Dreyfus
High Yield
Strategies Fund
Annual Report
March 31, 1999
<PAGE>
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
Enclosed is the annual report for the Dreyfus High Yield Strategies Fund. The
report covers the period from the Fund's inception on April 29, 1998, through
March 31, 1999. Your Fund produced a total return, including share price changes
and dividend income generated, of -13.37%.* During the reporting period, the
Fund produced income dividends of $1.20 per share. This is equivalent to an
annualized distribution rate per share of 12.13%.**
The Economy
The economy in the period ended March 31, 1999 had several persistent themes.
These included weakness in the world economy, strength in the U.S. economy,
pervasive disinflation and multiple rounds of central bank easing, which lowered
interest rates in many parts of the world.
Weakness in the world economy started in Asia with economic and financial
stresses throughout most of the continent. While China was able to generate
economic expansion by government spending, economic declines occurred in most of
the rest of Asia. The most severe phase of these crises occurred when Asian
currencies dropped and short-term interest rates rose there as well. Then Latin
America began to weaken, particularly Brazil. Tentative signs of a bottoming in
Asia had emerged by the end of your Fund's fiscal period; however, Brazil had
not yet turned the corner.
Europe was full of optimism about the benefits of currency unification into
the Euro as of year-end 1998. The reality was that economic growth in Europe
began the last year at a modest pace and showed signs of stagnation in early
1999. Even so, the new European central bank postponed the reduction in interest
rates at the beginning of 1999, probably because of a desire to build
anti-inflationary credibility. The bank finally eased in April of this year.
The U.S. economy proved to be a superperformer during the period, growing at
a high rate despite the economic weakness overseas. A major reason for this was
that the negative effects of foreign economic weakness on the traditional
industrial sector were offset by positive effects elsewhere in the economy. Low
inflation and low interest rates stimulated the housing and consumer sectors,
while the technology sector continued to expand.
The Federal Reserve eased monetary policy three times beginning on September
30, 1998, lowering the federal funds rate from 5.50% to 4.75%. This was not
because of any shortfall in U.S. economic growth. Rather, it was a response to a
financial crisis linked to the Russian default and the financial problems of a
major hedge fund. Despite widespread fears, the U.S. economy never did slow.
Long-term interest rates declined into early October, when fears of financial
crisis, deflation and possible economic recession were at their greatest.
However, those rates then drifted higher as the financial stresses eased and the
feared economic slowdown did not materialize.
Market Environment
The high yield market bottomed out in mid-October 1998 and has been steadily
climbing out of that deep hole ever since. While it may not get back to the high
levels of early 1998, we believe that the snapback that the market has
experienced shows signs of longevity.
As the financial markets experienced the full-blown panic last October, the
spread to treasuries of the various high yield indices widened to levels not
seen since the depths of 1990. This time, however, market fundamentals were much
better: the economy remained steady, although fears of deflation were worrisome;
high yield defaults were running 3%, close to their historical lows; and the
high yield market had become significantly more mature and broad-based since
1990.
To take a metaphor from chaos theory, a butterfly wing in Russia caused a
wave that spawned a hurricane over the financial markets. The virulence of the
credit contraction dried up liquidity in the high yield market. All high yield
bonds traded off without regard to any credit fundamentals, but the ensuing
recovery has been in stages. As investor confidence returned, the first stage of
recovery included the return of the BB spread to historical levels and the
rebound of defensive industries, such as cable and entertainment. The second
stage has seen the rebound of select industries that have enjoyed
<PAGE>
significant fundamental improvements, most prominently telecommunications and
energy, and the resumption of new issuance for higher-rated, defensive credits.
A third stage has just begun, and it entails the increased interest in
lower-rated bonds and more off-the-run credits, and a broader new-issue demand.
The bid for secondary credits still needs to be deeper for full recovery, but
we believe that the continued strength of the domestic economy, the apparent
rebound in foreign markets, and strong equity markets bode well for the
short-term outlook for high yield.
Portfolio Focus
The primary investment objective of the Fund is high current income. To
achieve that objective, the Fund has consistently outearned its dividend.
The performance of the Fund was primarily due to three factors: leverage,
illiquid issue pricing and issue selection.
Leverage is a two-edged sword. It can fund assets that help produce an
attractive dividend, but it increases volatility. The initial leverage of the
Fund at 25% proved to be manageable during the worst of the market crisis in
October 1998, in that assets did not have to be sold to keep leverage under its
limit as the net asset value reached its lowest point. We believe that if the
high yield market rally were to continue, leverage employed by the Fund should
influence net asset values positively.
The Fund is widely diversified by industry and number of holdings. The
average rating of the assets is single B, but many of the credits are not
considered to be actively traded. Less liquid issues in general suffered the
greatest price declines during the market sell-off last year, and have been the
slowest to recover during the last six months. As the high yield rally
continued, investor interest in off-the-run credits strengthened, and we think
this has been a positive indicator for the Fund.
Regarding issue selection, our exposure to energy, transportation, and
financial credits has been a prime contributor to underperformance.
We have seen several positive factors, including continued recovery of the
high yield market, a strong domestic economy, and rebounding international
markets. While downside indicators are less predictable and currently
unforeseen, they could come from any future credit contraction in the financial
markets or another emerging market shock. The Fund's dividend offered a very
competitive yield in the marketplace during the reporting period.
We look forward to continuing to manage the Fund's assets.
Sincerely,
/s/ Roger E. King
Roger E. King
Portfolio Manager
May 11, 1999
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid,
based upon net asset value per share.
** Distribution rate per share is based upon dividends per share declared from
net investment income during the period (annualized), divided by the market
price per share at the end of the period.
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Selected Information March 31, 1999 (Unaudited)
Market Price per share March 31, 1999........................... $11 7/8
Shares Outstanding March 31, 1999............................... 62,814,997
New York Stock Exchange Ticker Symbol........................... DHF
<TABLE>
<CAPTION>
MARKET PRICE (NEW YORK STOCK EXCHANGE)
Fiscal Year Ended March 31, 1999
-------------------------------------------------------------------------------------------------
April 29, 1998 (commencement Quarter Quarter Quarter
of operations) through Ended Ended Ended
June 30, 1998 September 30, 1998 December 31, 1998 March 31, 1999
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
High $15 1/4 $15 1/16 $13 1/8 $12 5/8
Low 15 11 13/16 11 3/8 11 7/8
Close 15 12 15/16 11 7/16 11 7/8
</TABLE>
PERCENTAGE GAIN (LOSS) based on change in Market Price*
April 29, 1998 (commencement of operations) through March 31, 1999.... (13.04)%
July 1, 1998 through March 31, 1999................................... (13.74)
October 1, 1998 through March 31, 1999................................ (2.59)
January 1, 1999 through March 31, 1999................................ 5.94
NET ASSET VALUE PER SHARE
April 29, 1998 (commencement of operations)................ $15.00
June 30, 1998.............................................. 14.91
September 30, 1998......................................... 12.34
December 31, 1998.......................................... 11.90
March 31, 1999............................................. 11.83
PERCENTAGE GAIN based on change in Net Asset Value*
April 29, 1998 (commencement of operations) through March 31, 1999.... (13.37)%
July 1, 1998 through March 31, 1999................................... (13.55)
October 1, 1998 through March 31, 1999................................ 1.74
January 1, 1999 through March 31, 1999................................ 1.44
- --------------
* With dividends reinvested.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Statement of Investments March 31, 1999
Principal
Bonds and Notes--130.6% Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Aircraft & Aerospace--4.2% American Pacific,
Sr. Notes, 9.25%, 2005..................... $ 9,125,000 $ 9,535,625
Burke Industries,
Sr. Sub. Notes, 10%, 2007.................. 12,895,000 11,669,975
Stellex Industries, Ser. B,
Sr. Sub. Notes, 9.5%, 2007................. 11,000,000 9,955,000
------------
31,160,600
------------
Automotive--10.0% Advanced Accessory Systems/Capital, Ser. B,
Sr. Sub. Notes, 9.75%, 2007................ 7,000,000 6,895,000
Aetna Industries,
Sr. Notes, 11.875%, 2006................... 14,195,000 15,117,675
Anchor Lamina,
Sr. Sub. Notes, 9.875%, 2008............... 11,025,000 10,308,375
HCC Industries,
Sr. Sub. Notes, 10.75%, 2007............... 11,750,000 11,338,750
J.H. Heafner,
Sr. Notes, 10%, 2008....................... 10,000,000 10,275,000
United Auto Group:
Sr. Sub. Notes, Ser. A, 11%, 2007.......... 12,000,000 9,660,000
Sr. Sub. Notes, Ser. B, 11%, 2007.......... 1,000,000 805,000
Walbro, Ser. B,
Sr. Notes, 10.125%, 2007................... 10,000,000 10,150,000
------------
74,549,800
------------
Broadcasting--2.6% ACME Intermediate Holdings/Finance, Ser. B,
Sr. Secured Discount Notes, 0/12%, 2005.... 4,800,000(a) 3,144,000
ACME Television/Finance, Ser. B,
Sr. Discount Notes, 0/10.875%, 2004........ 6,400,000(a) 5,440,000
Tri-State Outdoor Media Group,
Sr. Notes, 11%, 2008....................... 10,400,000 10,894,000
------------
19,478,000
------------
Building Materials--4.0% American Builders & Contractors, Ser. B,
Sr. Sub. Notes, 10.625%, 2007.............. 10,000,000 9,050,000
American Eco, Ser. B,
Sr. Notes, 9.625%, 2008.................... 20,645,000 12,180,550
ICF Kaiser International,
Sr. Sub. Notes, 13%, 2003.................. 12,324,000 8,811,660
------------
30,042,210
------------
Cable Television--6.7% Adelphia Communications, Ser. B,
Sr. Notes, 9.5%, 2004...................... 2,819,872 2,766,693
Classic Communications,
Sr. Discount Notes, 0/13.25%, 2009 (Units). 4,000,000(a,b,c) 2,820,000
Coaxial/Finance,
Sr. Discount Notes, 0/12.875%, 2008........ 7,500,000(a) 5,062,500
Coaxial Communications/Phoenix,
Sr. Notes, 10%, 2006....................... 2,650,000 2,828,875
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Cable Television (continued) Golden Sky Systems,
Sr. Sub. Notes, 12.375%, 2006.............. $ 10,000,000(b) $ 11,200,000
OpTel, Ser. B,
Sr. Notes, 13%, 2005....................... 11,722,000 11,868,525
Star Choice Communications,
Sr. Secured Notes, 13%, 2005............... 12,000,000(a) 12,060,000
UIH Australia/Pacific, Ser. D,
Sr. Discount Notes, 0/14.75%, 2006......... 2,000,000(a) 1,315,000
------------
49,921,593
------------
Casinos & Gaming--2.3% Ameristar Casinos, Ser. B,
Sr. Sub. Notes, 10.5%, 2004................ 13,000,000 13,065,000
Hard Rock Hotel, Ser. B,
Sr. Sub. Notes, 9.25%, 2005................ 3,900,000 3,802,500
------------
16,867,500
------------
Chemicals--4.8% GNI Group,
Sr. Notes, 10.875%, 2005................... 9,000,000 7,740,000
Laroche Industries, Ser. B,
Sr. Sub. Notes, 9.5%, 2007................. 4,750,000 3,538,750
Octel Developments,
Sr. Notes, 10%, 2006....................... 4,500,000 4,668,750
Sterling Chemicals:
Sr. Sub. Notes, 11.75%, 2006............... 2,000,000 1,890,000
Sr. Sub. Notes, Ser. A, 11.25%, 2007....... 8,450,000 7,774,000
Trans-Resources:
Sr. Discount Notes, Ser. B, 0/12%, 2008.... 12,000,000(a) 6,300,000
Sr. Notes, Ser. B, 10.75%, 2008............ 3,500,000 3,500,000
------------
35,411,500
------------
Construction--.3% FWT,
Sr. Sub. Notes, 9.875%, 2007............... 12,300,000(d) 1,906,500
------------
Consumer--8.5% BPC Holding, Ser. B,
Sr. Secured Notes, 12.5%, 2006............. 5,432,000 5,730,760
Carson, Ser. B,
Sr. Sub. Notes, 10.375%, 2007.............. 10,000,000 7,550,000
Concord Camera, Ser. B,
Sr. Notes, 11%, 2005....................... 15,000,000 14,962,500
Corning Consumer Products,
Sr. Sub. Notes, 9.625%, 2008............... 9,000,000 7,155,000
Decora Industries,
Sr. Secured Notes, 11%, 2005............... 12,000,000 11,460,000
E & S Holdings, Ser. B,
Sr. Sub. Notes, 10.375%, 2006.............. 4,500,000 1,620,000
Revlon Consumer Products,
Sr. Sub. Notes, 8.625%, 2008............... 7,500,000 6,900,000
Sparkling Spring Water,
Sr. Sub. Notes, 11.5%, 2007................ 10,000,000 7,550,000
------------
62,928,260
------------
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Energy--8.8% AEI Resources/Holdings,
Sr. Notes, 10.5%, 2005..................... $ 10,000,000(b) $ 10,100,000
Anker Coal Group, Ser. B,
Sr. Notes, 9.75%, 2007..................... 8,350,000 4,467,250
Belden & Blake, Ser. B,
Sr. Sub. Notes, 9.875%, 2007............... 12,000,000 7,680,000
Chiles Offshore/Finance,
Sr. Notes, 10%, 2008....................... 9,500,000 6,887,500
Costilla Energy,
Sr. Notes, 10.25%, 2006.................... 5,400,000 3,726,000
Magnum Hunter Resources,
Sr. Notes, 10%, 2007....................... 11,500,000 10,177,500
Michael Petroleum, Ser. B,
Sr. Notes, 11.5%, 2005..................... 8,875,000 5,413,750
Northern Offshore ASA,
Sr. Notes, 10%, 2005....................... 5,000,000(b) 1,925,000
P & L Coal Holdings,
Sr. Sub. Notes, 9.625%, 2008............... 7,000,000 7,341,250
Petsec Energy, Ser. B,
Sr. Sub. Notes, 9.5%, 2007................. 15,250,000 8,006,250
------------
65,724,500
------------
Entertainment--5.8% American Skiing, Ser. B,
Sr. Sub. Notes, 12%, 2006.................. 11,400,000 10,431,000
Booth Creek Ski Holdings, Ser. B,
Sr. Notes, 12.5%, 2007..................... 11,500,000 10,982,500
Fox Family Worldwide,
Sr. Notes, 9.25%, 2007..................... 6,150,000 5,873,250
Livent,
Sr. Notes, 9.375%, 2004.................... 6,950,000(d) 2,536,750
Production Resource Group,
Sr. Sub. Notes, 11.5%, 2008................ 13,000,000 12,935,000
------------
42,758,500
------------
Financial--3.5% Amresco:
Sr. Sub. Notes, Ser. 97-A, 10%, 2004....... 6,000,000 4,530,000
Sr. Sub. Notes, Ser. 98-A, 9.875%, 2005.... 6,000,000 4,530,000
Dollar Financial Group, Ser. A,
Sr. Notes, 10.875%, 2006................... 6,000,000 6,157,500
Imperial Credit Industries, Ser. B,
Sr. Notes, 9.875%, 2007.................... 4,750,000 4,013,750
Superior National Capital Trust I,
Gtd. Trust Preferred Securities,
10.75%, 2017............................... 6,965,000 7,052,063
------------
26,283,313
------------
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Food, Beverages
and Tobacco--5.9% Cuddy International,
Sr. Notes, 10.75%, 2007.................... $ 11,100,000 $ 10,323,000
Envirodyne Industries,
Sr. Notes, 10.25%, 2001.................... 4,019,000 3,114,725
FRD Acquisition, Ser. B,
Sr. Notes, 12.5%, 2004..................... 7,500,000 7,537,500
North Atlantic Trading, Ser. B,
Sr. Notes, 11%, 2004....................... 16,000,000 16,160,000
Specialty Foods, Ser. B,
Sr. Notes, 10.25%, 2001.................... 6,890,000 6,511,050
------------
43,646,275
------------
Forest Products--1.3% U.S. Timberlands Klamath Falls/Finance,
Sr. Notes, 9.625%, 2007.................... 9,750,000 9,810,938
------------
Industrial--11.7% Alliance Laundry Systems,
Sr. Sub. Notes, 9.625%, 2008............... 13,000,000(b) 12,480,000
Amazon.com,
Sr. Discount Notes, 0/10%, 2008............ 9,500,000(a) 6,507,500
Elgin National Industries, Ser. B,
Sr. Notes, 11%, 2007....................... 12,250,000 12,372,500
International Knife & Saw,
Sr. Sub. Notes, 11.375%, 2006.............. 8,500,000 8,648,750
Key Components/Finance,
Sr. Notes, 10.5%, 2008..................... 14,000,000 13,440,000
Numatics, Ser. B,
Sr. Sub. Notes, 9.625%, 2008............... 12,375,000 11,075,625
Precise Technology, Ser. B,
Sr. Sub. Notes, 11.125%, 2007.............. 12,650,000 12,080,750
United Rentals,
Sr. Sub. Notes, 9.5%, 2008................. 10,000,000 10,150,000
------------
86,755,125
------------
Metals--2.9% Kaiser Aluminum & Chemical, Ser. D,
Sr. Notes, 10.875%, 2006................... 8,500,000 8,755,000
Metallurg, Ser. B,
Sr. Notes, 11%, 2007....................... 5,000,000 4,575,000
Recycling Industries,
Sr. Sub. Notes, 13%, 2005.................. 10,000,000(d) 1,250,000
Renco Steel Holdings,
Sr. Notes, 11.5%, 2003..................... 6,900,000 7,210,500
------------
21,790,500
------------
Paper & Packaging--4.9% Fonda Group, Ser. B,
Sr. Sub. Notes, 9.5%, 2007................. 3,000,000 2,520,000
Indesco International,
Sr. Sub. Notes, 9.75%, 2008................ 10,000,000 8,500,000
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Paper & Packaging (continued) Repap New Brunswick,
Sr. Secured Notes, 10.625%, 2005........... $ 9,250,000 $ 7,677,500
Riverwood International:
Sr. Notes, 10.25%, 2006.................... 2,000,000 2,070,000
Sr. Notes, 10.625%, 2007................... 8,000,000 8,360,000
SF Holdings Group, Ser. B,
Sr. Secured Discount Notes, 0/12.75%, 2008. 28,550,000(a) 7,708,500
------------
36,836,000
------------
Personnel Services--.7% Employee Solutions, Ser. B,
Sr. Notes, 10%, 2004....................... 10,000,000 5,050,000
------------
Publishing--1.3% Day International Group,
Sr. Sub. Notes, 9.5%, 2008................. 10,000,000 9,800,000
------------
Real Estate--1.3% LNR Property, Ser. B,
Sr. Sub. Notes, 9.375%, 2008............... 10,000,000 9,650,000
------------
Retail--2.4% J Crew Operating,
Sr. Sub. Notes, 10.375%, 2007.............. 7,000,000 6,615,000
Pamida,
Gtd. Sr. Sub. Notes, 11.75%, 2003.......... 6,000,000 5,430,000
TM Group Holdings,
Sr. Notes, 11%, 2008....................... 6,000,000(b) 6,060,000
------------
18,105,000
------------
Shipping--2.7% Cenargo International,
First Pfd. Ship Mortgage Notes, 9.75%, 2008 10,000,000 9,025,000
Holt Group,
Sr. Notes, 9.75%, 2006..................... 13,500,000(b) 9,264,375
TBS Shipping International,
First Pfd. Ship Mortgage Notes, 10%, 2005.. 5,000,000 1,475,000
------------
19,764,375
------------
Technology--9.3% Axiohm Transaction Solutions,
Sr. Sub. Notes, 9.75%, 2007................ 10,000,000 9,125,000
Details, Ser. B
Sr. Sub. Notes, 10%, 2005.................. 9,000,000 8,280,000
Entex Information Services,
Sr. Notes, 12.5%, 2006..................... 10,000,000 7,162,500
Hadco,
Sr. Sub. Notes, 9.5%, 2008................. 10,000,000 9,925,000
Orbital Imaging:
Sr. Notes, Ser. B, 11.625%, 2005........... 5,000,000 5,000,000
Sr. Notes, 11.625%, 2005 (Units)........... 3,950,000(b,e) 4,029,000
Packard Bioscience, Ser. B,
Sr. Sub. Notes, 9.375%, 2007............... 15,895,000 15,457,887
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Technology (continued) Viasystems:
Sr. Sub. Notes, Ser. B, 9.75%, 2007........ $ 2,000,000 $ 1,910,000
Sr. Sub. Notes, Ser. B, 9.75%, 2007........ 8,960,000 8,556,800
-------------
69,446,187
-------------
Telecommunication/
Carriers--6.5% FirstWorld Communications,
Sr. Discount Notes, 0/13%, 2008............ 18,660,000(a) 7,277,400
GST Equipment,
Sr. Secured Notes, 13.25%, 2007............ 7,000,000 7,175,000
Level 3 Communications,
Sr. Notes, 9.125%, 2008.................... 10,000,000 10,125,000
MGC Communications, Ser. B,
Sr. Secured Notes, 13%, 2004............... 11,000,000 8,635,000
RSL Communications,
Sr. Notes, 9.125%, 2008.................... 15,000,000 14,925,000
-------------
48,137,400
-------------
Telecommunication
Equipment--2.7% Filtronic,
Sr. Notes, 10%, 2005....................... 10,000,000(b) 10,400,000
SBA Communications,
Sr. Discount Notes, 0/12%, 2008............ 15,000,000(a) 9,525,000
-------------
19,925,000
-------------
Textiles--1.1% Sassco Fashions,
Sr. Notes, 12.75%, 2004.................... 8,500,000 7,947,500
-------------
Transportation--4.0% Canadian Airlines,
Sr. Notes, 12.25%, 2006.................... 16,000,000 6,800,000
Fine Air Services,
Sr. Notes, 9.875%, 2008.................... 10,000,000 9,050,000
TFM, S.A. de C.V.,
Sr. Notes, 10.25%, 2007.................... 8,000,000 7,040,000
ValuJet,
Sr. Notes, 10.25%, 2001.................... 9,000,000 6,705,000
-------------
29,595,000
-------------
Utilities--1.4% ISG Resources,
Sr. Sub. Notes, 10%, 2008.................. 10,050,000 10,251,000
-------------
Wireless Communications--9.0% Dolphin Telecom,
Sr. Discount Notes, 0/11.5%, 2008.......... 15,250,000(a) 7,872,812
Globalstar/Capital,
Sr. Notes, 11.375%, 2004................... 10,000,000 6,350,000
Iridium Operating/Capital, Ser. D,
Gtd. Sr. Notes, 10.875%, 2005.............. 7,000,000 2,660,000
Metrocall,
Sr. Sub. Notes, 10.375%, 2007.............. 10,000,000 8,950,000
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
Wireless Communications
(continued) Microcell Telecommunications, Ser. B,
Sr. Discount Notes, 0/14%, 2006............ $ 7,500,000(a) $ 6,150,000
Omnipoint, Ser. A,
Sr. Notes, 11.625%, 2006................... 9,100,000 8,008,000
OrbCommunications Global/Capital,
Sr. Notes, 14%, 2004....................... 13,000,000 13,097,500
Satelites Mexicanos, Ser. B
Sr. Notes, 10.125%, 2004................... 10,000,000 8,350,000
WinStar Communications,
Sr. Sub. Notes, 10%, 2008.................. 8,000,000 5,160,000
-------------
66,598,312
-------------
TOTAL BONDS AND NOTES
(cost $1,117,210,003)...................... $ 970,140,888
=============
Preferred Stocks--4.6% Shares
- -------------------------------------------------------------------------------- -------------
Broadcasting--2.7% Cumulus Media, Ser. A,
Cum., $137.50.............................. 10,343 $ 11,661,732
Paxson Communications,
Cum., $1,325............................... 952 7,949,200
-------------
19,610,932
-------------
Cable Television--.9% HMV Media Group,
Sr. Cum., $12.875 (Units).................. 6,500(b,c) 6,727,500
-------------
Wireless Communications--1.0% Winstar Communications, Ser. C,
Cum., $142.50.............................. 10,000 7,300,000
-------------
TOTAL PREFERRED STOCKS
(cost $40,497,905)......................... $ 33,638,432
=============
Common Stock--.0%
- --------------------------------------------------------------------------------
Paper & Packaging; SF Holdings, Cl. C
(cost $132,695)............................ 53,100(b,f) $ 106,200
=============
Warrants--.0%
- --------------------------------------------------------------------------------
Telecommunication/Carriers--.0% FirstWorld Communications..................... 18,660(f) $ 186,600
Transportation--.0% HighwayMaster Communications.................. 8,660(f) 866
-------------
TOTAL WARRANTS
(cost $71,600)............................. $ 187,466
=============
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) March 31, 1999
Principal
Short-Term Investments--.6% Amount Value
- -------------------------------------------------------------------------------- ------------- -------------
U.S. Government Agencies; Federal Home Loan Banks,
4.80%, 4/1/1999
(cost $4,500,000).......................... $ 4,500,000 $ 4,500,000
==============
TOTAL INVESTMENTS (cost $1,162,412,203)........................................ 135.8% $1,008,572,986
====== ==============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (35.8%) $ (265,739,539)
====== ==============
NET ASSETS..................................................................... 100.0% $ 742,833,447
====== ==============
<FN>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Zero coupon until a specified date at which time the stated coupon rate
becomes effective until maturity.
(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 March 31, 1999,
these securities amounted to $75,112,075 or 10.1% of net assets.
(c) With common stock attached.
(d) Non-income producing--security in default.
(e) With warrants to purchase common stock.
(f) Non-income producing security.
</FN>
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- ---------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1999
Cost Value
-------------- --------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $1,162,412,203 $1,008,572,986
Cash............................................. 9,494,529
Interest receivable.............................. 31,749,321
Dividends receivable............................. 389,305
Prepaid expenses and other assets................ 420,395
--------------
1,050,626,536
--------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 799,069
Due to Shareholder Servicing Agent............... 87,591
Bank loan payable--Note 2........................ 295,000,000
Swap expense payable............................. 4,583,581
Unrealized depreciation on interest rate swaps--Note 1(a) 4,085,099
Payable for investment securities purchased...... 2,345,972
Interest payable--Note 2......................... 714,024
Accrued expenses and other liabilities........... 177,753
--------------
307,793,089
--------------
NET ASSETS..................................................................... $ 742,833,447
==============
REPRESENTED BY: Paid-in capital.................................. $ 937,490,555
Accumulated undistributed investment income--net. 11,419,692
Accumulated net realized gain (loss) on investments (48,152,484)
Accumulated net unrealized appreciation (depreciation)
on investments and interest rate swaps--Note 4(b) (157,924,316)
--------------
NET ASSETS..................................................................... $ 742,833,447
==============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 62,814,997
NET ASSET VALUE per share...................................................... $11.83
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- ----------------------------------------------------------------------------
Statement of Operations
from April 29, 1998 (commencement of operations) to March 31, 1999
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest................................... $ 110,886,437
Dividends.................................. $1,585,405
-------------
Total Income............................. $ 112,471,842
EXPENSES: Management fee--Note 3(a).................. 9,148,455
Interest expense--Note 2................... 15,807,837
Shareholder servicing costs--Note 3(b)..... 1,052,680
Prospectus and shareholders' reports....... 183,585
Loan commitment fees--Note 2............... 144,917
Professional fees.......................... 144,698
Trustees' fees and expenses--Note 3(c)..... 118,622
Custodian fees--Note 3(a).................. 46,717
Organization expense--Note 1(e)............ 15,842
Miscellaneous.............................. 87,770
-------------
Total Expenses........................... 26,751,123
-------------
INVESTMENT INCOME--NET.................................................... 85,720,719
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.... $ (48,152,484)
Net unrealized appreciation (depreciation)
on investments and interest rate swaps... (157,924,316)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... (206,076,800)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $(120,356,081)
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------
Statement of Cash Flows
from April 29, 1998 (commencement of operations) to March 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Interest received...................................................... $ 92,511,606
Dividend received...................................................... 1,196,100
Interest and loan commitment fees paid................................. (15,254,572)
Operating expenses paid................................................ (1,876,715)
Paid to The Dreyfus Corporation........................................ (8,349,386) $ 68,227,033
---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of portfolio securities...................................... (1,826,764,481)
Net purchases of short-term portfolio securities....................... (2,549,807)
Proceeds from sales of portfolio securities............................ 612,392,256 (1,216,922,032)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Fund shares sold......................................... 937,390,550
Dividends paid......................................................... (74,301,027)
Proceeds from Bank loan payable........................................ 295,000,000 1,158,089,523
--------------- ---------------
Increase in cash.................................................... 9,394,524
Cash at beginning of period......................................... 100,005
---------------
Cash at end of period............................................... $ 9,494,529
===============
RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH USED BY OPERATING ACTIVITIES:
Net (Decrease) in Net Assets Resulting From Operations................. $ (120,356,081)
Adjustments to reconcile net decrease in net assets resulting from operations
to net cash used by operating activities:
Increase in interest receivable.................................. (27,078,149)
Increase in dividends receivable................................. (389,305)
Increase in interest and loan commitment fees.................... 714,024
Increase in accrued operating expenses........................... 177,753
Increase in prepaid expenses..................................... (420,395)
Increase in due to The Dreyfus Corporation....................... 799,069
Net interest purchsed on investments............................. 17,953,365
Net realized loss on investments................................. 48,152,484
Net unrealized depreciation on investments....................... 157,924,316
Net amortization of discount on investments...................... (9,250,048)
---------------
Net Cash Used by Operating Activities.................................. $ 68,227,033
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------
Statement of Changes in Net Assets
from April 29, 1998 (commencement of operations) to March 31, 1999
OPERATIONS:
<S> <C>
Investment income--net........................................................................ $ 85,720,719
Net realized gain (loss) on investments....................................................... (48,152,484)
Net unrealized appreciation (depreciation) on investments..................................... (157,924,316)
-------------
Net Increase (Decrease) in Net Assets Resulting from Operations............................ (120,356,081)
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net........................................................................ (74,301,027)
-------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold................................................................. 919,248,500
Dividends reinvested.......................................................................... 18,142,050
-------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions.................... 937,390,550
-------------
Total Increase (Decrease) in Net Assets................................................. 742,733,442
NET ASSETS:
Beginning of Period........................................................................... 100,005
-------------
End of Period................................................................................. $ 742,833,447
=============
Undistributed investment income--net............................................................. $ 11,419,692
-------------
CAPITAL SHARE TRANSACTIONS: Shares
-------------
Shares sold.................................................................................. 61,352,500
Shares issued for dividends reinvested....................................................... 1,455,830
-------------
Net Increase (Decrease) in Shares Outstanding............................................. 62,808,330
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus High Yield Strategies Fund
- -------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from April 29, 1998
(commencement of operations) to March 31, 1999. This information has been
derived from the financial statements and market price data for the Fund's
shares.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period.......................................................... $15.00
------
Investment Operations:
Investment income--net........................................................................ 1.38
Net realized and unrealized gain (loss) on investments........................................ (3.35)
------
Total from Investment Operations.............................................................. (1.97)
------
Distributions:
Dividends from investment income--net......................................................... (1.20)
------
Net asset value, end of period................................................................ $11.83
======
Market value, end of period................................................................... $117/8
======
TOTAL INVESTMENT RETURN(1)....................................................................... (14.12%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets............................................. 1.46%(2)
Ratio of interest expense to average net assets............................................... 2.17%(2)
Ratio of net investment income to average net assets.......................................... 11.64%(2)
Portfolio Turnover Rate....................................................................... 59.40%(3)
Net Assets, end of period (000's Omitted)..................................................... $742,833
<FN>
- -------------
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
</FN>
See notes to financial statements.
</TABLE>
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus High Yield Strategies Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act") as a non-diversified
closed-end management investment company. The Fund's primary investment
objective is to seek high current income by investing at least 65% of its total
assets in income securities rated below investment grade. The Dreyfus
Corporation (the "Manager") serves as the Fund's investment manager and
administrator. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon").
The Fund sold 53,350,000 shares at $15.00 per share through an initial
offering which settled on April 29, 1998. Subsequently, an additional 8,002,500
shares at $15.00 per share were also issued to cover over-allotments to the
underwriters on May 19, 1998. Costs associated with initial underwriting of
$1,039,000 were charged against the proceeds of the offering.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (excluding short-term
investments, other than U.S. Treasury Bills) are valued each business day by an
independent pricing service ("Service") approved by the Board of Trustees.
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 Board of Trustees.
Short-term investments, excluding U.S. Treasury Bills, are carried at amortized
cost, which approximates value. Interest rate swap transactions are valued based
on the net present value of all future cash settlement amounts based on implied
forward interest rates.
(b) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Fund received net
earnings credits of $7,160 during the period ended March 31, 1999 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income. The Fund includes in interest income amounts paid
and received under its interest rate swap agreements.
(c) Dividends to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid monthly.
Dividends from net realized capital gain, if any, are declared and paid at least
annually. To the extent that net realized capital gain can be offset by capital
loss carryovers, if any, it is the policy of the Fund not to distribute such
gain.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested
either (i) through receipt of additional unissued but authorized shares from
the Fund ("newly issued shares") or (ii) by purchase of outstanding shares on
the open market on the New York Stock exchange or elsewhere as defined in the
dividend reinvestment plan.
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
On March 31, 1999, the Board of Trustees declared a cash dividend of $.12 per
share from investment income-net, payable on April 29, 1999 to shareholders of
record as of the close of business on April 15, 1999.
(d) Federal income taxes: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests of
its shareholders, by complying with the applicable provisions of the Internal
Revenue Code of 1986, as amended, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $32,078,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to March 31, 1999. The carryover
does not include net realized securities losses from November 1, 1998 through
March 31, 1999 which are treated, for Federal income tax purposes, as arising in
fiscal 2000. If not applied, the carryover expires in fiscal 2007.
(e) Other: Organization expenses paid by the Fund in the amount of $69,880
were capitalized. However, on April 3, 1998, Statement of Position 98-5 was
issued by the Board of Certified Public Accountants. This Statement of Position
requires that unamortized organization costs on the Fund's statement of assets
and liabilities be written off. This Statement of Position is effective for
fiscal years beginning after December 15, 1998, therefore, the Fund is required
to write off the deferred organization expenses on April 1, 1999.
NOTE 2--Borrowings:
The Fund may borrow money from banks or enter into reverse repurchase
agreements for leveraging purposes. The Fund has entered into a $325,000,000
line of credit facility ("Facility") which expires on June 15, 2001. Under the
terms of the Facility the Fund may borrow under either a Eurodollar Loan, a
Federal Funds Rate Loan or a combination of the two. Interest is charged to the
Fund at rates in effect at time of borrowing for the loan type chosen by the
Fund. In addition, the Fund pays a commitment fee of .10 of 1% on the unused
portion of the Facility.
The average daily amount of borrowings outstanding under the Facility and
reverse repurchase agreement during the period ended March 31, 1999 was
approximately $303,386,000, with a related weighted average annualized interest
rate of 5.60%.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management and administration agreement with the Manager,
the management and administration fee is computed at the annual rate of .90 of
1% of the value of the Fund's average weekly total assets minus the sum of
accrued liabilities (other than the aggregate indebtedness constituting
financial leverage) (the "Managed Assets") and is payable monthly.
The Fund compensates Mellon, an affiliate of the Manager, under a custody
agreement for providing custodial services for the Fund. During the period ended
March 31, 1999, the Fund was charged $46,717 pursuant to the custody agreement.
The Fund compensates Mellon, an affiliate of the Manager, under a transfer
agency agreement for providing personnel and facilities to perform transfer
agency services for the Fund. During the period ended March 31, 1999, the Fund
was charged $12,918 pursuant to the transfer agency agreement.
(b) In accordance with the Shareholder Servicing Agreement, Paine Webber
Inc. provides certain shareholder services for which the Fund pays a fee
computed at the annual rate of .10 of 1% of the value of the Fund's average
weekly Managed Assets. During the period ended March 31, 1999, the Fund was
charged $1,016,495 pursuant to the Shareholder Servicing Agreement.
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Effective July 1, 1998 each Trustee who is not an "interested person" of
the Fund as defined in the Act receives $5,000 per year plus $1,000 for each
Board meeting attended and $2,000 for separate committee meetings attended which
are not held in conjunction with a regularly scheduled Board meeting. In the
event that there is a joint committee meeting of the Dreyfus /Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, The Dreyfus/Laurel Funds
Trust, collectively (the "Dreyfus/Laurel Funds") and the Fund, the $2,000 fee
will be allocated between the Dreyfus/Laurel Funds and the Fund. Each Trustee
who is not an interested person also receives $500 for Board meetings and
separate committee meetings attended that are conducted by telephone. The Fund
also reimburses each Trustee who is not an "interested person" of the Fund for
travel and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable
amounts). Prior to July 1, 1998, each Trustee received $1,500 per year, $250 for
each Board meeting attended and was reimbursed for travel and out-of-pocket
expenses.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended March 31, 1999,
amounted to $1,802,159,548 and $603,394,714, respectively.
In addition, the following summarizes open interest rate swap agreements at
March 31, 1999:
<TABLE>
<CAPTION>
Notional Rate Paid Rate Received Net
Swap Principal by the Fund by the Fund Floating Termination Unrealized
Counter party Amount at 3/31/99 at 3/31/99 Rate Index Date (Loss)
-------------- ------------- ------------ ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Three-month
Chase $150,000,000 6.0875% 5.00% LIBOR 6/15/03 $(2,364,698)
Three-month
J.P. Morgan 150,000,000 6.0205% 5.00% LIBOR 6/15/01 (1,720,401)
-----------
$(4,085,099)
===========
</TABLE>
The Fund enters into interest rate swaps to hedge its exposure to floating
rate financing currently utilized to leverage its portfolio. Interest rate swaps
involve the exchange of commitments to pay or receive interest, e.g., an
exchange of floating-rate payments for fixed rate payments. If forecasts of
interest rates and other factors are incorrect, investment performance will
diminish compared to what performance would have been if these investment
techniques were not used. Even if the forecasts are correct, there is the risk
that the positions may correlate imperfectly with the assets or liability being
hedged. The Fund is also exposed to credit risk associated with counter party
nonperformance on these transactions as well as the fact that a liquid secondary
market for these transactions may not always exist.
(b) At March 31, 1999, accumulated net unrealized depreciation on investments
was $153,839,217, consisting of $8,557,056 gross unrealized appreciation and
$162,396,273 gross unrealized depreciation.
At March 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Trustees and Shareholders
Dreyfus High Yield Strategies Fund
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus High Yield Strategies Fund as
of March 31, 1999, and the related statement of operations, the statement of
cash flows, the statement of changes in net assets, and the financial highlights
for the period from April 29, 1998 (commencement of operations) to March 31,
1999. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of March 31, 1999 by correspondence with the custodian and brokers. As to
securities purchased, but not received, we performed other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus High Yield Strategies Fund as of March 31, 1999, the results of its
operations, its cash flows, changes in its net assets, and its financial
highlights for the period from April 29, 1998 to March 31, 1999, in conformity
with generally accepted accounting principles.
KPMG LLP
New York, New York
May 12, 1999
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
To participate automatically in the Dividend Reinvestment Plan (the "Plan")
of Dreyfus High Yield Strategies Fund, Inc. (the "Fund") either Fund shares must
be registered in your name, or, if your Fund shares are held in nominee or
"street" name through your broker-dealer, your broker-dealer must be a
participant in the Plan. You may terminate your participation in the Plan, as
set forth below. All shareholders participating (the "Participants") in the Plan
will be bound by the following provisions:
ChaseMellon Shareholders Services, L.L.C (the "Agent") will act as Agent
for each Participant, and will open an account for each Participant under the
Plan in the same name as their present shares are registered, and put into
effect for them the dividends reinvestment option of the plan as of the first
record date for a dividend or capital gains distribution.
Whenever the Fund declares and income dividend or capital gains
distribution payable in shares of the Fund or cash at the option of the
shareholders, each Participant that does not opt for cash distributions shall
take such distribution entirely in shares. If on the payment date for a dividend
or distribution, the net asset value is equal to or less than the market price
per share plus estimated brokerage commissions, the Agent shall automatically
receive such shares, including fractions, for each Participant's account except
in the circumstances described in paragraph 3 below. Except in such
circumstances, the number of additional shares to be credited to each
Participant's account shall be determined by dividing the dollar amount of the
income dividend or capital gains distribution payable on their shares by the
greater of the net asset value per share determined as of the date of purchase
or 95% of the then current market price per share of the fund's shares on the
payment date.
Should the net asset value per share of the Fund shares exceed the market
price per share plus estimated brokerage commissions on the payment date for a
share or cash income dividend or capital gains distribution, the Agent or a
broker-dealer selected by the Agent shall endeavor, for a purchase period of 30
days to apply the amount of such dividend or distribution on each Participant's
shares (less their pro rata share of brokerage commissions incurred with respect
to the Agent's open-market purchases in connection with the reinvestment of such
dividend or distribution) to purchase shares of the Fund on the open market for
each Participant's account. In no event may such purchase be made more than 30
days after the payment date for such dividend except where temporary curtailment
or suspension of purchase is necessary to comply with applicable provisions of
federal securities laws. If, at the close of business on any day during the
purchase period the net asset value per share equals or is less than the market
price per share plus estimated brokerage commissions, the Agent will not make
any further open-market purchases in connection with the reinvestment of such
dividend or distribution. If the Agent is unable to invest the full dividend or
distribution amount through open-market purchases during the purchase period,
the Agent shall request that, with respect to the uninvested portion of such
dividend or distribution amount, the Fund issue new shares at the close of
business on the earlier of the last day of the purchase period or the first day
during the purchase period on which the net asset value per share equals or is
less than the market price per share, plus estimated brokerage commissions, such
shares to be issued in accordance with the terms specified in the third
paragraph hereof. These newly specified in the third paragraph hereof. These
newly issued shares will be valued at the then-current market price per share of
the Fund's shares at the time such shares are to be issued.
For purposes of making the dividend reinvestment purchase comparison under
the Plan, (a) the market price of the Fund's shares on a particular date shall
be the last sales price on the New York Stock Exchange on that date, or, if
there is no sale on such Exchange on that date, then the mean between the
closing bid and asked quotations for such shares on such Exchange on such date
and (b) the net asset value per share of the Fund's shares on a particular date
shall be the net asset value per share most recently calculated by or on behalf
of the Fund.
<PAGE>
Dreyfus High Yield Strategies Fund
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (UNAUDITED) (continued)
Open-market purchases provided for above may be made on any securities
exchange where the Fund's shares are traded, in the over-the-counter market or
in negotiated transactions and may be on such terms as to price, delivery and
otherwise as the Agent shall determine. Each Participant's uninvested funds held
by the Agent will not bear interest, and it is understood that, in any event,
the Agent shall have no liability in connection with any inability to purchase
shares within 30 days after the initial date of such purchase as herein
provided, or with the timing of any purchase effected. The Agent shall have no
responsibility as to the value of the Fund's shares acquired for each
Participant's account. For the purpose of cash investments, the Agent may
commingle each Participant's fund with those of other shareholders of the Fund
for whom the Agent similarly acts as Agent, and the average price (including
brokerage commissions) of all shares purchased by the Agent as Agent shall be
the price per share allocable to each Participant in connection therewith.
The Agent may hold each Participant's shares acquired pursuant to the Plan
together with the shares of other shareholders of the Fund acquired pursuant to
the Plan in noncertificated form in the Agent's name or that of the Agent's
nominee. The Agent will forward to each Participant any proxy solicitation
material; and will vote any shares so held for each Participant first in
accordance with the instructions set forth on proxies returned by the
participant to the Fund, and then with respect to any proxies not returned by
the participant to the Fund in the same portion as the agent votes proxies
returned by the participants to the Fund. Upon a Participant's written request,
the Agent will deliver to the Participant, without charge, a certificate or
certificates for the full shares.
The Agent will confirm to each Participant each acquisition made for their
account as soon as practicable but not later than 60 days after the date
thereof. Although each Participant may from time to time have an undivided
fractional interest (computed to four decimal places) in a share of the Fund, no
certificates for a fractional share will be issued. However, dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's shares at the time of termination.
Any share dividends or split shares distributed by the Fund on shares held
by the Agent for Participants will be credited to their accounts. In the event
that the Fund makes available to its shareholders rights to purchase additional
shares of other securities, the shares held for each Participant under the Plan
will be added to other shares held by the Participant in calculating the number
of rights to be issued to each Participant.
The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Each Participant will be charged their pro
rata share of brokerage commissions on all open-market purchases.
Each Participant my terminate their account under the Plan by notifying the
Agent in writing. Such termination will be effectively immediately if the
Participant's notice is received by the Agent not less than ten days prior to
any dividend or distribution record date, otherwise such termination will be
effective shortly after the investment of such dividend distributions with
respect to any subsequent dividend or distribution. The Plan may be terminated
by the Agent or the Fund upon notice in writing mailed to each Participant at
least 90 days prior to any record date for the payment of any dividend or
distribution by the Fund. Upon any termination, the Agent will cause a
certificate or certificates to be issued for the full shares held for each
Participant under the Plan and cash adjustment for any fraction to be delivered
to them without charge. If a Participant elects by notice to the Agent in
writing in advance of such termination to have the Agent sell part or all of
their shares and remit the proceeds to them, the Agent is authorized to deduct a
$5.00 fee plus brokerage commission for this transaction from the proceeds.
<PAGE>
Dreyfus High Yield Strategies Fund
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DIVIDEND REINVESTMENT PLAN (UNAUDITED) (continued)
These terms and conditions may be amended or supplemented by the Agent or
the Fund at any time or times but, except when necessary or appropriate to
comply with applicable law or the rules or policies of the Securities and
Exchange Commission or any other regulatory authority, only by mailing to each
Participant appropriate written notice at least 30 days prior to the effective
date thereof. The amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of their account under the Plan. Any such
amendment may include an appointment by the Agent in its place and stead of a
successor Agent under these terms and conditions, with full power and authority
to perform all or any of the acts to be performed by the Agent under these terms
and conditions. Upon any such appointment of any Agent for the purpose of
receiving dividends and distributions, the Fund will be authorized to pay to
such successor Agent, for each Participant's account, all dividends and
distributions payable on shares of the Fund held in their name or under the Plan
for retention or application by such successor Agent as provided in these terms
and conditions.
The Agent shall at all times act in good faith and agree to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement and to comply with applicable law, but assumes no
responsibility and shall not be liable for loss or damage due to errors unless
such error is caused by the Agent's negligence, bad faith, or willful misconduct
or that of its employees.
These terms and conditions shall be governed by the laws of the State of
New York.
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OFFICERS AND DIRECTORS
DREYFUS HIGH YIELD STRATEGIES FUND
200 Park Avenue
New York, NY 10166
Trustees
Joseph S. DiMartino, Chairman
James M. Fitzgibbons
J. Tomlinson Fort
Arthur L. Goeschel
Kenneth A. Himmel
Stephen J. Lockwood
John J. Sciullo
Roslyn M. Watxon
Benaree Pratl Wiley
Officers
President and Treasurer
Marie E. Connolly
Vice President and Secretary
Margaret W. Chambers
Vice President and Assistant Treasurer
George A. Rio
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President, Assistant Treasurer and Assistant Secretary
Stephanie Pierce
Vice President and Assistant Secretary
Douglas C. Conroy
Vice President and Assistant Secretary
Christopher J. Kelley
Vice President and Assistant Secretary
Kathleen K. Morrisey
Vice President and Assistant Secretary
Elba Vasquez
Portfolio Managers
Michael Hoeh
Roger E. King
Kevin M. McClintock
Gerald E. Thunelius
Investment Manager and Administrator
The Dreyfus Corporation
Custodian
Mellon Bank, N.A.
Counsel
Kirkpatrick & Lockhart LLP
Transfer Agent and
Dividend Distribution Agent
Chase Mellon Shareholder Services, L.L.C.
Stock Exchange Listing
NYSE Symbol: DHF
Initial SEC Effective Date
4/23/98
The Net Asset Value appears in the following publications: Barron's, Closed-End
Bond Funds section under the heading "Municipal Bond Funds" every Monday; Wall
Street Journal, Mutual Funds section under the heading"Closed-End Bond Funds"
every Monday; New York Times, Money and Business Section under the heading
"Closed-End Bond Funds--Single State Municipal Bond Funds" every Sunday.
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase shares of its common
stock in the open market when it can do so at prices below the then current net
asset value per share.
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<PAGE>
Dreyfus High Yield Strategies Fund
200 Park Avenue
New York, NY 10166
Investment Manager and Administrator
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Chase Mellon Shareholder Services, LLC
450 West 33rd Street
New York, NY 10001
Printed in U.S.A. 430AR993
