41,455,000
4.50%, 5/15/17 4,625,000 a 510,000 a 5,260,000 a 10,395,000
4.63%, 12/31/11 6,410,000 a 6,410,000
4.63%, 11/15/16 25,790,000 a 7,045,000 a 3,925,000 a 12,425,000 a 49,185,000
4.75%, 8/15/17 5,350,000 g 16,064,000 2,210,000 g 21,021,000 g 44,645,000
5.13%, 6/30/08 8,442,000 a 8,442,000
Total Bonds and Notes
(cost $750,962,326, $390,304,526,
$110,300,634 and $793,545,334
respectively)
Dreyfus Dreyfus
Intermediate Dreyfus Dreyfus Premier Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Bonds and Notes--90.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 511,500 52,313 726,562 1,290,375
Raytheon,
Sr. Notes 379,610 379,610
511,500 379,610 52,313 726,562 1,669,985
Agricultural--.3%
Philip Morris,
Debs. 1,841,723 1,817,085 129,352 2,463,844 6,252,004
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 1,119,161 530,129 117,806 1,207,516 2,974,612
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 422,255 422,255
Capital Auto
Receivables Asset
Trust, Ser. 2005-1, Cl. D 893,812 1,092,437 1,986,249
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 1,072,742 1,072,742
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 477,521 477,521 676,170 1,631,212
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 109,939 109,939
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 997,778 49,889 1,396,889 2,444,556
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 1,126,090 1,126,090
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 1,398,250 1,134,523 124,400 1,975,464 4,632,637
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 713,789 361,852 84,267 763,358 1,923,266
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 681,056 875,644 1,556,700
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 335,620 335,620
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 1,513,955 288,372 240,310 1,634,110 3,676,747
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 201,478 201,478
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 490,403 49,536 539,939
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 464,978 464,978
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 915,563 915,563
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 223,414 223,414
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 81,549 49,590 131,139
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 85,672 54,631 140,303
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 2,051,371 571,205 168,878 2,543,104 5,334,558
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 386,764 94,212 480,976
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 49,330 49,330
11,577,059 6,115,096 2,092,564 12,589,584 32,374,303
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 2,131,810 2,025,702 419,610 2,266,857 6,843,979
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 2,733,047 2,733,047
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 417,155 417,155
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 9,975,770 4,415,265 14,391,035
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 957,200 957,200
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 5,426,033 11,661,644 17,087,677
17,533,613 10,131,214 836,765 13,928,501 42,430,093
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 230,706 230,706
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 900,844 900,844
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 1,595,217 2,266,185 3,861,402
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 239,066 239,066
Centex Home Equity,
Ser. 2006-A, Cl. AV1 157,803 112,595 341,196 611,594
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 1,656,089 136,384 2,289,299 4,081,772
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 901,453 1,583,983 100,448 2,585,884
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 393,295 757,358 1,150,653
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 1,586,741 1,586,741
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 1,624,920 525,709 2,150,629
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 86,768 86,768
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 330,519 330,519
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 247,847 23,730 271,577
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 784,162 784,162
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 163,381 163,381
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 118,564 118,564
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 1,515,566 159,533 1,709,997 3,385,096
First NLC Trust,
Ser. 2005-3, Cl. AV2 311,470 311,470
GSAA Trust,
Ser. 2006-7, Cl. AV1 588,677 588,677
GSAMP Trust,
Ser. 2006-S4, Cl. A1 276,853 276,853
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 183,158 183,158
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 1,254,726 1,254,726
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 615,473 183,211 14,313 812,997
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 749,695 491,354 75,983 967,512 2,284,544
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 428,295 428,295
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 779,583 779,583
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 1,480,711 140,789 2,039,012 3,660,512
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 242,693 242,693
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 87,476 87,476
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 478,518 478,518
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 1,554,088 2,063,946 3,618,034
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 474,908 581,521 1,056,429
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 48,633 48,633
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 536,582 175,421 727,688 1,439,691
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 431,837 532,599 964,436
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 291,529 291,529
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 212,445 291,128 503,573
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 237,842 237,842
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 896,000 1,120,000 2,016,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 312,185 312,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 363,699 363,699
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 653,185 653,185
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 165,036 165,036
13,419,009 15,937,042 1,312,998 14,930,083 45,599,132
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 1,320,343 460,874 59,789 1,893,321 3,734,327
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 36,820 36,820
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 378,996 378,996
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 1,381,597 115,552 1,507,197 3,004,346
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 750,809 1,007,797 1,758,606
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 79,419 79,419
3,452,749 839,870 291,580 4,408,315 8,992,514
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 2,563,945 318,009 1,937,865 4,819,819
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 2,722,676 249,787 3,741,806 6,714,269
DaimlerChrysler N.A. Holding,
Gtd. Notes 1,369,921 134,501 1,917,889 3,422,311
DaimlerChrysler N.A. Holding,
Notes 291,835 64,303 356,138
6,656,542 291,835 766,600 7,597,560 15,312,537
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 959,174 959,174
ERAC USA Finance,
Notes 1,158,526 1,158,526
Goodyear Tire & Rubber,
Sr. Notes 298,688 30,375 384,750 713,813
Banks--6.4% 298,688 30,375 2,502,450 2,831,513
BAC Capital Trust XIV,
Bank Gtd. Notes 2,790,213 447,577 3,052,093 6,289,883
Barclays Bank,
Sub. Notes 251,856 251,856
Barclays Bank,
Jr. Sub. Bonds 127,751 127,751
Capital One Financial,
Sr. Unsub. Notes 5,243,471 536,772 2,485,057 8,265,300
Chevy Chase Bank,
Sub. Notes 1,192,550 469,200 141,738 1,671,525 3,475,013
Chuo Mitsui Trust & Banking,
Sub. Notes 355,903 355,903
Colonial Bank,
Sub. Notes 1,093,312 742,067 247,356 1,513,817 3,596,552
Colonial Bank,
Sub. Notes 400,227 259,887 561,358 1,221,472
Ford Motor Credit,
Sr. Notes 323,661 323,661
Glitnir Banki,
Sub. Notes 460,277 460,277
Greater Bay Bancorp,
Sr. Notes, Ser. B 99,955 99,955
ICICI Bank,
Bonds 704,240 396,755 843,104 1,944,099
Industrial Bank of Korea,
Sub. Notes 2,585,027 270,298 3,248,484 6,103,809
Islandsbanki,
Notes 974,731 86,976 1,244,656 2,306,363
J.P. Morgan & Co.,
Sub. Notes 1,123,959 162,012 1,169,525 2,455,496
Landsbanki Islands,
Sr. Notes 2,465,518 251,584 3,245,427 5,962,529
M&T Bank,
Sr. Unscd. Bonds 248,066 248,066
Manufacturers & Traders Trust,
Sub. Notes 456,210 456,210
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 2,435,285 2,615,677 260,566 2,655,764 7,967,292
Marshall and Ilsley,
Sr. Unscd. Notes 2,779,635 1,402,384 326,720 2,960,588 7,469,327
Morgan Stanley,
Notes 679,786 679,786
NB Capital Trust IV,
Gtd. Cap. Secs. 1,040,740 187,333 1,228,073
Northern Rock,
Sub. Notes 683,362 683,362
Northern Rock,
Sub. Notes 245,309 245,309 490,618
Northern Rock,
Sub. Notes 792,270 823,821 1,616,091
Northern Rock,
Sub. Notes 150,742 150,742
Popular North America,
Notes 1,317,129 125,202 1,817,938 3,260,269
Regions Financial,
Sr. Notes 1,446,646 1,446,646
Resona Bank,
Notes 362,683 362,683
Royal Bank of Scotland,
Bonds 1,858,890 1,884,354 3,743,244
Royal Bank of Scotland,
Bonds 1,064,406 295,385 1,359,791
Shinsei Finance Cayman,
Jr. Sub. Bonds 738,347 738,347
Societe Generale,
Sub. Notes 313,164 313,164
Sovereign Bancorp,
Sr. Notes 904,312 904,312
Sovereign Bancorp,
Sr. Unscd. Notes 2,106,160 585,322 250,138 1,851,019 4,792,639
Sovereign Bancorp,
Sr. Notes 2,142,737 194,794 2,961,872 5,299,403
SunTrust Preferred Capital I,
Bank Gtd. Notes 2,823,612 692,399 324,102 3,069,144 6,909,257
USB Capital IX,
Gtd. Notes 5,593,081 1,417,048 796,150 6,419,275 14,225,554
Wachovia,
Sr. Notes 152,225 152,225
Wachovia Bank,
Sub. Notes 802,992 802,992
Wachovia,
Sub. Notes 929,997 929,997
Washington Mutual,
Notes 785,965 785,965
Wells Fargo & Co.,
Notes 4,085,141 774,181 4,382,154 9,241,476
Wells Fargo Bank N.A.,
Sub. Notes 2,011,709 3,030,834 1,985,170 7,027,713
Wells Fargo & Co.,
Sub. Notes 559,067 559,067
Western Financial Bank,
Sub. Debs. 1,820,242 177,192 2,566,595 4,564,029
World Savings Bank,
Sr. Notes 4,061,699 329,732 4,276,525 8,667,956
Zions Bancorporation,
Sr. Unscd. Notes 2,351,887 620,498 105,084 3,077,469
Zions Bancorporation,
Sub. Notes 829,936 829,936
54,998,034 24,593,751 7,697,261 56,934,574 144,223,620
Building & Construction--.5%
American Standard,
Gtd. Notes 1,537,385 145,700 2,125,209 3,808,294
Centex,
Sr. Unscd. Notes 718,858 64,449 1,001,443 1,784,750
D.R. Horton,
Gtd. Notes 1,224,359 107,636 1,677,326 3,009,321
D.R. Horton,
Sr. Unsub. Notes 13,940 13,940
Masco,
Sr. Unscd. Notes 1,372,454 404,825 138,233 1,599,551 3,515,063
Owens Corning,
Gtd. Notes 203,167 203,167
4,853,056 607,992 469,958 6,403,529 12,334,535
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 320,588 213,725 30,088 435,750 1,000,151
ICI Wilmington,
Gtd. Notes 721,638 721,638
Lubrizol,
Sr. Notes 808,723 808,723
RPM International,
Sr. Notes 1,134,562 124,404 1,408,250 2,667,216
Rohm and Haas Holdings,
Unsub. Notes 219,599 219,599
1,455,150 1,963,685 154,492 1,844,000 5,417,327
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 695,774 198,793 69,577 964,144
ERAC USA Finance,
Notes 804,091 380,885 105,802 1,290,778
ERAC USA Finance,
Bonds 532,711 532,711
1,499,865 1,112,389 175,379 2,787,633
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 1,418,000 1,418,000
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 299,925 299,925
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 497,361 298,417 679,727 1,475,505
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 635,118 302,437 937,555
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 194,878 287,188 482,066
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 1,501,876 141,616 2,119,770 3,763,262
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 76,487 76,487
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 386,342 193,171 77,268 540,878 1,197,659
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 170,644 170,644
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 397,544 77,193 849,123 1,323,860
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 672,791 672,791
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 206,399 300,217 506,616
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 391,209 391,209
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 1,673,874 178,433 2,285,645 4,137,952
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 290,047 290,047
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 1,109,523 1,528,676 2,638,199
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 117,850 117,850
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 1,352,238 123,831 1,882,236 3,358,305
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 350,913 350,913
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 725,088 725,088
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 774,525 774,525
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 749,862 656,129 89,046 796,728 2,291,765
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 34,986 34,986
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 584,474 584,474
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 2,277,353 722,574 19,933 3,139,459 6,159,319
Crown Castle Towers,
Ser. 2005-1A, Cl. D 1,267,141 437,115 112,962 1,782,838 3,600,056
Crown Castle Towers,
Ser. 2006-1A, Cl. B 272,665 272,665
Crown Castle Towers,
Ser. 2006-1A, Cl. C 724,781 724,781
Crown Castle Towers,
Ser. 2006-1A, Cl. D 731,381 539,946 73,629 942,451 2,287,407
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 115,795 115,795
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 291,765 291,765
Global Signal Trust,
Ser. 2006-1, Cl. D 1,638,698 576,027 158,904 2,259,416 4,633,045
Global Signal Trust,
Ser. 2006-1, Cl. E 393,760 315,008 34,454 541,420 1,284,642
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 1,062,635 1,458,034 2,520,669
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 1,618,992 1,618,992
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 600,230 600,230
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 2,561,253 299,878 2,723,482 5,584,613
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 1,391,980 147,560 1,519,865 3,059,405
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 877,317 335,586 91,088 954,023 2,258,014
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 2,952,900 318,450 3,218,275 6,489,625
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 1,436,024 1,436,024
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 526,255 526,255
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 1,253,845 1,253,845
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 726,841 726,841
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 27,821 27,821
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 883,344 883,344
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 301,987 301,987
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 301,196 301,196
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 117,004 117,004
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 28,504 28,504
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 999,951 999,951
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 1,522,603 1,522,603
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 1,570,310 1,570,310
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 579,291 579,291
Morgan Stanley Dean Witter Capital
I, Ser. 2001-PPM, Cl. A3 104,880 104,880
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 956,430 406,155 108,090 1,018,663 2,489,338
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 680,614 230,136 68,551 871,577 1,850,878
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 505,468 505,468
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3,428,013 2,186,538 322,274 4,762,269 10,699,094
29,225,686 26,109,395 3,648,299 36,461,960 95,445,340
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 1,246,951 406,414 246,311 1,631,812 3,531,488
Amvescap,
Gtd. Notes 2,800,903 376,124 292,181 3,188,798 6,658,006
Bear Stearns,
Sr. Unscd. Notes 776,878 776,878
Boeing Capital,
Sr. Notes 950,573 950,573
Capmark Financial Group,
Gtd. Notes 2,958,191 783,989 309,949 3,733,063 7,785,192
CIT Group,
Sr. Notes 2,004,697 182,245 2,778,007 4,964,949
Countrywide Financial,
Gtd. Notes 246,530 246,530
Countrywide Financial,
Gtd. Notes 506,639 506,639
Countrywide Home Loans,
Gtd. Notes 361,461 361,461
Countrywide Home Loans,
Notes 1,328,679 1,848,197 3,176,876
Credit Suisse First Boston USA,
Notes 780,210 311,096 553,060 1,644,366
Credit Suisse Guernsey,
Jr. Sub. Notes 634,880 634,880
Credit Suisse USA,
Sr. Unsub. Notes 1,228,406 1,228,406
FCE Bank,
Notes EUR 2,893,098 2,893,098
FCE Bank,
Notes EUR 2,658,160 315,489 2,973,649
Ford Motor Credit,
Sr. Notes 2,883,967 2,584,459 5,468,426
Ford Motor Credit,
Unscd. Notes 1,417,570 1,417,570
Fuji JGB Investment,
Sub. Bonds 1,206,138 769,875 102,650 1,662,930 3,741,593
General Electric Capital,
Sr. Unscd. Notes, Ser. A 1,038,691 145,989 1,095,903 2,280,583
General Electric Capital,
Notes, Ser. A 1,192,784 168,978 1,257,394 2,619,156
Glencore Funding,
Gtd. Notes 1,262,422 433,957 138,077 1,607,615 3,442,071
GMAC,
Unsub. Notes 1,637,936 192,698 1,743,921 3,574,555
Goldman Sachs Capital II,
Gtd. Bonds 1,553,398 468,861 161,023 1,728,629 3,911,911
Goldman Sachs Group,
Sub. Notes 320,752 320,752
HSBC Finance Capital Trust IX,
Gtd. Notes 380,272 380,272
HSBC Finance,
Notes 778,114 778,114
HSBC Finance,
Sr. Notes 3,020,456 276,382 4,140,788 7,437,626
International Lease Finance,
Sr. Unscd. Notes 123,959 123,959
Janus Capital Group,
Notes 1,983,944 553,069 350,108 2,156,461 5,043,582
Jefferies Group,
Sr. Unscd. Debs. 1,073,661 1,073,661
Jefferies Group,
Sr. Unscd. Notes 867,402 150,853 1,131,394 2,149,649
John Deere Capital,
Notes 771,500 556,081 80,156 1,407,737
JPMorgan Chase & Co.,
Sub. Notes 1,426,092 1,426,092
Kaupthing Bank,
Sr. Notes 2,286,279 234,107 2,948,752 5,469,138
Kaupthing Bank,
Sub. Notes 353,794 353,794
Lehman Brothers Holdings,
Sr. Notes 320,213 320,213
Leucadia National,
Sr. Unscd. Notes 1,061,500 110,975 1,466,800 2,639,275
MBNA,
Notes 1,387,140 1,387,140
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 942,005 83,271 1,353,157 2,378,433
Merrill Lynch,
Sub. Notes 998,350 998,350
Merrill Lynch & Co.,
Notes, Ser. C 4,228,552 779,461 4,444,796 9,452,809
Merrill Lynch & Co.,
Notes, Ser. C 749,433 79,410 880,459 1,709,302
Merrill Lynch & Co.,
Sr. Unscd. Notes 1,770,526 210,410 1,888,561 3,869,497
Morgan Stanley,
Notes 4,827,465 5,083,617 9,911,082
Morgan Stanley,
Sr. Unscd. Notes 1,178,232 952,613 165,454 1,238,397 3,534,696
Morgan Stanley,
Sub. Notes 1,805,025 1,805,025
MUFG Capital Finance 1,
Bank Gtd. Bonds 561,685 561,685
Nuveen Investments,
Sr. Unscd. Notes 87,920 87,920
NIPSCO Capital Markets,
Notes 83,202 83,202
Residential Capital,
Gtd. Notes 69,094 69,094
Residential Capital,
Gtd. Notes 1,038,056 107,850 777,419 1,923,325
Residential Capital,
Gtd. Notes 299,178 35,578 321,819 656,575
Residential Capital,
Gtd. Notes 1,451,588 143,756 2,002,069 3,597,413
SB Treasury,
Jr. Sub. Bonds 2,445,329 286,482 3,407,090 6,138,901
SLM,
Unscd. Notes, Ser. A 1,334,845 702,550 168,612 1,264,590 3,470,597
SLM,
Unscd. Notes, Ser. A 2,634,973 274,076 2,985,982 5,895,031
SMFG Preferred Capital,
Sub. Bonds 776,291 776,291
Tokai Preferred Capital,
Bonds 2,320,145 227,871 3,226,452 5,774,468
Wachovia,
Sr. Notes 1,080,303 1,139,229 2,219,532
Windsor Financing,
Gtd. Notes 591,207 185,304 816,219 1,592,730
61,436,045 22,334,553 6,854,283 70,980,937 161,605,818
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 149,855 14,596 212,132 376,583
Wellpoint,
Sr. Unsub. Notes 387,964 387,964
149,855 387,964 14,596 212,132 764,547
Electric Utilities--2.5%
AES,
Sr. Notes 418,700 21,200 487,600 927,500
Appalachian Power,
Sr. Unscd. Notes 927,237 110,865 1,083,456 2,121,558
Cinergy,
Debs. 1,028,846 1,424,166 2,453,012
Cleveland Electric Illumination,
Sr. Unscd. Notes 804,139 804,139
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 655,695 655,695
Consumers Energy,
First Mortgage Bonds, Ser. O 1,144,654 1,144,654
Dominion Resources,
Sr. Unscd. Notes, Ser. B 1,335,814 140,085 1,726,052 3,201,951
Enel Finance Internation,
Gtd. Notes 1,937,067 277,444 277,444 2,002,645 4,494,600
FirstEnergy,
Unsub. Notes, Ser. B 2,669,769 589,833 3,652,823 6,912,425
FPL Group Capital,
Gtd. Debs. 1,591,487 1,591,487
Gulf Power,
Sr. Unsub. Notes, Ser. M 777,120 777,120
IPALCO Enterprises,
Scd. Notes 79,688 79,688
National Grid,
Sr. Unscd. Notes 1,023,249 1,013,118 151,968 1,362,644 3,550,979
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 862,046 91,816 958,963 1,912,825
NiSource Finance,
Gtd. Notes 1,662,456 382,117 272,941 2,014,797 4,332,311
NiSource Finance,
Gtd. Notes 604,417 604,417
Nisource Finance,
Sr. Unscd. Notes 706,473 95,878 741,797 1,544,148
Ohio Power,
Unscd. Notes 1,386,158 608,920 143,566 1,589,131 3,727,775
Southern,
Sr. Unsub. Notes, Ser. A 475,104 475,104
TXU Electric Delivery,
Bonds 4,395,858 455,427 5,123,550 9,974,835
TXU,
Sr. Notes, Ser. O 2,367,127 146,995 3,467,056 5,981,178
TXU,
Unscd. Notes, Ser. C 65,362 65,362
20,720,800 8,334,215 2,643,068 25,634,680 57,332,763
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 469,063 296,250 44,438 557,938 1,367,689
Allied Waste North America,
Scd. Notes 448,338 241,800 50,375 518,863 1,259,376
Oakmont Asset Trust,
Notes 1,257,014 129,179 1,619,710 3,005,903
Republic Services,
Sr. Notes 638,634 638,634
USA Waste Services,
Sr. Unscd. Notes 367,413 367,413
Waste Management,
Sr. Unsub. Notes 962,577 1,296,946 2,259,523
3,136,992 1,544,097 223,992 3,993,457 8,898,538
Food & Beverages--.5%
H.J. Heinz,
Notes 1,651,166 431,843 152,415 2,286,229 4,521,653
Kraft Foods,
Sr. Unscd. Notes 1,247,041 154,592 206,122 1,329,489 2,937,244
Safeway,
Sr. Unscd. Notes 923,111 84,370 1,285,407 2,292,888
Tyson Foods,
Sr. Unscd. Notes 828,414 538,469 82,841 1,139,069 2,588,793
4,649,732 1,124,904 525,748 6,040,194 12,340,578
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 1,786,756 203,624 1,900,492 3,890,872
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 2,070,640 1,179,668 219,010 2,643,053 6,112,371
Export-Import Bank of Korea,
Sr. Notes 1,063,920 1,063,920
Federal Republic of Brazil,
Unscd. Bonds BRL 3,444,337 1,114,157 502,962 3,508,003 8,569,459
Mexican Bonos,
Bonds, Ser. M MXN 2,459,506 249,355 3,418,086 6,126,947
Mexican Bonos,
Bonds, Ser. M 30 MXN 1,307,314 137,316 1,445,193 2,889,823
Republic of Argentina,
Bonds 6,381,448 1,173,436 886,470 6,776,381 15,217,735
Republic of Argentina,
Bonds, Ser. VII 630,000 630,000
Republic of El Salvador,
Unscd. Notes 65,910 65,910
Russian Federation,
Unsub. Bonds 4,057,771 1,015,312 445,068 5,264,323 10,782,474
21,507,772 6,176,493 2,709,715 24,955,531 55,349,511
Health Care--.7%
American Home Products,
Unscd. Notes 608,334 608,334
Baxter International,
Sr. Unscd. Notes 1,527,245 139,931 1,667,176
Community Health Systems,
Sr. Notes 320,075 320,075
Coventry Health Care,
Sr. Unscd. Notes 387,503 387,503
HCA,
Sr. Unscd. Notes 1,122,923 113,277 1,447,979 2,684,179
HCA,
Sr. Unscd. Notes 1,415,925 152,250 1,492,050 3,060,225
Medco Health Solutions,
Sr. Unscd. Notes 3,455,993 290,109 63,297 3,809,399
Pacific Life Global Funding,
Notes 216,621 216,621
Tenet Healthcare,
Sr. Notes 1,060,400 110,000 1,267,200 2,437,600
Teva Pharmaceutical Finance,
Gtd. Notes 538,572 538,572
UnitedHealth Group,
Sr. Unscd. Notes 375,305 375,305
8,582,486 2,519,898 795,376 4,207,229 16,104,989
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 190,000 14,250 247,000 451,250
MGM Mirage,
Gtd. Notes 366,625 366,625
MGM Mirage,
Gtd. Notes 1,653,750 162,750 2,157,750 3,974,250
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 957,500 19,150 1,297,413 2,274,063
2,801,250 366,625 196,150 3,702,163 7,066,188
Machinery--.2%
Atlas Copco,
Bonds 286,709 286,709
Case New Holland,
Gtd. Notes 669,500 329,600 66,950 803,400 1,869,450
Terex,
Gtd. Notes 1,132,200 117,300 1,570,800 2,820,300
1,801,700 616,309 184,250 2,374,200 4,976,459
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 533,470 60,393 654,256 1,248,119
Media--1.3%
AOL Time Warner,
Gtd. Notes 936,184 936,184
British Sky Broadcasting,
Gtd. Notes 921,275 921,275
Clear Channel Communications,
Sr. Unscd. Notes 1,577,586 2,134,382 3,711,968
Comcast,
Gtd. Notes 4,365,123 447,960 5,211,270 10,024,353
Comcast,
Gtd. Notes 992,676 992,676
Comcast,
Gtd. Notes 1,491,846 208,757 1,578,404 3,279,007
News America Holdings,
Gtd. Debs. 854,550 2,783,484 3,638,034
News America,
Gtd. Notes 2,619,750 406,997 3,026,747
Pacific Life Global Funding,
Notes 1,588,226 1,588,226
Time Warner,
Gtd. Notes 286,733 286,733
10,054,305 3,704,685 1,350,447 13,295,766 28,405,203
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 847,527 847,527
Anadarko Petroleum,
Sr. Unscd. Notes 531,159 531,159
ANR Pipeline,
Sr. Notes 54,460 54,460
BJ Services,
Sr. Unscd. Notes 4,858,143 500,840 6,761,333 12,120,316
Chesapeake Energy,
Gtd. Notes 159,650 159,650
Enterprise Products Operating,
Gtd. Notes, Ser. B 3,997,968 404,794 4,717,602 9,120,364
Enterprise Products Operating,
Gtd. Notes, Ser. B 1,368,415 1,368,415
Gazprom,
Sr. Unscd. Notes 709,566 709,566
Northwest Pipeline,
Sr. Unscd. Notes 211,050 211,050
8,856,111 3,085,158 1,702,303 11,478,935 25,122,507
Packaging & Containers--.0%
Ball,
Gtd. Notes 208,587 208,587
Crown Americas/Capital,
Gtd. Notes 592,969 592,969
801,556 801,556
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 1,075,827 103,161 1,503,210 2,682,198
Temple-Inland,
Gtd. Notes 1,073,731 683,283 102,493 1,488,581 3,348,088
2,149,558 683,283 205,654 2,991,791 6,030,286
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 792,351 78,193 948,736 1,819,280
Allstate,
Jr. Sub. Debs. 260,939 260,939
American International Group,
Sr. Notes 449,283 449,283
Chubb,
Sr. Unscd. Notes 2,373,126 1,598,737 249,803 3,347,357 7,569,023
Hartford Financial Services
Group,
Sr. Unscd. Notes 877,222 731,853 1,193,021 2,802,096
Hartford Financial Services
Group,
Sr. Notes 1,969,555 252,507 2,222,062
Leucadia National,
Sr. Unscd. Notes 3,317,738 339,913 3,734,250 7,391,901
Lincoln National,
Sr. Unscd. Notes 722,030 240,677 962,707
Metlife,
Sr. Notes 2,206,805 2,206,805
Nippon Life Insurance,
Notes 1,338,709 842,891 1,884,108 4,065,708
Pacific Life Global Funding,
Notes 1,521,270 1,521,270
Phoenix Cos.,
Sr. Unscd. Notes 736,466 355,708 70,140 1,027,045 2,189,359
12,926,437 7,168,246 1,231,233 12,134,517 33,460,433
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 981,480 83,426 1,064,906
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 173,197 865,986 221,308 1,260,491
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 339,582 454,441 794,023
Arden Realty,
Notes 666,324 666,324
Avalonbay Communities,
Sr. Unscd. Notes 385,012 385,012
Boston Properties,
Sr. Notes 786,044 82,486 1,086,876 1,955,406
Boston Properties,
Sr. Notes 755,963 755,963
Commercial Net Lease Realty,
Sr. Unscd. Notes 1,060,973 361,695 96,452 1,451,604 2,970,724
Duke Realty,
Notes 924,081 889,116 69,930 1,053,952 2,937,079
Duke Realty,
Sr. Unscd. Notes 349,302 349,302
Duke Realty,
Sr. Notes 2,217,456 255,860 2,473,316
Duke Realty,
Sr. Notes 177,214 177,214
ERP Operating,
Notes 556,466 54,653 993,690 1,604,809
ERP Operating,
Unscd. Notes 334,642 334,642
ERP Operating,
Notes 143,306 143,306
ERP Operating,
Notes 765,872 570,923 69,625 1,044,371 2,450,791
ERP Operating,
Unscd. Notes 239,235 239,235
Federal Realty Investment Trust,
Sr. Unscd. Notes 634,407 48,801 805,208 1,488,416
Federal Realty Investment Trust,
Notes 577,611 157,070 55,734 770,148 1,560,563
Federal Realty Investment Trust,
Sr. Unscd. Notes 531,264 531,264
Healthcare Realty Trust,
Sr. Unscd. Notes 2,710,652 841,071 3,652,651 7,204,374
Healthcare Realty Trust,
Unscd. Notes 241,208 241,208
HRPT Properties Trust,
Sr. Unscd. Notes 1,352,017 412,616 125,187 1,790,671 3,680,491
Istar Financial,
Sr. Unscd. Notes 2,738,123 1,026,213 279,876 3,204,584 7,248,796
Liberty Property,
Sr. Unscd. Notes 300,005 300,005
Mack-Cali Realty,
Bonds 666,413 666,413
Mack-Cali Realty,
Notes 572,009 665,701 54,242 788,978 2,080,930
Mack-Cali Realty,
Unscd. Notes 1,590,310 397,578 332,971 2,286,071 4,606,930
Mack-Cali Realty,
Sr. Unscd. Notes 70,812 70,812
Regency Centers,
Gtd. Notes 1,373,656 208,417 118,419 1,894,698 3,595,190
Regency Centers,
Sr. Unscd. Notes 178,860 178,860
Simon Property Group,
Notes 1,077,644 103,053 1,180,697
Simon Property Group,
Notes 840,007 74,118 1,166,128 2,080,253
Simon Property Group,
Unsub. Notes 971,279 971,279
Simon Property Group,
Unscd. Notes 199,950 199,950
Socgen Real Estate,
Bonds 1,590,000 1,590,000
19,403,433 15,576,095 2,394,067 22,665,379 60,038,974
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 595,339 54,954 650,293
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 154,294 154,294
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 266,892 266,892
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 173,149 173,149
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 388,451 522,112 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 323,292 365,679 688,971
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 391,840 304,765 43,538 740,143
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 1,205,229 120,523 1,606,972 2,932,724
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 95,983 138,215 9,598 130,536 374,332
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 1,639,940 1,639,940
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 45,735 45,735
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 303,468 303,468
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 200,548 200,548
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 920,332 920,332
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 1,913,707 74,602 1,988,309
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 5,592,774 3,756,090 3,403,620 12,752,484
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 1,096,157 103,483 1,517,756 2,717,396
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 818,545 71,178 1,150,946 2,040,669
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 693,685 467,081 64,744 948,036 2,173,546
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 381,741 477,089 858,830
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 94,797 94,797
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 1,094,010 1,276,346 91,168 1,458,681 3,920,205
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 904,887 106,756 1,016,727 2,028,370
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 730,251 64,232 1,016,181 1,810,664
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 704,351 70,942 901,975 1,677,268
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 194,651 194,651
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 1,667,727 749,269 145,020 2,276,810 4,838,826
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 1,165,591 759,829 112,170 1,589,886 3,627,476
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 3,262 3,262
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 1,069,041 1,069,041
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 1,683 1,683
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 697,576 697,576
Washington Mutual,
Ser. 2004-AR7, Cl. A6 131,897 131,897
Washington Mutual,
Ser. 2003-AR10, Cl. A6 200,936 200,936
Washington Mutual,
Ser. 2004-AR9, Cl. A7 162,432 162,432
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 3,290,848 1,014,472 4,478,522 8,783,842
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4,240,377 414,099 5,631,751 10,286,227
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 1,785,483 148,790 2,479,837 4,414,110
29,139,311 13,402,436 2,654,288 31,279,846 76,475,881
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 1,052,156 369,002 109,703 1,151,886 2,682,747
CVS Caremark,
Sr. Unscd. Notes 258,533 258,533
Delhaize Group,
Sr. Unscd. Notes 191,963 191,963
Federated Retail Holding,
Gtd. Bonds 152,144 152,144
Federated Retail Holding,
Gtd. Notes 254,037 254,037
Home Depot,
Sr. Unscd. Notes 804,817 83,938 1,002,319 1,891,074
Lowe's Companies,
Sr. Unscd. Notes 1,283,826 166,796 181,960 1,339,425 2,972,007
May Department Stores,
Unscd. Notes 44,725 44,725
May Department Stores,
Gtd. Notes 760,990 1,036,349 1,797,339
Saks,
Gtd. Notes 433 433
3,902,222 1,392,475 420,326 4,529,979 10,245,002
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 443,903 63,415 465,042 972,360
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 554,415 69,884 624,299
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 4,471,515 2,381,514 405,154 5,439,931 12,698,114
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 1,000,871 571,926 95,321 1,429,815 3,097,933
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 1,690,570 154,566 2,337,817 4,182,953
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 3,100,550 2,143,238 157,171 3,776,861 9,177,820
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 676,798 435,422 1,112,220
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 295,347 295,347
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 1,331,389 188,077 1,400,680 2,920,146
12,715,596 5,651,093 1,864,357 14,850,146 35,081,192
Steel--.0%
US Steel,
Sr. Unsub. Notes 314,225 314,225
Telecommunications--2.4%
America Movil,
Gtd. Notes 455,091 45,009 565,113 1,065,213
AT & T,
Notes 2,382,885 244,271 2,921,277 5,548,433
AT & T,
Sr. Notes 2,700,459 450,076 125,021 3,700,629 6,976,185
AT & T Wireless,
Sr. Unsub. Notes 558,635 558,635
AT & T,
Sr. Unscd. Notes 795,676 795,676
France Telecom,
Unsub. Notes 1,376,932 118,330 1,172,544 2,667,806
Intelsat,
Sr. Unscd. Notes 1,509,200 196,000 1,945,300 3,650,500
KPN,
Sr. Unsub. Bonds 380,952 380,952
Nextel Communications,
Gtd. Notes, Ser. F 989,421 477,981 90,816 1,343,127 2,901,345
Qwest,
Bank Note, Ser. B 475,600 475,600
Qwest,
Bank Note, Ser. B 1,904,450 1,904,450
Qwest,
Sr. Notes 749,050 68,575 2,073,075 2,890,700
Qwest,
Notes 54,813 54,813
Qwest,
Sr. Notes 107,250 1,716,000 1,823,250
Sprint Capital,
Gtd. Notes 1,420,081 218,474 1,512,070 3,150,625
Telefonica Emisiones,
Gtd. Notes 239,842 239,842
Telefonica Emisiones,
Gtd. Notes 2,469,239 636,402 478,574 3,263,469 6,847,684
Time Warner Cable,
Sr. Unscd. Notes 1,344,066 326,277 146,094 1,470,681 3,287,118
Time Warner,
Gtd. Notes 2,214,782 259,698 2,361,781 4,836,261
U.S. West Communications,
Notes 70,263 70,263
Verizon Global Funding,
Notes 283,613 283,613
Windstream,
Gtd. Notes 1,517,513 148,050 2,056,838 3,722,401
21,508,769 3,964,425 2,556,267 26,101,904 54,131,365
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 999,709 706,865 277,697 1,383,436 3,367,707
Transportation--.2%
Ryder System,
Notes 1,408,506 127,600 1,943,443 3,479,549
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 13,775,853 13,775,853
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 523,708 523,708
14,299,561 14,299,561
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 250,920 250,920
4.00%, 10/1/09 75,201 75,201
4.50%, 10/1/09 69,717 69,717
5.00% 1,636,333 1,636,333
5.00%, 10/1/18 407,650 407,650
5.50% 58,294,479 17,072,016 9,006,379 62,206,295 146,579,169
5.50%, 6/1/34 - 4/1/37 7,451,718 337,913 9,501,174 17,290,805
6.00%, 7/1/37 1,394,133 1,672,000 3,066,133
6.00%, 7/1/17 - 4/1/33 1,810,908 1,810,908
6.50%, 10/1/31 - 3/1/32 91,660 848,941 940,601
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 295,950 295,950
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,263,853 2,027,188 6,291,041
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 464,979 464,979
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 515,309 515,309
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 452,622 452,622
Federal National Mortgage
Association:
5.00% 25,877,395 24,365,364 1,716,873 30,966,400 82,926,032
5.50% 5,520,277 812,832 5,859,373 12,192,482
6.00% 100,751,854 30,063,118 12,170,544 100,759,631 243,745,147
6.50% 5,615,814 656,791 5,956,938 12,229,543
3.53%, 7/1/10 267,051 267,051
4.00%, 5/1/10 1,345,964 1,345,964
4.06%, 6/1/13 94,294 94,294
5.00%, 7/1/11 - 1/1/22 8,059,392 1,840,287 818,805 10,718,484
5.50%, 8/1/22 - 1/1/37 12,484,046 610,863 2,171,807 19,579,280 34,845,996
6.00%, 1/1/19 - 8/1/37 1,717,050 1,568,471 219,821 5,501,642 9,006,984
6.50%, 11/1/10 - 8/1/37 5,525,767 827,805 7,808,439 14,162,011
7.00%, 9/1/14 - 7/1/32 46,244 70,205 116,449
8.00%, 12/1/25 39,057 39,057
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 284,606 284,606
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,202,359 2,055,892 4,473,693 9,731,944
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 170,047 170,047
Government National Mortgage
Association I:
5.50%, 4/15/33 4,454,192 4,454,192
6.50%, 9/15/32 62,317 62,317
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,416 5,416
9.50%, 11/15/17 329,992 329,992
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 186,932 186,932
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,030 2,030
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 67,514 67,514
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 77,547 77,547
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,288,464 116,504 2,404,968
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 303,452 504,488 807,940
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 318,229 253,136 571,365
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 150,648 150,648
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,823,049 5,561,579 10,384,628
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 109,140 109,140
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 103,323 103,323
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 182,787 182,787
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 108,859 108,859
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 148,956 148,956
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 982,079 982,079
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 85,029 85,029
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 59,712 59,712
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,587,289 132,274 2,182,523 3,902,086
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 105,266 105,266
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 797,293 1,116,211 1,913,504
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,237,315 1,716,579 2,953,894
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,270,163 1,770,530 3,040,693
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,165,496 97,125 1,592,845 2,855,466
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,749,969 841,757 155,061 2,436,666 5,183,453
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,315,022 1,315,022
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,359,199 1,154,111 147,333 4,640,999 9,301,642
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,292,990 107,749 1,788,636 3,189,375
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 163,829 163,829
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,647,991 1,647,991
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,128,723 1,128,723
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,401,015 1,401,015
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,541,607 1,541,607
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,210,588 624,664 135,586 1,259,012 3,229,850
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,768,833 855,260 208,956 1,880,600 4,713,649
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 76,418 76,418
Government National Mortgage
Association II:
5.50%, 7/20/30 66,830 334,216 401,046
6.38%, 4/20/30 261,199 261,199
6.50%, 2/20/31 - 7/20/31 278,244 278,244
7.00%, 11/20/29 791 791
261,176,075 100,745,630 36,005,793 283,986,500 681,913,998
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,375,916 663,852 9,039,768
5.00%, 5/15/37 609,500 13,249,952 699,796 1,696,133 16,255,381
U.S. Treasury Notes:
3.88%, 9/15/10 11,493,555 4,703,041 229,174 16,425,770
4.13%, 8/31/12 7,701,020 7,701,020
4.25%, 1/15/11 25,670,400 1,549,987 27,220,387
4.38%, 12/31/07 8,169,564 8,169,564
4.50%, 5/15/10 739,410 739,410
4.50%, 9/30/11 4,642,618 4,642,618
4.50%, 4/30/12 14,490,005 12,748,370 14,738,087 41,976,462
4.50%, 5/15/17 4,600,432 507,291 5,232,059 10,339,782
4.63%, 12/31/11 6,524,181 6,524,181
4.63%, 11/15/16 25,925,011 7,081,881 3,945,547 12,490,045 49,442,484
4.75%, 8/15/17 5,423,568 16,284,896 2,240,390 21,310,060 45,258,914
5.13%, 6/30/08 8,504,657 8,504,657
88,212,471 81,274,095 27,058,274 55,695,558 252,240,398
Total Bonds and Notes
(cost $750,962,326,
$390,304,526,
$110,300,634 and
$793,545,334
respectively) 745,095,279 386,073,850 109,713,813 785,882,941 2,026,765,883
Preferred Stocks--.3% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 15,500 1,400 22,050 38,950
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 44,450 3,450 50,950 98,850
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 664,950 60,060 945,945 1,670,955
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 2,194,719 170,344 2,515,656 4,880,719
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively) 2,859,669 230,404 3,461,601 6,551,674
Options--.1% Face Amount Covered by Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 49,400,000 15,500,000 5,090,000 63,570,000 133,560,000
3-Month USD Libor-BBA,
Swaption 2,770,000 390,000 2,910,000 6,070,000
CDX Option DB
December 2007 @.450 58,320,000 58,320,000
Dow Jones CDX.DB
December 2007 @ .45 5,600,000 5,600,000
Dow Jones CDX.IG8
December 2007 @ .45 54,820,000 6,330,000 61,150,000
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 63,100,000 9,100,000 65,400,000 137,600,000
U.S. Treasury 5 Year Notes
October 2007 @ 107 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively)
Options--.1% Value ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 168,415 21,463 17,353 216,723 423,954
3-Month USD Libor-BBA,
Swaption 264,258 37,206 267,720 569,184
CDX Option DB
December 2007 @.450 55,404 55,404
Dow Jones CDX.DB
December 2007 @ .45 5,320 5,320
Dow Jones CDX.IG8
December 2007 @ .45 52,079 6,014 58,093
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 39,438 5,688 40,875 86,001
U.S. Treasury 5 Year Notes
October 2007 @ 107 172,814 43,204 25,156 179,377 420,551
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively) 697,004 69,987 91,417 760,099 1,618,507
Short-Term Investments--.9% Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 b,c 820,000 b,c 6,030,000 b,c 12,495,000
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,420,000 h 3,420,000
4.10%, 12/6/07 3,399,000 h 3,399,000
4.13%, 12/6/07 355,000 h 98,000 h 453,000
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively)
Short-Term Investments--.9% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 818,135 6,030,000 12,493,135
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,396,983 3,396,983
4.10%, 12/6/07 3,376,125 3,376,125
4.13%, 12/6/07 352,611 97,340 449,951
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively) 9,041,983 352,611 915,475 9,406,125 19,716,194
Other Investment--1.1% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 i 6,178,000 i 3,647,000 i 6,066,000 I 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Other Investment--1.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 6,178,000 3,647,000 6,066,000 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 i 32,557,177 I 67,484,785
(cost $0, $34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 i 24,190,518 i 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 32,557,177 67,484,785
(cost $0,,$34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 24,190,518 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively) 77,933,659 34,927,608 24,190,518 32,557,177 169,608,962
Total Investments-100.0%
(cost $850,306,723, $431,846,285,
$139,390,553 and $845,957,426
respectively) 844,310,594 427,602,056 138,788,627 838,133,943 2,248,835,220
| * | Management does not anticipate having to sell any securities as a result of the exchange. |
| a | All or a portion of these securities are on loan. At September 30, 2007, the total market value of the fund's securities on loan is $188,728,839 and the total market value of the collateral held by the fund is $193,466,218 consisting of cash collateral of $169,608,962 and U.S. Government and agency securities valued as $23,857,256. |
| b | Securities 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 September 30, 2007, these securities amounted to $227,731,914 or 10.1% market value. |
| c | Variable rate security--interest rate subject to periodic change. |
| d | Principal amount stated in U.S. Dollars unless otherwise noted.
BRL--Brazilian Real
EGP--Egyptian Pound
EUR--Euro
MXN--Mexican Peso |
| e | Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity. |
| f | Purchased on a forward commitment basis. |
| g | Purchased on a delayed delivery basis. |
| h | All or partially held by a broker as collateral for open financial futures positions. |
| i | Investment in affiliated money market mutual fund. |
| j | Notional face amount shown. |
STATEMENT OF FINANCIAL FUTURES
September 30, 2007 (Unaudited)
Contracts Expiration Market Value Covered by Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 261 December 2007 27,935,156
U.S. Treasury 5 Year Notes 84 December 2007 8,990,625
U.S. Treasury 5 Year Notes 12 December 2007 1,284,375
U.S. Treasury 5 Year Notes 425 December 2007 45,488,281
U.S. Treasury 10 Year Notes 599 December 2007 65,459,469
U.S. Treasury 10 Year Notes 85 December 2007 9,288,906
U.S. Treasury 10 Year Notes 524 December 2007 57,263,375
Financial Futures Short
U.S. Treasury 2 Year Notes 436 December 2007 (90,272,440)
U.S. Treasury 2 Year Notes 89 December 2007 (18,427,172)
U.S. Treasury 2 Year Notes 52 December 2007 (10,766,438)
U.S. Treasury 2 Year Notes 546 December 2007 (113,047,596)
U.S. Treasury 10 Year Notes 236 December 2007 (25,790,375)
U.S. Treasury 30 Year Bonds 135 December 2007 (15,031,406)
U.S. Treasury 30 Year Bonds 4 December 2007 (445,375)
Unrealized Appreciation (Depreciation) at 9/30/2007 ($)
- ---------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 27,935,156 (3,328) (3,328)
U.S. Treasury 5 Year Notes 8,990,625 64,719 64,719
U.S. Treasury 5 Year Notes 1,284,375 5,473 5,473
U.S. Treasury 5 Year Notes 45,488,281 54,930 54,930
U.S. Treasury 10 Year Notes 65,459,469 121,844 121,844
U.S. Treasury 10 Year Notes 9,288,906 20,149 20,149
U.S. Treasury 10 Year Notes 57,263,375 138,625 138,625
Financial Futures Short
U.S. Treasury 2 Year Notes (90,272,440) (333,815) (333,815)
U.S. Treasury 2 Year Notes (18,427,172) (37,547) (37,547)
U.S. Treasury 2 Year Notes (10,766,438) (39,911) (39,911)
U.S. Treasury 2 Year Notes (113,047,596) (418,034) (418,034)
U.S. Treasury 10 Year Notes (25,790,375) 57,156 57,156
U.S. Treasury 30 Year Bonds (15,031,406) 97,031 97,031
U.S. Treasury 30 Year Bonds (445,375) 117 117
(215,299) 181,359 (14,170) (224,479) (272,589)
STATEMENT OF OPTIONS WRITTEN
September 30, 2007 (Unaudited)
Face Amount
Covered by
Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 11,200,000 12,660,000 116,640,000 140,500,000
Dow Jones CDX.IG8
December 2007 @ .395 109,640,000 109,640,000
U.S. Treasury 5 Year Notes
October 2007 @ 108 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
(Premiums received $306,789, $59,234, $41,679 and $321,062 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 (5,320) (6,014) (55,404) (66,738)
Dow Jones CDX.IG8
December 2007 @ .395 (52,079) (52,079)
U.S. Treasury 5 Year Notes
October 2007 @ 108 (64,189) (16,047) (9,344) (66,627) (156,207)
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 (54,314) (13,579) (7,906) (56,377) (132,176)
(Premiums received $306,789, $59,234, (170,582) (34,946) (23,264) (178,407) (407,200)
$41,679 and $321,062 respectively)
Pro Forma Statement of Assets and Liabilities
September 30, 2007 (Unaudited) Dreyfus
Premier
Intermediate
Term
Dreyfus Dreyfus Income Fund
Intermediate Premier Dreyfus Dreyfus A Pro Forma
Term Income Managed Premier Bond Combined
Fund Income Fund Core Bond Plus, Inc. Adjustments (Note 1)
------------ ----------- ---------- ---------------- ------------ --------------
ASSETS:
Investments in securities,
at value - See Statement
of Investments (including
securities on loan, valued
at $188,728,839)
Unaffiliated issuers $ 757,693,935 $ 110,951,109 $ 799,510,766 $ 386,496,448 $ 2,054,652,258
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
Cash 10,358 10,358
Cash denominated in foreign
currencies 393,276 38,277 846,420 21,977 1,299,950
Receivable for investment
securities sold 173,350,932 25,171,177 185,439,728 43,966,620 427,928,457
Dividends and interest
receivable 6,229,325 994,265 6,589,490 3,608,232 17,421,312
Receivable for futures
variation margin 27,359 27,359
Receivable from broker for
swap transaction 1,038,010 104,986 1,377,623 2,520,619
Swap premium paid 2,013,869 226,752 2,471,723 248,776 4,961,120
Receivable for shares of
Beneficial Interest
subscribed 1,072,180 549,582 126,499 23,471 1,771,732
Prepaid expenses 34,389 6,927 22,889 64,205
--------------- ------------- -------------- ------------ ------------- -------------
Total Assets 1,028,442,575 165,873,666 1,034,992,353 475,531,738 2,704,840,332
--------------- ------------- -------------- ------------ ------------- -------------
LIABILITIES: Due to The Dreyfus Corporation
and affiliates 349,267 68,697 551,087 170,683 1,139,734
Cash overdraft due to Custodian 2,097,837 290,280 2,177,697 4,565,814
Outstanding options written,
at value (premiums received
$728,764) - see statement 170,582 23,268 178,407 34,946 407,203
Liability for securities loaned 77,933,659 24,190,518 32,557,177 34,927,608 169,608,962
Net unrealized depreciation on
forward currency exchange
contracts-Note 3(a) 38,909 4,553 49,523 92,985
Payable for investment
securities
purchased 372,907,207 53,629,063 410,722,756 155,527,763 992,786,789
Payable to broker for swap
transactions 750 54,810 55,560
Payable for shares of Beneficial
Interest redeemed 3,091 42,545 412,825 458,461
Unrealized depreciation on swaps 1,075,287 150,160 1,160,543 265,382 2,651,372
Payable for futures variation
margin 35,717 5,531 23,529 64,777
Accrued Interest payable 197 197
Merger costs 90,000 (a) 110,000 (a) 100,000 (a) 300,000
Accrued expenses 230,383 376,973 168,451 775,807
-------------- --------------- --------------- -------------- ------------- --------------
Total Liabilities 454,841,939 78,495,365 448,320,714 191,249,643 1,172,907,661
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
REPRESENTED BY: Paid-in capital 596,461,047 $ 95,504,465 $ 618,764,827 $ 329,276,172 $ 1,640,006,511
Accumulated undistributed
investment income-net 3,024,657 (130,982) 319,644 3,862,872 7,076,191
Accumulated net realized gain
(loss) on investments (18,796,225) (7,251,512) (23,371,769) (44,634,175) (94,053,681)
Accumulated net unrealized
appreciation
(depreciation) on
investments (7,088,843) (743,670) (9,041,063) (4,222,774) (21,096,350)
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS $ 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
Class A Shares (500 million, $.001 par
value shares authorized) (b)
Net Assets $ 538,484,842 $ 74,021,438 $ 433,278,945 $ 284,282,095 $ 1,330,067,320
Shares outstanding 43,433,975 7,000,995 30,809,721 21,404,884 4,610,372 (c) 107,259,947
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.57 $ 14.06 $ 13.28 $ 12.40
=============== =============== =============== ============== ============ ===============
Maximum offering price per share
(net asset value plus maximum sales
charge) $ 12.40 $ 11.07 $ 14.73 $ 12.98
=============== =============== =============== ============== ============ ===============
Class B Shares (500 million, $.001
par value shares authorized)
Net Assets $ 2,488,214 $ 94,585,171 $ 97,073,385
Shares outstanding 235,360 6,714,459 880,381 (c) 7,830,200
Net asset value, offering price and
redemption price per share $ 10.57 $ 14.09 $ 12.40
================ =============== =============== =============== ============ ===============
Class C Shares (500 million, $.001 par
value shares authorized)
Net Assets $ 8,833,042 $ 39,030,280 $ 47,863,322
Shares outstanding 834,740 2,780,181 245,183 (c) 3,860,104
Net asset value, offering price and
redemption price per share $ 10.58 $ 14.04 $ 12.40
=============== =============== =============== =============== ============ ==============
Class I Shares (500 million, $.001
par value shares authorized) (b)
Net Assets $ 35,115,794 $ 2,035,607 $ 19,777,243 $ 56,928,644
Shares outstanding 2,832,734 192,724 1,407,253 158,658 (c) 4,591,369
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.56 $ 14.05 $ 12.40
================ =============== ================ =============== =========== ==============
* Investments at cost
Unaffiliated issuers $ 763,690,064 $ 111,553,035 $ 807,334,249 $ 390,740,677 $2,073,318,025
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
(a) Includes expenses incurred as a result of the merger.
(b) Reflects redesignation of Dreyfus Intermediate Term Income Fund Investor Shares to Class A Shares and Institutional Shares to
Class I Shares.
(c) Reflects adjustment of shares as a result of the Exchange.
See notes to pro forma financial statements.
Pro Forma Statement of Operations
For the Twelve Months Ended September 30, 2007 (Unaudited)
Dreyfus Dreyfus
Intermediate Premier
Term Managed Dreyfus Dreyfus A Pro Forma
Income Income Premier Bond Combined
Fund Fund Core Bond Plus, Inc. Adjustments (Note 1)
-------------- ------------ ------------- -------------- -------------- -------------
INVESTMENT INCOME:
INCOME: Interest Income $ 31,416,543 $ 3,367,031 $37,012,268 $ 16,102,907 $ 87,898,749
Dividends 152,200 80,151 188,847 618,920 1,040,118
Securities lending income 76,954 14,272 42,534 34,616 168,376
-------------- ------------ ------------- -------------- -------------- --------------
Total Income 31,645,697 3,461,454 37,243,649 16,756,443 89,107,243
-------------- ------------ ------------- -------------- -------------- --------------
EXPENSES: Management fee $ 2,407,911 $ 420,241 $ 3,698,141 $ 1,938,292 $ (1,738,932)(a) $ 6,725,653
Shareholder servicing costs 1,987,228 2,422,765 629,004 536,757 (b) 5,575,754
Professional fees 54,053 66,872 53,004 (75,000)(a) 98,929
Prospectus and shareholders' reports 45,650 58,715 42,604 (15,000)(a) 131,969
Custodian fees 166,627 188,174 56,697 (50,000)(a) 361,498
Directors' fees and expenses 7,909 78,870 15,584 (60,000)(a) 42,363
Registration fees 37,787 68,495 37,429 (25,000)(a) 118,711
Interest 6,907 6,907
Distribution and service fees 188,932 1,027,205 1,216,137
Loan commitment fees 844 (844)(a) -
Merger cost - - - -
Miscellaneous 44,748 165,248 57,166 267,162
-------------- ------------ ------------- -------------- -------------- --------------
Total Expenses 4,751,913 610,017 7,781,392 2,829,780 (1,428,019) 14,545,083
-------------- ------------ ------------- -------------- -------------- --------------
Less- reduction in management fee due to
undertaking (586,776) (723,514) 237,936 (1,072,354)
-------------- ------------ ------------- -------------- -------------- --------------
Net Expenses 4,165,137 610,017 7,057,878 2,829,780 (1,190,083) 13,472,729
-
-------------- ------------ ------------- -------------- -------------- --------------
INVESTMENT GAIN 27,480,560 2,851,437 30,185,771 13,926,663 1,190,083 75,634,514
-------------- ------------ ------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments and
foreign currency transactions $ 2,460,530 $ 535,481 $ 1,507,249 $ (2,239,627) $ 2,263,633
Net realized gain (loss) on forward currency
exchange contracts (591,903) (70,953) (747,773) 87,615 (1,323,014)
Net realized gain (loss) on financial futures (1,931,470) (177,608) (1,157,908) (1,013,480) (4,280,466)
Net realized gain (loss) on options transactions 10,322 4,420 (364) (106,988) (92,610)
Net realized gain (loss) on swap transactions (2,419,831) (157,119) (2,393,828) (971,553) (5,942,331)
-------------- ------------- ------------- ------------- ---------------
Net Realized Gain (Loss) (2,472,352) 134,221 (2,792,624) (4,244,033) (9,374,788)
-------------- ------------ ------------- -------------- -------------- --------------
Net unrealized appreciation (depreciation) on
investments, foreign currency transactions,
option transactions, and swap transactions
(including $1,642,649 net unrealized
appreciation on financial futures) (4,201,364) (17,895) (5,770,332) (2,742,836) (12,732,427)
-------------- ------------ ------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,673,716) 116,326 (8,562,956) (6,986,869) (22,107,215)
-------------- ------------ ------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 20,806,844 $ 2,967,763 $21,622,815 $ 6,939,794 $ 1,190,083 53,527,299
============== ============ ============= ============== ============ ===============
(a) Reflects the anticipated savings as a result of the Merger.
(b) Reflects an anticipated expense increase as a result of the Merger.
See notes to pro forma financial statements.
Dreyfus Intermediate Term Income Fund
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
NOTE 1 — Basis of Combination:
At meetings of the Boards held on October 18, 2007, October 25, 2007, November 6, 2007 and November 7, 2007, the Boards of Directors/Trustees of Dreyfus Investment Grade Funds, Inc., on behalf of Dreyfus Intermediate Term Income Fund (the "Acquiring Fund"), The Dreyfus/Laurels Funds Trust, on behalf of Dreyfus Premier Managed Income Fund, Dreyfus Premier Fixed Income Funds, on behalf of Dreyfus Premier Core Bond Fund, and Dreyfus A Bonds Plus, Inc. (collectively, the "Funds"), respectively, each approved an Agreement and Plan of Reorganization pursuant to which, subject to approval by the respective Fund's shareholders, each Fund will transfer all of its assets, subject to its liabilities, to the Acquiring Fund, in exchange for a number of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares only with respect to Dreyfus A Bonds Plus, Inc.) equal in value to the assets less liabilities of the Fund (the "Exchange"). The Acquiring Fund shares will then be distributed to the respective Fund's shareholders on a pro rata basis in liquidation of the Fund. Fund shareholders will receive shares of the corresponding class of shares of the Acquiring Fund in the Exchange with holders of shares of Dreyfus A Bonds Plus, Inc. receiving Class A shares of the Acquiring Fund. The Acquiring Fund will redesignate Investor shares to Class A shares and Institutional shares to Class I shares, will create Class B and Class C shares and will change its name to Dreyfus Premier Intermediate Term Income Fund prior to the Exchange. If the Exchange is consummated only for Dreyfus A Bonds Plus, Inc., holders of shares of Dreyfus A Bonds Plus, Inc. will receive Investor shares of the Acquiring Fund and the Acquiring Fund will not change its name.
Each Exchange will be accounted for as a tax-free merger of investment companies. The unaudited pro forma statement of investments and statement of assets and liabilities reflect the financial position of the Acquiring Fund and the Funds on September 30, 2007. The unaudited pro forma statement of operations reflects the results of operations of the Acquiring Fund and the Funds for the twelve months ended September 30, 2007. These statements have been derived from the Fund's and the Acquiring Fund's respective books and records utilized in calculating daily net asset value at the dates indicated above under accounting principles generally accepted in the United States. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. The historical cost of investment securities will be carried forward to the surviving entity and results of operations of the Acquiring Fund for pre-combination periods will not be restated. The fiscal year end is July 31 for the Acquiring Fund, December 31 for Dreyfus Premier Managed Income Fund, October 31 for Dreyfus Premier Core Bond Fund and March 31 for Dreyfus A Bonds Plus. Inc.
The pro forma statements of investments, assets and liabilities and operations should be read in conjunction with the historical financial statements of the Funds and the Acquiring Fund included or incorporated by reference in the Statement of Additional Information of which the pro forma combined financial statements form a part. The pro forma combined financial statements are presented for information only and may not necessarily be representative of what the actual combined financial statements would have been had the Exchange, occurred on September 30, 2007. The pro forma financial statements were prepared in accordance with accounting principles generally accepted in the United States, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. Following the relevant Exchange, the Acquiring Fund will be the accounting survivor.
All costs with respect to each Exchange will be borne by the respective Fund.
The funds enter into contracts that contain a variety of indemnifications. The funds' maximum exposure under these arrangements is unknown. The funds do not anticipate recognizing any loss related to these arrangements.
NOTE 2 — Portfolio Valuation:
Investments in securities (excluding short-term investments other than U.S. Treasury Bills, options and financial futures) are valued each business day by an independent pricing service ("Service") approved by the respective fund's Board members. 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. Securities for which there are no such valuations are valued at fair value as determined in good faith under the direction of the respective Board. Short-term investments, excluding U.S. Treasury Bills, are carried at amortized cost, which approximates market value. Financial futures and options are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
NOTE 3 — Capital Shares:
The pro forma number of shares that would be issued was calculated by dividing the net assets of the respective Fund's Class A, Class B, Class C and Class I shares (fund shares only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007 by the net asset value per share of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares of the Acquiring Fund only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007.
NOTE 4 — Pro Forma Operating Expenses:
The accompanying pro forma statement of operations reflects changes in fund expenses as if the respective Exchange had taken place on October 1, 2006. Each Fund will bear the expense of the respective Exchange.
NOTE 5 — Federal Income Taxes:
Each fund has qualified as a "regulated investment company" under the Internal Revenue Code. After the relevant Exchange, the Acquiring Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, federal income taxes.
The identified cost of investments for the funds is substantially the same for both financial accounting and federal income tax purposes. The tax cost of investments will remain unchanged for the combined entity.
DREYFUS PREMIER CORE BOND FUND
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Shareholder:
As a shareholder of Dreyfus Premier Core Bond Fund (the "Fund"), you are being asked to vote on an Agreement and Plan of Reorganization to allow the Fund to transfer all of its assets in a tax-free reorganization to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities. The Acquiring Fund, like the Fund, normally invests at least 80% of its assets in fixed-income securities. The Acquiring Fund has a generally better performance record and is expected to have a lower total expense ratio than the Fund. The Fund is a series of Dreyfus Premier Fixed Income Funds (the "Trust"). The Dreyfus Corporation ("Dreyfus") is the investment adviser to the Acquiring Fund and the Fund.
If the Agreement and Plan of Reorganization is approved and consummated for the Fund, you would no longer be a shareholder of the Fund, but would become a shareholder of the Acquiring Fund, which has the same investment objective and substantially similar investment management policies as the Fund.
Management of Dreyfus has reviewed the funds in the Dreyfus Family of Funds and has concluded that it would be appropriate to consolidate certain funds having similar investment objectives and management policies and that would otherwise benefit fund shareholders. As a result of the review, management recommended to the Trust's Board that the Fund be consolidated with the Acquiring Fund. Management believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a fund that has a generally better performance record and is expected to have a lower total expense ratio than the Fund. Management also believes that the reorganization should enable shareholders of the Fund to benefit from more efficient portfolio management and will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
After careful review, the Trust's Board of Trustees has unanimously approved the proposed reorganization. The Trustees believe that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a fund that has a generally better performance record and is expected to have a lower total expense ratio than the Fund. The Board of Trustees recommends that you read the enclosed materials carefully and then vote FOR the proposal.
Your vote is extremely important, no matter how large or small your Fund holdings. By voting now, you can help avoid additional costs that are incurred with follow-up letters and calls.
To vote, you may use any of the following methods:
| • | By Mail. Please complete, date and sign the enclosed proxy card and mail it in the enclosed, postage-paid envelope. |
| • | By Internet. Have your proxy card available. Go to the website listed on the proxy card. Enter your control number from your proxy card. Follow the instructions on the website. |
| • | By Telephone. Have your proxy card available. Call the toll-free number listed on the proxy card. Enter your control number from your proxy card. Follow the recorded instructions. |
| • | In Person. Any shareholder who attends the meeting in person may vote by ballot at the meeting. |
Further information about the proposed reorganization is contained in the enclosed materials, which you should review carefully before you vote. If you have any questions after considering the enclosed materials, please call 1-800-554-4611.
| Sincerely,
J. David Officer
President |
December 21, 2007
TRANSFER OF THE ASSETS OF
DREYFUS PREMIER CORE BOND FUND
TO AND IN EXCHANGE FOR SHARES OF
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
QUESTIONS AND ANSWERS
The enclosed materials include a Prospectus/Proxy Statement containing information you need to make an informed decision. However, we thought it also would be helpful to begin by answering some of the important questions you might have about the proposed reorganization.
WHAT WILL HAPPEN TO MY DREYFUS PREMIER CORE BOND FUND INVESTMENT IF THE PROPOSED REORGANIZATION IS APPROVED?
You will become a shareholder of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), an open-end investment company managed by The Dreyfus Corporation ("Dreyfus"), on or about April 3, 2008 (the "Closing Date"), and will no longer be a shareholder of Dreyfus Premier Core Bond Fund (the "Fund"), a series of Dreyfus Premier Fixed Income Funds (the "Trust"). You will receive Class A, Class B, Class C or Class I shares of the Acquiring Fund corresponding to your Class A, Class B, Class C or Class I shares of the Fund with a value equal to the value of your investment in the Fund as of the Closing Date. The Fund will then cease operations and will be terminated as a series of the Trust.
WHAT ARE THE BENEFITS OF THE PROPOSED REORGANIZATION FOR ME?
The Trust's Board believes that the reorganization will permit Fund shareholders to pursue substantially similar investment goals in a fund that also is managed by Dreyfus. By combining the Fund with the Acquiring Fund, Fund shareholders should benefit from more efficient portfolio management. In addition, the Acquiring Fund has a generally better performance record and is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund. The reorganization also will eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities. Other potential benefits are described in the enclosed Prospectus/Proxy Statement.
DO THE FUNDS HAVE SIMILAR INVESTMENT GOALS AND STRATEGIES?
Yes. The Acquiring Fund and the Fund have the same investment objective and substantially similar investment management policies. Each fund seeks to maximize total return, consisting of capital appreciation and current income. To pursue its goal, each fund normally invests at least 80% of its assets in fixed-income securities, which, in the case of the Acquiring Fund, are rated investment grade or the unrated equivalent as determined by Dreyfus. These securities generally include: U.S. government bonds and notes, corporate bonds, municipal bonds, convertible securities, preferred stocks, inflation-indexed securities, asset-backed securities, mortgage-related securities (including collateralized mortgage obligations), and foreign bonds. The Fund may invest up to 35% and the Acquiring Fund may invest up 20% of their respective assets in fixed-income securities rated below investment grade ("high yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. The Fund may invest up to 35% and the Acquiring Fund may invest up to 30% of their respective assets in fixed-income securities of foreign issuers, including those of emerging market issuers. The Fund typically can be expected to have an average effective portfolio maturity of between 5 and 10 years and an effective portfolio duration between 3.5 and 6 years, but the Fund may invest without regard to maturity or duration. The Acquiring Fund is required to generally maintain an average effective portfolio maturity of between 5 and 10 years and can be expected to have an effective portfolio duration between 3 and 8 years. The Fund and the Acquiring Fund may invest in individual securities of any maturity. As of September 30, 2007, the average effective maturity of the Fund's portfolio and the Acquiring Fund's portfolio was 6.48 years and 6.44 years, respectively. The average effective duration of the Fund's portfolio and the Acquiring Fund's portfolio as of such date was 4.98 years and 4.93 years, respectively. The primary portfolio manager of the Fund and the Acquiring Fund and management believe that, because of prevalent market conditions, the characteristics of the funds' portfolios are not significantly different. Dreyfus is the investment adviser to the Acquiring Fund and the Fund and provides day-to-day management of each fund's investments. MBSC Securities Corporation, a wholly-owned subsidiary of Dreyfus, distributes each fund's shares. For additional information regarding the Fund and the Acquiring Fund, please refer to the enclosed Prospectus/Proxy Statement.
WHAT ARE THE TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION?
The reorganization will not be a taxable event for federal income tax purposes. Shareholders will not recognize any capital gain or loss as a direct result of the reorganization. A shareholder's tax basis in Fund shares will carry over to the shareholder's Acquiring Fund shares. The Fund will distribute any undistributed net investment income and net realized capital gains prior to the reorganization, which distribution will be taxable to shareholders.
WILL I ENJOY THE SAME PRIVILEGES AS A SHAREHOLDER OF THE ACQUIRING FUND THAT I CURRENTLY HAVE AS A SHAREHOLDER OF THE FUND?
Yes. You will continue to enjoy the same shareholder privileges such as the Fund Exchanges service, Dreyfus TeleTransfer Privilege, Dreyfus-Automatic Asset Builder®, Dreyfus Payroll Savings Plan, Dreyfus Government Direct Deposit Privilege, Dreyfus Dividend Options, Dreyfus Auto-Exchange Privilege and Dreyfus Automatic Withdrawal Plan. In addition, if you hold Class A shares, you also will have the ability to write redemption checks against your account through the Checkwriting Privilege.
WILL THE PROPOSED REORGANIZATION RESULT IN A HIGHER MANAGEMENT FEE OR HIGHER FUND EXPENSES?
No. The Fund has agreed to pay Dreyfus a management fee at the annual rate of 0.60% of the value of the Fund's average daily net assets, and the Acquiring Fund has agreed to pay Dreyfus a management fee at the annual rate of 0.45% of the value of the Acquiring Fund's average daily net assets. Dreyfus has contractually agreed, as to the Fund, to waive receipt of its fees and/or assume the expenses of the Fund, until at least September 30, 2008, so that the total annual operating expenses of none of the Fund's classes of shares (excluding Rule 12b-1 fees, shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) exceed 0.725%. Dreyfus also has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A and Class I shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. It currently is anticipated that each class of shares of the Acquiring Fund will have a lower total expense ratio than the corresponding class of shares of the Fund based on expenses of the funds, as of July 31, 2007.
WILL I BE CHARGED A SALES CHARGE, REDEMPTION FEE OR CONTINGENT DEFERRED SALES CHARGE ("CDSC") AT THE TIME OF THE REORGANIZATION?
No. No sales charge, redemption fee or CDSC will be imposed at the time of the reorganization. Any subsequent investment in the Acquiring Fund will be subject to any applicable sales charges and any redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Acquiring Fund received in the reorganization will be subject to the same CDSC as redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Fund (calculated from the date of original purchase of Fund shares).
WHO WILL PAY THE EXPENSES OF THE PROPOSED REORGANIZATION?
Because of the anticipated benefits to shareholders of the Fund as a result of the reorganization, expenses relating to the proposed reorganization will be borne by the Fund.
HOW DOES THE BOARD OF TRUSTEES OF THE TRUST RECOMMEND I VOTE?
The Trust's Board of Trustees has determined that reorganizing the Fund into the Acquiring Fund, which is managed by Dreyfus and has the same investment objective and substantially similar investment management policies as the Fund, offers potential benefits to shareholders of the Fund. These potential benefits include permitting Fund shareholders to pursue substantially similar investment goals in a fund that has a generally better performance record and is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the Fund. By combining the Fund with the Acquiring Fund, shareholders of the Fund also should benefit from more efficient portfolio management.
The Trust's Board of Trustees believes that the reorganization is in the best interests of the Fund and its shareholders. Therefore, the Trustees recommend that you vote FOR the reorganization.
HOW CAN I VOTE MY SHARES?
You can vote in any one of the following ways:
| • | By mail, with the enclosed proxy card and postage-paid envelope; |
| • | By telephone, with a toll-free call to the number listed on your proxy card; |
| • | Through the Internet, at the website address listed on your proxy card; or |
| • | In person at the meeting. |
We encourage you to vote through the Internet or by telephone using the number that appears on your proxy card. These voting methods will save the Fund money because the Fund would not have to pay for return-mail postage. Whichever voting method you choose, please take the time to read the Prospectus/Proxy Statement before you vote.
Please note: if you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal. Thank you in advance for your vote.
DREYFUS PREMIER CORE BOND FUND
_________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
_________________
To the Shareholders:
A Special Meeting of Shareholders of Dreyfus Premier Core Bond Fund (the "Fund"), a series of Dreyfus Premier Fixed Income Funds (the "Trust"), will be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, on Wednesday, February 27, 2008, at 9:30 a.m., for the following purposes:
| 1. | To approve an Agreement and Plan of Reorganization providing for the transfer of all of the assets of the Fund to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets and the assumption by the Acquiring Fund of the Fund's stated liabilities (the "Reorganization"). Class A, Class B, Class C and Class I shares of the Acquiring Fund received by the Fund in the Reorganization will be distributed by the Fund to its Class A, Class B, Class C and Class I shareholders, respectively, in liquidation of the Fund, after which the Fund will cease operations and will be terminated as a series of the Trust; and |
| 2. | To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. |
Shareholders of record at the close of business on December 21, 2007 will be entitled to receive notice of and to vote at the meeting.
| By Order of the Board of Trustees
Michael A. Rosenberg
Secretary |
New York, New York
December 21, 2007
WE NEED YOUR PROXY VOTE
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY LAW, THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A QUORUM OF FUND SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE FUND, AT SHAREHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE FUND TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD OR OTHERWISE VOTE PROMPTLY. YOU AND ALL OTHER SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION. |
Transfer of the Assets of
DREYFUS PREMIER CORE BOND FUND
(A Series of Dreyfus Premier Fixed Income Funds)
To and in Exchange for Class A, Class B, Class C and Class I Shares of
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
(A Series of Dreyfus Investment Grade Funds, Inc.)
_________________
PROSPECTUS/PROXY STATEMENT
December 17, 2007
_________________
Special Meeting of Shareholders
To Be Held on Wednesday, February 27, 2008
This Prospectus/Proxy Statement is furnished in connection with a solicitation of proxies by the Board of Trustees of Dreyfus Premier Fixed Income Funds (the "Trust"), on behalf of Dreyfus Premier Core Bond Fund (the "Fund"), to be used at the Special Meeting of Shareholders (the "Meeting") of the Fund to be held on Wednesday, February 27, 2008, at 9:30 a.m., at the offices of The Dreyfus Corporation ("Dreyfus"), 200 Park Avenue, 8th Floor, New York, New York 10166, for the purposes set forth in the accompanying Notice of Special Meeting of Shareholders. Shareholders of record at the close of business on December 21, 2007 are entitled to receive notice of and to vote at the Meeting.
It is proposed that the Fund transfer all of its assets to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities, all as more fully described in this Prospectus/Proxy Statement (the "Reorganization"). Upon consummation of the Reorganization, the Acquiring Fund shares received by the Fund will be distributed to Fund shareholders, with each shareholder receiving a pro rata distribution of the Acquiring Fund's shares (or fractions thereof) for Fund shares held prior to the Reorganization. It is contemplated that each shareholder will receive for his or her Fund shares a number of Class A, Class B, Class C or Class I shares (or fractions thereof) of the Acquiring Fund equal in value to the aggregate net asset value of the shareholder's Class A, Class B, Class C or Class I Fund shares, respectively, as of the date of the Reorganization.
This Prospectus/Proxy Statement, which should be retained for future reference, concisely sets forth information about the Acquiring Fund that Fund shareholders should know before voting on the proposal or investing in the Acquiring Fund.
A Statement of Additional Information ("SAI") dated December 17, 2007, relating to this Prospectus/Proxy Statement, has been filed with the Securities and Exchange Commission (the "Commission") and is incorporated by reference in its entirety. The Commission maintains a website (http://www.sec.gov) that contains the SAI, material incorporated in this Prospectus/Proxy Statement by reference, and other information regarding the Acquiring Fund and the Fund. A copy of the SAI is available without charge by calling 1-800-554-4611, or writing to the Acquiring Fund at its offices at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Shares of the Acquiring Fund and the Fund are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Investing in the Acquiring Fund, as in the Fund, involves certain risks, including the possible loss of principal.
The Securities and Exchange Commission has not approved or disapproved the Acquiring Fund's shares or passed upon the adequacy of this Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
The Fund and the Acquiring Fund are open-end management investment companies advised by Dreyfus. The funds have the same investment objective and substantially similar investment management policies. The Fund and the Acquiring Fund each invest primarily in fixed-income securities and have the same primary portfolio manager. However, the investment practices and limitations of each fund (and the related risks) are not identical. The Acquiring Fund is a series of Dreyfus Investment Grade Funds, Inc. (the "Company"). To help facilitate the Reorganization, the Acquiring Fund plans to change its multi-class structure by designating its current Investor shares and Institutional shares as Class A shares and Class I shares, respectively, and creating Class B and Class C share classes. In addition, the Acquiring Fund intends to change its name from Dreyfus Intermediate Term Income Fund to Dreyfus Premier Intermediate Term Income Fund. A comparison of the Fund and the Acquiring Fund is set forth in this Prospectus/Proxy Statement.
The Acquiring Fund's Prospectus dated December 3, 2007 and Annual Report for its fiscal year ended July 31, 2007 (including its audited financial statements for the fiscal year) accompany this Prospectus/Proxy Statement. The Acquiring Fund's Prospectus and the financial statements contained in its Annual Report are incorporated into this Prospectus/Proxy Statement by reference. For a free copy of the Fund's most-recent Prospectus, its Annual Report for the fiscal year ended October 31, 2006 and its Semi-Annual Report for the six-month period ended April 30, 2007, please call your financial adviser, call 1-800-554-4611, visit www.dreyfus.com, or write to the Fund at its offices located at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Shareholders are entitled to one vote for each Fund share held and fractional votes for each fractional Fund share held. Class A, Class B, Class C and Class I shareholders will vote together on the proposal. Fund shares represented by executed and unrevoked proxies will be voted in accordance with the specifications made thereon. If the enclosed proxy card is executed and returned, it nevertheless may be revoked by giving another proxy before the Meeting. Also, any shareholder who attends the Meeting in person may vote by ballot at the Meeting, thereby canceling any proxy previously given. If you sign and date your proxy card, but do not provide voting instructions, your shares will be voted FOR the proposal.
As of October 31, 2007, the following numbers of Fund shares were issued and outstanding:
Class A Shares
Outstanding
31,062,657.871 | Class B Shares
Outstanding
5,997,485.243 | Class C Shares
Outstanding
2,742,761.687 | Class I Shares
Outstanding
1,399,030.342 |
Proxy materials will be mailed to shareholders of record on or about December 28, 2007.
TABLE OF CONTENTS
| Reasons for the Reorganization | |
| Information about the Reorganization | |
| Additional Information about the Acquiring Fund and the Fund | |
| Financial Statements and Experts | |
| Notice To Banks, Broker/Dealers and Voting Trustees and Their Nominees | |
| Exhibit A: Agreement and Plan of Reorganization | A-1 |
| Exhibit B: Pro Forma Fees and Expenses | B-1 |
| Exhibit C: Description of the Company's Board Members | C-1 |
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION PROVIDING
FOR THE TRANSFER OF ALL OF THE ASSETS OF THE FUND TO THE
ACQUIRING FUND
SUMMARY
This Summary is qualified by reference to the more complete information contained elsewhere in this Prospectus/Proxy Statement, the Acquiring Fund's Prospectus, the Fund's Prospectus and the Agreement and Plan of Reorganization (the "Plan") attached to this Prospectus/Proxy Statement as Exhibit A.
Proposed Transaction. The Trust's Board, all of whose members are not "interested persons" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund or the Acquiring Fund, has unanimously approved the Plan for the Fund. The Plan provides that, subject to the requisite approval of the Fund's shareholders, on the date of the Reorganization the Fund will assign, transfer and convey to the Acquiring Fund all of the assets of the Fund, including all securities and cash, in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets, and the Acquiring Fund will assume the Fund's stated liabilities. The Fund will distribute all Acquiring Fund shares received by it among its shareholders so that each Class A, Class B, Class C and Class I shareholder of the Fund will receive a pro rata distribution of the Acquiring Fund's Class A, Class B, Class C and Class I shares (or fractions thereof), respectively, having an aggregate net asset value equal to the aggregate net asset value of the shareholder's Fund shares as of the date of the Reorganization. Thereafter, the Fund will cease operations and will be terminated as a series of the Trust.
As a result of the Reorganization, each Fund shareholder will cease to be a shareholder of the Fund and will become a shareholder of the Acquiring Fund as of the close of business on the date of the Reorganization. No sales charge, redemption fee or contingent deferred sales charge ("CDSC") will be imposed at the time of the Reorganization. Any subsequent investment in the Acquiring Fund after the Reorganization will be subject to any applicable sales charges, and any redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Acquiring Fund received in the Reorganization will be subject to the same CDSC as the redemption of Class B or Class C shares (or Class A shares subject to a CDSC) of the Fund and would be calculated from the date of original purchase of Fund shares.
The Trust's Board has unanimously concluded that the Reorganization is in the best interests of the Fund and its shareholders and the interests of the Fund's existing shareholders will not be diluted as a result of the transactions contemplated thereby. See "Reasons for the Reorganization."
Tax Consequences. As a condition to the closing of the Reorganization, the Fund and the Acquiring Fund will receive an opinion of counsel to the effect that, for federal income tax purposes, the Reorganization will qualify as a tax-free reorganization and, thus, no gain or loss will be recognized by the Fund, the Fund's shareholders, or the Acquiring Fund as a result of the Reorganization. Certain tax attributes of the Fund will carry over to the Acquiring Fund, including the ability of the Acquiring Fund to utilize the Fund's capital loss carryforwards. See "Information about the Reorganization—Federal Income Tax Consequences."
Comparison of the Fund and the Acquiring Fund. The following discussion is primarily a summary of certain parts of the Fund's Prospectus and the Acquiring Fund's Prospectus. Information contained in this Prospectus/Proxy Statement is qualified by the more complete information set forth in such Prospectuses, which are incorporated herein by reference.
Goal/Approach. The Acquiring Fund and the Fund have the same investment objective and substantially similar investment management policies. Each fund seeks to maximize total return, consisting of capital appreciation and current income.
To pursue its goal, the Fund normally invests at least 80% of its assets in bonds. These securities include U.S. government bonds and notes, corporate bonds, convertible securities, preferred stocks, asset-backed securities, mortgage-related securities, inflation-indexed bonds, and bonds of foreign issuers. The Fund also may own warrants and common stock acquired in "units" with bonds. The Fund has the flexibility to shift its investment focus among different fixed-income securities, based on market conditions and other factors. In choosing market sectors and securities for investment, the Fund's portfolio manager reviews the issuer's financial strength, and the current state and long-term outlook of the industry or sector. Current and forecasted interest rate and liquidity conditions also are important factors in this regard.
To pursue its goal, the Acquiring Fund normally invests at least 80% of its assets in fixed-income securities of U.S. and foreign issuers rated investment grade (BBB/Baa or higher) or the unrated equivalent as determined by Dreyfus. These securities include: U.S. government bonds and notes, corporate bonds, municipal bonds, convertible securities, preferred stocks, inflation-indexed securities, asset-backed securities, mortgage-related securities (including collateralized mortgage obligations), and foreign bonds. The Acquiring Fund also may invest in collateralized debt obligations, which include collateralized loan obligations and other similarly structured securities. The Acquiring Fund's portfolio manager buys and sells fixed-income securities based on credit quality, financial outlook and yield potential. Fixed-income securities with deteriorating credit quality are potential sell candidates, while those offering higher yields are potential buy candidates.
Generally, the Fund seeks to maintain a portfolio with an investment grade average credit quality. However, the Fund may invest up to 35% of its assets in fixed-income securities rated below investment grade ("high yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. For additional yield, the Acquiring Fund may invest up to 20% of its assets in fixed-income securities rated below investment grade to as low as Caa/CCC or the unrated equivalent as determined by Dreyfus.
The Fund may invest up to 35% of its assets in dollar-denominated and non-dollar-denominated securities of foreign issuers, including those of issuers in emerging markets. The Acquiring Fund focuses primarily on U.S. securities, but may invest up to 30% of its assets in fixed-income securities of foreign issuers, including those of issuers in emerging markets.
The Fund typically can be expected to have an average effective portfolio maturity of between 5 and 10 years and an effective portfolio duration between 3.5 and 6 years, but the Fund may invest without regard to maturity. The Acquiring Fund is required to generally maintain an average effective portfolio maturity of between 5 and 10 years and can be expected to have an effective portfolio duration between 3 and 8 years. The Fund and the Acquiring Fund may invest in individual securities of any maturity. As of September 30, 2007, the average effective maturity of the Fund's portfolio and the Acquiring Fund's portfolio was 6.48 years and 6.44 years, respectively. The average effective duration of the Fund's portfolio and the Acquiring Fund's portfolio as of such date was 4.98 years and 4.93 years, respectively. Duration is a measure of how sensitive a fund's portfolio may be to changes in interest rates — generally, the longer a fund's duration, the more likely its portfolio is to react to interest rate fluctuations and the greater its long-term risk/return potential. The primary portfolio manager of the Fund and the Acquiring Fund and management believe that, because of prevalent market conditions, the characteristics of the funds' portfolios are not significantly different.
Each fund may, but is not required to, use derivatives, such as futures, options and swap agreements, as a substitute for taking a position in an underlying asset, to increase returns, to manage interest rate risk, to manage the effective duration or maturity of the fund's portfolio, or as part of a hedging strategy. Each fund may enter into swap agreements, such as credit default swaps, which can be used to transfer the credit risk of a security without actually transferring ownership of the security or to customize exposure to particular corporate credit. To enhance current income, each fund also may engage in a series of purchase and sale contracts or forward roll transactions in which the fund sells a mortgage-related security, for example, to a financial institution and simultaneously agrees to purchase a similar security from the institution at a later date at an agreed-upon price. Each fund also may make forward commitments in which the fund agrees to buy or sell a security in the future at a price agreed upon today. Each fund also may engage in short-selling, typically for hedging purposes, such as to limit exposure to a possible market decline in the value of its portfolio securities.
Each fund may lend its portfolio securities to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. Loans of portfolio securities may not exceed 33-1/3% of the value of the fund's total assets.
Each fund is a "diversified" fund, which means that neither fund will, with respect to 75% of its total assets, invest more than 5% of its assets in the securities of any single issuer nor hold more than 10% of the outstanding voting securities of any single issuer (other than, in each case, securities of other investment companies, and securities issued or guaranteed by the U.S. government, its agencies or instrumentalities).
For more information on either the Fund's or the Acquiring Fund's investment management policies, see "Goal/Approach" in the relevant Prospectus and "Description of the Company and Fund[s]" in the relevant Statement of Additional Information.
The Fund is a series of the Trust, which is an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts. The Acquiring Fund is a series of the Company, which is a corporation organized under the laws of the State of Maryland. See "Certain Organizational Differences Between the Trust and the Company" below.
Main Risks. The principal risks associated with an investment in the Fund and the Acquiring Fund are substantially similar. These risks are discussed below. As a result, the value of your investment in the Acquiring Fund, as in the Fund, will fluctuate, sometimes dramatically, which means you could lose money.
| • | Interest rate risk. Prices of bonds tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect bond prices and, accordingly, a fund's share price. The longer the effective maturity and duration of a fund's portfolio, the more the fund's share price is likely to react to interest rates. |
| • | Call risk. Some bonds give the issuer the option to call, or redeem, the bonds before their maturity date. If an issuer "calls" its bond during a time of declining interest rates, the funds might have to reinvest the proceeds in an investment offering a lower yield. During periods of market illiquidity or rising interest rates, prices of a fund's "callable" issues are subject to increased price fluctuation. |
| • | Credit risk. Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a bond, can cause a bond's price to fall, potentially lowering the Fund's or the Acquiring Fund's share price. Although each fund invests primarily in investment grade bonds, the Fund and the Acquiring Fund may invest to a limited extent in high yield ("junk") bonds, which involve greater credit risk, including the risk of default, than investment grade bonds, and are considered predominantly speculative with respect to the issuer's continuing ability to make principal and interest payments. The prices of high yield bonds can fall dramatically in response to bad news about the issuer or its industry, or the economy in general. |
| • | Market risk. The market value of a security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. A security's market value also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. |
| • | Market sector risk. Each fund's overall risk level will depend on the market sectors in which the fund is invested and the current interest rate, liquidity and credit quality of such sectors. Each fund may significantly overweight or underweight certain companies, industries or market sectors, which may cause the fund's performance to be more or less sensitive to developments affecting those companies, industries or sectors. |
| • | Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the fund's share price may fall dramatically. Investments in foreign securities tend to have greater exposure to liquidity risk than domestic securities. |
| • | Prepayment and extension risk. When interest rates fall, the principal on mortgage-backed and certain asset-backed securities may be prepaid. The loss of higher yielding, underlying mortgages and the reinvestment of proceeds at lower interest rates can reduce a fund's potential price gain in response to falling interest rates, reduce the fund's yield, or cause the fund's share price to fall. When interest rates rise, the effective duration of certain mortgage-related and other asset-backed securities may lengthen due to a drop in prepayments of the underlying mortgages or other assets. This is known as extension risk and would increase the fund's sensitivity to rising rates and its potential for price declines. |
| • | Derivatives risk. In addition to investing in mortgage-related and asset-backed securities, each fund may use derivative instruments such as options, futures and options on futures (including those relating to securities, indexes, foreign currencies and interest rates), swaps (including credit default swaps on corporate bonds and asset-backed securities), options on swaps, and other credit derivatives. A small investment in derivatives could have a potentially large impact on a fund's performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult to value, and there is the risk that changes in the value of a derivative held by a fund will not correlate with the underlying instruments or the fund's other investments. Derivative instruments also involve the risk that a loss may be sustained as a result of the failure of the counterparty to the derivative instruments to make required payments or otherwise comply with the derivative instruments' terms. Credit default swaps and similar instruments involve greater risks than if the fund had invested in the reference obligation directly, since, in addition to general market risks, they are subject to illiquidity risk, counterparty risk and credit risks.
Additionally, some derivatives the funds may use may involve economic leverage, which could increase the volatility of these instruments, as they may increase or decrease in value more quickly than the underlying security, index, futures contract, or other economic variable. Each fund may be required to segregate permissible liquid assets to cover its obligations relating to its purchase of derivative instruments. |
| • | Foreign investment risk. The prices and yields of foreign bonds can be affected by political and economic instability or changes in currency exchange rates. The bonds of issuers located in emerging markets can be more volatile and less liquid than those of issuers in more mature economies. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by a fund and denominated in those currencies. |
| • | Inflation-indexed security risk. Interest payments on inflation-indexed securities can be unpredictable and will vary as the principal and/or interest is periodically adjusted based on the rate of inflation. If the index measuring inflation falls, the interest payable on these securities will be reduced. In the case of U.S. Treasury inflation-indexed bonds, the U.S. Treasury has guaranteed that in the event of a drop in prices, it would repay the par amount of its inflation-indexed securities. Inflation-indexed securities issued by corporations generally do not guarantee repayment of principal. Any increase in the principal amount of an inflation-indexed security will be considered taxable ordinary income, even though investors do not receive their principal until maturity. As a result, a fund may be required to make annual distributions to shareholders that exceed the cash the fund received, which may cause the fund to liquidate certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-indexed bond is adjusted downward due to deflation, amounts previously distributed may be characterized in some circumstances as a return of capital. |
| • | Short sale risk. Each fund may make short sales, which involves selling a security it does not own in anticipation that the security's price will decline. Short sales expose the fund to the risk that it will be required to buy the security sold short (also known as "covering" the short position) at a time when the security has appreciated in value, thus resulting in a loss to the fund. |
| • | Leveraging risk. The use of leverage, such as borrowing money to purchase securities, engaging in reverse repurchase agreements, lending portfolio securities, entering into futures contracts, and engaging in forward commitment transactions, may magnify the fund's gains or losses. |
The Fund and the Acquiring Fund may lend their respective portfolio securities to brokers, dealers and other financial institutions. In connection with such loans, the fund will receive collateral from the borrower equal to at least 100% of the value of the loaned securities. If the borrower of the securities fails financially, there could be delays in recovering the loaned securities or exercising rights to the collateral.
The Fund and the Acquiring Fund may engage in short-term trading, which could produce higher transaction costs and taxable distributions, and lower the respective fund's after-tax performance. A fund's forward roll transactions will increase its portfolio turnover rate.
Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations, such as those issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by a fund does not apply to the market value of such security or to shares of the fund itself. In addition, because many types of U.S. government securities trade actively outside the U.S., their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
Under adverse market conditions, the Fund and the Acquiring Fund each could invest some or all of its respective assets in U.S. Treasury securities and money market securities. Although the Fund or the Acquiring Fund would do this for temporary defensive purposes, this strategy could reduce the benefit from any upswing in the market. To the extent the Fund or the Acquiring Fund invests defensively in these securities, the fund might not achieve its investment objective. Each fund also may purchase money market instruments when it has cash reserves or in anticipation of taking a market position.
An investment in a fund is not a bank deposit. It is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
See "Main Risks" in the relevant Prospectus and "Description of the Company and Fund[s]" in the relevant Statement of Additional Information for a more complete description of investment risks.
Sales Charges. The schedules of sales charges imposed at the time of purchase of Class A shares of the Fund and the Acquiring Fund are identical. The maximum sales charge imposed on the purchase of Class A shares of the Fund and the Acquiring Fund is 4.50%. In addition, Fund and Acquiring Fund Class A shares purchased without an initial sales charge as part of an investment of at least $1,000,000 and redeemed within one year of purchase are subject to the same 1.00% CDSC. The CDSCs imposed at the time of redemption on Class B and Class C shares for the Fund and the Acquiring Fund are identical. See in the relevant Prospectus "Shareholder Guide" for a discussion of sales charges and the CDSC. No sales charge or CDSC will be imposed at the time of the Reorganization. Shares of the Fund and the Acquiring Fund currently are not subject to any exchange or redemption fees.
Fees and Expenses. The fees and expenses set forth below are based on net assets and accruals of the Fund and the Acquiring Fund, respectively, as of July 31, 2007, and are adjusted for the Fund to include estimated costs of the Reorganization totaling $110,000. The "Pro Forma After Reorganization" operating expenses information is based on the net assets and accruals of the Fund and the Acquiring Fund, as of July 31, 2007, as adjusted showing the effect of the Reorganization had it occurred on such date. Annual fund operating expenses are paid out of fund assets, so their effect is reflected in the share prices.
The management fee payable to Dreyfus by the Fund (0.60%) is higher than that payable by the Acquiring Fund (0.45%). Dreyfus has contractually agreed, as to the Fund, to waive receipt of its fees and/or assume the expenses of the Fund, until at least September 30, 2008, so that the total annual operating expenses of none of the Fund's classes of shares (excluding Rule 12b-1 fees, shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses (which include the expenses of the Reorganization)) exceed 0.725%. Dreyfus also has contractually agreed, as to the Acquiring Fund, to waive receipt of its fees and/or assume the expenses of the Acquiring Fund, until at least March 31, 2009, so that the total annual operating expenses of the Acquiring Fund's Class A and Class I shares (excluding shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) do not exceed 0.55%. It currently is anticipated that each class of shares of the Acquiring Fund will have a lower total expense ratio than the corresponding class of shares of the Fund based on expenses of the funds, as of July 31, 2007, and the estimated expenses for the Acquiring Fund's Class B and C shares if the Reorganization is consummated.
Annual Fund Operating Expenses
(expenses paid from fund assets)
(percentage of average daily net assets):
| Fund
Class A
| Acquiring Fund
Class A
| Pro Forma After
Reorganization
Acquiring Fund
Class A
|
|---|
| Management fees | .60% | .45% | .45% |
| Rule 12b-1 fee | none | none | none |
| Shareholder services fee | .25% | .25% | .25% |
| Other expenses | .26%* | .22% | .20% |
|
|
|
|
| Total | 1.11% | .92% | .90% |
| Fee waiver and/or |
| expense reimbursement | (.11)% | (.12)% | (.10)% |
|
|
|
|
| Net operating expenses | 1.00% | .80% | .80% |
| Fund
Class B
| Acquiring Fund
Class B
| Pro Forma After
Reorganization
Acquiring Fund
Class B
|
|---|
| Management fees | .60% | .45% | .45% |
| Rule 12b-1 fee | .50% | .50% | .50% |
| Shareholder services fee | .25% | .25% | .25% |
| Other expenses | .23%* | .17%** | .17%** |
|
|
|
|
| Total | 1.58% | 1.37% | 1.37% |
| Fee waiver and/or |
| expense reimbursement | (.08)% | N/A | N/A |
|
|
|
|
| Net operating expenses | 1.50% | 1.37% | 1.37% |
| Fund
Class C
| Acquiring Fund
Class C
| Pro Forma After
Reorganization
Acquiring Fund
Class C
|
|---|
| Management fees | .60% | .45% | .45% |
| Rule 12b-1 fee | .75% | .75% | .75% |
| Shareholder services fee | .25% | .25% | .25% |
| Other expenses | .24%* | .18%** | .18%** |
|
|
|
|
| Total | 1.84% | 1.63% | 1.63% |
| Fee waiver and/or |
| expense reimbursement | (.09)% | N/A | N/A |
|
|
|
|
| Net operating expenses | 1.75% | 1.63% | 1.63% |
| Fund
Class I
| Acquiring Fund
Class I
| Pro Forma After
Reorganization
Acquiring Fund
Class I
|
|---|
| Management fees | .60% | .45% | .45% |
| Rule 12b-1 fee | none | none | none |
| Shareholder services fee | none | none | none |
| Other expenses | .19%* | .09% | .08% |
|
|
|
|
| Total | .79% | .54% | .53% |
| Fee waiver and/or |
| expense reimbursement | (.00)% | (.00)% | (.00)% |
|
|
|
|
| Net operating expenses | .75% | .54% | .53% |
_________________
| * | "Other expenses" for the Fund reflect the costs of the Reorganization, which are estimated to be $110,000 or .02% of the Fund's average daily net assets. |
| ** | "Other expenses" for the Acquiring Fund's Class B and Class C shares are based on estimated amounts for the current fiscal year. Actual expenses may be greater or less than the amounts listed in the table. |
Expense example
This example shows what you could pay in expenses over time. It uses the same hypothetical conditions other funds use in their prospectuses: $10,000 initial investment, 5% total return each year and no changes in expenses. This example is based on net operating expenses, which reflect, for the applicable years, the expense waiver/reimbursement by Dreyfus. Because actual returns and expenses will be different, the example is for comparison only.
|
| Fund
|
|
|
|---|
| Class A Shares
| Class B Shares*
| Class C Shares*
| Class I Shares
|
|---|
| 1 Year | $547 | $553/$153 | $278/$178 | $77 |
| 3 Years | $777 | $791/$491 | $570/$570 | $248 |
| 5 Years | $1,024 | $1,053/$853 | $987/$987 | $435 |
| 10 Years | $1,731 | $1,631**/$1,631** | $2,151/$2,151 | $974 |
|
| Acquiring Fund
|
|
|
|---|
| Class A Shares
| Class B Shares*
| Class C Shares*
| Class I Shares
|
|---|
| 1 Year | $528 | $539/$139 | $266/$166 | $55 |
| 3 Years | $719 | $734/$434 | $514/$514 | $173 |
| 5 Years | $925 | $950/$750 | $887/$887 | $302 |
| 10 Years | $1,520 | $1,411**/$1,411** | $1,933/$1,933 | $677 |
|
| Pro Forma After Reorganization
Acquiring Fund
|
|
|
|---|
| Class A Shares
| Class B Shares*
| Class C Shares*
| Class I Shares
|
|---|
| 1 Year | $528 | $539/$139 | $266/$166 | $54 |
| 3 Years | $715 | $734/$434 | $514/$514 | $170 |
| 5 Years | $917 | $950/$750 | $887/$887 | $296 |
| 10 Years | $1,499 | $1,400**/$1,400** | $1,933/$1,933 | $665 |
_________________
| * | With redemption/without redemption. |
| ** | Assumes conversion of Class B to Class A at end of sixth year following the date of purchase. |
Shareholders of two other funds advised by Dreyfus—Dreyfus A Bonds Plus, Inc. and Dreyfus Premier Managed Income Fund (together, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such Proposed Acquired Fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganization of the respective Proposed Acquired Fund. Set forth in Exhibit B is information with respect to the fees and expenses of the funds, including the total annual operating expenses of the Acquiring Fund assuming that shareholders of the Fund and of the Proposed Acquired Funds approve the reorganization of their respective fund into the Acquiring Fund.
Past Performance. The bar charts and tables below illustrate the risks of investing in the Acquiring Fund and the Fund. The bar chart for the Acquiring Fund shows the changes in the performance of the Acquiring Fund's Class A shares from year to year and the bar chart for the Fund shows the changes in the performance of the Fund's Class A shares from year to year. Sales loads are not reflected in the bar charts; if they were, the returns shown would have been lower. The table for the Acquiring Fund compares the average annual total returns of each of the Acquiring Fund's share classes to those of the Lehman Brothers U.S. Aggregate Index, a widely recognized, unmanaged index of U.S. dollar-denominated, investment grade, fixed-rate taxable bond performance. The historical performance of the Acquiring Fund's Class A shares is used to calculate the performance shown for Class B and Class C shares of the Acquiring Fund in the table. Such performance figures have been adjusted to reflect applicable sales charges, but do not reflect applicable class fees and expenses; if these fees and expenses had been reflected, the performance shown for Class B and Class C shares of the Acquiring Fund would have been lower. The table for the Fund compares the average annual total returns of each of the Fund's share classes also to those of the Lehman Brothers U.S. Aggregate Index. The returns in the tables reflect applicable sales loads. All returns assume reinvestment of dividends and distributions. Of course, past performance (before and after taxes) is no guarantee of future results. With respect to each fund, performance for each share class will vary from the performance of the respective fund's other share classes due to differences in charges and expenses.
After-tax performance is shown only for Class A shares. After-tax performance of each fund's other share classes will vary. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
Acquiring Fund--Class A Shares
Year-by-year total returns as of 12/31 each year (%)
| +14.62 | +7.83 | +5.40 | +12.34 | +6.20 | +6.81 | +7.57 | +4.36 | +1.88 | +4.89 |
| '97 | '98 | '99 | '00 | '01 | '02 | '03 | '04 | '05 | '06 |
| Best Quarter: | Q3 '97 | +5.40% | |
| Worst Quarter: | Q2 '04 | -3.25% | |
The year-to-date total return of the Acquiring Fund's Class A shares as of 9/30/07 was 2.62%.
Acquiring Fund
Average annual total returns as of 12/31/06
Share class
| 1 Year
| 5 Years
| 10 Years
|
|---|
Class A | | | |
| returns before taxes | 0.18% | 4.12% | 6.64% |
Class A | | | |
| returns after taxes | | | |
| on distributions | -1.47% | 2.22% | 3.95% |
Class A | | | |
| returns after taxes | | | |
| on distributions and | | | |
| sale of fund shares | 0.09% | 2.38% | 4.00% |
Class B* | | | |
| returns before taxes | 0.89% | 4.76% | 7.13%** |
Class C* | | | |
| returns before taxes | 3.89% | 5.09% | 7.13% |
Class I | | | |
| returns before taxes | 5.20% | 5.38% | 5.10%† |
Lehman Brothers U.S.
Aggregate Index | | | |
| reflects no deduction for | | | |
| fees, expenses or taxes | 4.33% | 5.06% | 6.24%†† |
| * | Based on the performance of Class A shares, adjusted to reflect applicable sales charges |
| ** | Assumes conversion of Class B shares to Class A shares at end of the sixth year following the date of purchase. |
| † | Since inception on 5/31/01. |
| †† | Reflects 10 year period. For the period 5/31/01 through 12/31/06, the average annual total return of the Lehman Brothers U.S. Aggregate Index was 5.45%. |
Fund-- Class A Shares
Year-by-year total returns as of 12/31 each year (%)
| +11.17 | +4.33 | +4.92 | +9.13 | +5.69 | +5.89 | +7.32 | +3.86 | +1.60 | +4.90 |
| '97 | '98 | '99 | '00 | '01 | '02 | '03 | '04 | '05 | '06 |
| Best Quarter: | Q3 '97 | +4.61% | |
| Worst Quarter: | Q2 '04 | -3.36% | |
The year-to-date total return of the Fund's Class A shares as of 9/30/07 was 2.19%.
Fund
Average annual total returns as of 12/31/06
Share class
| 1 Year
| 5 Years
| 10 Years
|
|---|
Class A | 0.21% | 3.73% | 5.36% |
| returns before taxes |
Class A |
| returns after taxes |
| on distributions | -1.42% | 2.03% | 3.09% |
Class A |
| returns after taxes |
| on distributions and |
| sale of fund shares | 0.11% | 2.17% | 3.15% |
Class B |
| returns before taxes | 0.31% | 3.86% | 5.12%* |
Class C |
| returns before taxes | 3.06% | 3.96% | 4.74%* |
Class I |
| returns before taxes | 5.10% | 5.05% | 5.86%* |
Lehman Brothers U.S.
Aggregate Index |
| reflects no deduction for |
| fees, expenses or taxes | 4.33% | 5.06% | 6.24%** |
| * | Since inception on 3/1/00. |
| ** | Reflects 10 year period. For the period 3/1/00 through 12/31/06, the average annual total return of the Lehman Brothers U.S. Aggregate Index was 6.48%. |
Investment Adviser. The investment adviser for the Fund and the Acquiring Fund is Dreyfus, located at 200 Park Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages approximately $247 billion in approximately 180 mutual fund portfolios. A discussion regarding the basis for the Company's Board approving the Acquiring Fund's management agreement with Dreyfus is available in the Acquiring Fund's Annual Report for its fiscal year ended July 31, 2007. Dreyfus is the primary mutual fund business of The Bank of New York Mellon Corporation ("BNY Mellon"), a global financial services company focused on helping clients move and manage their financial assets, operating in 37 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing asset and wealth management, asset servicing, issuer services, and treasury services through a worldwide client-focused team. BNY Mellon has more than $18 trillion in assets under custody and administration and $1 trillion in assets under management, and it services more than $11 trillion in outstanding debt. Additional information is available at www.bnymellon.com.
Primary Portfolio Manager. Kent Wosepka is each fund's primary portfolio manager. Mr. Wosepka has served in this capacity for the Fund since April 2006 and for the Acquiring Fund since January 2005. He has been employed by Dreyfus since September 2001. Mr.Wosepka also is a senior portfolio manager for active core strategies with Standish Mellon Asset Management Company, LLC ("Standish Mellon"), a subsidiary of BNY Mellon and an affiliate of Dreyfus. Mr. Wosepka joined Standish Mellon in 1998.
Board Members. Other than Joseph S. DiMartino, who is Chairman of the Board of the Trust and the Company, and Clifford L. Alexander, Jr. and David W. Burke, who are both Board members of the Trust and the Company, the Trust and the Company have different Board members. None of the Board members of the Trust or the Company is an "interested person" (as defined in the 1940 Act) of the Fund or the Acquiring Fund ("Independent Board Members"). For a description of the Company's Board members, see Exhibit C.
Independent Registered Public Accounting Firm. Ernst & Young LLP is the independent registered public accounting firm for both the Fund and the Acquiring Fund.
Capitalization. Each fund has classified its shares into four classes — Class A, Class B, Class C and Class I. Class B and Class C shares of the Acquiring Fund are new and have been authorized by the Company's Board to be issued to Fund shareholders in connection with the Reorganization. The following table sets forth, as of September 30, 2007, (1) the capitalization of each class of the Fund's shares*, (2) the capitalization of each class of the Acquiring Fund's shares and (3) the pro forma capitalization of each class of the Acquiring Fund's shares, as adjusted showing the effect of the Reorganization had it occurred on such date.
| Fund
Class A
| Acquiring Fund
Class A
| Adjustments
Class A
| Pro Forma After
Reorganization
Acquiring Fund
Class A
|
|---|
| Total net assets | $433,278,945 | $538,484,842 | | $971,763,787 |
| Net asset value per share | $14.06 | $12.40 | | $12.40 |
| Shares outstanding | 30,809,721 | 43,433,975 | 4,124,527 | 78,368,223 |
| Fund
Class B
| Acquiring Fund
Class B
| Adjustments
Class B
| Pro Forma After
Reorganization
Acquiring Fund
Class B
|
|---|
| Total net assets | $94,585,171 | $0 | | $94,585,171 |
| Net asset value per share | $14.09 | N/A | | $12.40 |
| Shares outstanding | 6,714,459 | None | 915,115 | 7,629,574 |
| Fund
Class C
| Acquiring Fund
Class C
| Adjustments
Class C
| Pro Forma After
Reorganization
Acquiring Fund
Class C
|
|---|
| Total net assets | $39,030,280 | $0 | | $39,030,280 |
| Net asset value per share | $14.04 | N/A | | $12.40 |
| Shares outstanding | 2,780,181 | None | 367,701 | 3,147,882 |
| Fund
Class I
| Acquiring Fund
Class I
| Adjustments
Class I
| Pro Forma After
Reorganization
Acquiring Fund
Class I
|
|---|
| Total net assets | $19,777,243 | $35,115,794 | | $54,893,037 |
| Net asset value per share | $14.05 | $12.40 | | $12.40 |
| Shares outstanding | 1,407,253 | 2,832,734 | 187,255 | 4,427,242 |
_________________
| * | Reflects the estimated costs of the Reorganization to be paid by the Fund. |
The Acquiring Fund's total net assets (attributable to Class A and Class I shares) and the Fund's total net assets (attributable to Class A, Class B, Class C and Class I shares), as of September 30, 2007, were approximately $573.6 million and $586.7 million, respectively. The Acquiring Fund currently does not offer Class B or Class C shares. Each share has one vote. Shares have no preemptive or subscription rights and are freely transferable. All share classes of a fund will invest in the same portfolio of securities, but the classes are subject to different charges and expenses and will likely have different share prices. Shareholders of the Proposed Acquired Funds also are being asked in proxy materials directed to them to approve a separate Agreement and Plan of Reorganization providing for the transfer of all of such funds' assets, subject to liabilities, to the Acquiring Fund in exchange for Acquiring Fund shares. As of September 30, 2007, the Proposed Acquired Funds had total aggregate net assets of approximately $371.7 million. The reorganizations of the Proposed Acquired Funds, if approved by their shareholders, are scheduled to close before the closing of the Fund's Reorganization. If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganizations of those funds.
Purchase Procedures. The purchase procedures of the Fund and the Acquiring Fund and the automatic investment services they offer are substantially similar. See "Shareholder Guide — Buying shares," "Services for Fund Investors," "Instructions for Regular Accounts" and "Instructions for IRAs" in the relevant Prospectus and "How to Buy Shares" and "Shareholder Services" in the relevant Statement of Additional Information for a discussion of purchase procedures.
Distribution Plan. Class B and Class C shares of the Fund and the Acquiring Fund are subject to plans adopted pursuant to Rule 12b-1 under the 1940 Act (each, a "Rule 12b-1 Plan"). Under the respective Rule 12b-1 Plan, the Fund and the Acquiring Fund each pay MBSC Securities Corporation ("MBSC") (formerly, Dreyfus Service Corporation), their distributor, a fee at an annual rate of 0.50% of the value of the average daily net assets of Class B shares and 0.75% of the value of the average daily net assets of Class C shares (there is no Rule 12b-1 Plan fee for Class A or Class I shares of each fund) to finance the sale and distribution of such shares. Because the Rule 12b-1 Plan fees are paid out of the assets attributable to the relevant class of shares on an ongoing basis, over time they will increase the cost of your investment in such class of shares and may cost you more than paying other types of sales charges. See "Distribution and Servicing Arrangements—Distribution Plan" in the Acquiring Fund's Statement of Additional Information and "Distribution Plan and Shareholder Services Plan — Distribution Plan" in the Fund's Statement of Additional Information for a discussion of the Rule 12b-1 Plan.
Shareholder Services Plan. Class A, Class B and Class C shares of the Fund and the Acquiring Fund are subject to a Shareholder Services Plan pursuant to which the Fund and the Acquiring Fund each pay MBSC a fee at an annual rate of 0.25% of the value of the average daily net assets of the relevant class for providing shareholder services (there is no Shareholder Services Plan fee for Class I shares of each fund). See "Distribution and Servicing Arrangements—Shareholder Services Plan" in the Acquiring Fund's Statement of Additional Information and "Distribution Plan and Shareholder Services Plan—Shareholder Services Plan" in the Fund's Statement of Additional Information for a discussion of the Shareholder Services Plan.
Redemption Procedures. The redemption procedures of the Fund and the Acquiring Fund are substantially similar. See "Shareholder Guide—Selling shares," "Instructions for Regular Accounts" and "Instructions for IRAs" in the relevant Prospectus and "How to Redeem Shares" in the relevant Statement of Additional Information for a discussion of redemption procedures.
Distributions. The Fund normally declares dividends daily and pays dividends monthly. The Acquiring Fund normally declares and pays dividends monthly. Otherwise, the dividends and distributions policies of the Fund and the Acquiring Fund are the same. Although they may do so more frequently, each fund anticipates paying its shareholders dividends once a month and any capital gain distribution annually. The actual amount of dividends paid per share by the Fund and the Acquiring Fund is different. See "Distributions and Taxes" in the relevant Prospectus for a discussion of such policies.
Shareholder Services. The shareholder services offered by the Fund and the Acquiring Fund are substantially similar. The privileges you currently have on your Fund account will transfer automatically to your account with the Acquiring Fund. See "Services for Fund Investors" in the relevant Prospectus and "Shareholder Services" in the relevant Statement of Additional Information for a further discussion of the shareholder services offered.
Certain Organizational Differences Between the Trust and the Company. The Acquiring Fund is a series of the Company, which is a Maryland corporation, and the rights of its shareholders are governed by the Company's Articles of Incorporation (the "Charter"), the Company's By-Laws and the Maryland General Corporation Law (the "Maryland Code"). The Fund is a series of the Trust, which is a Massachusetts business trust, and the rights of its shareholders are governed by the Trust's Agreement and Declaration of Trust (the "Trust Agreement"), the Trust's By-Laws and applicable Massachusetts law. Certain relevant differences between the two forms of organization are summarized below.
Shareholder Meetings and Voting Rights. Generally, neither the Acquiring Fund nor the Fund is required to hold annual meetings of its shareholders. The relevant Board is required to call a special meeting of shareholders for the purpose of removing a Board member when requested in writing to do so by the holders of at least 10% of its outstanding shares entitled to vote. Shareholders may remove a Board member by the affirmative vote of two-thirds, in the case of the Fund, or a majority, in the case of the Acquiring Fund, of the respective fund's outstanding voting shares. Moreover, 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 the shareholders.
Shares of the Fund and the Acquiring Fund are entitled to one vote for each full share held and a proportionate fractional vote for each fractional share held. Generally, on matters submitted to a vote of shareholders, all shares then entitled to vote will be voted in the aggregate as a single class. The Trust Agreement provides that 30% of the Fund's shares entitled to vote shall constitute a quorum for the transaction of business at a Fund shareholders' meeting. The Company's Charter provides that 33-1/3% of the Acquiring Fund's shares entitled to vote shall constitute a quorum for the transaction of business at an Acquiring Fund's stockholders' meeting. Matters requiring a larger vote by law or under the organizational documents for the Company or the Trust are not affected by such quorum requirements.
Shareholder Liability. Under the Maryland Code, Acquiring Fund stockholders have no personal liability as such for the Acquiring Fund's acts or obligations.
Under Massachusetts law, shareholders of a Massachusetts business trust, under certain circumstances, could be held personally liable for the obligations of the business trust. However, the Trust Agreement disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in every note, bond, contract or other undertaking issued or entered into by or on behalf of the Fund, or the Trust's Trustees. The Trust Agreement provides for indemnification out of the Fund's property of all losses and expenses of any shareholder held personally liable for the obligations of the Fund solely by reason of being or having been a Fund shareholder and not because of such shareholder's acts or omissions or some other reason. Thus, the Fund considers the risk of a Fund shareholder incurring financial loss on account of shareholder liability to be remote because it is limited to circumstances in which a disclaimer is inoperative or the Fund itself would be unable to meet its obligations. The Trust Agreement also provides that the Fund, upon request, will assume the defense of any claim made against any shareholder for any act or obligation of the Fund and satisfy any judgment thereon.
Liability and Indemnification of Board Members. Under the Maryland Code, the Charter and By-Laws of the Company, and subject to the 1940 Act, a Director or officer of the Company is not liable to the Acquiring Fund or its stockholders for monetary damages except to the extent he or she receives an improper personal benefit or his or her action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated. In addition, a Director is entitled to indemnification against judgments, penalties, fines, settlements and reasonable expenses unless his or her act or omission was material to the cause of action and was committed in bad faith or was the result of active and deliberate dishonesty or the individual received an improper personal benefit (or, in a criminal case, had reasonable cause to believe that his or her act or omission was unlawful). Indemnification may be made against amounts recovered by settlement of suits brought by or in the right of the Acquiring Fund except where the individual is adjudged liable to the Acquiring Fund. The termination of a civil proceeding by judgment, order or settlement does not create a presumption that the requisite standard of conduct was not met. A Director or officer is entitled to advances of expenses in the course of litigation if (i) such Director or officer undertakes to repay such sums if indemnification ultimately is denied and provides acceptable security, (ii) the Acquiring Fund is insured against losses arising from the advances, or (iii) the disinterested non-party Directors or independent legal counsel determine there is a reason to believe the Director or officer ultimately will be found to be entitled to indemnification. Officers, employees and agents also are indemnified to the same extent as Directors and to such further extent as is consistent with law.
If these provisions of the Maryland Code are amended, the Directors and officers will be entitled to limited liability and to indemnification to the fullest extent of Maryland law as amended. No amendment or repeal of the provisions of the Charter relating to limited liability and indemnification will apply to any event, omission or proceeding that precedes the amendment or repeal.
Under Massachusetts law, the Trust Agreement and By-Laws of the Trust, and subject to the 1940 Act, a Trustee is entitled to indemnification against all liability and expenses reasonably incurred by such Trustee in connection with the defense or disposition of any threatened or actual proceeding by reason of his or her being or having been a Trustee, unless such Trustee is adjudicated to have acted with bad faith, willful misfeasance, gross negligence or in reckless disregard of his or her duties. A Trustee is entitled to advances of expenses in the course of litigation if (i) such Trustee undertakes to repay such sums if indemnification ultimately is denied and (ii) any of the following has occurred: (x) the Trustee provides acceptable security, (y) the Fund is insured against losses arising from the advances, or (z) the disinterested non-party Trustees or independent legal counsel determine there is a reason to believe the Trustee ultimately will be found to be entitled to indemnification. Officers, employees and agents of the Fund may be indemnified to the same extent as Trustees.
Under the 1940 Act, a director or trustee may not be protected against liability to a fund and its security holders to which he or she would otherwise be subject as a result of his or her willful misfeasance, bad faith or gross negligence in the performance of his or her duties, or by reason of reckless disregard of his or her obligations and duties.
* * * * * * * * * *
The foregoing is only a summary of certain differences between the Acquiring Fund, the Company's Charter and By-Laws and the Maryland Code, and the Fund, the Trust's Trust Agreement and By-Laws and Massachusetts law. It is not a complete description of the differences, but only of material differences. Shareholders desiring copies of the Company's Charter and By-Laws or the Trust's Trust Agreement and By-Laws should write to the relevant fund at 200 Park Avenue, New York, New York 10166, Attention: Legal Department.
REASONS FOR THE REORGANIZATION
After management of Dreyfus reviewed the funds in the Dreyfus Family of Funds to determine whether it would be appropriate to consolidate certain funds having similar investment objectives and investment management policies and that would otherwise benefit fund shareholders, management recommended to the Trust's Board that the Fund be consolidated with the Acquiring Fund. The Trust's Board and the Company's Board have concluded that the Reorganization is in the best interests of the Fund and its shareholders and the Acquiring Fund and its shareholders, respectively. The Trust's Board believes that the Reorganization will permit Fund shareholders to pursue substantially similar investment goals in a fund with a generally better performance record, without diluting such shareholders' interests. In addition, each class of shares of the Acquiring Fund is expected to have a lower total expense ratio (after fee waivers and expense reimbursements) than the corresponding class of Fund shares. As of September 30, 2007, the Fund had net assets of approximately $586.7 million and the Acquiring Fund had net assets of approximately $573.6 million. If the Reorganization of the Fund and the reorganizations of the Proposed Acquired Funds are consummated, the Acquiring Fund would have net assets of approximately $1.5 billion, as of such date. By combining the Fund with the Acquiring Fund, Fund shareholders should benefit from more efficient portfolio management and Dreyfus should be able to eliminate the duplication of resources and costs associated with marketing and servicing the funds as separate entities.
The Company's Board considered that the Reorganization presents an opportunity for the Acquiring Fund to acquire substantial investment assets without the obligation to pay commissions or other transaction costs that a fund normally incurs when purchasing securities. This opportunity provides an economic benefit to the Acquiring Fund.
In determining whether to recommend approval of the Reorganization, each Board considered the following factors, among others: (1) the compatibility of the Fund's and the Acquiring Fund's investment objectives, management policies and restrictions, as well as shareholder services offered by the Fund and the Acquiring Fund; (2) the terms and conditions of the Reorganization and whether the Reorganization would result in dilution of shareholder interests; (3) the expense ratios and information regarding the fees and expenses of the Fund and the Acquiring Fund, as well as the estimated expense ratio of the combined Acquiring Fund; (4) the relative performance of the Fund and the Acquiring Fund; (5) the tax consequences of the Reorganization; and (6) the costs to be incurred by the Fund in connection with the Reorganization.
For the reasons described above, the Boards of the Trust and the Company, each of which is comprised entirely of Independent Board Members, approved the Reorganization.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The following summary of the Plan is qualified in its entirety by reference to the Plan attached to this Prospectus/Proxy Statement as Exhibit A. The Plan provides that, subject to the requisite approval of the Fund's shareholders, the Acquiring Fund will acquire all of the assets of the Fund in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund and the assumption by the Acquiring Fund of the Fund's stated liabilities on April 3, 2008 or such other date as may be agreed upon by the parties (the "Closing Date"). The number of Acquiring Fund Class A, Class B, Class C and Class I shares to be issued to the Fund will be determined on the basis of the relative net asset values per share and aggregate net assets of the corresponding class of the Fund and the Acquiring Fund, generally computed as of the close of trading on the floor of the New York Stock Exchange (usually at 4:00 p.m., Eastern time) on the Closing Date. Portfolio securities of the Fund and the Acquiring Fund will be valued in accordance with the valuation practices of the Acquiring Fund, which are described under the caption "Shareholder Guide—Buying shares" in the Acquiring Fund's Prospectus and under the caption "Determination of Net Asset Value" in the Acquiring Fund's Statement of Additional Information.
On or before the Closing Date, the Fund will declare a dividend or dividends which, together with all previous dividends, will have the effect of distributing to Fund shareholders all of the Fund's previously undistributed investment company taxable income, if any, for the tax periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), its net exempt interest income for the tax periods ending on or before the Closing Date, and all of its previously undistributed net capital gain, if any, realized in the tax periods ending on or before the Closing Date (after reduction for any capital loss carryforward). Any such distributions will be taxable to Fund shareholders.
As soon as conveniently practicable after the Closing Date, the Fund will liquidate and distribute pro rata to its Class A, Class B, Class C and Class I shareholders of record as of the close of business on the Closing Date, Acquiring Fund Class A, Class B, Class C and Class I shares, respectively, received by it in the Reorganization. Such liquidation and distribution will be accomplished by establishing accounts on the share records of the Acquiring Fund in the name of each Fund shareholder, each account being credited with the respective pro rata number of Acquiring Fund shares due to the shareholder. After such distribution and the winding up of its affairs, the Fund will cease operations and will be terminated as a series of the Trust. After the Closing Date, any outstanding certificates representing Fund shares will be canceled and Acquiring Fund shares distributed to the Fund's shareholders of record will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
The Plan may be amended at any time prior to the Reorganization. The Fund will provide its shareholders with information describing any material amendment to the Plan prior to shareholder consideration. The obligations of the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, under the Plan are subject to various conditions, including approval by Fund shareholders holding the requisite number of Fund shares and the continuing accuracy of various representations and warranties of the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund.
The total expenses of the Reorganization are expected to be approximately $110,000, which will be borne by the Fund. In addition to use of the mails, proxies may be solicited personally or by telephone, and the Fund may pay persons holding Fund shares in their names or those of their nominees for their expenses in sending soliciting materials to their principals. In addition, an outside firm may be retained to solicit proxies on behalf of the Trust's Board. The cost of any such outside solicitation firm is estimated to be approximately $41,000, which amount is included in the estimated total expenses of the Reorganization listed above.
If the Reorganization is not approved by Fund shareholders, the Trust's Board will consider other appropriate courses of action with respect to the Fund.
Temporary Suspension of Certain of the Fund's Investment Restrictions. Since certain of the Fund's existing investment restrictions could preclude the Fund from consummating the Reorganization in the manner contemplated in the Plan, Fund shareholders are requested to authorize the temporary suspension of any investment restriction of the Fund to the extent necessary to permit the consummation of the Reorganization. The temporary suspension of any of the Fund's investment restrictions will not affect the investment restrictions of the Acquiring Fund. A vote in favor of the proposal is deemed to be a vote in favor of the temporary suspension.
Federal Income Tax Consequences. The exchange of Fund assets for Acquiring Fund Class A, Class B, Class C and Class I shares, the Acquiring Fund's assumption of the Fund's stated liabilities and the Fund's distribution of those shares to Fund shareholders are intended to qualify for federal income tax purposes as a tax-free reorganization under Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). As a condition to the closing of the Reorganization, the Fund and the Acquiring Fund will receive the opinion of Stroock & Stroock & Lavan LLP, counsel to the Fund, the Acquiring Fund and the Independent Board Members, to the effect that, on the basis of the existing provisions of the Code, Treasury regulations issued thereunder, current administrative regulations and pronouncements and court decisions, and certain facts, assumptions and representations, for federal income tax purposes: (1) the transfer of all of the Fund's assets to the Acquiring Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of the Fund's stated liabilities, followed by the distribution by the Fund of those Acquiring Fund Class A, Class B, Class C and Class I shares pro rata to Fund shareholders in complete liquidation of the Fund, will qualify as a "reorganization" within the meaning of Section 368(a) of the Code, and each of the Fund and the Acquiring Fund will be "a party to a reorganization"; (2) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of stated liabilities of the Fund pursuant to the Reorganization; (3) no gain or loss will be recognized by the Fund upon the transfer of its assets to the Acquiring Fund in exchange solely for Acquiring Fund Class A, Class B, Class C and Class I shares and the assumption by the Acquiring Fund of stated liabilities of the Fund or upon the distribution (whether actual or constructive) of those Acquiring Fund Class A, Class B, Class C and Class I shares to Fund shareholders in exchange for their shares of the Fund in liquidation of the Fund pursuant to the Reorganization; (4) no gain or loss will be recognized by Fund shareholders upon the exchange of their Fund Class A, Class B, Class C and Class I shares for Acquiring Fund Class A, Class B, Class C and Class I shares , respectively, pursuant to the Reorganization; (5) the aggregate tax basis for the Acquiring Fund Class A, Class B, Class C and Class I shares received by each Fund shareholder pursuant to the Reorganization will be the same as the aggregate tax basis for the Fund shares held by such shareholder immediately prior to the Reorganization, and the holding period of those Acquiring Fund Class A, Class B, Class C and Class I shares received by each Fund shareholder will include the period during which the Fund shares exchanged therefor were held by such shareholder (provided the Fund shares were held as capital assets on the date of the Reorganization); and (6) the tax basis of each Fund asset acquired by the Acquiring Fund will be the same as the tax basis of such asset to the Fund immediately prior to the Reorganization, and the holding period of each Fund asset in the hands of the Acquiring Fund will include the period during which that asset was held by the Fund.
Neither the Fund nor the Acquiring Fund has sought a tax ruling from the Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the IRS, nor does it preclude the IRS from adopting a contrary position. Fund shareholders should consult their tax advisers regarding the effect, if any, of the Reorganization in light of their individual circumstances. Because the foregoing discussion relates only to the federal income tax consequences of the Reorganization, Fund shareholders also should consult their tax advisers as to state and local tax consequences, if any, of the Reorganization.
Required Vote and Board's Recommendation
The Trust's Board has approved the Plan and the Reorganization and has determined that (1) participation in the Reorganization is in the best interests of the Fund and its shareholders and (2) the interests of shareholders of the Fund will not be diluted as a result of the Reorganization. The affirmative vote of a majority of the Fund's shares outstanding and entitled to vote is required to approve the Plan and the Reorganization.
THE TRUST'S BOARD, ALL OF WHOSE MEMBERS ARE INDEPENDENT BOARD
MEMBERS, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE PLAN AND THE REORGANIZATION.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND AND THE FUND
Information about the Acquiring Fund is incorporated by reference into this Prospectus/Proxy Statement from the Acquiring Fund's Prospectus forming a part of the Company's Registration Statement on Form N-1A (File No. 33-48926). Information about the Fund is incorporated by reference into this Prospectus/Proxy Statement from the Fund's Prospectus forming a part of the Trust's Registration Statement on Form N-1A (File No. 33-7172).
The Fund and the Acquiring Fund are subject to the requirements of the 1940 Act and file reports, proxy statements and other information with the Commission. Reports, proxy statements and other information filed by the Fund and the Acquiring Fund may be inspected and copied at the Public Reference Facilities of the Commission at 100 F Street, N.E., Washington, D.C. 20549. Text-only versions of fund documents can be viewed on-line or downloaded from www.sec.gov or www.dreyfus.com. Copies of such material also can be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
VOTING INFORMATION
In addition to the use of the mails, proxies may be solicited personally or by telephone, and persons holding Fund shares in their names or in nominee name may be paid for their expenses in sending soliciting materials to their principals. An outside firm may be retained to assist in the solicitation of proxies, primarily by contacting shareholders by telephone.
Authorizations to execute proxies may be obtained by telephonic or electronically transmitted instructions in accordance with procedures designed to authenticate the shareholder's identity. In all cases where a telephonic proxy is solicited (as opposed to where the shareholder calls the toll-free number directly to vote), the shareholder will be asked to provide or confirm certain identifiable information and to confirm that the shareholder has received the Prospectus/Proxy Statement and proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic or electronically transmitted voting instructions, a confirmation will be sent to the shareholder to ensure that the vote has been taken in accordance with the shareholder's instructions and to provide a telephone number to call immediately if the shareholder's instructions are not correctly reflected in the confirmation. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting a new proxy to the Fund or by attending the Meeting and voting in person.
If a proxy is executed properly and returned accompanied by instructions to withhold authority to vote, represents a broker "non-vote" (that is, a proxy from a broker or nominee indicating that such person has not received instructions from the beneficial owner or other person entitled to vote Fund shares on a particular matter with respect to which the broker or nominee does not have discretionary power) or is marked with an abstention (collectively, "abstentions"), the Fund shares represented thereby will be considered to be present at the Meeting for purposes of determining the existence of a quorum for the transaction of business. Abstentions will have the effect of a "no" vote for the purpose of obtaining requisite approval for the proposal.
With respect to Dreyfus individual retirement accounts ("IRAs"), the Individual Retirement Custodial Account Agreement governing the IRAs requires The Dreyfus Trust Company ("DTC"), as the custodian of the IRAs, to vote Fund shares held in such IRAs in accordance with the IRA shareholder's instructions. However, if no voting instructions are received, DTC may vote Fund shares held in the IRA in the same proportions as the Fund shares for which voting instructions are received from other Dreyfus IRA shareholders. Therefore, if an IRA shareholder does not provide voting instructions prior to the Meeting, DTC will vote the IRA shares "FOR", "AGAINST" or "ABSTAIN" in the same proportions as it votes the shares for which properly conveyed instructions are timely received from other Dreyfus IRA shareholders.
In the event that a quorum is not present at the Meeting, or if a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. In determining whether to adjourn the Meeting, the following factors may be considered: the nature of the proposal, the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to Fund shareholders with respect to the reasons for the solicitation. Any adjournment will require the affirmative vote of a majority of those shares affected by the adjournment that are represented at the Meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote "FOR" the proposal in favor of such adjournment, and will vote those proxies required to be voted "AGAINST" the proposal against any adjournment. A quorum is constituted by the presence in person or by proxy of the holders of 30% of the Fund's outstanding shares entitled to vote at the Meeting.
The votes of the Acquiring Fund's shareholders are not being solicited since their approval or consent is not necessary for the Reorganization.
As of October 31, 2007, the following shareholders were known by the Fund to own of record or beneficially 5% or more of the indicated class of outstanding voting shares of the Fund:
|
Name and Address | Percentage of
Outstanding Shares |
| | Before
Reorganization | After
Reorganization |
Class A
City National Bank
Investment Operations
555 South Flower Street, 10th Floor
Los Angeles, CA 90071-2300 |
10.4344% | 4.6109% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 9.799% | 9.0014% |
The Vanguard Fiduciary Trust Co.
Attn: Outside Funds
P.O. Box 2600
Valley Forge, PA 19482-2600 | 6.8245% | 3.0157% |
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 | 6.7435% | 2.9796% |
Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of Its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484 | 5.9714% | 2.6387% |
Class B
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 |
20.9346% |
20.9346% |
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 | 11.6803% | 11.6803% |
Merrill Lynch, Pierce, Fenner & Smith
4800 Dear Lake Drive East
Jacksonville, FL 32246-6484 | 9.9124% | 9.9124% |
First Clearing, LLC
10750 Wheat First Drive
Glen Allen, VA 23060 | 6.0743% | 6.0743% |
Citigroup Global Markets Inc.
333 West 34th Street, 3rd Floor
New York, NY 10001-2402 | 5.2571% | 5.2571% |
Class C
Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of Its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484 |
22.7149% |
22.7149% |
Pershing LLC
P.O. Box 2052
Jersey City, NJ 07303-2052 | 12.7494% | 12.7494% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 7.3023% | 7.3023% |
First Clearing, LLC
10750 Wheat First Drive
Glen Allen, VA 23060 | 6.9963% | 6.9963% |
Citigroup Global Markets Inc.
333 West 34th Street, 3rd Floor
New York, NY 10001-2402 | 5.9898% | 5.9898% |
Class I
The Bear Stearns Co. Inc.
Cash or Deferred Compensation Plan
Custodial Trust Co.
101 Carneige Center
Princeton, NJ 08540-6231 |
41.5744% |
14.8594% |
Mac & Co.
For the Benefit of Benchmark Electronics
Mutual Fund Operations
P.O. Box 3198
525 William Penn Place
Pittsburgh, PA 15230-3198 | 25.8937% | 9.2549% |
The Bear Stearns Co. Inc.
For the Benefit of Profit Sharing Plan
Custodial Trust Co. Effective 5/1/04
115 South Jefferson Road
Whippany, NJ 07981-1048 | 17.6477% | 6.3076% |
Charles Schwab & Co. Inc.
Reinvest Account
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4151 | 13.7293% | 4.9071% |
As of October 31, 2007, the following shareholders were known by the Acquiring Fund to own of record or beneficially 5% or more of the indicated class of outstanding voting shares of the Acquiring Fund:
|
Name and Address | Percentage of
Outstanding Shares |
| | Before
Reorganization | After
Reorganization |
Investor Shares
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104-4151 |
29.519% |
16.4745% |
Wells Fargo Bank of Minnesota
NPF Coordinator
Wells Fargo Center
6th & Marquette
P.O. Box 9131
Minneapolis, MN 55480 | 18.2891% | 10.2071% |
Union Bank of California
Select Benefit Omnibus Account
P.O. Box 85484
San Diego, CA 92186-5484 | 10.6142% | 5.9237% |
National Financial Services
82 Devonshire Street
Boston, MA 02109-3605 | 7.8669% | 9.0014% |
Institutional Shares
SEI Private Trust
Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456 |
90.1224% |
57.5978% |
As of October 31, 2007, Board members and officers of the Trust and the Company, as a group, owned less than 1% of the Fund's and the Acquiring Fund's outstanding shares, respectively.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of the Fund for its fiscal year ended October 31, 2006 and the audited financial statements of the Acquiring Fund for its fiscal year ended July 31, 2007 have been incorporated herein by reference in reliance upon the reports of Ernst & Young LLP, the independent registered public accounting firm for the Fund and the Acquiring Fund, given on their authority as experts in accounting and auditing.
OTHER MATTERS
The Trust's Board members are not aware of any other matters that may come before the Meeting. However, should any such matters properly come before the Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the Fund, in care of Dreyfus Transfer, Inc., P.O. Box 55263, Boston, Massachusetts 02205-8501, whether other persons are the beneficial owners of Fund shares for which proxies are being solicited from you, and, if so, the number of copies of the Prospectus/Proxy Statement and other soliciting material you wish to receive in order to supply copies to the beneficial owners of Fund shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of November 6, 2007 (the "Agreement"), between DREYFUS PREMIER CORE BOND FUND (the "Fund"), a series of DREYFUS PREMIER FIXED INCOME FUNDS (the "Trust"), a Massachusetts business trust, and DREYFUS INTERMEDIATE TERM INCOME FUND (the "Acquiring Fund"), a series of DREYFUS INVESTMENT GRADE FUNDS, INC. (the "Company"), a Maryland corporation.
This Agreement is intended to be and is adopted as a "plan of reorganization" within the meaning of the regulations under Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will consist of the transfer of all of the assets of the Fund to the Acquiring Fund in exchange solely for the Acquiring Fund's Class A, Class B, Class C and Class I shares ("Acquiring Fund Shares") of common stock, par value $.001 per share, and the assumption by the Acquiring Fund of certain liabilities of the Fund and the distribution, after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the Fund in liquidation of the Fund as a series of the Trust as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement (the "Reorganization").
WHEREAS, the Fund is a series of the Trust, a registered, open-end management investment company, and the Acquiring Fund is a series of the Company, a registered, open-end management investment company, and the Fund owns securities which are assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Fund are authorized to issue their shares of common stock and beneficial interest, respectively;
WHEREAS, the Trust's Board has determined that the Reorganization is in the best interests of the Fund and the Fund's shareholders and that the interests of the Fund's existing shareholders will not be diluted as a result of the Reorganization; and
WHEREAS, the Company's Board has determined that the Reorganization is in the best interests of the Acquiring Fund and the Acquiring Fund's shareholders and that the interests of the Acquiring Fund's existing shareholders will not be diluted as a result of the Reorganization:
NOW THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties agree as follows:
1. THE REORGANIZATION.
1.1 Subject to the terms and conditions contained herein, the Fund agrees to assign, transfer and convey to the Acquiring Fund all of the assets of the Fund, including all securities and cash (subject to liabilities), and the Acquiring Fund agrees in exchange therefor (a) to deliver to the Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined as set forth in paragraph 2.3; and (b) to assume certain liabilities of the Fund, as set forth in paragraph 1.2. Such transactions shall take place at the closing (the "Closing") as of the close of business on the closing date (the "Closing Date"), provided for in paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the Fund's account on the books of the Acquiring Fund and shall deliver a confirmation thereof to the Fund.
1.2 The Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all liabilities, expenses, costs, charges and reserves reflected on an unaudited statement of assets and liabilities of the Fund prepared by The Dreyfus Corporation ("Dreyfus"), as of the Valuation Date (as defined in paragraph 2.1), in accordance with U.S. generally accepted accounting principles consistently applied from the prior audited period. The Acquiring Fund shall assume only those liabilities of the Fund reflected in that unaudited statement of assets and liabilities and shall not assume any other liabilities, whether absolute or contingent.
1.3 Delivery of the assets of the Fund to be transferred shall be made on the Closing Date and shall be delivered to Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, the Acquiring Fund's custodian (the "Custodian"), for the account of the Acquiring Fund, with all securities not in bearer or book-entry form duly endorsed, or accompanied by duly executed separate assignments or stock powers, in proper form for transfer, with signatures guaranteed, and with all necessary stock transfer stamps, sufficient to transfer good and marketable title thereto (including all accrued interest and dividends and rights pertaining thereto) to the Custodian for the account of the Acquiring Fund free and clear of all liens, encumbrances, rights, restrictions and claims. All cash delivered shall be in the form of immediately available funds payable to the order of the Custodian for the account of the Acquiring Fund.
1.4 The Fund will pay or cause to be paid to the Acquiring Fund any interest received on or after the Closing Date with respect to assets transferred to the Acquiring Fund hereunder. The Fund will transfer to the Acquiring Fund any distributions, rights or other assets received by the Fund after the Closing Date as distributions on or with respect to the securities transferred. Such assets shall be deemed included in assets transferred to the Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the "Liquidation Date"), the Fund will liquidate as a series of the Trust and distribute pro rata to the Fund's Class A, Class B, Class C and Class I shareholders of record, determined as of the close of business on the Closing Date ("Fund Shareholders"), the corresponding class of Acquiring Fund Shares received by the Fund pursuant to paragraph 1.1. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Fund Shareholders and representing the respective pro rata number of the applicable Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Fund simultaneously will be canceled on the books of the Fund; Fund share certificates, if any, will be canceled and Acquiring Fund Shares distributed to Fund Shareholders will be reflected on the books of the Acquiring Fund as uncertificated, book-entry shares.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will be issued in the manner described in the Acquiring Fund's current prospectus and statement of additional information; the Acquiring Fund, however, will not issue share certificates in the Reorganization.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the registered holder of the Acquiring Fund Shares on the books of the Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Fund is and shall remain the responsibility of the Fund up to and including the Closing Date and such later date on which the Fund's existence is terminated.
2. VALUATION.
2.1 The value of the Fund's assets to be acquired, and the amount of the Fund's liabilities to be assumed, by the Acquiring Fund hereunder shall be computed as of the close of trading on the floor of the New York Stock Exchange (usually 4:00 p.m., Eastern time) on the Closing Date (such time and date being hereinafter called the "Valuation Date"), using the valuation procedures set forth in the Company's Articles of Incorporation, as amended (the "Company's Charter"), and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset value per share computed as of the Valuation Date, using the valuation procedures set forth in the Company's Charter and the then-current prospectus or statement of additional information of the Acquiring Fund, which are and shall be consistent with the policies currently in effect for the Fund.
2.3 The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Fund's net assets shall be determined by dividing the value of the net assets of the applicable class of the Fund determined using the same valuation procedures referred to in paragraph 2.1 by the net asset value of one Acquiring Fund Share of the corresponding class, determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular practices of Dreyfus as fund accountant for the Fund and the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be April 3, 2008, or such other date as the parties, through their duly authorized officers, may mutually agree. All acts taking place at the Closing shall be deemed to take place simultaneously on the Closing Date unless otherwise provided. The Closing shall be held at 5:00 p.m., Eastern time, at the offices of Dreyfus, 200 Park Avenue, 7th Floor, New York, New York, or such other time and/or place as the parties may mutually agree.
3.2 The Custodian shall deliver at the Closing a certificate of an authorized officer stating that the Fund's portfolio securities, cash and any other assets have been delivered in proper form to the Acquiring Fund on the Closing Date.
3.3 If on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or the Fund shall be closed to trading or trading thereon shall be restricted, or (b) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
3.4 The transfer agent for the Fund shall deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Fund Shareholders and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund's transfer agent shall issue and deliver to the Trust's Secretary a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date, or provide evidence satisfactory to the Trust that such Acquiring Fund Shares have been credited to the Fund's account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, receipts or other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust, on behalf of the Fund, represents and warrants to the Company, on behalf of the Acquiring Fund, as follows:
(a) The Fund is a duly established and designated series of the Trust, a business trust duly organized and validly existing under the laws of the Commonwealth of Massachusetts, and has power to carry out its obligations under this Agreement.
(b) The Trust is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company, and the Fund's shares are registered under the Securities Act of 1933, as amended (the "1933 Act"), and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Trust's Agreement and Declaration of Trust, as amended (the "Trust's Declaration of Trust"), or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Trust is a party on behalf of the Fund or by which the Fund is bound.
(e) The Fund has no material contracts or other commitments outstanding (other than this Agreement) which will be terminated with liability to it on or prior to the Closing Date.
(f) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(g) The Statements of Assets and Liabilities of the Fund for each of its five fiscal years ended October 31, 2006 have been audited by Ernst & Young LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Fund as of such dates, and there are no known contingent liabilities of the Fund as of such dates not disclosed therein.
(h) Since October 31, 2006, there has not been any material adverse change in the Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraphs 1.2 and 4.1(g) hereof.
(i) At the Closing Date, all federal and other tax returns and reports of the Fund required by law then to be filed shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Trust's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(j) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Fund. All of the issued and outstanding shares of the Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of its transfer agent as provided in paragraph 3.4. The Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Fund's shares, nor is there outstanding any security convertible into any of the Fund's shares.
(l) On the Closing Date, the Fund will have full right, power and authority to sell, assign, transfer and deliver the assets to be transferred by it hereunder.
(m) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Trust's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Trust, on behalf of the Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(n) The proxy statement of the Fund (the "Proxy Statement") included in the Registration Statement referred to in paragraph 5.5 (other than information therein that has been furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
4.2 The Company, on behalf of the Acquiring Fund, represents and warrants to the Trust, on behalf of the Fund, as follows:
(a) The Acquiring Fund is a duly established and designated series of the Company, a corporation duly organized and validly existing under the laws of the State of Maryland, and has power to carry out its obligations under this Agreement.
(b) The Company is registered under the 1940 Act as an open-end management investment company, and the Acquiring Fund's shares are registered under the 1933 Act, and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Acquiring Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in material violation of the Company's Charter or its By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Company is a party on behalf of the Acquiring Fund or by which the Acquiring Fund is bound.
(e) No litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Acquiring Fund for each of its five fiscal years ended July 31, 2007 have been audited by Ernst & Young LLP, an independent registered public accounting firm, and are in accordance with U.S. generally accepted accounting principles, and such statements (copies of which have been furnished to the Fund) fairly reflect the financial condition of the Acquiring Fund as of such dates.
(g) Since July 31, 2007, there has not been any material adverse change in the Acquiring Fund's financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as disclosed on the statement of assets and liabilities referred to in paragraph 4.2(f) hereof.
(h) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law then to be filed shall have been filed, and all federal and other taxes shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund's knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns.
(i) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are, and at the Closing Date (including the shares of the Acquiring Fund to be issued pursuant to paragraph 1.1 of this Agreement) will be, duly and validly issued and outstanding, fully paid and non-assessable by the Acquiring Fund. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Company's Board and, subject to the approval of the Fund's shareholders, this Agreement will constitute the valid and legally binding obligation of the Company, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to general principles of equity and the discretion of the court (regardless of whether the enforceability is considered in a proceeding in equity or at law).
(l) The Proxy Statement included in the Registration Statement (only insofar as it relates to the Acquiring Fund and is based on information furnished by the Acquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.
(m) No consideration other than the Acquiring Fund Shares (and the Acquiring Fund's assumption of the Fund's stated liabilities) will be issued in exchange for the Fund's assets in the Reorganization.
(n) The Acquiring Fund does not directly or indirectly own, nor on the Closing Date will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of the Fund.
| 5. | COVENANTS OF THE TRUST AND THE COMPANY, ON BEHALF OF THE FUND AND THE ACQUIRING FUND, RESPECTIVELY. |
5.1 The Acquiring Fund and the Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include payment of customary dividends and other distributions.
5.2 The Trust will call a meeting of the Fund's shareholders to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Fund and the Acquiring Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after the Closing Date, the Trust shall furnish the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Fund for federal income tax purposes which will be carried over to the Acquiring Fund as a result of Section 381 of the Code and which will be certified by the Trust's President or its Vice President and Treasurer.
5.5 The Trust, on behalf of the Fund, will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus, which will include the Proxy Statement referred to in paragraph 4.1(n), all to be included in a Registration Statement on Form N-14 of the Company, on behalf of the Acquiring Fund (the "Registration Statement"), in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act in connection with the meeting of the Fund's shareholders to consider approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
5.7 The Trust, on behalf of the Fund, covenants that the Fund is not acquiring the Acquiring Fund Shares to be issued hereunder for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement.
5.8 As soon as is reasonably practicable after the Closing, the Fund will make a liquidating distribution to the Fund's shareholders consisting of the Acquiring Fund Shares received at the Closing.
| 6. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND. |
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Trust, on behalf of the Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
6.2 The Trust shall have delivered to the Acquiring Fund a statement of the Fund's assets and liabilities, together with a list of the Fund's portfolio securities showing the tax basis of such securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Trust's Treasurer.
6.3 The Trust shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in the Trust's name by the Trust's President or Vice President and the Trust's Treasurer, in form and substance satisfactory to the Acquiring Fund, to the effect that the representations and warranties of the Trust, on behalf of the Fund, made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request.
| 7. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND. |
The obligations of the Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Company, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date.
7.2 The Company shall have delivered to the Fund on the Closing Date a certificate executed in the Company's name by the Company's President or Vice President and the Company's Treasurer, in form and substance reasonably satisfactory to the Fund, to the effect that the representations and warranties of the Company, on behalf of the Acquiring Fund, made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Fund shall reasonably request.
| 8. | FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE ACQUIRING FUND. |
If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement.
8.1 This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Fund in accordance with the provisions of the Trust's Declaration of Trust and the 1940 Act.
8.2 On the Closing Date, no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Commission and of state Blue Sky and securities authorities) deemed necessary by the Fund or the Acquiring Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Fund or the Acquiring Fund, provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Fund shall have declared and paid a dividend or dividends which, together with all previous dividends, shall have the effect of distributing to Fund shareholders all of the Fund's investment company taxable income (within the meaning of Section 852(b)(2) of the Code) for all taxable years or periods ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid); the excess of its interest income excludable from gross income under Section 103(a) of the Code over its disallowed deductions under Sections 265 and 171(a)(2) of the Code, for all taxable years or periods; and all of its net capital gain (as defined in Section 1222(11) of the Code) realized in all taxable years or periods (after reduction for any capital loss carryforward).
8.6 The Fund and Acquiring Fund shall have received an opinion of Stroock & Stroock & Lavan LLP substantially to the effect that based on the facts and assumptions stated herein and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes:
(a) The transfer of all of the Fund's assets to the Acquiring Fund in exchange solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund, followed by the distribution by the Fund of those Acquiring Fund Shares to Fund Shareholders in complete liquidation of the Fund, will qualify as a "reorganization" within the meaning of Section 368(a) of the Code and each of the Fund and the Acquiring Fund will be "a party to a reorganization"; (b) no gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund pursuant to the Reorganization; (c) no gain or loss will be recognized by the Fund upon the transfer of the Fund's assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of certain identified liabilities of the Fund or upon the distribution (whether actual or constructive) of those Acquiring Fund Shares to Fund Shareholders in exchange for their shares of the Fund in liquidation of the Fund pursuant to the Reorganization; (d) no gain or loss will be recognized by Fund Shareholders upon the exchange of their Fund shares for the Acquiring Fund Shares pursuant to the Reorganization; (e) the aggregate tax basis for the Acquiring Fund Shares received by each Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Fund shares held by such Shareholder immediately prior to the Reorganization, and the holding period of those Acquiring Fund Shares received by each Fund Shareholder will include the period during which the Fund shares exchanged therefor were held by such Shareholder (provided the Fund shares were held as capital assets on the date of the Reorganization); and (f) the tax basis of each Fund asset acquired by the Acquiring Fund will be the same as the tax basis of such asset to the Fund immediately prior to the Reorganization, and the holding period of each asset of the Fund in the hands of the Acquiring Fund will include the period during which that asset was held by the Fund.
In rendering its opinion, counsel may rely as to factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which counsel may treat as representations and warranties made to it, and in separate letters addressed to counsel and the certificates delivered pursuant to this Agreement.
No opinion will be expressed as to the effect of the Reorganization on (i) the Fund or the Acquiring Fund with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting, and (ii) any shareholder of the Fund that is required to recognize unrealized gains and losses for federal income tax purposes under a mark-to-market system of accounting.
| 9. | TERMINATION OF AGREEMENT; EXPENSES. |
9.1 This Agreement and the transactions contemplated hereby may be terminated and abandoned by resolution of the Board of the Trust or of the Company, as the case may be, at any time prior to the Closing Date (and notwithstanding any vote of the Fund's shareholders) if circumstances should develop that, in the opinion of the party's Board, make proceeding with the Reorganization inadvisable.
9.2 If this Agreement is terminated and the transactions contemplated hereby are abandoned pursuant to the provisions of this Section 9, this Agreement shall become void and have no effect, without any liability on the part of any party hereto or the Board members or officers of the Company or the Trust, or shareholders of the Acquiring Fund or of the Fund, as the case may be, in respect of this Agreement.
9.3 The Fund shall bear the aggregate expenses of the transactions contemplated hereby.
At any time prior to the Closing Date, any of the foregoing conditions may be waived by the Board of the Trust or of the Company if, in the judgment of either, such waiver will not have a material adverse effect on the benefits intended under this Agreement to the shareholders of the Fund or of the Acquiring Fund, as the case may be.
11.1 None of the representations and warranties included or provided for herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and merges and supersedes all prior discussions, agreements and understandings of every kind and nature between them relating to the subject matter hereof. Neither party shall be bound by any condition, definition, warranty or representation, other than as set forth or provided in this Agreement or as may be, on or subsequent to the date hereof, set forth in a writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws; provided, however, that the due authorization, execution and delivery of this Agreement by the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, shall be governed and construed in accordance with the internal laws of the Commonwealth of Massachusetts and the State of Maryland, respectively, without giving effect to principles of conflict of laws; provided that, in the case of any conflict between those laws and federal securities laws, the latter shall govern.
11.4 This Agreement may be amended only by a signed writing between the parties.
11.5 This Agreement may be executed in counterparts, each of which, when executed and delivered, shall be deemed to be an original.
11.6 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
11.7 It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Board members or officers of the Trust or the Company, or shareholders, nominees, agents, or employees of the Fund or the Acquiring Fund personally, but shall bind only the property of the Fund or the Acquiring Fund, as the case may be, as provided in the Trust's Declaration of Trust or the Company's Charter, respectively; a copy of the Trust's Declaration of Trust is on file at the office of the Secretary of the Commonwealth of Massachusetts and at the Trust's principal offices. The execution and delivery of this Agreement by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of the Fund or the Acquiring Fund, as the case may be.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, and the Company, on behalf of the Acquiring Fund, have caused this Agreement and Plan of Reorganization to be executed and attested on its behalf by its duly authorized representatives as of the date first above written.
| DREYFUS PREMIER FIXED INCOME
FUNDS, on behalf of Dreyfus Premier
Core Bond Fund
By: /s/ J. David Officer
J. David Officer,
President |
ATTEST: /s/ Jeff Prusnofsky
Jeff Prusnofsky,
Assistant Secretary | |
| DREYFUS INVESTMENT GRADE
FUNDS, INC., on behalf of Dreyfus
Intermediate Term Income Fund
By: /s/ J. David Officer
J. David Officer,
President |
ATTEST: /s/ Jeff Prusnofsky
Jeff Prusnofsky,
Assistant Secretary | |
Exhibit B
PRO FORMA FEES AND EXPENSES
Shareholders of two other funds advised by Dreyfus—Dreyfus A Bonds Plus, Inc. ("A Bonds") and Dreyfus Premier Managed Income Fund ("Managed Income" and, together with A Bonds, the "Proposed Acquired Funds")—also are being asked in separate proxy materials directed to them to approve an Agreement and Plan of Reorganization providing for the transfer of all of each such fund's assets, subject to its liabilities, to the Acquiring Fund in exchange for shares of the Acquiring Fund (Class A shares only of the Acquiring Fund will be exchanged in the A Bonds reorganization). If approved by the Fund's shareholders, the Reorganization will be consummated for the Fund whether or not the shareholders of the Proposed Acquired Funds approve the reorganization of the respective Proposed Acquired Fund. The fees and expenses set forth below assume that shareholders of the Fund and of the Proposed Acquired Funds approve the reorganizations of their respective funds into the Acquiring Fund. The fees and expenses set forth below are based on net assets and accruals of the Fund, the Proposed Acquired Funds and the Acquiring Fund, respectively, as of July 31, 2007, and are adjusted for the Fund and the Proposed Acquired Funds to include estimated costs of the reorganizations totaling $300,000. The "Pro Forma After Reorganization" operating expenses information is based on the net assets and accruals of the Fund, the Proposed Acquired Funds and the Acquiring Fund, as of July 31, 2007, as adjusted showing the effect of the reorganizations had they occurred on such date.
Annual Fund Operating Expenses (expenses paid from fund assets)
(percentage of average daily net assets):
| Fund
Class A
| Managed
Income
Class A
| A Bonds
| Acquiring
Fund
Class A
| Pro Forma After
Reorganizations
Acquiring Fund
Class A
|
|---|
| Management fees | .60% | .70% | .65% | .45% | .45% |
| Rule 12b-1 fee | none | .25% | none | none | none |
| Shareholder |
| services fee | .25% | none | .07% | .25% | .25% |
| Other expenses | .26% | .14% | .28% | .22% | .19% |
|
|
|
|
|
|
| Total | 1.11% | 1.09% | 1.00% | .92% | .89% |
| Fee waiver and/or |
| expense reimbursement | (.11)% | N/A | N/A | (.12)% | (.09)% |
|
|
|
|
|
|
| Net operating expenses | 1.00% | 1.09% | 1.00% | .80% | .80% |
| Fund
Class B
| Managed
Income
Class B
| Acquiring Fund
Class B
| Pro Forma After
Reorganizations
Acquiring Fund
Class B
|
|---|
| Management fees | .60% | .70% | .45% | .45% |
| Rule 12b-1 fee | .50% | 1.00% | .50% | .50% |
| Shareholder services fee | .25% | none | .25% | .25% |
| Other expenses | .23% | .14% | .17%* | .17%* |
|
|
|
|
|
|
| Total | 1.58 | 1.84 | 1.37 | 1.37 |
| Fee waiver and/or expense |
| reimbursement | (.08)% | N/A | N/A | N/A |
|
|
|
|
|
|
| Net operating expenses | 1.50% | 1.84% | 1.37% | 1.37% |
| Fund
Class C
| Managed
Income
Class C
| Acquiring Fund
Class C
| Pro Forma After
Reorganizations
Acquiring Fund
Class C
|
|---|
| Management fees | .60% | .70% | .45% | .45% |
| Rule 12b-1 fee | .75% | 1.00% | .75% | .75% |
| Shareholder services fee | .25% | none | .25% | .25% |
| Other expenses | .24% | .14% | .18%* | .17%* |
|
|
|
|
|
|
| Total | 1.84% | 1.84% | 1.63% | 1.62% |
| Fee waiver and/or expense |
| reimbursement | (.09)% | N/A | N/A | N/A |
|
|
|
|
|
|
| Net operating expenses | 1.75% | 1.84% | 1.63% | 1.62% |
| Fund
Class I
| Managed
Income
Class I
| Acquiring Fund
Class I
| Pro Forma After
Reorganizations
Acquiring Fund
Class I
|
|---|
| Management fees | .60% | .70% | .45% | .45% |
| Rule 12b-1 fee | none | none | none | none |
| Shareholder services fee | none | none | none | none |
| Other expenses | .19% | .14% | .09% | .08% |
|
|
|
|
|
|
| Total | .79% | .84% | .54% | .53% |
| Fee waiver and/or expense |
| reimbursement | (.0)% | N/A | (.0)% | (.0)% |
|
|
|
|
|
|
| Net operating expenses | .75% | .84% | .54% | .53% |
_________________
| * | "Other expenses" for the Acquiring Fund's Class B and Class C shares are based on estimated amounts for the current fiscal year. Actual expenses may be greater or less than the amounts listed in the table. |
Expense example
This example shows what you could pay in expenses over time. It uses the same hypothetical conditions other funds use in their prospectuses: $10,000 initial investment, 5% total return each year and no changes in expenses. The example shows the reorganizations of the Fund, Managed Income, A Bonds and the Acquiring Fund. The example is based on net operating expenses, which reflect, for the applicable years, the expense waiver/reimbursement by Dreyfus. Because actual returns and expenses will be different, the example is for comparison only.
Class A
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class A Shares | $547 | $777 | $1,024 | $1,731 |
Managed Income Class A |
| Shares | $556 | $781 | $1,024 | $1,719 |
A Bonds Shares | $102 | $318 | $552 | $1,225 |
Acquiring Fund Class A |
| Shares | $528 | $719 | $925 | $1,520 |
Pro Forma After |
| Reorganizations--Acquiring |
| Fund Class A Shares | $528 | $712 | $912 | $1,489 |
Class B*
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class B Shares | $553/$153 | $791/$491 | $1,053/$853 | $1,631**/$1,631** |
Managed Income Class B |
| Shares | $587/$187 | $879/$579 | $1,195/$995 | $1,782**/$1,782** |
Acquiring Fund Class B |
| Shares | $539/$139 | $734/$434 | $950/$750 | $1,411**/$1,411** |
Pro Forma After Reorganizations--
Acquiring Fund Class B Shares | $539/$139 | $734/$434 | $950/$750 | $1,395**/$1,395** |
| * | With redemption/without redemption. |
| ** | Assumes conversion of Class B to Class A at end of sixth year following the date of purchase. |
Class C*
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class C Shares | $278/$178 | $570/$570 | $987/$987 | $2,151/$2,151 |
Managed Income Class C Shares | $287/$187 | $579/$579 | $995/$995 | $2,159/$2,159 |
Acquiring Fund Class C Shares | $266/$166 | $514/$514 | $887/$887 | $1,933/$1,933 |
Pro Forma After Reorganizations--
Acquiring Fund Class C Shares | $265/$165 | $511/$511 | $881/$881 | $1,922/$1,922 |
| * | With redemption/without redemption. |
Class I
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
|---|
Fund Class I Shares | $77 | $248 | $435 | $974 |
Managed Income Class I Shares | $86 | $268 | $466 | $1,037 |
Acquiring Fund Class I Shares | $55 | $173 | $302 | $677 |
Pro Forma After Reorganizations--
Acquiring Fund Class I Shares | $54 | $170 | $296 | $665 |
Exhibit C
DESCRIPTION OF THE COMPANY'S BOARD MEMBERS
Board members of the Company, together with information as to their positions with the Company, principal occupations and other board memberships and affiliations, are shown below.(1)
Name (Age)
Position with Company (Since) | Principal Occupation
During Past 5 Years |
Other Board Memberships and Affiliations |
Joseph S. DiMartino (64)
Chairman of the Board
(1995) | Corporate Director and Trustee | The Muscular Dystrophy Association, Director
Century Business Services, Inc., a provider of
outsourcing functions for small and medium
size companies, Director
The Newark Group, a provider of a national
market of paper recovery facilities, paperboard
mills and paperboard converting plants,
Director
Sunair Services Corporation, a provider of a
certain outdoor-related services to homes
and businesses, Director |
Clifford L. Alexander, Jr. (74)
Board Member (2003) | President of Alexander &
Associates, Inc., a
management consulting
firm (January 1981-present)
Chairman of the Board of
Moody's Corporation
(October 2000 - October 2003) | Mutual of America Life Insurance
Company, Director |
David W. Burke (71)
Board Member (1994) | Corporate Director and Trustee | John F. Kennedy Library Foundation,
Director |
Whitney I. Gerard (73)
Board Member (1993) | Partner of Chadbourne & Parke LLP | None |
George L. Perry (73)
Board Member (1992) | Economist and Senior Fellow at
Brookings Institution | None |
_______________________
| 1 | None of the Board members are "interested persons" of the Company, as defined in the 1940 Act. |
DREYFUS PREMIER CORE BOND FUND
(A Series of Dreyfus Premier Fixed Income Funds)
The undersigned shareholder of Dreyfus Premier Core Bond Fund (the "Fund"), a series of Dreyfus Premier Fixed Income Funds (the "Trust"), hereby appoints Joseph M. Chioffi and Jeff Prusnofsky, and each of them, the attorneys and proxies of the undersigned, with full power of substitution, to vote, as indicated herein, all of the shares of beneficial interest of the Fund standing in the name of the undersigned at the close of business on December 21, 2007, at a Special Meeting of Shareholders to be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 8th Floor, New York, New York 10166, at 9:30 a.m., on Wednesday, February 27, 2008, and at any and all adjournments thereof, with all of the powers the undersigned would possess if then and there personally present and especially (but without limiting the general authorization and power hereby given) to vote as indicated on the proposal, as more fully described in the Prospectus/Proxy Statement for the meeting.
THIS PROXY IS SOLICITED BY THE TRUST'S BOARD OF TRUSTEES AND WILL BE VOTED FOR THE PROPOSAL SHOWN ON THE REVERSE SIDE UNLESS OTHERWISE INDICATED.
THREE EASY WAYS TO VOTE YOUR PROXY
| 3. | TELEPHONE: Call 1-888-221-0697 and follow the simple instructions. |
| 4. | INTERNET: Go to www.proxyweb.com, and follow the on-line directions. |
| 5. | MAIL: Vote, sign and date, and return in the enclosed postage-paid envelope. |
If you are NOT voting by Telephone or Internet, Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
| Dated: ________________________
Sign, Date and Return the Proxy Card Promptly
Using the Enclosed Envelope
______________________________
Signature(s) (Sign in the Box)
Signature(s) should be exactly as name or names appearing on this proxy. If shares are held jointly, each holder should sign. If signing is by attorney, executor, administrator, trustee or guardian, please give full title. By signing this proxy card, receipt of the accompanying Notice of Special Meeting of Shareholders and Prospectus/Proxy Statement is acknowledged. |
| Please fill in box as shown using black or blue ink or number 2 pencil.
Please do not use fine point pens. |
| 1. | To approve an Agreement and Plan of Reorganization providing for the transfer of all of the assets of the Fund to Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"), a series of Dreyfus Investment Grade Funds, Inc., in exchange for Class A, Class B, Class C and Class I shares of the Acquiring Fund having an aggregate net asset value equal to the value of the Fund's net assets and the assumption by the Acquiring Fund of the Fund's stated liabilities, and the pro rata distribution of those shares to the Fund's shareholders and subsequent termination of the Fund as a series of the Trust.
FOR AGAINST ABSTAIN
/_/ /_/ /_/ |
| 2. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournment(s) thereof. |
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
STATEMENT OF ADDITIONAL INFORMATION
December 17, 2007
Acquisition of the Assets of
DREYFUS PREMIER CORE BOND FUND
(A Series of Dreyfus Premier Fixed Income Funds)
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611
By and in Exchange for Class A, Class B, Class C and
Class I Shares of
DREYFUS PREMIER INTERMEDIATE TERM INCOME FUND
(A Series of Dreyfus Investment Grade Funds, Inc.)
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611
This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the Prospectus/Proxy Statement dated December 17, 2007 relating specifically to the proposed transfer of all of the assets and liabilities of Dreyfus Premier Core Bond Fund (the "Fund") in exchange for Class A, Class B, Class C and Class I shares of Dreyfus Premier Intermediate Term Income Fund (the "Acquiring Fund"). The transfer is to occur pursuant to an Agreement and Plan of Reorganization. This Statement of Additional Information consists of this cover page and the following documents attached hereto:
| 1. | The Acquiring Fund's Statement of Additional Information dated December 3, 2007. |
| 2. | The Acquiring Fund's Annual Report for the fiscal year ended July 31, 2007. |
| 3. | The Fund's Annual Report for the fiscal year ended October 31, 2006. |
| 4. | The Fund's Semi-Annual Report for the six-month period ended April 30, 2007. |
| 5. | Pro forma financials for the combined Fund and Acquiring Fund as of September 30, 2007. |
The Acquiring Fund's Statement of Additional Information, and the financial statements included in the Acquiring Fund's Annual Report and Semi-Annual Report, and the Fund's Annual Report and Semi-Annual Report, are incorporated herein by reference. The Prospectus/Proxy Statement dated December 17, 2007 may be obtained by writing to the Fund or the Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
DOCUMENTS INCORPORATED BY REFERENCE
The Acquiring Fund's Statement of Additional Information dated December 3, 2007 is incorporated herein by reference to the Acquiring Fund's Post-Effective Amendment No. 33 to its Registration Statement on Form N-1A, filed November 30, 2007 (File No. 33-48926). The financial statements of the Acquiring Fund are incorporated herein by reference to its Annual Report dated July 31, 2007, filed September 28, 2007.
The Fund's Statement of Additional Information dated March 1, 2007 is incorporated herein by reference to the Fund's Post-Effective Amendment No. 39 to its Registration Statement on Form N-1A, filed February 27, 2007 (File No. 33-7172). The financial statements of the Fund are incorporated herein by reference to its Annual Report dated October 31, 2006 and Semi-Annual Report dated April 30, 2007.
Pro Forma STATEMENT OF INVESTMENTS
Dreyfus Intermediate Term Income Fund
September 30, 2007 (Unaudited)
Dreyfus
Intermediate Dreyfus Dreyfus Premier Dreyfus Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Coupon Maturity
Bonds and Notes--90.1% Rate (%) Date Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 3.00 8/1/35 440,000 45,000 625,000 1,110,000
Raytheon,
Sr. Notes 5.50 11/15/12 375,000 375,000
Agricultural--.3%
Philip Morris,
Debs. 7.75 1/15/27 1,495,000 a 1,475,000 105,000 2,000,000 a 5,075,000
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 6.96 3/8/16 1,140,000 b 540,000 b 120,000 b 1,230,000 b 3,030,000
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 4.73 9/15/10 425,000 425,000
Capital Auto Receivables Asset
Trust, Ser. 2005-1, Cl. D 6.50 5/15/12 900,000 b 1,100,000 b 2,000,000
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 7.16 1/15/13 1,050,000 b 1,050,000
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 6.57 9/16/13 500,000 b 500,000 b 708,000 b 1,708,000
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 2.85 8/8/10 110,000 110,000
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 4.19 7/15/09 1,000,000 50,000 1,400,000 2,450,000
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 3.72 10/15/09 1,135,000 1,135,000
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 4.64 4/15/10 1,405,000 1,140,000 125,000 1,985,000 4,655,000
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 4.72 2/15/11 720,000 365,000 85,000 770,000 1,940,000
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 7.12 2/15/13 700,000 b 900,000 b 1,600,000
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 5.47 9/15/12 340,000 340,000
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 7.05 12/15/13 1,575,000 b 300,000 b 250,000 b 1,700,000 b 3,825,000
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 2.65 5/16/11 201,705 201,705
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 5.25 5/15/13 495,000 50,000 545,000
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 5.04 1/17/12 465,000 465,000
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 5.65 2/20/13 945,000 945,000
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 2.81 8/22/11 224,581 224,581
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 3.51 2/17/12 82,610 50,236 132,846
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 3.13 5/17/12 86,887 55,406 142,293
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 4.57 11/19/12 2,065,000 575,000 170,000 2,560,000 5,370,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 4.50 5/17/13 390,000 95,000 485,000
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 4.54 5/17/13 50,000 50,000
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 6.14 1/15/13 2,210,000 b,c 2,100,000 b,c 435,000 b.c 2,350,000 b,c 7,095,000
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 6.04 6/15/14 2,875,000 c 2,875,000
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 6.04 1/15/14 435,000 c 435,000
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 6.04 1/9/12 10,235,000 c 4,530,000 c 14,765,000
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 960,000 c 960,000
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 6.80 7/15/14 5,268,000 11,322,000 16,590,000
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 5.19 4/25/36 231,064 c 231,064
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 5.14 1/25/34 925,000 c 925,000
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 5.21 4/28/39 1,795,000 c 2,550,000 c 4,345,000
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 5.17 5/25/36 239,941 c 239,941
Centex Home Equity,
Ser. 2006-A, Cl. AV1 5.18 6/25/36 157,998 c 112,734 c 341,617 c 612,349
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 5.01 2/25/35 1,700,000 140,000 2,350,000 4,190,000
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 5.96 7/25/36 905,209 c 1,590,581 c 100,866 c 2,596,656
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 5.87 9/25/36 395,159 c 760,948 c 1,156,107
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 5.56 9/25/36 1,600,000 c 1,600,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 5.98 6/25/37 1,631,721 c 527,910 c 2,159,631
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 7.00 6/25/37 150,000 c 150,000
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 7.00 6/25/37 525,000 c 525,000
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.26 7/25/36 248,050 c 23,749 c 271,799
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 5.24 12/25/25 1,119,527 c 1,119,527
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 5.45 12/25/35 164,024 c 164,024
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 5.72 12/25/36 119,006 c 119,006
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 5.86 2/25/37 1,520,000 160,000 1,715,000 3,395,000
First NLC Trust,
Ser. 2005-3, Cl. AV2 5.36 12/25/35 312,260 c 312,260
GSAA Trust,
Ser. 2006-7, Cl. AV1 5.21 3/25/46 589,418 c 589,418
GSAMP Trust,
Ser. 2006-S4, Cl. A1 5.22 5/25/36 289,900 c 289,900
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 5.17 5/25/36 183,691 c 183,691
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 5.42 4/1/37 1,264,019 c 1,264,019
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 5.17 4/25/36 617,395 c 183,783 c 14,358 c 815,536
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 5.83 11/25/36 740,000 c 485,000 c 75,000 c 955,000 c 2,255,000
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 5.20 3/25/36 430,032 c 430,032
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 5.42 12/25/36 787,764 c 787,764
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 5.91 1/25/36 1,525,000 c 145,000 c 2,100,000 c 3,770,000
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 5.36 1/25/36 243,865 c 243,865
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 6.64 8/25/35 130,000 c 130,000
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 6.00 8/25/36 480,115 c 480,115
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 5.61 2/25/35 1,585,000 c 2,105,000 c 3,690,000
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 5.68 2/25/35 490,000 c 600,000 c 1,090,000
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 5.96 9/25/31 61,551 c 61,551
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 5.75 9/25/33 723,951 236,676 c 981,789 1,942,416
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 5.60 10/25/35 450,000 c 555,000 c 1,005,000
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 5.17 6/25/36 292,586 c 292,586
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 5.24 3/25/36 213,510 c 292,588 c 506,098
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 5.50 3/25/36 240,000 c 240,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 5.73 5/25/35 1,120,000 c 1,400,000 c 2,520,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 5.83 5/25/35 317,185 c 317,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 5.83 7/22/30 420,000 b,c 420,000
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 5.19 2/25/37 657,166 c 657,166
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 5.16 5/25/36 165,222 c 165,222
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 9.25 3/15/20 1,272,548 444,191 57,625 1,824,786 3,599,150
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 3.79 12/15/17 37,251 37,251
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 5.25 2/15/14 379,875 379,875
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 5.25 12/15/18 1,375,000 115,000 1,500,000 2,990,000
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 6.48 1/15/37 745,000 1,000,000 1,745,000
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 6.75 3/7/29 80,000 80,000
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 6.05 3/13/09 2,580,000 c 320,000 c 1,950,000 c 4,850,000
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 5.89 10/31/08 2,725,000 c 250,000 c 3,745,000 c 6,720,000
DaimlerChrysler N.A. Holding,
Gtd. Notes 6.13 3/13/09 1,375,000 c 135,000 c 1,925,000 c 3,435,000
DaimlerChrysler N.A. Holding,
Notes 4.88 6/15/10 295,000 65,000 360,000
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 965,000 b,c 965,000
ERAC USA Finance,
Notes 7.95 12/15/09 1,095,000 b 1,095,000
Goodyear Tire & Rubber,
Sr. Notes 9.13 12/1/09 295,000 b,c 30,000 b,c 380,000 b,c 705,000
Banks--6.4%
BAC Capital Trust XIV,
Bank Gtd. Notes 5.63 12/31/49 2,930,000 c 470,000 c 3,205,000 c 6,605,000
Barclays Bank,
Sub. Notes 5.93 9/29/49 265,000 a,b,c 265,000
Barclays Bank,
Jr. Sub. Bonds 7.43 12/15/49 120,000 b,c 120,000
Capital One Financial,
Sr. Unsub. Notes 6.00 9/10/09 5,275,000 c 540,000 c 2,500,000 c 8,315,000
Chevy Chase Bank,
Sub. Notes 6.88 12/1/13 1,220,000 480,000 145,000 1,710,000 3,555,000
Chuo Mitsui Trust & Banking,
Sub. Notes 5.51 12/29/49 385,000 b,c 385,000
Colonial Bank,
Sub. Notes 6.38 12/1/15 1,105,000 750,000 250,000 1,530,000 3,635,000
Colonial Bank,
Sub. Notes 8.00 3/15/09 385,000 250,000 540,000 1,175,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 335,000 335,000
Glitnir Banki,
Sub. Notes 6.69 6/15/16 450,000 b,c 450,000
Greater Bay Bancorp,
Sr. Notes, Ser. B 5.25 3/31/08 100,000 100,000
ICICI Bank,
Bonds 5.90 1/12/10 710,000 b,c 400,000 b,c 850,000 b,c 1,960,000
Industrial Bank of Korea,
Sub. Notes 4.00 5/19/14 2,630,000 b,c 275,000 b,c 3,305,000 b,c 6,210,000
Islandsbanki,
Notes 5.52 10/15/08 975,000 b,c 87,000 b,c 1,245,000 b,c 2,307,000
J.P. Morgan & Co.,
Sub. Notes 6.25 1/15/09 1,110,000 160,000 1,155,000 2,425,000
Landsbanki Islands,
Sr. Notes 6.21 8/25/09 2,450,000 b,c 250,000 b,c 3,225,000 b,c 5,925,000
M&T Bank,
Sr. Unscd. Bonds 5.38 5/24/12 245,000 245,000
Manufacturers & Traders Trust,
Sub. Notes 5.59 12/28/20 475,000 c 475,000
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 5.85 12/4/12 2,430,000 c 2,610,000 c 260,000 c 2,650,000 c 7,950,000
Marshall and Ilsley,
Sr. Unscd. Notes 5.63 8/17/09 2,765,000 1,395,000 325,000 2,945,000 7,430,000
Morgan Stanley,
Notes 3.88 1/15/09 690,000 690,000
NB Capital Trust IV,
Gtd. Cap. Secs. 8.25 4/15/27 1,000,000 180,000 1,180,000
Northern Rock,
Sub. Notes 5.60 4/29/49 975,000 b,c 975,000
Northern Rock,
Sub. Notes 5.60 4/30/49 350,000 b,c 350,000 b,c 700,000
Northern Rock,
Sub. Notes 6.59 6/28/49 1,130,000 b,c 1,175,000 b,c 2,305,000
Northern Rock,
Sub. Notes 6.59 6/29/49 215,000 b,c 215,000
Popular North America,
Notes 6.05 12/12/07 1,315,000 c 125,000 c 1,815,000 c 3,255,000
Regions Financial,
Sr. Notes 5.44 8/8/08 1,450,000 c 1,450,000
Resona Bank,
Notes 5.85 9/29/49 385,000 b,c 385,000
Royal Bank of Scotland,
Bonds 6.99 10/5/49 1,825,000 b,c 1,850,000b,c,g 3,675,000
Royal Bank of Scotland,
Bonds 6.99 10/29/49 1,045,000 b,c,g 290,000 b,c,g 1,335,000
Shinsei Finance Cayman,
Jr. Sub. Bonds 6.42 1/29/49 795,000 b,c 795,000
Societe Generale,
Sub. Notes 5.92 4/29/49 330,000 b,c 330,000
Sovereign Bancorp,
Sr. Notes 4.80 9/1/10 925,000 c 925,000
Sovereign Bancorp,
Sr. Unscd. Notes 5.44 3/23/10 2,105,000 c 585,000 c 250,000 c 1,850,000 c 4,790,000
Sovereign Bancorp,
Sr. Notes 5.90 3/1/09 2,145,000 c 195,000 c 2,965,000 c 5,305,000
SunTrust Preferred Capital I,
Bank Gtd. Notes 5.85 12/31/49 2,875,000 c 705,000 a,b,c 330,000 c 3,125,000 c 7,035,000
USB Capital IX,
Gtd. Notes 6.19 4/15/49 5,585,000 a,c 1,415,000 c 795,000 a,c 6,410,000 c 14,205,000
Wachovia,
Sr. Notes 3.63 2/17/09 155,000 155,000
Wachovia Bank,
Sub. Notes 5.00 8/15/15 850,000 850,000
Wachovia,
Sub. Notes 6.38 1/15/09 915,000 915,000
Washington Mutual,
Notes 5.66 1/15/10 810,000 c 810,000
Wells Fargo & Co.,
Notes 3.13 4/1/09 4,195,000 795,000 4,500,000 9,490,000
Wells Fargo Bank N.A.,
Sub. Notes 7.55 6/21/10 1,895,000 2,855,000 1,870,000 6,620,000
Wells Fargo & Co.,
Sub. Notes 6.38 8/1/11 540,000 540,000
Western Financial Bank,
Sub. Debs. 9.63 5/15/12 1,695,000 165,000 2,390,000 4,250,000
World Savings Bank,
Sr. Notes 4.50 6/15/09 4,065,000 330,000 4,280,000 8,675,000
Zions Bancorporation,
Sr. Unscd. Notes 5.48 4/15/08 2,350,000 c 620,000 c 105,000 c 3,075,000
Zions Bancorporation,
Sub. Notes 6.00 9/15/15 825,000 825,000
Building & Construction--.5%
American Standard,
Gtd. Notes 7.38 2/1/08 1,530,000 145,000 2,115,000 3,790,000
Centex,
Sr. Unscd. Notes 4.75 1/15/08 725,000 65,000 1,010,000 1,800,000
D.R. Horton,
Gtd. Notes 5.88 7/1/13 1,365,000 120,000 1,870,000 3,355,000
D.R. Horton,
Sr. Unsub. Notes 6.00 4/15/11 15,000
Masco,
Sr. Unscd. Notes 6.00 3/12/10 1,390,000 c 410,000 c 140,000 c 1,620,000 c 3,560,000
Owens Corning,
Gtd. Notes 6.50 12/1/16 210,000 210,000
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 10.13 9/1/08 309,000 206,000 29,000 420,000 964,000
ICI Wilmington,
Gtd. Notes 4.38 12/1/08 725,000 725,000
Lubrizol,
Sr. Notes 4.63 10/1/09 815,000 815,000
RPM International,
Sr. Notes 4.45 10/15/09 1,140,000 125,000 1,415,000 2,680,000
Rohm and Haas Holdings,
Unsub. Notes 5.60 3/15/13 220,000 220,000
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 5.61 4/30/09 700,000 b,c 200,000 b,c 70,000 b,c 970,000
ERAC USA Finance,
Notes 7.95 12/15/09 760,000 b 360,000 b 100,000 b 1,220,000
ERAC USA Finance,
Bonds 5.60 5/1/15 550,000 b 550,000
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 4.25 7/10/43 1,424,590 1,424,590
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 5.12 7/11/43 300,000 300,000
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 5.71 12/25/33 505,134 b,c 303,081 b,c 690,350 b,c 1,498,565
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 5.49 4/25/34 636,882 b,c 303,277 b,c 940,159
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 6.33 4/25/34 192,076 b,c 283,059 b,c 475,135
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 5.53 11/25/35 1,538,477 b,c 145,067 b,c 2,171,428 b,c 3,854,972
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 6.23 11/25/35 76,351 b,c 76,351
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 8.13 11/25/35 381,756 b,c 190,878 b,c 76,351 b,c 534,458 b,c 1,183,443
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 8.63 1/25/36 186,517 b,c 186,517
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 5.78 1/25/36 426,916 b,c 82,896 b,c 911,859 b,c 1,421,671
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 6.60 7/25/36 673,353 b,c 673,353
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 7.83 7/25/36 231,465 b,c 336,677 b,c 568,142
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 5.40 4/25/36 397,251 b,c 397,251
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 5.41 1/25/37 1,711,777 b,c 182,474 b,c 2,337,402 b,c 4,231,653
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 4.24 8/13/39 295,000 295,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 4.25 7/11/42 1,125,000 1,550,000 2,675,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 4.57 7/11/42 120,000 120,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 4.56 2/13/42 1,365,000 125,000 1,900,000 3,390,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 5.52 9/11/41 350,000 350,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 5.87 9/11/38 715,000 c 715,000
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 5.53 10/12/41 775,000 775,000
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 6.26 10/15/30 744,322 651,281 88,388 790,842 2,274,833
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 6.60 12/19/29 35,072 35,072
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 5.41 1/15/46 580,000 580,000
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 5.94 5/15/23 2,285,000 b,c 725,000 b,c 20,000 b,c 3,150,000 b,c 6,180,000
Crown Castle Towers,
Ser. 2005-1A, Cl. D 5.61 6/15/35 1,290,000 b 445,000 b 115,000 b 1,815,000 b 3,665,000
Crown Castle Towers,
Ser. 2006-1A, Cl. B 5.36 11/15/36 275,000 b 275,000
Crown Castle Towers,
Ser. 2006-1A, Cl. C 5.47 11/15/36 730,000 b 730,000
Crown Castle Towers,
Ser. 2006-1A, Cl. D 5.77 11/15/36 745,000 b 550,000 b 75,000 b 960,000 b 2,330,000
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 6.24 11/12/31 114,944 114,944
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 6.41 6/10/31 291,074 291,074
Global Signal Trust,
Ser. 2006-1, Cl. D 6.05 2/15/36 1,650,000 b 580,000 b 160,000 b 2,275,000 b 4,665,000
Global Signal Trust,
Ser. 2006-1, Cl. E 6.50 2/15/36 400,000 b 320,000 b 35,000 b 550,000 b 1,305,000
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 4.22 4/10/40 1,075,000 1,475,000 2,550,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 6.05 3/6/20 1,630,000 b,c 1,630,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 6.24 3/6/20 610,000 b,c 610,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 6.28 3/6/20 2,605,000 b,c 305,000 b,c 2,770,000 b,c 5,680,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 6.32 3/6/20 1,415,000 b,c 150,000 b,c 1,545,000 b,c 3,110,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 6.85 3/6/20 915,000 b,c 350,000 b,c 95,000 b,c 995,000 b,c 2,355,000
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 7.10 3/6/20 3,060,000 b,c 330,000 b,c 3,335,000 b,c 6,725,000
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 5.44 3/10/39 1,450,000 1,450,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 4.30 1/15/38 540,000 540,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 5.20 12/15/44 1,250,000 1,250,000
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 6.07 4/15/45 710,000 c 710,000
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 3.89 5/28/40 27,970 b 27,970
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 4.96 7/12/38 885,000 885,000
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 5.40 11/12/37 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 7.42 3/15/30 300,000 c 300,000
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 6.71 12/15/31 115,699 115,699
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 7.02 3/15/32 28,077 28,077
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 5.09 10/12/52 1,000,000 1,000,000
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 5.33 12/15/43 1,540,000 1,540,000
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 5.71 7/12/44 1,550,000 1,550,000
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 5.80 6/11/42 570,000 c 570,000
Morgan Stanley Dean Witter Capital I,
Ser. 2001-PPM, Cl. A3 6.54 2/15/31 102,547 102,547
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 6.48 8/20/30 952,391 404,440 107,633 1,014,362 2,478,826
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 5.85 11/15/36 695,000 b 235,000 b 70,000 b 890,000 b 1,890,000
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 6.10 8/15/39 495,000 c 495,000
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3.83 1/25/35 3,499,442 b 2,232,099 b 328,989 b 4,861,500 b 10,922,030
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 7.52 6/1/66 1,215,000 c 396,000 c 240,000 c 1,590,000 c 3,441,000
Amvescap,
Gtd. Notes 5.63 4/17/12 2,780,000 380,000 290,000 3,165,000 6,615,000
Bear Stearns,
Sr. Unscd. Notes 5.50 8/15/11 785,000 785,000
Boeing Capital,
Sr. Notes 7.38 9/27/10 890,000 890,000
Capmark Financial Group,
Gtd. Notes 5.88 5/10/12 3,245,000 b 860,000 b 340,000 b 4,095,000 b 8,540,000
CIT Group,
Sr. Notes 5.71 8/15/08 2,035,000 c 185,000 c 2,820,000 c 5,040,000
Countrywide Financial,
Gtd. Notes 5.50 1/5/09 260,000 c 260,000
Countrywide Financial,
Gtd. Notes 5.80 6/7/12 540,000 540,000
Countrywide Home Loans,
Gtd. Notes 3.25 5/21/08 375,000 375,000
Countrywide Home Loans,
Notes 4.13 9/15/09 1,445,000 2,010,000 3,455,000
Credit Suisse First Boston USA,
Notes 3.88 1/15/09 790,000 315,000 560,000 1,665,000
Credit Suisse Guernsey,
Jr. Sub. Notes 5.86 5/29/49 670,000 c 670,000
Credit Suisse USA,
Sr. Unsub. Notes 5.50 8/16/11 1,215,000 a 1,215,000
FCE Bank,
Notes EUR 5.72 9/30/09 2,155,000 c,d 2,155,000
FCE Bank,
Notes EUR 5.73 9/30/09 1,980,000 c,d 235,000 c,d 2,215,000
Ford Motor Credit,
Sr. Notes 5.80 1/12/09 2,985,000 2,675,000 5,660,000
Ford Motor Credit,
Unscd. Notes 7.38 10/28/09 1,445,000 1,445,000
Fuji JGB Investment,
Sub. Bonds 9.87 12/29/49 1,175,000 b,c 750,000 b,c 100,000 b,c 1,620,000 b,c 3,645,000
General Electric Capital,
Sr. Unscd. Notes, Ser. A 4.13 9/1/09 1,053,000 148,000 1,111,000 2,312,000
General Electric Capital,
Notes, Ser. A 4.63 9/15/09 1,200,000 170,000 1,265,000 2,635,000
Glencore Funding,
Gtd. Notes 6.00 4/15/14 1,280,000 b 440,000 b 140,000 b 1,630,000 b 3,490,000
GMAC,
Unsub. Notes 6.81 5/15/09 1,700,000 c 200,000 c 1,810,000 c 3,710,000
Goldman Sachs Capital II,
Gtd. Bonds 5.79 12/29/49 1,640,000 c 495,000 c 170,000 c 1,825,000 c 4,130,000
Goldman Sachs Group,
Sub. Notes 5.63 1/15/17 330,000 330,000
HSBC Finance Capital Trust IX,
Gtd. Notes 5.91 11/30/35 400,000 c 400,000
HSBC Finance,
Notes 5.50 1/19/16 800,000
HSBC Finance,
Sr. Notes 6.04 9/14/12 3,060,000 c 280,000 c 4,195,000 c 7,535,000
International Lease Finance,
Sr. Unscd. Notes 5.72 5/24/10 125,000 c 125,000
Janus Capital Group,
Notes 6.25 6/15/12 1,955,000 545,000 345,000 2,125,000 4,970,000
Jefferies Group,
Sr. Unscd. Debs. 6.25 1/15/36 1,195,000 1,195,000
Jefferies Group,
Sr. Unscd. Notes 7.75 3/15/12 805,000 140,000 1,050,000 1,995,000
John Deere Capital,
Notes 5.66 9/1/09 770,000 c 555,000 a,b 80,000 c 1,405,000
JPMorgan Chase & Co.,
Sub. Notes 5.13 9/15/14 1,460,000 1,460,000
Kaupthing Bank,
Sr. Notes 6.06 1/15/10 2,295,000 b,c 235,000 b,c 2,960,000 b,c 5,490,000
Kaupthing Bank,
Sub. Notes 7.13 5/19/16 350,000 b 350,000
Lehman Brothers Holdings,
Sr. Notes 6.00 7/19/12 315,000 a 315,000
Leucadia National,
Sr. Unscd. Notes 7.00 8/15/13 1,100,000 115,000 1,520,000 2,735,000
MBNA,
Notes 6.13 3/1/13 1,345,000 1,345,000
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 8.28 12/1/26 905,000 80,000 1,300,000 2,285,000
Merrill Lynch,
Sub. Notes 5.70 5/2/17 1,025,000 1,025,000
Merrill Lynch & Co.,
Notes, Ser. C 4.25 2/8/10 4,302,000 793,000 4,522,000 9,617,000
Merrill Lynch & Co.,
Notes, Ser. C 5.58 2/5/10 755,000 c 80,000 c 887,000 c 1,722,000
Merrill Lynch & Co.,
Sr. Unscd. Notes 6.05 8/15/12 1,725,000 205,000 1,840,000 3,770,000
Morgan Stanley,
Notes 3.88 1/15/09 4,900,000 5,160,000 10,060,000
Morgan Stanley,
Sr. Unscd. Notes 5.75 8/31/12 1,175,000 950,000 165,000 1,235,000 3,525,000
Morgan Stanley,
Sub. Notes 4.75 4/1/14 1,919,000 1,919,000
MUFG Capital Finance 1,
Bank Gtd. Bonds 6.35 7/29/49 590,000 c 590,000
Nuveen Investments,
Sr. Unscd. Notes 5.00 9/15/10 93,000 93,000
NIPSCO Capital Markets,
Notes 7.86 3/27/17 75,000 75,000
Residential Capital,
Gtd. Notes 6.22 6/9/08 75,000 c 75,000
Residential Capital,
Gtd. Notes 7.80 11/21/08 1,155,000 c 120,000 c 865,000 c 2,140,000
Residential Capital,
Gtd. Notes 7.88 6/30/15 370,000 44,000 c 398,000 c 812,000
Residential Capital,
Gtd. Notes 9.19 4/17/09 2,070,000 b,c 205,000 b,c 2,855,000 b,c 5,130,000
SB Treasury,
Jr. Sub. Bonds 9.40 12/29/49 2,390,000 b,c 280,000 b,c 3,330,000 b,c 6,000,000
SLM,
Unscd. Notes, Ser. A 4.50 7/26/10 1,425,000 a 750,000 180,000 1,350,000 3,705,000
SLM,
Unscd. Notes, Ser. A 5.50 7/27/09 2,740,000 a,c 285,000 c 3,105,000 c 6,130,000
SMFG Preferred Capital,
Sub. Bonds 6.08 1/29/49 835,000 b,c 835,000
Tokai Preferred Capital,
Bonds 9.98 12/29/49 2,240,000 b,c 220,000 b,c 3,115,000 b,c 5,575,000
Wachovia,
Sr. Notes 3.63 2/17/09 1,100,000 1,160,000 2,260,000
Windsor Financing,
Gtd. Notes 5.88 7/15/17 580,515 b 181,952 b 801,457 b 1,563,924
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 5.38 6/1/15 154,000 15,000 218,000 387,000
Wellpoint,
Sr. Unsub. Notes 5.88 6/15/17 390,000 390,000
Electric Utilities--2.5%
AES,
Sr. Notes 9.38 9/15/10 395,000 20,000 460,000 875,000
Appalachian Power,
Sr. Unscd. Notes 5.65 8/15/12 920,000 110,000 1,075,000 2,105,000
Cinergy,
Debs. 6.53 12/16/08 1,015,000 1,405,000 2,420,000
Cleveland Electric Illumination,
Sr. Unscd. Notes 5.70 4/1/17 825,000 825,000
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 5.30 12/1/16 675,000 675,000
Consumers Energy,
First Mortgage Bonds, Ser. O 5.00 2/15/12 1,160,000 1,160,000
Dominion Resources,
Sr. Unscd. Notes, Ser. B 5.76 11/14/08 1,335,000 c 140,000 c 1,725,000 c 3,200,000
Enel Finance Internation,
Gtd. Notes 5.70 1/15/13 1,920,000 b 275,000 b 275,000 b 1,985,000 b 4,455,000
FirstEnergy,
Unsub. Notes, Ser. B 6.45 11/15/11 2,580,000 570,000 3,530,000 a 6,680,000
FPL Group Capital,
Gtd. Debs. 5.63 9/1/11 1,570,000 1,570,000
Gulf Power,
Sr. Unsub. Notes, Ser. M 5.30 12/1/16 800,000 800,000
IPALCO Enterprises,
Scd. Notes 8.63 11/14/11 75,000 c 75,000
National Grid,
Sr. Unscd. Notes 6.30 8/1/16 1,010,000 1,000,000 150,000 1,345,000 3,505,000
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 7.75 10/1/08 845,000 90,000 940,000 1,875,000
NiSource Finance,
Gtd. Notes 6.06 11/23/09 1,675,000 c 385,000 c 275,000 c 2,030,000 c 4,365,000
NiSource Finance,
Gtd. Notes 5.25 9/15/17 650,000 650,000
Nisource Finance,
Sr. Unscd. Notes 6.40 3/15/18 700,000 95,000 735,000 1,530,000
Ohio Power,
Unscd. Notes 5.54 4/5/10 1,400,000 c 615,000 c 145,000 c 1,605,000 c 3,765,000
Southern,
Sr. Unsub. Notes, Ser. A 5.30 1/15/12 475,000 475,000
TXU Electric Delivery,
Bonds 6.07 9/16/08 4,440,000 b,c 460,000 b,c 5,175,000 b,c 10,075,000
TXU,
Sr. Notes, Ser. O 4.80 11/15/09 2,335,000 145,000 3,420,000 5,900,000
TXU,
Unscd. Notes, Ser. C 6.38 1/1/08 65,000 65,000
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 5.75 2/15/11 475,000 300,000 45,000 565,000 1,385,000
Allied Waste North America,
Scd. Notes 6.38 4/15/11 445,000 240,000 50,000 515,000 1,250,000
Oakmont Asset Trust,
Notes 4.51 12/22/08 1,265,000 b 130,000 b 1,630,000 b 3,025,000
Republic Services,
Sr. Notes 6.75 8/15/11 610,000 610,000
USA Waste Services,
Sr. Unscd. Notes 7.00 7/15/28 355,000 355,000
Waste Management,
Sr. Unsub. Notes 6.50 11/15/08 950,000 1,280,000 2,230,000
Food & Beverages--.5%
H.J. Heinz,
Notes 6.43 12/1/20 1,625,000 b 425,000 b 150,000 b 2,250,000 b 4,450,000
Kraft Foods,
Sr. Unscd. Notes 6.00 2/11/13 1,210,000 150,000 200,000 1,290,000 2,850,000
Safeway,
Sr. Unscd. Notes 4.13 11/1/08 930,000 85,000 1,295,000 2,310,000
Tyson Foods,
Sr. Unscd. Notes 6.85 4/1/16 800,000 c 520,000 a,c 80,000 c 1,100,000 c 2,500,000
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 8.75 7/18/12 9,740,000 b,d 1,110,000 b,d 10,360,000 b,d 21,210,000
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 5.84 6/16/08 2,080,000 c 1,185,000 c 220,000 c 2,655,000 c 6,140,000
Export-Import Bank of Korea,
Sr. Notes 4.50 8/12/09 1,075,000 1,075,000
Federal Republic of Brazil,
Unscd. Bonds BRL 12.50 1/5/16 5,410,000 a,d 1,750,000 a,d 790,000 a,d 5,510,000 a,d 13,460,000
Mexican Bonos,
Bonds, Ser. M MXN 9.00 12/22/11 25,645,000 d 2,600,000 d 35,640,000 d 63,885,000
Mexican Bonos,
Bonds, Ser. M 30 MXN 10.00 11/20/36 11,615,000 d 1,220,000 d 12,840,000 d 25,675,000
Republic of Argentina,
Bonds 5.39 8/3/12 11,230,000 c 2,065,000 c 1,560,000 c 11,925,000 c 26,780,000
Republic of Argentina,
Bonds, Ser. VII 7.00 9/12/13 720,000 720,000
Republic of El Salvador,
Unscd. Notes 8.50 7/25/11 60,000 b 60,000
Russian Federation,
Unsub. Bonds 8.25 3/31/10 3,890,107 b 973,360 b 426,678 b 5,046,806 b 10,336,951
Health Care--.7%
American Home Products,
Unscd. Notes 6.95 3/15/11 580,000 c 580,000
Baxter International,
Sr. Unscd. Notes 5.20 2/16/08 1,528,000 140,000 1,668,000
Community Health Systems,
Sr. Notes 8.88 7/15/15 310,000 b 310,000
Coventry Health Care,
Sr. Unscd. Notes 5.95 3/15/17 400,000 400,000
HCA,
Sr. Unscd. Notes 7.88 2/1/11 1,140,000 115,000 1,470,000 2,725,000
HCA,
Sr. Unscd. Notes 8.75 9/1/10 1,395,000 150,000 1,470,000 3,015,000
Medco Health Solutions,
Sr. Unscd. Notes 7.25 8/15/13 3,276,000 275,000 60,000 3,611,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 220,000 b 220,000
Tenet Healthcare,
Sr. Notes 6.38 12/1/11 1,205,000 125,000 1,440,000 2,770,000
Teva Pharmaceutical Finance,
Gtd. Notes 6.15 2/1/36 565,000 565,000
UnitedHealth Group,
Sr. Unscd. Notes 5.38 3/15/16 385,000 385,000
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 9.75 3/15/14 200,000 e 15,000 e 260,000 e 475,000
MGM Mirage,
Gtd. Notes 8.38 2/1/11 350,000 a 350,000
MGM Mirage,
Gtd. Notes 8.50 9/15/10 1,575,000 155,000 2,055,000 3,785,000
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 6.13 2/15/13 1,000,000 20,000 1,355,000 2,375,000
Machinery--.2%
Atlas Copco,
Bonds 5.60 5/22/17 290,000 b 290,000
Case New Holland,
Gtd. Notes 7.13 3/1/14 650,000 320,000 65,000 780,000 1,815,000
Terex,
Gtd. Notes 7.38 1/15/14 1,110,000 115,000 1,540,000 2,765,000
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 6.88 1/15/29 530,000 60,000 650,000 1,240,000
Media--1.3%
AOL Time Warner,
Gtd. Notes 6.75 4/15/11 900,000 900,000
British Sky Broadcasting,
Gtd. Notes 6.88 2/23/09 900,000 900,000
Clear Channel Communications,
Sr. Unscd. Notes 4.50 1/15/10 1,700,000 2,300,000 4,000,000
Comcast,
Gtd. Notes 5.66 7/14/09 4,385,000 c 450,000 c 5,235,000 c 10,070,000
Comcast,
Gtd. Notes 5.50 3/15/11 990,000 990,000
Comcast,
Gtd. Notes 6.30 11/15/17 1,465,000 205,000 1,550,000 3,220,000
News America Holdings,
Gtd. Debs. 7.70 10/30/25 775,000 2,975,000 3,750,000
News America,
Gtd. Notes 6.15 3/1/37 2,800,000 435,000 3,235,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,613,000 b 1,613,000
Time Warner,
Gtd. Notes 5.73 11/13/09 290,000 c
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 6.65 8/15/11 810,000 810,000
Anadarko Petroleum,
Sr. Unscd. Notes 6.09 9/15/09 534,000 c 534,000
ANR Pipeline,
Sr. Notes 7.00 6/1/25 50,000 50,000
BJ Services,
Sr. Unscd. Notes 5.75 6/1/08 4,850,000 c 500,000 c 6,750,000 c 12,100,000
Chesapeake Energy,
Gtd. Notes 7.50 6/15/14 155,000 155,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 4.00 10/15/07 4,000,000 405,000 4,720,000 9,125,000
Enterprise Products Operating,
Gtd. Notes, Ser. B 5.60 10/15/14 1,395,000 1,395,000
Gazprom,
Sr. Unscd. Notes 6.51 3/7/22 715,000 b 715,000
Northwest Pipeline,
Sr. Unscd. Notes 6.63 12/1/07 210,000 210,000
Packaging & Containers--.0%
Ball,
Gtd. Notes 6.88 12/15/12 205,000 205,000
Crown Americas/Capital,
Gtd. Notes 7.63 11/15/13 575,000 575,000
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 6.75 6/15/12 1,095,000 b 105,000 b 1,530,000 b 2,730,000
Temple-Inland,
Gtd. Notes 6.88 1/15/18 1,100,000 700,000 c 105,000 c 1,525,000 3,430,000
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 7.63 10/15/25 760,000 75,000 910,000 1,745,000
Allstate,
Jr. Sub. Debs. 6.50 5/15/57 270,000 a,c 270,000
American International Group,
Sr. Notes 5.05 10/1/15 470,000 470,000
Chubb,
Sr. Unscd. Notes 5.47 8/16/08 2,375,000 1,600,000 250,000 3,350,000 7,575,000
Hartford Financial Services
Group,
Sr. Unscd. Notes 5.55 8/16/08 875,000 730,000 1,190,000 2,795,000
Hartford Financial Services
Group,
Sr. Notes 5.66 11/16/08 1,950,000 250,000 2,200,000
Leucadia National,
Sr. Unscd. Notes 7.13 3/15/17 3,465,000 355,000 3,900,000 7,720,000
Lincoln National,
Sr. Unscd. Notes 5.78 3/12/10 720,000 c 240,000 c 960,000
Metlife,
Sr. Notes 5.50 6/15/14 2,195,000 2,195,000
Nippon Life Insurance,
Notes 4.88 8/9/10 1,350,000 b 850,000 b 1,900,000 b 4,100,000
Pacific Life Global Funding,
Notes 3.75 1/15/09 1,545,000 b 1,545,000
Phoenix Cos.,
Sr. Unscd. Notes 6.68 2/16/08 735,000 355,000 70,000 1,025,000 2,185,000
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 3.00 6/15/08 1,000,000 85,000 1,085,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.25 5/1/15 180,000 a 900,000 230,000 a 1,310,000
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 5.63 8/15/14 340,000 455,000 795,000
Arden Realty,
Notes 5.25 3/1/15 675,000 675,000
Avalonbay Communities,
Sr. Unscd. Notes 6.63 9/15/11 370,000 370,000
Boston Properties,
Sr. Notes 5.63 4/15/15 810,000 85,000 1,120,000 2,015,000
Boston Properties,
Sr. Notes 5.00 6/1/15 810,000 810,000
Commercial Net Lease Realty,
Sr. Unscd. Notes 6.15 12/15/15 1,100,000 375,000 100,000 1,505,000 3,080,000
Duke Realty,
Notes 3.50 11/1/07 925,000 890,000 70,000 1,055,000 2,940,000
Duke Realty,
Sr. Unscd. Notes 5.63 8/15/11 350,000 350,000
Duke Realty,
Sr. Notes 5.88 8/15/12 2,210,000 255,000 2,465,000
Duke Realty,
Sr. Notes 6.95 3/15/11 170,000 170,000
ERP Operating,
Notes 4.75 6/15/09 560,000 55,000 1,000,000 1,615,000
ERP Operating,
Unscd. Notes 5.50 10/1/12 340,000 340,000
ERP Operating,
Notes 5.25 9/15/14 150,000 150,000
ERP Operating,
Notes 5.13 3/15/16 825,000 a 615,000 a 75,000 1,125,000 a 2,640,000
ERP Operating,
Unscd. Notes 5.38 8/1/16 255,000 255,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.40 12/1/13 650,000 50,000 825,000 1,525,000
Federal Realty Investment Trust,
Notes 6.00 7/15/12 570,000 155,000 55,000 760,000 1,540,000
Federal Realty Investment Trust,
Sr. Unscd. Notes 5.65 6/1/16 550,000 550,000
Healthcare Realty Trust,
Sr. Unscd. Notes 5.13 4/1/14 2,820,000 875,000 3,800,000 7,495,000
Healthcare Realty Trust,
Unscd. Notes 8.13 5/1/11 225,000 225,000
HRPT Properties Trust,
Sr. Unscd. Notes 6.29 3/16/11 1,350,000 c 412,000 c 125,000 c 1,788,000 c 3,675,000
Istar Financial,
Sr. Unscd. Notes 6.07 3/9/10 2,935,000 c 1,100,000 c 300,000 c 3,435,000 c 7,770,000
Liberty Property,
Sr. Unscd. Notes 5.50 12/15/16 320,000 320,000
Mack-Cali Realty,
Bonds 5.80 1/15/16 690,000 690,000
Mack-Cali Realty,
Notes 5.25 1/15/12 580,000 675,000 55,000 800,000 2,110,000
Mack-Cali Realty,
Unscd. Notes 5.05 4/15/10 1,600,000 400,000 335,000 2,300,000 4,635,000
Mack-Cali Realty,
Sr. Unscd. Notes 5.13 1/15/15 75,000 75,000
Regency Centers,
Gtd. Notes 5.25 8/1/15 1,450,000 a 220,000 125,000 2,000,000 3,795,000
Regency Centers,
Sr. Unscd. Notes 5.88 6/15/17 185,000 185,000
Simon Property Group,
Notes 4.60 6/15/10 1,098,000 105,000 1,203,000
Simon Property Group,
Notes 4.88 8/15/10 850,000 75,000 1,180,000 2,105,000
Simon Property Group,
Unsub. Notes 5.00 3/1/12 1,000,000 1,000,000
Simon Property Group,
Unscd. Notes 5.75 5/1/12 200,000 200,000
Socgen Real Estate,
Bonds 7.64 12/29/49 1,590,000 b,c 1,590,000
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 5.75 12/25/35 598,112 b,c 55,210 b,c 653,322
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 6.75 4/20/31 154,643 154,643
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 4.15 7/25/34 270,857 c 270,857
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 6.83 4/25/36 187,960 b,c 187,960
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 8.08 4/25/36 388,451 b,c 522,112 b,c 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 5.77 4/25/36 375,921 b,c 425,208 b,c 801,129
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 5.59 9/25/36 390,766 303,929 c 43,418 c 738,113
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 5.99 9/25/36 1,200,000 120,000 c 1,600,000 c 2,920,000
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 4.92 8/25/35 96,192 c 138,517 c 9,619 c 130,822 c 375,150
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 5.25 8/25/35 1,650,000 c 1,650,000
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 5.70 3/25/36 45,828 c 45,828
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 5.85 10/25/32 329,460 c 329,460
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 5.00 5/25/18 230,943 b 230,943
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 5.50 1/25/36 922,845 c 922,845
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 6.00 11/25/36 1,912,021 c 74,536 c 1,986,557
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 6.25 10/25/34 5,518,007 3,705,877 3,358,118 12,582,002
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 5.88 2/25/36 1,291,836 c 121,956 c 1,788,695 c 3,202,487
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 6.63 2/25/36 1,038,889 c 90,338 c 1,460,768 c 2,589,995
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 5.48 5/25/36 704,489 c 474,356 c 65,752 c 962,802 c 2,207,399
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 6.05 6/25/36 399,271 c 498,997 c 898,268
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 6.05 6/25/36 119,759 c 119,759
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 6.14 9/25/36 1,087,488 c 1,268,736 c 90,624 c 1,449,984 c 3,896,832
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 5.71 12/25/36 890,000 c 105,000 c 1,000,000 c 1,995,000
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 4.49 2/25/35 744,909 c 65,521 c 1,036,578 c 1,847,008
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 5.89 10/25/36 695,000 c 70,000 c 890,000 c 1,655,000
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 4.86 2/25/35 200,000 c 200,000
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 4.98 5/25/35 1,725,000 c 775,000 c 150,000 c 2,355,000 c 5,005,000
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 5.16 3/25/35 1,195,000 c 779,000 c 115,000 c 1,630,000 c 3,719,000
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 6.73 4/28/24 3,287 b,c 3,287
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 4.75 3/25/19 1,126,404 1,126,404
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 5.86 4/30/30 1,691 c 1,691
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 5.21 10/25/37 697,702 b,c 697,702
Washington Mutual,
Ser. 2004-AR7, Cl. A6 3.94 7/25/34 135,000 c 135,000
Washington Mutual,
Ser. 2003-AR10, Cl. A6 4.06 10/25/33 203,000 c 203,000
Washington Mutual,
Ser. 2004-AR9, Cl. A7 4.15 8/25/34 165,000 c 165,000
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 4.67 4/25/35 3,325,000 c 1,025,000 c 4,525,000 c 8,875,000
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4.54 2/25/35 4,288,950 c 418,843 c 5,696,261 c 10,404,054
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 5.75 2/25/33 1,800,000 150,000 2,500,000 4,450,000
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 5.92 6/1/10 1,055,000 c 370,000 c 110,000 c 1,155,000 c 2,690,000
CVS Caremark,
Sr. Unscd. Notes 5.75 8/15/11 255,000 255,000
Delhaize Group,
Sr. Unscd. Notes 6.50 6/15/17 190,000 b 190,000
Federated Retail Holding,
Gtd. Bonds 5.35 3/15/12 155,000 155,000
Federated Retail Holding,
Gtd. Notes 5.90 12/1/16 265,000 265,000
Home Depot,
Sr. Unscd. Notes 5.82 12/16/09 815,000 c 85,000 c 1,015,000 c 1,915,000
Lowe's Companies,
Sr. Unscd. Notes 5.60 9/15/12 1,270,000 165,000 180,000 1,325,000 2,940,000
May Department Stores,
Unscd. Notes 4.80 7/15/09 45,000 45,000
May Department Stores,
Gtd. Notes 5.95 11/1/08 760,000 1,035,000 1,795,000
Saks,
Gtd. Notes 8.25 11/15/08 429 429
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 3.50 10/1/27 525,000 75,000 550,000 1,150,000
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 6.00 6/1/28 595,000 75,000 670,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.31 6/1/34 4,525,000 2,410,000 410,000 5,505,000 12,850,000
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 7.54 6/1/34 1,050,000 c 600,000 c 100,000 c 1,500,000 c 3,250,000
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 6.00 6/1/27 1,750,000 160,000 2,420,000 4,330,000
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 6.50 6/1/23 3,255,000 2,250,000 165,000 3,965,000 9,635,000
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 4.50 6/1/23 715,000 460,000 1,175,000
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 7.47 6/1/47 300,000 300,000
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 4.50 10/1/23 1,345,000 190,000 1,415,000 2,950,000
Steel--.0%
US Steel,
Sr. Unsub. Notes 5.65 6/1/13 320,000 320,000
Telecommunications--2.4%
America Movil,
Gtd. Notes 5.30 6/27/08 455,000 b,c 45,000 b,c 565,000 b,c 1,065,000
AT & T,
Notes 5.46 2/5/10 2,390,000 c 245,000 c 2,930,000 c 5,565,000
AT & T,
Sr. Notes 5.65 5/15/08 2,700,000 c 450,000 c 125,000 c 3,700,000 c 6,975,000
AT & T Wireless,
Sr. Unsub. Notes 8.75 3/1/31 440,000 440,000
AT & T,
Sr. Unscd. Notes 7.30 11/15/11 740,000 c 740,000
France Telecom,
Unsub. Notes 7.75 3/1/11 1,280,000 c 110,000 c 1,090,000 c 2,480,000
Intelsat,
Sr. Unscd. Notes 5.25 11/1/08 1,540,000 200,000 1,985,000 3,725,000
KPN,
Sr. Unsub. Bonds 8.38 10/1/30 330,000 330,000
Nextel Communications,
Gtd. Notes, Ser. F 5.95 3/15/14 1,035,000 500,000 95,000 1,405,000 3,035,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 464,000 c 464,000
Qwest,
Bank Note, Ser. B 6.95 6/30/10 1,858,000 c 1,858,000
Qwest,
Sr. Notes 7.88 9/1/11 710,000 65,000 1,965,000 2,740,000
Qwest,
Notes 8.88 3/15/12 50,000 c 50,000
Qwest,
Sr. Notes 8.94 6/15/13 100,000 c 1,600,000 c 1,700,000
Sprint Capital,
Gtd. Notes 8.75 3/15/32 1,235,000 190,000 1,315,000 2,740,000
Telefonica Emisiones,
Gtd. Notes 5.89 6/19/09 240,000 c 240,000
Telefonica Emisiones,
Gtd. Notes 5.98 6/20/11 2,425,000 625,000 470,000 3,205,000 6,725,000
Time Warner Cable,
Sr. Unscd. Notes 5.85 5/1/17 1,380,000 b 335,000 b 150,000 b 1,510,000 b 3,375,000
Time Warner,
Gtd. Notes 5.88 11/15/16 2,260,000 265,000 2,410,000 4,935,000
U.S. West Communications,
Notes 5.63 11/15/08 70,000 70,000
Verizon Global Funding,
Notes 7.75 6/15/32 245,000 245,000
Windstream,
Gtd. Notes 8.13 8/1/13 1,435,000 140,000 1,945,000 3,520,000
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 5.75 1/15/11 990,000 700,000 275,000 1,370,000 3,335,000
Transportation--.2%
Ryder System,
Notes 3.50 3/15/09 1,435,000 130,000 1,980,000 3,545,000
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 5.13 8/23/10 13,515,000 13,515,000
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 6.55 10/1/17 509,198 509,198
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 261,236 261,236
4.00%, 10/1/09 76,494 76,494
4.50%, 10/1/09 70,428 70,428
5.00% 1,670,000 f 1,670,000
5.00%, 10/1/18 414,636 414,636
5.50% 59,340,000 f 17,440,000 f 9,195,000 f 63,275,000 f 149,250,000
5.50%, 6/1/34 - 4/1/37 7,605,237 344,620 9,696,625 17,646,482
6.00%, 7/1/37 1,392,268 1,669,764 3,062,032
6.00%, 7/1/17 - 4/1/33 1,788,559 1,788,559
6.50%, 10/1/31 - 3/1/32 89,512 829,072 918,584
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 296,225 296,225
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,550,989 2,163,703 6,714,692
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 4,367,209 j 4,367,209
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 4,617,400 j 4,617,400
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 4,000,000 j 4,000,000
Federal National Mortgage
Association:
5.00% 26,720,000 f 25,365,000 f 1,795,000 f 32,000,000 f 85,880,000
5.50% 5,535,000 f 815,000 f 5,875,000 f 12,225,000
6.00% 100,380,000 f 29,955,000 f 12,150,000 f 100,380,000 f 242,865,000
6.50% 5,515,000 f 645,000 f 5,850,000 f 12,010,000
3.53%, 7/1/10 277,136 277,136
4.00%, 5/1/10 1,377,551 1,377,551
4.06%, 6/1/13 100,000 100,000
5.00%, 7/1/11 - 1/1/22 8,216,200 1,873,938 832,086 10,922,224
5.50%, 8/1/22 - 1/1/37 12,725,081 622,282 2,196,169 19,955,020 35,498,552
6.00%, 1/1/19 - 8/1/37 1,714,218 1,549,871 218,502 5,481,229 8,963,820
6.50%, 11/1/10 - 8/1/37 5,425,907 811,807 7,665,930 13,903,644
7.00%, 9/1/14 - 7/1/32 44,432 67,827 112,259
8.00%, 12/1/25 36,962 36,962
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 275,000
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,192,303 2,049,436 4,459,645 9,701,384
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 154,918 154,918
Government National Mortgage
Association I:
5.50%, 4/15/33 4,510,118 4,510,118
6.50%, 9/15/32 60,822 60,822
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,089 5,089
9.50%, 11/15/17 308,407 308,407
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 190,991 190,991
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,037 2,037
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 68,319 68,319
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 79,659 79,659
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,361,724 120,233 2,481,957
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 313,158 520,626 833,784
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 326,420 259,652 586,072
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 154,829 154,829
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,800,000 5,535,000 10,335,000
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 110,964 110,964
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 105,225 105,225
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 187,617 187,617
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 111,336 111,336
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 151,096 151,096
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 994,099 994,099
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 86,419 86,419
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 60,685 60,685
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,611,293 134,274 2,215,528 3,961,095
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 106,763 106,763
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 806,061 1,128,486 1,934,547
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,255,831 1,742,267 2,998,098
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,285,577 1,792,017 3,077,594
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,184,876 98,740 1,619,331 2,902,947
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,788,493 860,288 158,474 2,490,307 5,297,562
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,348,502 1,348,502
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,401,893 1,168,779 149,206 4,699,984 9,419,862
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,316,705 109,725 1,821,442 3,247,872
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 166,371 166,371
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,675,856 1,675,856
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,147,425 1,147,425
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,426,569 1,426,569
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,572,440 1,572,440
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,240,264 639,976 138,910 1,289,875 3,309,025
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,815,351 877,752 214,451 1,930,057 4,837,611
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 75,000 75,000
Government National Mortgage
Association II:
5.50%, 7/20/30 66,101 c 330,573 c 396,674
6.38%, 4/20/30 258,769 c 258,769
6.50%, 2/20/31 - 7/20/31 271,775 271,775
7.00%, 11/20/29 757 757
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,832,000 a 700,000 9,532,000
5.00%, 5/15/37 594,000 g 12,913,000 682,000 g 1,653,000 g 15,842,000
U.S. Treasury Notes:
3.88%, 9/15/10 11,535,000 4,720,000 a 230,000 a 16,485,000
4.13%, 8/31/12 7,730,000 7,730,000
4.25%, 1/15/11 25,505,000 a 1,540,000 a 27,045,000
4.38%, 12/31/07 8,160,000 h 8,160,000
4.50%, 5/15/10 730,000 a 730,000
4.50%, 9/30/11 4,580,000 a 4,580,000
4.50%, 4/30/12 14,310,000 a 12,590,000 a 14,555,000 a 41,455,000
4.50%, 5/15/17 4,625,000 a 510,000 a 5,260,000 a 10,395,000
4.63%, 12/31/11 6,410,000 a 6,410,000
4.63%, 11/15/16 25,790,000 a 7,045,000 a 3,925,000 a 12,425,000 a 49,185,000
4.75%, 8/15/17 5,350,000 g 16,064,000 2,210,000 g 21,021,000 g 44,645,000
5.13%, 6/30/08 8,442,000 a 8,442,000
Total Bonds and Notes
(cost $750,962,326, $390,304,526,
$110,300,634 and $793,545,334
respectively)
Dreyfus Dreyfus
Intermediate Dreyfus Dreyfus Premier Premier Pro Forma
Term Income A-Bonds Managed Core Bond Combined
Fund Plus, Inc. Income Fund Fund (*)
Bonds and Notes--90.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--.1%
L-3 Communications,
Gtd. Bonds 511,500 52,313 726,562 1,290,375
Raytheon,
Sr. Notes 379,610 379,610
511,500 379,610 52,313 726,562 1,669,985
Agricultural--.3%
Philip Morris,
Debs. 1,841,723 1,817,085 129,352 2,463,844 6,252,004
Asset-Backed Ctfs./Auto
Receivables--1.5%
Americredit Prime Automobile
Receivables, Ser. 2007-1, Cl. E 1,119,161 530,129 117,806 1,207,516 2,974,612
Capital Auto Receivables
Asset Trust, Ser. 2005-1,
Cl. C, 422,255 422,255
Capital Auto
Receivables Asset
Trust, Ser. 2005-1, Cl. D 893,812 1,092,437 1,986,249
Capital Auto Receivables Asset
Trust, Ser. 2006-1, Cl. D 1,072,742 1,072,742
Capital Auto Receivables Asset
Trust, Ser. 2007-1, Cl. D 477,521 477,521 676,170 1,631,212
Daimler Chrysler Auto Trust,
Ser. 2004-A, Cl. CTFS 109,939 109,939
Ford Credit Auto Owner Trust,
Ser. 2004-A, Cl. C 997,778 49,889 1,396,889 2,444,556
Ford Credit Auto Owner Trust,
Ser. 2005-A, Cl. A4 1,126,090 1,126,090
Ford Credit Auto Owner Trust,
Ser. 2005-B, Cl. B 1,398,250 1,134,523 124,400 1,975,464 4,632,637
Ford Credit Auto Owner Trust,
Ser. 2005-C, Cl. C 713,789 361,852 84,267 763,358 1,923,266
Ford Credit Auto Owner Trust,
Ser. 2006-B, Cl. D 681,056 875,644 1,556,700
Ford Credit Auto Owner Trust,
Ser. 2006-C, Cl. C 335,620 335,620
Ford Credit Auto Owner Trust,
Ser. 2007-A, Cl. D 1,513,955 288,372 240,310 1,634,110 3,676,747
GS Auto Loan Trust,
Ser. 2004-1, Cl. A4 201,478 201,478
Hyundai Auto Receivables Trust,
Ser. 2006-B, Cl. C 490,403 49,536 539,939
Hyundai Auto Receivables Trust,
Ser. 2007-A, Cl. A3A 464,978 464,978
Wachovia Automobile Loan Owner
Trust, Ser. 2007-1, Cl. D 915,563 915,563
WFS Financial Owner Trust,
Ser. 2004-1, Cl. A4 223,414 223,414
WFS Financial Owner Trust,
Ser. 2004-3, Cl. B 81,549 49,590 131,139
WFS Financial Owner Trust,
Ser. 2004-4, Cl. B 85,672 54,631 140,303
WFS Financial Owner Trust,
Ser. 2005-2, Cl. B 2,051,371 571,205 168,878 2,543,104 5,334,558
WFS Financial Owner Trust,
Ser. 2005-3, Cl. B 386,764 94,212 480,976
WFS Financial Owner Trust,
Ser. 2005-3, Cl. C 49,330 49,330
11,577,059 6,115,096 2,092,564 12,589,584 32,374,303
Asset-Backed Ctfs./Credit Cards--2%
American Express Credit Account
Master Trust, Ser. 2007-6,
Cl. C 2,131,810 2,025,702 419,610 2,266,857 6,843,979
BA Credit Card Trust,
Ser. 2007-C1, Cl. C1 2,733,047 2,733,047
Chase Issuance Trust,
Ser. 2006-C4, Cl. C4 417,155 417,155
Citibank Credit Card Issuance
Trust, Ser. 2006-C4, Cl. C4 9,975,770 4,415,265 14,391,035
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 957,200 957,200
MBNA Credit Card Master Note
Trust, Ser. 2002-C1, Cl. C1 5,426,033 11,661,644 17,087,677
17,533,613 10,131,214 836,765 13,928,501 42,430,093
Asset-Backed Ctfs./Home Equity
Loans--2%
Accredited Mortgage Loan Trust,
Ser. 2006-1, Cl. A1 230,706 230,706
Ameriquest Mortgage Securities,
Ser. 2003-11, Cl. AF6 900,844 900,844
Bayview Financial Acquisition
Trust, Ser. 2005-B, Cl. 1A6 1,595,217 2,266,185 3,861,402
Carrington Mortgage Loan Trust,
Ser. 2006-RFC1, Cl. A1 239,066 239,066
Centex Home Equity,
Ser. 2006-A, Cl. AV1 157,803 112,595 341,196 611,594
Citigroup Mortgage Loan Trust,
Ser. 2005-WF1, Cl. A5 1,656,089 136,384 2,289,299 4,081,772
Citicorp Residential Mortgage
Securities, Ser. 2006-1, Cl. A1 901,453 1,583,983 100,448 2,585,884
Citicorp Residential Mortgage
Securities, Ser. 2006-2,
Cl. A1A 393,295 757,358 1,150,653
Citicorp Residential Mortgage
Securities, Ser. 2006-2, Cl. A2 1,586,741 1,586,741
Citicorp Residential Mortgage
Securities, Ser. 2007-2,
Cl. A1A 1,624,920 525,709 2,150,629
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M8 86,768 86,768
Citicorp Residential Mortgage
Securities, Ser. 2007-2, Cl. M9 330,519 330,519
Countrywide Asset-Backed
Certificates, Ser. 2006-1,
Cl. AF1 247,847 23,730 271,577
Countrywide Asset-Backed
Certificates, Ser. 2006-SPS1,
Cl. A 784,162 784,162
Credit-Based Asset Servicing and
Securitization, Ser. 2005-CB8,
Cl. AF1B 163,381 163,381
Credit-Based Asset Servicing and
Securitization, Ser. 2006-CB2,
Cl. AF1 118,564 118,564
Credit Suisse Mortgage Capital
Certificates, Ser. 2007-1,
Cl. 1A6A 1,515,566 159,533 1,709,997 3,385,096
First NLC Trust,
Ser. 2005-3, Cl. AV2 311,470 311,470
GSAA Trust,
Ser. 2006-7, Cl. AV1 588,677 588,677
GSAMP Trust,
Ser. 2006-S4, Cl. A1 276,853 276,853
J.P. Morgan Mortgage Acquisition,
Ser. 2006-CW1, Cl. A2 183,158 183,158
J.P. Morgan Mortgage Acquisition,
Ser. 2007-HE1, Cl. AF1 1,254,726 1,254,726
Morgan Stanley ABS Capital I,
Ser. 2006-HE3, Cl. A2A 615,473 183,211 14,313 812,997
Morgan Stanley Mortgage Loan
Trust, Ser. 2006-15XS, Cl. A6B 749,695 491,354 75,983 967,512 2,284,544
Newcastle Mortgage Securities
Trust, Ser. 2006-1, Cl. A1 428,295 428,295
Ownit Mortgage Loan Asset Backed
Certificates, Ser. 2006-1,
Cl. AF1 779,583 779,583
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-6, Cl. M1 1,480,711 140,789 2,039,012 3,660,512
Popular ABS Mortgage Pass-Through
Trust, Ser. 2005-D, Cl. A1 242,693 242,693
Renaissance Home Equity Loan
Trust, Ser. 2005-2, Cl. M9 87,476 87,476
Renaissance Home Equity Loan
Trust, Ser. 2006-2, Cl. AF1 478,518 478,518
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M2 1,554,088 2,063,946 3,618,034
Residential Asset Mortgage
Products, Ser. 2005-RS2, Cl. M3 474,908 581,521 1,056,429
Residential Asset Securities,
Ser. 2001-KS3, Cl. MII1 48,633 48,633
Residential Asset Securities,
Ser. 2003-KS7, Cl. MI3 536,582 175,421 727,688 1,439,691
Residential Asset Securities,
Ser. 2005-AHL2, Cl. M3 431,837 532,599 964,436
Residential Asset Securities,
Ser. 2006-EMX4, Cl. A1 291,529 291,529
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI1 212,445 291,128 503,573
Residential Funding Mortgage
Securities II, Ser. 2006-HSA2,
Cl. AI2 237,842 237,842
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M2 896,000 1,120,000 2,016,000
Soundview Home Equity Loan Trust,
Ser. 2005-B, Cl. M3 312,185 312,185
Sovereign Commercial Mortgage
Securities, Ser. 2007-C1, Cl. D 363,699 363,699
Specialty Underwriting &
Residential Finance,
Ser. 2006-BC2, Cl. A2A 653,185 653,185
Wells Fargo Home Equity Trust,
Ser. 2006-1, Cl. A1 165,036 165,036
13,419,009 15,937,042 1,312,998 14,930,083 45,599,132
Asset-Backed Ctfs./Manufactured
Housing--.4%
Green Tree Financial,
Ser. 1994-7, Cl. M1 1,320,343 460,874 59,789 1,893,321 3,734,327
Origen Manufactured Housing,
Ser. 2004-B, Cl. A2 36,820 36,820
Origen Manufactured Housing,
Ser. 2005-B, Cl. A1 378,996 378,996
Origen Manufactured Housing,
Ser. 2005-B, Cl. A2 1,381,597 115,552 1,507,197 3,004,346
Origen Manufactured Housing,
Ser. 2005-B, Cl. M2 750,809 1,007,797 1,758,606
Vanderbilt Mortgage Finance,
Ser. 1999-A, Cl. 1A6 79,419 79,419
3,452,749 839,870 291,580 4,408,315 8,992,514
Automobile Manufacturers--.7%
Daimler Chrysler N.A. Holding,
Gtd. Notes 2,563,945 318,009 1,937,865 4,819,819
DaimlerChrysler N.A. Holding,
Gtd. Notes, Ser. E 2,722,676 249,787 3,741,806 6,714,269
DaimlerChrysler N.A. Holding,
Gtd. Notes 1,369,921 134,501 1,917,889 3,422,311
DaimlerChrysler N.A. Holding,
Notes 291,835 64,303 356,138
6,656,542 291,835 766,600 7,597,560 15,312,537
Automotive, Trucks & Parts--.1%
ERAC USA Finance,
Notes 959,174 959,174
ERAC USA Finance,
Notes 1,158,526 1,158,526
Goodyear Tire & Rubber,
Sr. Notes 298,688 30,375 384,750 713,813
Banks--6.4% 298,688 30,375 2,502,450 2,831,513
BAC Capital Trust XIV,
Bank Gtd. Notes 2,790,213 447,577 3,052,093 6,289,883
Barclays Bank,
Sub. Notes 251,856 251,856
Barclays Bank,
Jr. Sub. Bonds 127,751 127,751
Capital One Financial,
Sr. Unsub. Notes 5,243,471 536,772 2,485,057 8,265,300
Chevy Chase Bank,
Sub. Notes 1,192,550 469,200 141,738 1,671,525 3,475,013
Chuo Mitsui Trust & Banking,
Sub. Notes 355,903 355,903
Colonial Bank,
Sub. Notes 1,093,312 742,067 247,356 1,513,817 3,596,552
Colonial Bank,
Sub. Notes 400,227 259,887 561,358 1,221,472
Ford Motor Credit,
Sr. Notes 323,661 323,661
Glitnir Banki,
Sub. Notes 460,277 460,277
Greater Bay Bancorp,
Sr. Notes, Ser. B 99,955 99,955
ICICI Bank,
Bonds 704,240 396,755 843,104 1,944,099
Industrial Bank of Korea,
Sub. Notes 2,585,027 270,298 3,248,484 6,103,809
Islandsbanki,
Notes 974,731 86,976 1,244,656 2,306,363
J.P. Morgan & Co.,
Sub. Notes 1,123,959 162,012 1,169,525 2,455,496
Landsbanki Islands,
Sr. Notes 2,465,518 251,584 3,245,427 5,962,529
M&T Bank,
Sr. Unscd. Bonds 248,066 248,066
Manufacturers & Traders Trust,
Sub. Notes 456,210 456,210
Marshall and Ilsley Bank,
Sub. Notes, Ser. BN 2,435,285 2,615,677 260,566 2,655,764 7,967,292
Marshall and Ilsley,
Sr. Unscd. Notes 2,779,635 1,402,384 326,720 2,960,588 7,469,327
Morgan Stanley,
Notes 679,786 679,786
NB Capital Trust IV,
Gtd. Cap. Secs. 1,040,740 187,333 1,228,073
Northern Rock,
Sub. Notes 683,362 683,362
Northern Rock,
Sub. Notes 245,309 245,309 490,618
Northern Rock,
Sub. Notes 792,270 823,821 1,616,091
Northern Rock,
Sub. Notes 150,742 150,742
Popular North America,
Notes 1,317,129 125,202 1,817,938 3,260,269
Regions Financial,
Sr. Notes 1,446,646 1,446,646
Resona Bank,
Notes 362,683 362,683
Royal Bank of Scotland,
Bonds 1,858,890 1,884,354 3,743,244
Royal Bank of Scotland,
Bonds 1,064,406 295,385 1,359,791
Shinsei Finance Cayman,
Jr. Sub. Bonds 738,347 738,347
Societe Generale,
Sub. Notes 313,164 313,164
Sovereign Bancorp,
Sr. Notes 904,312 904,312
Sovereign Bancorp,
Sr. Unscd. Notes 2,106,160 585,322 250,138 1,851,019 4,792,639
Sovereign Bancorp,
Sr. Notes 2,142,737 194,794 2,961,872 5,299,403
SunTrust Preferred Capital I,
Bank Gtd. Notes 2,823,612 692,399 324,102 3,069,144 6,909,257
USB Capital IX,
Gtd. Notes 5,593,081 1,417,048 796,150 6,419,275 14,225,554
Wachovia,
Sr. Notes 152,225 152,225
Wachovia Bank,
Sub. Notes 802,992 802,992
Wachovia,
Sub. Notes 929,997 929,997
Washington Mutual,
Notes 785,965 785,965
Wells Fargo & Co.,
Notes 4,085,141 774,181 4,382,154 9,241,476
Wells Fargo Bank N.A.,
Sub. Notes 2,011,709 3,030,834 1,985,170 7,027,713
Wells Fargo & Co.,
Sub. Notes 559,067 559,067
Western Financial Bank,
Sub. Debs. 1,820,242 177,192 2,566,595 4,564,029
World Savings Bank,
Sr. Notes 4,061,699 329,732 4,276,525 8,667,956
Zions Bancorporation,
Sr. Unscd. Notes 2,351,887 620,498 105,084 3,077,469
Zions Bancorporation,
Sub. Notes 829,936 829,936
54,998,034 24,593,751 7,697,261 56,934,574 144,223,620
Building & Construction--.5%
American Standard,
Gtd. Notes 1,537,385 145,700 2,125,209 3,808,294
Centex,
Sr. Unscd. Notes 718,858 64,449 1,001,443 1,784,750
D.R. Horton,
Gtd. Notes 1,224,359 107,636 1,677,326 3,009,321
D.R. Horton,
Sr. Unsub. Notes 13,940 13,940
Masco,
Sr. Unscd. Notes 1,372,454 404,825 138,233 1,599,551 3,515,063
Owens Corning,
Gtd. Notes 203,167 203,167
4,853,056 607,992 469,958 6,403,529 12,334,535
Chemicals--.2%
Equistar Chemicals/Funding,
Gtd. Notes 320,588 213,725 30,088 435,750 1,000,151
ICI Wilmington,
Gtd. Notes 721,638 721,638
Lubrizol,
Sr. Notes 808,723 808,723
RPM International,
Sr. Notes 1,134,562 124,404 1,408,250 2,667,216
Rohm and Haas Holdings,
Unsub. Notes 219,599 219,599
1,455,150 1,963,685 154,492 1,844,000 5,417,327
Commercial & Professional
Services--.1%
ERAC USA Finance,
Notes 695,774 198,793 69,577 964,144
ERAC USA Finance,
Notes 804,091 380,885 105,802 1,290,778
ERAC USA Finance,
Bonds 532,711 532,711
1,499,865 1,112,389 175,379 2,787,633
Commercial Mortgage Pass-Through
Ctfs.--4.2%
Banc of America Commercial
Mortgage, Ser. 2005-2, Cl. A2 1,418,000 1,418,000
Banc of America Commercial
Mortgage, Ser. 2002-2, Cl. A3 299,925 299,925
Bayview Commercial Asset Trust,
Ser. 2003-2, Cl. A 497,361 298,417 679,727 1,475,505
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. A 635,118 302,437 937,555
Bayview Commercial Asset Trust,
Ser. 2004-1, Cl. M2 194,878 287,188 482,066
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. A2 1,501,876 141,616 2,119,770 3,763,262
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B1 76,487 76,487
Bayview Commercial Asset Trust,
Ser. 2005-3A, Cl. B3 386,342 193,171 77,268 540,878 1,197,659
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. B3 170,644 170,644
Bayview Commercial Asset Trust,
Ser. 2005-4A, Cl. M5 397,544 77,193 849,123 1,323,860
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B2 672,791 672,791
Bayview Commercial Asset Trust,
Ser. 2006-2A, Cl. B3 206,399 300,217 506,616
Bayview Commercial Asset Trust,
Ser. 2006-SP1, Cl. A1 391,209 391,209
Bayview Commercial Asset Trust,
Ser. 2006-SP2, Cl. A 1,673,874 178,433 2,285,645 4,137,952
Bear Stearns Commercial Mortgage
Securities, Ser. 2003-T12,
Cl. A3 290,047 290,047
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A2 1,109,523 1,528,676 2,638,199
Bear Stearns Commercial Mortgage
Securities, Ser. 2004-PWR5,
Cl. A3 117,850 117,850
Bear Stearns Commercial Mortgage
Securities, Ser. 2005-T18,
Cl. A2 1,352,238 123,831 1,882,236 3,358,305
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW13,
Cl. A3 350,913 350,913
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-PW12,
Cl. AAB 725,088 725,088
Bear Stearns Commercial Mortgage
Securities, Ser. 2006-T24,
Cl. AAB 774,525 774,525
Capco America Securitization,
Ser. 1998-D7, Cl. A1B 749,862 656,129 89,046 796,728 2,291,765
Chase Commercial Mortgage
Securities, Ser. 1997-2, Cl. C 34,986 34,986
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Ser. 2006-CD2,
Cl. A2 584,474 584,474
Credit Suisse/Morgan Stanley
Commercial Mortgage
Certificates, Ser. 2006-HC1A,
Cl. A1 2,277,353 722,574 19,933 3,139,459 6,159,319
Crown Castle Towers,
Ser. 2005-1A, Cl. D 1,267,141 437,115 112,962 1,782,838 3,600,056
Crown Castle Towers,
Ser. 2006-1A, Cl. B 272,665 272,665
Crown Castle Towers,
Ser. 2006-1A, Cl. C 724,781 724,781
Crown Castle Towers,
Ser. 2006-1A, Cl. D 731,381 539,946 73,629 942,451 2,287,407
DLJ Commercial Mortgage,
Ser. 1998-CF2, Cl. A1B 115,795 115,795
DLJ Commercial Mortgage,
Ser. 1998-CGI, Cl. A1B 291,765 291,765
Global Signal Trust,
Ser. 2006-1, Cl. D 1,638,698 576,027 158,904 2,259,416 4,633,045
Global Signal Trust,
Ser. 2006-1, Cl. E 393,760 315,008 34,454 541,420 1,284,642
GMAC Commercial Mortgage
Securities, Ser. 2003-C3,
Cl. A2 1,062,635 1,458,034 2,520,669
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. B 1,618,992 1,618,992
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. E 600,230 600,230
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. F 2,561,253 299,878 2,723,482 5,584,613
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. G 1,391,980 147,560 1,519,865 3,059,405
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. K 877,317 335,586 91,088 954,023 2,258,014
Goldman Sachs Mortgage Securities
Corporation II, Ser. 2007-EOP,
Cl. L 2,952,900 318,450 3,218,275 6,489,625
Greenwich Capital Commercial
Funding, Ser. 2007-GG9, Cl. AAB 1,436,024 1,436,024
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2004-C1, Cl. A2 526,255 526,255
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2005-LDP5, Cl. A2 1,253,845 1,253,845
J.P. Morgan Chase Commercial
Mortgage Securities,
Ser. 2006-LDP7, Cl. ASB 726,841 726,841
Mach One Trust Commercial
Mortgage-Backed, Ser. 2004-1A,
Cl. A1 27,821 27,821
Merrill Lynch Mortgage Trust,
Ser. 2005-CIP1, Cl. A2 883,344 883,344
Merrill Lynch Mortgage Trust,
Ser. 2005-CKI1, Cl. A2 301,987 301,987
Morgan Stanley Capital I,
Ser. 1998-HF1, Cl. E 301,196 301,196
Morgan Stanley Capital I,
Ser. 1999-RM1, Cl. A2 117,004 117,004
Morgan Stanley Capital I,
Ser. 1999-CAM1, Cl. A4 28,504 28,504
Morgan Stanley Capital I,
Ser. 2006-T21, Cl. A2 999,951 999,951
Morgan Stanley Capital I,
Ser. 2006-IQ12, Cl. AAB 1,522,603 1,522,603
Morgan Stanley Capital I,
Ser. 2006-HQ9, Cl. A3 1,570,310 1,570,310
Morgan Stanley Capital I,
Ser. 2007-T27, Cl. A2 579,291 579,291
Morgan Stanley Dean Witter Capital
I, Ser. 2001-PPM, Cl. A3 104,880 104,880
Nationslink Funding Corporation,
Ser. 1998-2, Cl. A2 956,430 406,155 108,090 1,018,663 2,489,338
SBA CMBS Trust,
Ser. 2006-1A, Cl. D 680,614 230,136 68,551 871,577 1,850,878
TIAA Real Estate,
Ser. 2007-C4, Cl. A3 505,468 505,468
Washington Mutual Commercial
Mortgage Securities Trust,
Ser. 2003-C1A, Cl. A 3,428,013 2,186,538 322,274 4,762,269 10,699,094
29,225,686 26,109,395 3,648,299 36,461,960 95,445,340
Diversified Financial
Services--7.2%
Ameriprise Financial,
Jr. Sub. Notes 1,246,951 406,414 246,311 1,631,812 3,531,488
Amvescap,
Gtd. Notes 2,800,903 376,124 292,181 3,188,798 6,658,006
Bear Stearns,
Sr. Unscd. Notes 776,878 776,878
Boeing Capital,
Sr. Notes 950,573 950,573
Capmark Financial Group,
Gtd. Notes 2,958,191 783,989 309,949 3,733,063 7,785,192
CIT Group,
Sr. Notes 2,004,697 182,245 2,778,007 4,964,949
Countrywide Financial,
Gtd. Notes 246,530 246,530
Countrywide Financial,
Gtd. Notes 506,639 506,639
Countrywide Home Loans,
Gtd. Notes 361,461 361,461
Countrywide Home Loans,
Notes 1,328,679 1,848,197 3,176,876
Credit Suisse First Boston USA,
Notes 780,210 311,096 553,060 1,644,366
Credit Suisse Guernsey,
Jr. Sub. Notes 634,880 634,880
Credit Suisse USA,
Sr. Unsub. Notes 1,228,406 1,228,406
FCE Bank,
Notes EUR 2,893,098 2,893,098
FCE Bank,
Notes EUR 2,658,160 315,489 2,973,649
Ford Motor Credit,
Sr. Notes 2,883,967 2,584,459 5,468,426
Ford Motor Credit,
Unscd. Notes 1,417,570 1,417,570
Fuji JGB Investment,
Sub. Bonds 1,206,138 769,875 102,650 1,662,930 3,741,593
General Electric Capital,
Sr. Unscd. Notes, Ser. A 1,038,691 145,989 1,095,903 2,280,583
General Electric Capital,
Notes, Ser. A 1,192,784 168,978 1,257,394 2,619,156
Glencore Funding,
Gtd. Notes 1,262,422 433,957 138,077 1,607,615 3,442,071
GMAC,
Unsub. Notes 1,637,936 192,698 1,743,921 3,574,555
Goldman Sachs Capital II,
Gtd. Bonds 1,553,398 468,861 161,023 1,728,629 3,911,911
Goldman Sachs Group,
Sub. Notes 320,752 320,752
HSBC Finance Capital Trust IX,
Gtd. Notes 380,272 380,272
HSBC Finance,
Notes 778,114 778,114
HSBC Finance,
Sr. Notes 3,020,456 276,382 4,140,788 7,437,626
International Lease Finance,
Sr. Unscd. Notes 123,959 123,959
Janus Capital Group,
Notes 1,983,944 553,069 350,108 2,156,461 5,043,582
Jefferies Group,
Sr. Unscd. Debs. 1,073,661 1,073,661
Jefferies Group,
Sr. Unscd. Notes 867,402 150,853 1,131,394 2,149,649
John Deere Capital,
Notes 771,500 556,081 80,156 1,407,737
JPMorgan Chase & Co.,
Sub. Notes 1,426,092 1,426,092
Kaupthing Bank,
Sr. Notes 2,286,279 234,107 2,948,752 5,469,138
Kaupthing Bank,
Sub. Notes 353,794 353,794
Lehman Brothers Holdings,
Sr. Notes 320,213 320,213
Leucadia National,
Sr. Unscd. Notes 1,061,500 110,975 1,466,800 2,639,275
MBNA,
Notes 1,387,140 1,387,140
MBNA Capital A,
Gtd. Cap. Secs., Ser. A 942,005 83,271 1,353,157 2,378,433
Merrill Lynch,
Sub. Notes 998,350 998,350
Merrill Lynch & Co.,
Notes, Ser. C 4,228,552 779,461 4,444,796 9,452,809
Merrill Lynch & Co.,
Notes, Ser. C 749,433 79,410 880,459 1,709,302
Merrill Lynch & Co.,
Sr. Unscd. Notes 1,770,526 210,410 1,888,561 3,869,497
Morgan Stanley,
Notes 4,827,465 5,083,617 9,911,082
Morgan Stanley,
Sr. Unscd. Notes 1,178,232 952,613 165,454 1,238,397 3,534,696
Morgan Stanley,
Sub. Notes 1,805,025 1,805,025
MUFG Capital Finance 1,
Bank Gtd. Bonds 561,685 561,685
Nuveen Investments,
Sr. Unscd. Notes 87,920 87,920
NIPSCO Capital Markets,
Notes 83,202 83,202
Residential Capital,
Gtd. Notes 69,094 69,094
Residential Capital,
Gtd. Notes 1,038,056 107,850 777,419 1,923,325
Residential Capital,
Gtd. Notes 299,178 35,578 321,819 656,575
Residential Capital,
Gtd. Notes 1,451,588 143,756 2,002,069 3,597,413
SB Treasury,
Jr. Sub. Bonds 2,445,329 286,482 3,407,090 6,138,901
SLM,
Unscd. Notes, Ser. A 1,334,845 702,550 168,612 1,264,590 3,470,597
SLM,
Unscd. Notes, Ser. A 2,634,973 274,076 2,985,982 5,895,031
SMFG Preferred Capital,
Sub. Bonds 776,291 776,291
Tokai Preferred Capital,
Bonds 2,320,145 227,871 3,226,452 5,774,468
Wachovia,
Sr. Notes 1,080,303 1,139,229 2,219,532
Windsor Financing,
Gtd. Notes 591,207 185,304 816,219 1,592,730
61,436,045 22,334,553 6,854,283 70,980,937 161,605,818
Diversified Metals & Mining--.0%
Falconbridge,
Bonds 149,855 14,596 212,132 376,583
Wellpoint,
Sr. Unsub. Notes 387,964 387,964
149,855 387,964 14,596 212,132 764,547
Electric Utilities--2.5%
AES,
Sr. Notes 418,700 21,200 487,600 927,500
Appalachian Power,
Sr. Unscd. Notes 927,237 110,865 1,083,456 2,121,558
Cinergy,
Debs. 1,028,846 1,424,166 2,453,012
Cleveland Electric Illumination,
Sr. Unscd. Notes 804,139 804,139
Consolidated Edison of NY,
Sr. Unscd. Debs., Ser. D 655,695 655,695
Consumers Energy,
First Mortgage Bonds, Ser. O 1,144,654 1,144,654
Dominion Resources,
Sr. Unscd. Notes, Ser. B 1,335,814 140,085 1,726,052 3,201,951
Enel Finance Internation,
Gtd. Notes 1,937,067 277,444 277,444 2,002,645 4,494,600
FirstEnergy,
Unsub. Notes, Ser. B 2,669,769 589,833 3,652,823 6,912,425
FPL Group Capital,
Gtd. Debs. 1,591,487 1,591,487
Gulf Power,
Sr. Unsub. Notes, Ser. M 777,120 777,120
IPALCO Enterprises,
Scd. Notes 79,688 79,688
National Grid,
Sr. Unscd. Notes 1,023,249 1,013,118 151,968 1,362,644 3,550,979
Niagara Mohawk Power,
Sr. Unscd. Notes, Ser. G 862,046 91,816 958,963 1,912,825
NiSource Finance,
Gtd. Notes 1,662,456 382,117 272,941 2,014,797 4,332,311
NiSource Finance,
Gtd. Notes 604,417 604,417
Nisource Finance,
Sr. Unscd. Notes 706,473 95,878 741,797 1,544,148
Ohio Power,
Unscd. Notes 1,386,158 608,920 143,566 1,589,131 3,727,775
Southern,
Sr. Unsub. Notes, Ser. A 475,104 475,104
TXU Electric Delivery,
Bonds 4,395,858 455,427 5,123,550 9,974,835
TXU,
Sr. Notes, Ser. O 2,367,127 146,995 3,467,056 5,981,178
TXU,
Unscd. Notes, Ser. C 65,362 65,362
20,720,800 8,334,215 2,643,068 25,634,680 57,332,763
Environmental Control--.4%
Allied Waste North America,
Scd. Notes, Ser. B 469,063 296,250 44,438 557,938 1,367,689
Allied Waste North America,
Scd. Notes 448,338 241,800 50,375 518,863 1,259,376
Oakmont Asset Trust,
Notes 1,257,014 129,179 1,619,710 3,005,903
Republic Services,
Sr. Notes 638,634 638,634
USA Waste Services,
Sr. Unscd. Notes 367,413 367,413
Waste Management,
Sr. Unsub. Notes 962,577 1,296,946 2,259,523
3,136,992 1,544,097 223,992 3,993,457 8,898,538
Food & Beverages--.5%
H.J. Heinz,
Notes 1,651,166 431,843 152,415 2,286,229 4,521,653
Kraft Foods,
Sr. Unscd. Notes 1,247,041 154,592 206,122 1,329,489 2,937,244
Safeway,
Sr. Unscd. Notes 923,111 84,370 1,285,407 2,292,888
Tyson Foods,
Sr. Unscd. Notes 828,414 538,469 82,841 1,139,069 2,588,793
4,649,732 1,124,904 525,748 6,040,194 12,340,578
Foreign/Governmental--2.5%
Arab Republic of Egypt,
Unsub. Notes EGP 1,786,756 203,624 1,900,492 3,890,872
Banco Nacional de
Desenvolvimento
Economico e Social, Unsub.
Notes 2,070,640 1,179,668 219,010 2,643,053 6,112,371
Export-Import Bank of Korea,
Sr. Notes 1,063,920 1,063,920
Federal Republic of Brazil,
Unscd. Bonds BRL 3,444,337 1,114,157 502,962 3,508,003 8,569,459
Mexican Bonos,
Bonds, Ser. M MXN 2,459,506 249,355 3,418,086 6,126,947
Mexican Bonos,
Bonds, Ser. M 30 MXN 1,307,314 137,316 1,445,193 2,889,823
Republic of Argentina,
Bonds 6,381,448 1,173,436 886,470 6,776,381 15,217,735
Republic of Argentina,
Bonds, Ser. VII 630,000 630,000
Republic of El Salvador,
Unscd. Notes 65,910 65,910
Russian Federation,
Unsub. Bonds 4,057,771 1,015,312 445,068 5,264,323 10,782,474
21,507,772 6,176,493 2,709,715 24,955,531 55,349,511
Health Care--.7%
American Home Products,
Unscd. Notes 608,334 608,334
Baxter International,
Sr. Unscd. Notes 1,527,245 139,931 1,667,176
Community Health Systems,
Sr. Notes 320,075 320,075
Coventry Health Care,
Sr. Unscd. Notes 387,503 387,503
HCA,
Sr. Unscd. Notes 1,122,923 113,277 1,447,979 2,684,179
HCA,
Sr. Unscd. Notes 1,415,925 152,250 1,492,050 3,060,225
Medco Health Solutions,
Sr. Unscd. Notes 3,455,993 290,109 63,297 3,809,399
Pacific Life Global Funding,
Notes 216,621 216,621
Tenet Healthcare,
Sr. Notes 1,060,400 110,000 1,267,200 2,437,600
Teva Pharmaceutical Finance,
Gtd. Notes 538,572 538,572
UnitedHealth Group,
Sr. Unscd. Notes 375,305 375,305
8,582,486 2,519,898 795,376 4,207,229 16,104,989
Lodging & Entertainment--.3%
Cinemark,
Sr. Discount Notes 190,000 14,250 247,000 451,250
MGM Mirage,
Gtd. Notes 366,625 366,625
MGM Mirage,
Gtd. Notes 1,653,750 162,750 2,157,750 3,974,250
Mohegan Tribal Gaming Authority,
Sr. Unscd. Notes 957,500 19,150 1,297,413 2,274,063
2,801,250 366,625 196,150 3,702,163 7,066,188
Machinery--.2%
Atlas Copco,
Bonds 286,709 286,709
Case New Holland,
Gtd. Notes 669,500 329,600 66,950 803,400 1,869,450
Terex,
Gtd. Notes 1,132,200 117,300 1,570,800 2,820,300
1,801,700 616,309 184,250 2,374,200 4,976,459
Manufacturing--.1%
Tyco International Group,
Gtd. Notes 533,470 60,393 654,256 1,248,119
Media--1.3%
AOL Time Warner,
Gtd. Notes 936,184 936,184
British Sky Broadcasting,
Gtd. Notes 921,275 921,275
Clear Channel Communications,
Sr. Unscd. Notes 1,577,586 2,134,382 3,711,968
Comcast,
Gtd. Notes 4,365,123 447,960 5,211,270 10,024,353
Comcast,
Gtd. Notes 992,676 992,676
Comcast,
Gtd. Notes 1,491,846 208,757 1,578,404 3,279,007
News America Holdings,
Gtd. Debs. 854,550 2,783,484 3,638,034
News America,
Gtd. Notes 2,619,750 406,997 3,026,747
Pacific Life Global Funding,
Notes 1,588,226 1,588,226
Time Warner,
Gtd. Notes 286,733 286,733
10,054,305 3,704,685 1,350,447 13,295,766 28,405,203
Oil & Gas--1.1%
Amerada Hess,
Unscd. Notes 847,527 847,527
Anadarko Petroleum,
Sr. Unscd. Notes 531,159 531,159
ANR Pipeline,
Sr. Notes 54,460 54,460
BJ Services,
Sr. Unscd. Notes 4,858,143 500,840 6,761,333 12,120,316
Chesapeake Energy,
Gtd. Notes 159,650 159,650
Enterprise Products Operating,
Gtd. Notes, Ser. B 3,997,968 404,794 4,717,602 9,120,364
Enterprise Products Operating,
Gtd. Notes, Ser. B 1,368,415 1,368,415
Gazprom,
Sr. Unscd. Notes 709,566 709,566
Northwest Pipeline,
Sr. Unscd. Notes 211,050 211,050
8,856,111 3,085,158 1,702,303 11,478,935 25,122,507
Packaging & Containers--.0%
Ball,
Gtd. Notes 208,587 208,587
Crown Americas/Capital,
Gtd. Notes 592,969 592,969
801,556 801,556
Paper & Forest Products--.3%
Sappi Papier Holding,
Gtd. Notes 1,075,827 103,161 1,503,210 2,682,198
Temple-Inland,
Gtd. Notes 1,073,731 683,283 102,493 1,488,581 3,348,088
2,149,558 683,283 205,654 2,991,791 6,030,286
Property & Casualty
Insurance--1.5%
Allmerica Financial,
Debs. 792,351 78,193 948,736 1,819,280
Allstate,
Jr. Sub. Debs. 260,939 260,939
American International Group,
Sr. Notes 449,283 449,283
Chubb,
Sr. Unscd. Notes 2,373,126 1,598,737 249,803 3,347,357 7,569,023
Hartford Financial Services
Group,
Sr. Unscd. Notes 877,222 731,853 1,193,021 2,802,096
Hartford Financial Services
Group,
Sr. Notes 1,969,555 252,507 2,222,062
Leucadia National,
Sr. Unscd. Notes 3,317,738 339,913 3,734,250 7,391,901
Lincoln National,
Sr. Unscd. Notes 722,030 240,677 962,707
Metlife,
Sr. Notes 2,206,805 2,206,805
Nippon Life Insurance,
Notes 1,338,709 842,891 1,884,108 4,065,708
Pacific Life Global Funding,
Notes 1,521,270 1,521,270
Phoenix Cos.,
Sr. Unscd. Notes 736,466 355,708 70,140 1,027,045 2,189,359
12,926,437 7,168,246 1,231,233 12,134,517 33,460,433
Real Estate Investment
Trusts--2.7%
Archstone-Smith Operating Trust,
Notes 981,480 83,426 1,064,906
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 173,197 865,986 221,308 1,260,491
Archstone-Smith Operating Trust,
Sr. Unscd. Notes 339,582 454,441 794,023
Arden Realty,
Notes 666,324 666,324
Avalonbay Communities,
Sr. Unscd. Notes 385,012 385,012
Boston Properties,
Sr. Notes 786,044 82,486 1,086,876 1,955,406
Boston Properties,
Sr. Notes 755,963 755,963
Commercial Net Lease Realty,
Sr. Unscd. Notes 1,060,973 361,695 96,452 1,451,604 2,970,724
Duke Realty,
Notes 924,081 889,116 69,930 1,053,952 2,937,079
Duke Realty,
Sr. Unscd. Notes 349,302 349,302
Duke Realty,
Sr. Notes 2,217,456 255,860 2,473,316
Duke Realty,
Sr. Notes 177,214 177,214
ERP Operating,
Notes 556,466 54,653 993,690 1,604,809
ERP Operating,
Unscd. Notes 334,642 334,642
ERP Operating,
Notes 143,306 143,306
ERP Operating,
Notes 765,872 570,923 69,625 1,044,371 2,450,791
ERP Operating,
Unscd. Notes 239,235 239,235
Federal Realty Investment Trust,
Sr. Unscd. Notes 634,407 48,801 805,208 1,488,416
Federal Realty Investment Trust,
Notes 577,611 157,070 55,734 770,148 1,560,563
Federal Realty Investment Trust,
Sr. Unscd. Notes 531,264 531,264
Healthcare Realty Trust,
Sr. Unscd. Notes 2,710,652 841,071 3,652,651 7,204,374
Healthcare Realty Trust,
Unscd. Notes 241,208 241,208
HRPT Properties Trust,
Sr. Unscd. Notes 1,352,017 412,616 125,187 1,790,671 3,680,491
Istar Financial,
Sr. Unscd. Notes 2,738,123 1,026,213 279,876 3,204,584 7,248,796
Liberty Property,
Sr. Unscd. Notes 300,005 300,005
Mack-Cali Realty,
Bonds 666,413 666,413
Mack-Cali Realty,
Notes 572,009 665,701 54,242 788,978 2,080,930
Mack-Cali Realty,
Unscd. Notes 1,590,310 397,578 332,971 2,286,071 4,606,930
Mack-Cali Realty,
Sr. Unscd. Notes 70,812 70,812
Regency Centers,
Gtd. Notes 1,373,656 208,417 118,419 1,894,698 3,595,190
Regency Centers,
Sr. Unscd. Notes 178,860 178,860
Simon Property Group,
Notes 1,077,644 103,053 1,180,697
Simon Property Group,
Notes 840,007 74,118 1,166,128 2,080,253
Simon Property Group,
Unsub. Notes 971,279 971,279
Simon Property Group,
Unscd. Notes 199,950 199,950
Socgen Real Estate,
Bonds 1,590,000 1,590,000
19,403,433 15,576,095 2,394,067 22,665,379 60,038,974
Residential Mortgage Pass-
Through Ctfs.--3.4%
American General Mortgage Loan
Trust, Ser. 2006-1, Cl. A1 595,339 54,954 650,293
Banc of America Mortgage
Securities, Ser. 2001-4,
Cl. 2B3 154,294 154,294
Banc of America Mortgage
Securities, Ser. 2004-F,
Cl. 2A7 266,892 266,892
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B2 173,149 173,149
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. B3 388,451 522,112 910,563
Bayview Commercial Asset Trust,
Ser. 2006-1A, Cl. M6 323,292 365,679 688,971
ChaseFlex Trust,
Ser. 2006-2, Cl. A1A 391,840 304,765 43,538 740,143
ChaseFlex Trust,
Ser. 2006-2, Cl. A5 1,205,229 120,523 1,606,972 2,932,724
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF2 95,983 138,215 9,598 130,536 374,332
Citigroup Mortgage Loan Trust,
Ser. 2005-WF2, Cl. AF7 1,639,940 1,639,940
Citigroup Mortgage Loan Trust,
Ser. 2006-WF1, Cl. A2A 45,735 45,735
Countrywide Home Loan Mortgage
Pass Through Trust,
Ser. 2002-J4, Cl. B3 303,468 303,468
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2003-8, Cl. B3 200,548 200,548
Countrywide Home Loan Mortgage
Pass-Through Trust,
Ser. 2005-31, Cl. 2A1 920,332 920,332
CSAB Mortgage Backed Trust,
Ser. 2006-3, Cl. A1A 1,913,707 74,602 1,988,309
First Horizon Alternative Mortgage
Securities, Ser. 2004-FA1,
Cl. 1A1 5,592,774 3,756,090 3,403,620 12,752,484
Impac CMB Trust,
Ser. 2005-8, Cl. 2M2 1,096,157 103,483 1,517,756 2,717,396
Impac CMB Trust,
Ser. 2005-8, Cl. 2M3 818,545 71,178 1,150,946 2,040,669
Impac Secured Assets CMN Owner
Trust, Ser. 2006-1, Cl. 2A1 693,685 467,081 64,744 948,036 2,173,546
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B1 381,741 477,089 858,830
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR9, Cl. B2 94,797 94,797
IndyMac Index Mortgage Loan Trust,
Ser. 2006-AR25, Cl. 4A2 1,094,010 1,276,346 91,168 1,458,681 3,920,205
J.P. Morgan Alternative Loan
Trust, Ser. 2006-S4, Cl. A6 904,887 106,756 1,016,727 2,028,370
J.P. Morgan Mortgage Trust,
Ser. 2005-A1, Cl. 5A1 730,251 64,232 1,016,181 1,810,664
New Century Alternative Mortgage
Loan Trust, Ser. 2006-ALT2,
Cl. AF6A 704,351 70,942 901,975 1,677,268
Nomura Asset Acceptance,
Ser. 2005-AP1, Cl. 2A5 194,651 194,651
Nomura Asset Acceptance,
Ser. 2005-AP2, Cl. A5 1,667,727 749,269 145,020 2,276,810 4,838,826
Nomura Asset Acceptance,
Ser. 2005-WF1, Cl. 2A5 1,165,591 759,829 112,170 1,589,886 3,627,476
Prudential Home Mortgage
Securities, Ser. 1994-A, Cl. 5B 3,262 3,262
Residential Funding Mortgage
Securities I, Ser. 2004-S3,
Cl. M1 1,069,041 1,069,041
Structured Asset Mortgage
Investments, Ser. 1998-2, Cl. B 1,683 1,683
Terwin Mortgage Trust,
Ser. 2006-9HGA Cl. A1 697,576 697,576
Washington Mutual,
Ser. 2004-AR7, Cl. A6 131,897 131,897
Washington Mutual,
Ser. 2003-AR10, Cl. A6 200,936 200,936
Washington Mutual,
Ser. 2004-AR9, Cl. A7 162,432 162,432
Washington Mutual Pass-Through
Certificates, Ser. 2005-AR4,
Cl. A4B 3,290,848 1,014,472 4,478,522 8,783,842
Wells Fargo Mortgage Backed
Securities Trust,
Ser. 2005-AR1, Cl. 1A1 4,240,377 414,099 5,631,751 10,286,227
Wells Fargo Mortgage Backed
Securities Trust, Ser. 2003-1,
Cl. 2A9 1,785,483 148,790 2,479,837 4,414,110
29,139,311 13,402,436 2,654,288 31,279,846 76,475,881
Retail--.5%
CVS Caremark,
Sr. Unscd. Notes 1,052,156 369,002 109,703 1,151,886 2,682,747
CVS Caremark,
Sr. Unscd. Notes 258,533 258,533
Delhaize Group,
Sr. Unscd. Notes 191,963 191,963
Federated Retail Holding,
Gtd. Bonds 152,144 152,144
Federated Retail Holding,
Gtd. Notes 254,037 254,037
Home Depot,
Sr. Unscd. Notes 804,817 83,938 1,002,319 1,891,074
Lowe's Companies,
Sr. Unscd. Notes 1,283,826 166,796 181,960 1,339,425 2,972,007
May Department Stores,
Unscd. Notes 44,725 44,725
May Department Stores,
Gtd. Notes 760,990 1,036,349 1,797,339
Saks,
Gtd. Notes 433 433
3,902,222 1,392,475 420,326 4,529,979 10,245,002
State/Territory Gen Oblg--1.6%
California
GO (Insured; AMBAC) 443,903 63,415 465,042 972,360
Erie Tobacco Asset
Securitization/NY, Tobacco
Settlement Asset-Backed Bonds 554,415 69,884 624,299
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 4,471,515 2,381,514 405,154 5,439,931 12,698,114
Michigan Tobacco Settlement
Finance Authority, Tobacco
Settlement Asset-Backed Bonds 1,000,871 571,926 95,321 1,429,815 3,097,933
New York Counties Tobacco Trust
IV, Tobacco Settlement
Pass-Through Bonds 1,690,570 154,566 2,337,817 4,182,953
Tobacco Settlement Authority of
Iowa, Tobacco Settlement
Asset-Backed Bonds 3,100,550 2,143,238 157,171 3,776,861 9,177,820
Tobacco Settlement Financing
Corporation of New Jersey,
Tobacco Settlement
Asset-Backed Bonds 676,798 435,422 1,112,220
Tobacco Settlement Finance
Authority of West Virginia,
Tobacco Settlement
Asset-Backed Bonds 295,347 295,347
Washington Convention Center
Authority, Senior Lien
Dedicated Tax Revenue
(Insured; AMBAC) 1,331,389 188,077 1,400,680 2,920,146
12,715,596 5,651,093 1,864,357 14,850,146 35,081,192
Steel--.0%
US Steel,
Sr. Unsub. Notes 314,225 314,225
Telecommunications--2.4%
America Movil,
Gtd. Notes 455,091 45,009 565,113 1,065,213
AT & T,
Notes 2,382,885 244,271 2,921,277 5,548,433
AT & T,
Sr. Notes 2,700,459 450,076 125,021 3,700,629 6,976,185
AT & T Wireless,
Sr. Unsub. Notes 558,635 558,635
AT & T,
Sr. Unscd. Notes 795,676 795,676
France Telecom,
Unsub. Notes 1,376,932 118,330 1,172,544 2,667,806
Intelsat,
Sr. Unscd. Notes 1,509,200 196,000 1,945,300 3,650,500
KPN,
Sr. Unsub. Bonds 380,952 380,952
Nextel Communications,
Gtd. Notes, Ser. F 989,421 477,981 90,816 1,343,127 2,901,345
Qwest,
Bank Note, Ser. B 475,600 475,600
Qwest,
Bank Note, Ser. B 1,904,450 1,904,450
Qwest,
Sr. Notes 749,050 68,575 2,073,075 2,890,700
Qwest,
Notes 54,813 54,813
Qwest,
Sr. Notes 107,250 1,716,000 1,823,250
Sprint Capital,
Gtd. Notes 1,420,081 218,474 1,512,070 3,150,625
Telefonica Emisiones,
Gtd. Notes 239,842 239,842
Telefonica Emisiones,
Gtd. Notes 2,469,239 636,402 478,574 3,263,469 6,847,684
Time Warner Cable,
Sr. Unscd. Notes 1,344,066 326,277 146,094 1,470,681 3,287,118
Time Warner,
Gtd. Notes 2,214,782 259,698 2,361,781 4,836,261
U.S. West Communications,
Notes 70,263 70,263
Verizon Global Funding,
Notes 283,613 283,613
Windstream,
Gtd. Notes 1,517,513 148,050 2,056,838 3,722,401
21,508,769 3,964,425 2,556,267 26,101,904 54,131,365
Textiles & Apparel--.1%
Mohawk Industries,
Sr. Unscd. Notes 999,709 706,865 277,697 1,383,436 3,367,707
Transportation--.2%
Ryder System,
Notes 1,408,506 127,600 1,943,443 3,479,549
U.S. Government Agencies--.6%
Federal Home Loan Mortgage Corp.,
Notes 13,775,853 13,775,853
Small Business Administration
Participation Ctfs., Gov't
Gtd. Ctfs., Ser. 97-J 523,708 523,708
14,299,561 14,299,561
U.S. Government Agencies/
Mortgage-Backed--30.3%
Federal Home Loan Mortgage Corp.:
3.50% 250,920 250,920
4.00%, 10/1/09 75,201 75,201
4.50%, 10/1/09 69,717 69,717
5.00% 1,636,333 1,636,333
5.00%, 10/1/18 407,650 407,650
5.50% 58,294,479 17,072,016 9,006,379 62,206,295 146,579,169
5.50%, 6/1/34 - 4/1/37 7,451,718 337,913 9,501,174 17,290,805
6.00%, 7/1/37 1,394,133 1,672,000 3,066,133
6.00%, 7/1/17 - 4/1/33 1,810,908 1,810,908
6.50%, 10/1/31 - 3/1/32 91,660 848,941 940,601
Multiclass Mortgage
Participation Ctfs.,
Ser. 51, Cl. E, 10.00%,
7/15/20 295,950 295,950
Multiclass Mortgage
Participation Ctfs.,
Ser. 2586, Cl. WE, 4.00%,
12/15/32 4,263,853 2,027,188 6,291,041
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2731,
Cl. PY, 5.00%, 5/15/26 464,979 464,979
Multiclass Mortgage
Participation Ctfs.
(Interest Only) Ser. 2750,
Cl. IK, 5.00%, 5/15/26 515,309 515,309
Multiclass Mortgage
Participation Ctfs.
(Interest Only
Obligations), Ser. 2752,
Cl. GM, 5.00%, 3/15/26 452,622 452,622
Federal National Mortgage
Association:
5.00% 25,877,395 24,365,364 1,716,873 30,966,400 82,926,032
5.50% 5,520,277 812,832 5,859,373 12,192,482
6.00% 100,751,854 30,063,118 12,170,544 100,759,631 243,745,147
6.50% 5,615,814 656,791 5,956,938 12,229,543
3.53%, 7/1/10 267,051 267,051
4.00%, 5/1/10 1,345,964 1,345,964
4.06%, 6/1/13 94,294 94,294
5.00%, 7/1/11 - 1/1/22 8,059,392 1,840,287 818,805 10,718,484
5.50%, 8/1/22 - 1/1/37 12,484,046 610,863 2,171,807 19,579,280 34,845,996
6.00%, 1/1/19 - 8/1/37 1,717,050 1,568,471 219,821 5,501,642 9,006,984
6.50%, 11/1/10 - 8/1/37 5,525,767 827,805 7,808,439 14,162,011
7.00%, 9/1/14 - 7/1/32 46,244 70,205 116,449
8.00%, 12/1/25 39,057 39,057
Grantor Trust,
Ser. 2001-T6, Cl. B, 6.09%,
5/25/11 284,606 284,606
Pass-Through Ctfs.,
Ser. 2004-58, Cl. LJ,
5.00%, 7/25/34 3,202,359 2,055,892 4,473,693 9,731,944
Pass-Through Ctfs.,
Ser. 1988-16, Cl. B, 9.50%,
6/25/18 170,047 170,047
Government National Mortgage
Association I:
5.50%, 4/15/33 4,454,192 4,454,192
6.50%, 9/15/32 62,317 62,317
7.00%, 6/15/08 432 432
8.00%, 2/15/30 - 5/15/30 5,416 5,416
9.50%, 11/15/17 329,992 329,992
Ser. 2003-88, Cl. AC,
2.91%, 6/16/18 186,932 186,932
Ser. 2003-64, Cl. A, 3.09%,
4/16/24 2,030 2,030
Ser. 2003-96, Cl. B, 3.61%,
8/16/18 67,514 67,514
Ser. 2004-9, Cl. A, 3.36%,
8/16/22 77,547 77,547
Ser. 2004-23, Cl. B, 2.95%,
3/16/19 2,288,464 116,504 2,404,968
Ser. 2004-43, Cl. A, 2.82%,
12/16/19 303,452 504,488 807,940
Ser. 2004-25, Cl. AC,
3.38%, 1/16/23 318,229 253,136 571,365
Ser. 2004-57, Cl. A, 3.02%,
1/16/19 150,648 150,648
Ser. 2004-39, Cl. LC,
5.50%, 12/20/29 4,823,049 5,561,579 10,384,628
Ser. 2004-67, Cl. A, 3.65%,
9/16/17 109,140 109,140
Ser. 2004-77, Cl. A, 3.40%,
3/16/20 103,323 103,323
Ser. 2004-97, Cl. AB,
3.08%, 4/16/22 182,787 182,787
Ser. 2004-108, Cl. A,
4.00%, 5/16/27 108,859 108,859
Ser. 2004-51, Cl. A, 4.15%,
2/16/18 148,956 148,956
Ser. 2005-87, Cl. A, 4.45%,
3/16/25 982,079 982,079
Ser. 2005-9, Cl. A, 4.03%,
5/16/22 85,029 85,029
Ser. 2005-12, Cl. A, 4.04%,
5/16/21 59,712 59,712
Ser. 2005-42, Cl. A, 4.05%,
7/16/20 1,587,289 132,274 2,182,523 3,902,086
Ser. 2005-14, Cl. A, 4.13%,
2/16/27 105,266 105,266
Ser. 2005-67, Cl. A, 4.22%,
6/16/21 797,293 1,116,211 1,913,504
Ser. 2005-34, Cl. A, 3.96%,
9/16/21 1,237,315 1,716,579 2,953,894
Ser. 2005-59, Cl. A, 4.39%,
5/16/23 1,270,163 1,770,530 3,040,693
Ser. 2005-50, Cl. A, 4.02%,
10/16/26 1,165,496 97,125 1,592,845 2,855,466
Ser. 2005-29, Cl. A, 4.02%,
7/16/27 1,749,969 841,757 155,061 2,436,666 5,183,453
Ser. 2005-90, Cl. A, 3.76%,
9/16/28 1,315,022 1,315,022
Ser. 2005-32, Cl. B, 4.39%,
8/16/30 3,359,199 1,154,111 147,333 4,640,999 9,301,642
Ser. 2005-79, Cl. A, 4.00%,
10/16/33 1,292,990 107,749 1,788,636 3,189,375
Ser. 2006-6, Cl. A, 4.05%,
10/16/23 163,829 163,829
Ser. 2006-3, Cl. A, 4.21%,
1/16/28 1,647,991 1,647,991
Ser. 2006-5, Cl. A, 4.24%,
7/16/29 1,128,723 1,128,723
Ser. 2006-55, Cl. A, 4.25%,
7/16/29 1,401,015 1,401,015
Ser. 2006-66, Cl. A, 4.09%,
1/16/30 1,541,607 1,541,607
Ser. 2007-46, Cl. A, 3.14%,
11/16/29 1,210,588 624,664 135,586 1,259,012 3,229,850
Ser. 2007-52, Cl. A, 4.05%,
10/16/25 1,768,833 855,260 208,956 1,880,600 4,713,649
Federal National Mortgage
Association, Grantor Trust,
Ser. 2001-T11, Cl. B,
5.50%, 9/25/11 76,418 76,418
Government National Mortgage
Association II:
5.50%, 7/20/30 66,830 334,216 401,046
6.38%, 4/20/30 261,199 261,199
6.50%, 2/20/31 - 7/20/31 278,244 278,244
7.00%, 11/20/29 791 791
261,176,075 100,745,630 36,005,793 283,986,500 681,913,998
U.S. Government Securities--11.2%
U.S. Treasury Bonds
4.50%, 2/15/36 8,375,916 663,852 9,039,768
5.00%, 5/15/37 609,500 13,249,952 699,796 1,696,133 16,255,381
U.S. Treasury Notes:
3.88%, 9/15/10 11,493,555 4,703,041 229,174 16,425,770
4.13%, 8/31/12 7,701,020 7,701,020
4.25%, 1/15/11 25,670,400 1,549,987 27,220,387
4.38%, 12/31/07 8,169,564 8,169,564
4.50%, 5/15/10 739,410 739,410
4.50%, 9/30/11 4,642,618 4,642,618
4.50%, 4/30/12 14,490,005 12,748,370 14,738,087 41,976,462
4.50%, 5/15/17 4,600,432 507,291 5,232,059 10,339,782
4.63%, 12/31/11 6,524,181 6,524,181
4.63%, 11/15/16 25,925,011 7,081,881 3,945,547 12,490,045 49,442,484
4.75%, 8/15/17 5,423,568 16,284,896 2,240,390 21,310,060 45,258,914
5.13%, 6/30/08 8,504,657 8,504,657
88,212,471 81,274,095 27,058,274 55,695,558 252,240,398
Total Bonds and Notes
(cost $750,962,326,
$390,304,526,
$110,300,634 and
$793,545,334
respectively) 745,095,279 386,073,850 109,713,813 785,882,941 2,026,765,883
Preferred Stocks--.3% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 15,500 1,400 22,050 38,950
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 44,450 3,450 50,950 98,850
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Banks--.1%
Sovereign Capital Trust IV,
Conv., Cum. $2.1875 664,950 60,060 945,945 1,670,955
Diversified Financial Services--.2%
AES Trust VII,
Conv., Cum. $3.00 2,194,719 170,344 2,515,656 4,880,719
Total Preferred Stocks
(cost $2,973,894, $0, $241,056
and $3,617,438 respectively) 2,859,669 230,404 3,461,601 6,551,674
Options--.1% Face Amount Covered by Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 49,400,000 15,500,000 5,090,000 63,570,000 133,560,000
3-Month USD Libor-BBA,
Swaption 2,770,000 390,000 2,910,000 6,070,000
CDX Option DB
December 2007 @.450 58,320,000 58,320,000
Dow Jones CDX.DB
December 2007 @ .45 5,600,000 5,600,000
Dow Jones CDX.IG8
December 2007 @ .45 54,820,000 6,330,000 61,150,000
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 63,100,000 9,100,000 65,400,000 137,600,000
U.S. Treasury 5 Year Notes
October 2007 @ 107 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively)
Options--.1% Value ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options
3-Month Floor USD Libor-BBA
Interest Rate, October 2009
@ 4 168,415 21,463 17,353 216,723 423,954
3-Month USD Libor-BBA,
Swaption 264,258 37,206 267,720 569,184
CDX Option DB
December 2007 @.450 55,404 55,404
Dow Jones CDX.DB
December 2007 @ .45 5,320 5,320
Dow Jones CDX.IG8
December 2007 @ .45 52,079 6,014 58,093
U.S. Treasury 5 Year Notes
October 2007 @ 109.5 39,438 5,688 40,875 86,001
U.S. Treasury 5 Year Notes
October 2007 @ 107 172,814 43,204 25,156 179,377 420,551
Total Options
(cost $714,169, $83,839,
$95,952 and $768,081
respectively) 697,004 69,987 91,417 760,099 1,618,507
Short-Term Investments--.9% Principal Amount ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 b,c 820,000 b,c 6,030,000 b,c 12,495,000
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,420,000 h 3,420,000
4.10%, 12/6/07 3,399,000 h 3,399,000
4.13%, 12/6/07 355,000 h 98,000 h 453,000
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively)
Short-Term Investments--.9% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Commerical Paper--.5%
Cox Communications
5.57%, 1/15/08 5,645,000 818,135 6,030,000 12,493,135
U.S. Treasury Bills--.3%
4.04%, 12/6/07 3,396,983 3,396,983
4.10%, 12/6/07 3,376,125 3,376,125
4.13%, 12/6/07 352,611 97,340 449,951
Total Short-Term Investments
(cost $9,039,675, $352,312,
$915,393 and $9,403,396
respectively) 9,041,983 352,611 915,475 9,406,125 19,716,194
Other Investment--1.1% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 i 6,178,000 i 3,647,000 i 6,066,000 I 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Other Investment--1.1% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Preferred
Plus Money Market Fund 8,683,000 6,178,000 3,647,000 6,066,000 24,574,000
(cost $8,683,000, $6,178,000,
$3,647,000 and $6,066,000
respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 i 32,557,177 I 67,484,785
(cost $0, $34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 i 24,190,518 i 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively)
Investment of Cash Collateral for
Securities Loaned--7.5% Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Registered Investment Company;
Dreyfus Institutional Cash
Advantage Fund 34,927,608 32,557,177 67,484,785
(cost $0,,$34,927,608, $0 and
$32,557,177 respectively)
Dreyfus Institutional Cash
Advantage Plus Fund 77,933,659 24,190,518 102,124,177
(cost $77,933,659, $0, $24,190,518
and $0 respectively) 77,933,659 34,927,608 24,190,518 32,557,177 169,608,962
Total Investments-100.0%
(cost $850,306,723, $431,846,285,
$139,390,553 and $845,957,426
respectively) 844,310,594 427,602,056 138,788,627 838,133,943 2,248,835,220
| * | Management does not anticipate having to sell any securities as a result of the exchange. |
| a | All or a portion of these securities are on loan. At September 30, 2007, the total market value of the fund's securities on loan is $188,728,839 and the total market value of the collateral held by the fund is $193,466,218 consisting of cash collateral of $169,608,962 and U.S. Government and agency securities valued as $23,857,256. |
| b | Securities 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 September 30, 2007, these securities amounted to $227,731,914 or 10.1% market value. |
| c | Variable rate security--interest rate subject to periodic change. |
| d | Principal amount stated in U.S. Dollars unless otherwise noted.
BRL--Brazilian Real
EGP--Egyptian Pound
EUR--Euro
MXN--Mexican Peso |
| e | Zero coupon until a specified date at which time the stated coupon rate becomes effective until maturity. |
| f | Purchased on a forward commitment basis. |
| g | Purchased on a delayed delivery basis. |
| h | All or partially held by a broker as collateral for open financial futures positions. |
| i | Investment in affiliated money market mutual fund. |
| j | Notional face amount shown. |
STATEMENT OF FINANCIAL FUTURES
September 30, 2007 (Unaudited)
Contracts Expiration Market Value Covered by Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 261 December 2007 27,935,156
U.S. Treasury 5 Year Notes 84 December 2007 8,990,625
U.S. Treasury 5 Year Notes 12 December 2007 1,284,375
U.S. Treasury 5 Year Notes 425 December 2007 45,488,281
U.S. Treasury 10 Year Notes 599 December 2007 65,459,469
U.S. Treasury 10 Year Notes 85 December 2007 9,288,906
U.S. Treasury 10 Year Notes 524 December 2007 57,263,375
Financial Futures Short
U.S. Treasury 2 Year Notes 436 December 2007 (90,272,440)
U.S. Treasury 2 Year Notes 89 December 2007 (18,427,172)
U.S. Treasury 2 Year Notes 52 December 2007 (10,766,438)
U.S. Treasury 2 Year Notes 546 December 2007 (113,047,596)
U.S. Treasury 10 Year Notes 236 December 2007 (25,790,375)
U.S. Treasury 30 Year Bonds 135 December 2007 (15,031,406)
U.S. Treasury 30 Year Bonds 4 December 2007 (445,375)
Unrealized Appreciation (Depreciation) at 9/30/2007 ($)
- ---------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Futures Long
U.S. Treasury 5 Year Notes 27,935,156 (3,328) (3,328)
U.S. Treasury 5 Year Notes 8,990,625 64,719 64,719
U.S. Treasury 5 Year Notes 1,284,375 5,473 5,473
U.S. Treasury 5 Year Notes 45,488,281 54,930 54,930
U.S. Treasury 10 Year Notes 65,459,469 121,844 121,844
U.S. Treasury 10 Year Notes 9,288,906 20,149 20,149
U.S. Treasury 10 Year Notes 57,263,375 138,625 138,625
Financial Futures Short
U.S. Treasury 2 Year Notes (90,272,440) (333,815) (333,815)
U.S. Treasury 2 Year Notes (18,427,172) (37,547) (37,547)
U.S. Treasury 2 Year Notes (10,766,438) (39,911) (39,911)
U.S. Treasury 2 Year Notes (113,047,596) (418,034) (418,034)
U.S. Treasury 10 Year Notes (25,790,375) 57,156 57,156
U.S. Treasury 30 Year Bonds (15,031,406) 97,031 97,031
U.S. Treasury 30 Year Bonds (445,375) 117 117
(215,299) 181,359 (14,170) (224,479) (272,589)
STATEMENT OF OPTIONS WRITTEN
September 30, 2007 (Unaudited)
Face Amount
Covered by
Contracts ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 11,200,000 12,660,000 116,640,000 140,500,000
Dow Jones CDX.IG8
December 2007 @ .395 109,640,000 109,640,000
U.S. Treasury 5 Year Notes
October 2007 @ 108 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 31,600,000 7,900,000 4,600,000 32,800,000 76,900,000
(Premiums received $306,789, $59,234, $41,679 and $321,062 respectively)
Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Call Options:
Dow Jones CDX.DB
December 2007@.39 (5,320) (6,014) (55,404) (66,738)
Dow Jones CDX.IG8
December 2007 @ .395 (52,079) (52,079)
U.S. Treasury 5 Year Notes
October 2007 @ 108 (64,189) (16,047) (9,344) (66,627) (156,207)
Put Options:
U.S. Treasury 5 Year Notes
October 2007 @ 106 (54,314) (13,579) (7,906) (56,377) (132,176)
(Premiums received $306,789, $59,234, (170,582) (34,946) (23,264) (178,407) (407,200)
$41,679 and $321,062 respectively)
Pro Forma Statement of Assets and Liabilities
September 30, 2007 (Unaudited) Dreyfus
Premier
Intermediate
Term
Dreyfus Dreyfus Income Fund
Intermediate Premier Dreyfus Dreyfus A Pro Forma
Term Income Managed Premier Bond Combined
Fund Income Fund Core Bond Plus, Inc. Adjustments (Note 1)
------------ ----------- ---------- ---------------- ------------ --------------
ASSETS:
Investments in securities,
at value - See Statement
of Investments (including
securities on loan, valued
at $188,728,839)
Unaffiliated issuers $ 757,693,935 $ 110,951,109 $ 799,510,766 $ 386,496,448 $ 2,054,652,258
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
Cash 10,358 10,358
Cash denominated in foreign
currencies 393,276 38,277 846,420 21,977 1,299,950
Receivable for investment
securities sold 173,350,932 25,171,177 185,439,728 43,966,620 427,928,457
Dividends and interest
receivable 6,229,325 994,265 6,589,490 3,608,232 17,421,312
Receivable for futures
variation margin 27,359 27,359
Receivable from broker for
swap transaction 1,038,010 104,986 1,377,623 2,520,619
Swap premium paid 2,013,869 226,752 2,471,723 248,776 4,961,120
Receivable for shares of
Beneficial Interest
subscribed 1,072,180 549,582 126,499 23,471 1,771,732
Prepaid expenses 34,389 6,927 22,889 64,205
--------------- ------------- -------------- ------------ ------------- -------------
Total Assets 1,028,442,575 165,873,666 1,034,992,353 475,531,738 2,704,840,332
--------------- ------------- -------------- ------------ ------------- -------------
LIABILITIES: Due to The Dreyfus Corporation
and affiliates 349,267 68,697 551,087 170,683 1,139,734
Cash overdraft due to Custodian 2,097,837 290,280 2,177,697 4,565,814
Outstanding options written,
at value (premiums received
$728,764) - see statement 170,582 23,268 178,407 34,946 407,203
Liability for securities loaned 77,933,659 24,190,518 32,557,177 34,927,608 169,608,962
Net unrealized depreciation on
forward currency exchange
contracts-Note 3(a) 38,909 4,553 49,523 92,985
Payable for investment
securities
purchased 372,907,207 53,629,063 410,722,756 155,527,763 992,786,789
Payable to broker for swap
transactions 750 54,810 55,560
Payable for shares of Beneficial
Interest redeemed 3,091 42,545 412,825 458,461
Unrealized depreciation on swaps 1,075,287 150,160 1,160,543 265,382 2,651,372
Payable for futures variation
margin 35,717 5,531 23,529 64,777
Accrued Interest payable 197 197
Merger costs 90,000 (a) 110,000 (a) 100,000 (a) 300,000
Accrued expenses 230,383 376,973 168,451 775,807
-------------- --------------- --------------- -------------- ------------- --------------
Total Liabilities 454,841,939 78,495,365 448,320,714 191,249,643 1,172,907,661
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
REPRESENTED BY: Paid-in capital 596,461,047 $ 95,504,465 $ 618,764,827 $ 329,276,172 $ 1,640,006,511
Accumulated undistributed
investment income-net 3,024,657 (130,982) 319,644 3,862,872 7,076,191
Accumulated net realized gain
(loss) on investments (18,796,225) (7,251,512) (23,371,769) (44,634,175) (94,053,681)
Accumulated net unrealized
appreciation
(depreciation) on
investments (7,088,843) (743,670) (9,041,063) (4,222,774) (21,096,350)
-------------- --------------- --------------- -------------- ------------- --------------
NET ASSETS $ 573,600,636 $ 87,378,301 $ 586,671,639 $ 284,282,095 $ -- $ 1,531,932,671
============== =============== =============== ============== ============= ==============
Class A Shares (500 million, $.001 par
value shares authorized) (b)
Net Assets $ 538,484,842 $ 74,021,438 $ 433,278,945 $ 284,282,095 $ 1,330,067,320
Shares outstanding 43,433,975 7,000,995 30,809,721 21,404,884 4,610,372 (c) 107,259,947
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.57 $ 14.06 $ 13.28 $ 12.40
=============== =============== =============== ============== ============ ===============
Maximum offering price per share
(net asset value plus maximum sales
charge) $ 12.40 $ 11.07 $ 14.73 $ 12.98
=============== =============== =============== ============== ============ ===============
Class B Shares (500 million, $.001
par value shares authorized)
Net Assets $ 2,488,214 $ 94,585,171 $ 97,073,385
Shares outstanding 235,360 6,714,459 880,381 (c) 7,830,200
Net asset value, offering price and
redemption price per share $ 10.57 $ 14.09 $ 12.40
================ =============== =============== =============== ============ ===============
Class C Shares (500 million, $.001 par
value shares authorized)
Net Assets $ 8,833,042 $ 39,030,280 $ 47,863,322
Shares outstanding 834,740 2,780,181 245,183 (c) 3,860,104
Net asset value, offering price and
redemption price per share $ 10.58 $ 14.04 $ 12.40
=============== =============== =============== =============== ============ ==============
Class I Shares (500 million, $.001
par value shares authorized) (b)
Net Assets $ 35,115,794 $ 2,035,607 $ 19,777,243 $ 56,928,644
Shares outstanding 2,832,734 192,724 1,407,253 158,658 (c) 4,591,369
Net asset value, offering price and
redemption price per share $ 12.40 $ 10.56 $ 14.05 $ 12.40
================ =============== ================ =============== =========== ==============
* Investments at cost
Unaffiliated issuers $ 763,690,064 $ 111,553,035 $ 807,334,249 $ 390,740,677 $2,073,318,025
Affiliated issuers 86,616,659 27,837,518 38,623,177 41,105,608 194,182,962
(a) Includes expenses incurred as a result of the merger.
(b) Reflects redesignation of Dreyfus Intermediate Term Income Fund Investor Shares to Class A Shares and Institutional Shares to
Class I Shares.
(c) Reflects adjustment of shares as a result of the Exchange.
See notes to pro forma financial statements.
Pro Forma Statement of Operations
For the Twelve Months Ended September 30, 2007 (Unaudited)
Dreyfus Dreyfus
Intermediate Premier
Term Managed Dreyfus Dreyfus A Pro Forma
Income Income Premier Bond Combined
Fund Fund Core Bond Plus, Inc. Adjustments (Note 1)
-------------- ------------ ------------- -------------- -------------- -------------
INVESTMENT INCOME:
INCOME: Interest Income $ 31,416,543 $ 3,367,031 $37,012,268 $ 16,102,907 $ 87,898,749
Dividends 152,200 80,151 188,847 618,920 1,040,118
Securities lending income 76,954 14,272 42,534 34,616 168,376
-------------- ------------ ------------- -------------- -------------- --------------
Total Income 31,645,697 3,461,454 37,243,649 16,756,443 89,107,243
-------------- ------------ ------------- -------------- -------------- --------------
EXPENSES: Management fee $ 2,407,911 $ 420,241 $ 3,698,141 $ 1,938,292 $ (1,738,932)(a) $ 6,725,653
Shareholder servicing costs 1,987,228 2,422,765 629,004 536,757 (b) 5,575,754
Professional fees 54,053 66,872 53,004 (75,000)(a) 98,929
Prospectus and shareholders' reports 45,650 58,715 42,604 (15,000)(a) 131,969
Custodian fees 166,627 188,174 56,697 (50,000)(a) 361,498
Directors' fees and expenses 7,909 78,870 15,584 (60,000)(a) 42,363
Registration fees 37,787 68,495 37,429 (25,000)(a) 118,711
Interest 6,907 6,907
Distribution and service fees 188,932 1,027,205 1,216,137
Loan commitment fees 844 (844)(a) -
Merger cost - - - -
Miscellaneous 44,748 165,248 57,166 267,162
-------------- ------------ ------------- -------------- -------------- --------------
Total Expenses 4,751,913 610,017 7,781,392 2,829,780 (1,428,019) 14,545,083
-------------- ------------ ------------- -------------- -------------- --------------
Less- reduction in management fee due to
undertaking (586,776) (723,514) 237,936 (1,072,354)
-------------- ------------ ------------- -------------- -------------- --------------
Net Expenses 4,165,137 610,017 7,057,878 2,829,780 (1,190,083) 13,472,729
-
-------------- ------------ ------------- -------------- -------------- --------------
INVESTMENT GAIN 27,480,560 2,851,437 30,185,771 13,926,663 1,190,083 75,634,514
-------------- ------------ ------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments and
foreign currency transactions $ 2,460,530 $ 535,481 $ 1,507,249 $ (2,239,627) $ 2,263,633
Net realized gain (loss) on forward currency
exchange contracts (591,903) (70,953) (747,773) 87,615 (1,323,014)
Net realized gain (loss) on financial futures (1,931,470) (177,608) (1,157,908) (1,013,480) (4,280,466)
Net realized gain (loss) on options transactions 10,322 4,420 (364) (106,988) (92,610)
Net realized gain (loss) on swap transactions (2,419,831) (157,119) (2,393,828) (971,553) (5,942,331)
-------------- ------------- ------------- ------------- ---------------
Net Realized Gain (Loss) (2,472,352) 134,221 (2,792,624) (4,244,033) (9,374,788)
-------------- ------------ ------------- -------------- -------------- --------------
Net unrealized appreciation (depreciation) on
investments, foreign currency transactions,
option transactions, and swap transactions
(including $1,642,649 net unrealized
appreciation on financial futures) (4,201,364) (17,895) (5,770,332) (2,742,836) (12,732,427)
-------------- ------------ ------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,673,716) 116,326 (8,562,956) (6,986,869) (22,107,215)
-------------- ------------ ------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 20,806,844 $ 2,967,763 $21,622,815 $ 6,939,794 $ 1,190,083 53,527,299
============== ============ ============= ============== ============ ===============
(a) Reflects the anticipated savings as a result of the Merger.
(b) Reflects an anticipated expense increase as a result of the Merger.
See notes to pro forma financial statements.
Dreyfus Intermediate Term Income Fund
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
NOTE 1 — Basis of Combination:
At meetings of the Boards held on October 18, 2007, October 25, 2007, November 6, 2007 and November 7, 2007, the Boards of Directors/Trustees of Dreyfus Investment Grade Funds, Inc., on behalf of Dreyfus Intermediate Term Income Fund (the "Acquiring Fund"), The Dreyfus/Laurels Funds Trust, on behalf of Dreyfus Premier Managed Income Fund, Dreyfus Premier Fixed Income Funds, on behalf of Dreyfus Premier Core Bond Fund, and Dreyfus A Bonds Plus, Inc. (collectively, the "Funds"), respectively, each approved an Agreement and Plan of Reorganization pursuant to which, subject to approval by the respective Fund's shareholders, each Fund will transfer all of its assets, subject to its liabilities, to the Acquiring Fund, in exchange for a number of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares only with respect to Dreyfus A Bonds Plus, Inc.) equal in value to the assets less liabilities of the Fund (the "Exchange"). The Acquiring Fund shares will then be distributed to the respective Fund's shareholders on a pro rata basis in liquidation of the Fund. Fund shareholders will receive shares of the corresponding class of shares of the Acquiring Fund in the Exchange with holders of shares of Dreyfus A Bonds Plus, Inc. receiving Class A shares of the Acquiring Fund. The Acquiring Fund will redesignate Investor shares to Class A shares and Institutional shares to Class I shares, will create Class B and Class C shares and will change its name to Dreyfus Premier Intermediate Term Income Fund prior to the Exchange. If the Exchange is consummated only for Dreyfus A Bonds Plus, Inc., holders of shares of Dreyfus A Bonds Plus, Inc. will receive Investor shares of the Acquiring Fund and the Acquiring Fund will not change its name.
Each Exchange will be accounted for as a tax-free merger of investment companies. The unaudited pro forma statement of investments and statement of assets and liabilities reflect the financial position of the Acquiring Fund and the Funds on September 30, 2007. The unaudited pro forma statement of operations reflects the results of operations of the Acquiring Fund and the Funds for the twelve months ended September 30, 2007. These statements have been derived from the Fund's and the Acquiring Fund's respective books and records utilized in calculating daily net asset value at the dates indicated above under accounting principles generally accepted in the United States. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. The historical cost of investment securities will be carried forward to the surviving entity and results of operations of the Acquiring Fund for pre-combination periods will not be restated. The fiscal year end is July 31 for the Acquiring Fund, December 31 for Dreyfus Premier Managed Income Fund, October 31 for Dreyfus Premier Core Bond Fund and March 31 for Dreyfus A Bonds Plus. Inc.
The pro forma statements of investments, assets and liabilities and operations should be read in conjunction with the historical financial statements of the Funds and the Acquiring Fund included or incorporated by reference in the Statement of Additional Information of which the pro forma combined financial statements form a part. The pro forma combined financial statements are presented for information only and may not necessarily be representative of what the actual combined financial statements would have been had the Exchange, occurred on September 30, 2007. The pro forma financial statements were prepared in accordance with accounting principles generally accepted in the United States, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. Following the relevant Exchange, the Acquiring Fund will be the accounting survivor.
All costs with respect to each Exchange will be borne by the respective Fund.
The funds enter into contracts that contain a variety of indemnifications. The funds' maximum exposure under these arrangements is unknown. The funds do not anticipate recognizing any loss related to these arrangements.
NOTE 2 — Portfolio Valuation:
Investments in securities (excluding short-term investments other than U.S. Treasury Bills, options and financial futures) are valued each business day by an independent pricing service ("Service") approved by the respective fund's Board members. 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. Securities for which there are no such valuations are valued at fair value as determined in good faith under the direction of the respective Board. Short-term investments, excluding U.S. Treasury Bills, are carried at amortized cost, which approximates market value. Financial futures and options are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments denominated in foreign currencies are translated to U.S. dollars at the prevailing rates of exchange.
NOTE 3 — Capital Shares:
The pro forma number of shares that would be issued was calculated by dividing the net assets of the respective Fund's Class A, Class B, Class C and Class I shares (fund shares only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007 by the net asset value per share of Class A, Class B, Class C and Class I shares of the Acquiring Fund (Class A shares of the Acquiring Fund only in the case of Dreyfus A Bonds Plus, Inc.) on September 30, 2007.
NOTE 4 — Pro Forma Operating Expenses:
The accompanying pro forma statement of operations reflects changes in fund expenses as if the respective Exchange had taken place on October 1, 2006. Each Fund will bear the expense of the respective Exchange.
NOTE 5 — Federal Income Taxes:
Each fund has qualified as a "regulated investment company" under the Internal Revenue Code. After the relevant Exchange, the Acquiring Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, federal income taxes.
The identified cost of investments for the funds is substantially the same for both financial accounting and federal income tax purposes. The tax cost of investments will remain unchanged for the combined entity.
DREYFUS INVESTMENT GRADE FUNDS, INC.
PART C
OTHER INFORMATION
| The response to this item is incorporated by reference to Item 25 of Part C of Post-Effective Amendment No. 31 to the Registrant's Registration Statement on Form N-1A (File No. 33-48926) (the "Registration Statement"), filed on September 27, 2007. |
| (1)(a) | Articles of Incorporation and Articles of Amendment are incorporated by reference to Exhibit (1) of Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A, filed on November 28, 1995 ("Post-Effective Amendment No. 7"). Registrant's Articles Supplementary and Articles of Amendment are incorporated by reference to Exhibit (a) of Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A, filed on May 2, 2001 and to Exhibit (a)(2) of Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A, filed November 14, 2001. |
| (1)(b) | Articles Supplementary are incorporated by reference to Exhibit (a)(2) of Post-Effective Amendment No. 21 to the Registration Statement on Form N-1A, filed August 2, 2002 ("Post-Effective Amdendment No. 21"). |
| (1)(c) | Articles Supplementary are incorporated by reference to Exhibit (a)(3) of Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed November 28, 2003 ("Post-Effective Amendment No. 26"). |
| (1)(d) | Articles of Amendment are incorporated by reference to Exhibit (a)(4) of Post-Effective Amendment No. 26. |
| (1)(e) | Articles of Amendment and Articles Supplementary are incorporated by reference Post-Effective Amendment No. 31 to the Registrant's Registration Statement on Form N-1A, filed September 27, 2007 ("Post-Effective Amdmendment No. 31"). |
| (2) | Amended and Restated By-Laws are incorporated by reference to Exhibit (b) of Post- Effective Amendment No. 29 to the Registration Statement on Form N-1A, filed on March 27, 2006. |
| (4) | Plan of Reorganization.* |
| (5) | Reference is made to Exhibits (1) and (2) hereof. |
| (6) | Management Agreement is incorporated by reference to Exhibit (d) of Post-Effective Amendment No. 21. |
| (7)(a) | Distribution Agreement is incorporated by reference to Exhibit (e)(1) of Post-Effective Amendment No. 21. |
| (7)(b) | Forms of Services Agreement are incorporated by reference to Exhibit (e)(2) of Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A, filed on November 30, 2000. |
| (9) | Amended and Restated Custody Agreement is incorporated by reference to Exhibit (8)(a) of Post-Effective Amendment No. 7. |
| (10) | Shareholder Services Plan is incorporated by reference Post-Effective Amendment No. 31. |
| (11) | Opinion and consent of Registrant's counsel.* |
| (12) | Opinion and consent of counsel regarding tax matters.** |
| (14) | Consent of Independent Registered Public Accounting Firm.(1) |
| (16) | Power of Attorney.(2) |
| (17)(b) | The Prospectus and Statement of Additional Information of Dreyfus Investment Grade Funds, Inc. are incorporated by reference to Post-Effective Amendment No. 31. |
________________________
| ** | To be filed by Post-Effective Amendment. |
| (1) | Incorporated by reference to Exhibit (14) to Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form N-14 (File No. 333-147346), filed with the Securities and Exchange Commission (the "SEC") on November 30, 2007. |
| (2) | Filed as part of signature page to Registrant's Registation Statement on Form N-14 (File No. 333-147346), filed with the SEC on November 13, 2007. |
| (1) | The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
| (2) | The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933 each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. |
| (3) | The undersigned Registrant agrees to file by post-effective amendment the final opinion of counsel regarding tax matters within a reasonable period of time after receiving such opinion. |
SIGNATURES
As required by the Securities Act of 1933, this Pre-Effective Amendment to the Registrant's Registration Statement has been signed on behalf of the Registrant, in the City of New York, and State of New York on the 14th day of December, 2007.
| | DREYFUS INVESTMENT GRADE FUNDS, INC.
By: /s/ J. David Officer*
J. David Officer, President |
Pursuant to the requirements of the Securities Act of 1993, the following persons in the capacities and on the dates indicated have signed this Amendment to the Registration Statement below.
/s/ J. David Officer*
J. David Officer | President (Principal Executive Officer) | December 14, 2007 |
/s/ James Windels*
James Windels | Treasurer (Principal Financial and
Accounting Officer) | December 14, 2007 |
/s/ Joseph S. DiMartino*
Joseph S. DiMartino | Chairman of the Board | December 14, 2007 |
/s/ Clifford L. Alexander*
Clifford L. Alexander | Board Member | December 14, 2007 |
/s/ David W. Burke*
David W. Burke | Board Member | December 14, 2007 |
/s/ Whitney I. Gerard*
Whitney I. Gerard | Board Member | December 14, 2007 |
/s/ George L. Perry*
George L. Perry | Board Member | December 14, 2007 |
| *By: | /s/ Robert R. Mullery
Robert R. Mullery
Attorney-in-Fact |
Exhibit Index
(11) Opinion and Consent of Registrant's Counsel
