File Nos. 33-________
811-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
DREYFUS STABLE VALUE MUTUAL FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement is declared effective.
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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DREYFUS STABLE VALUE MUTUAL FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
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1 Front and Back Cover Pages Covers
2 Risk/Return Summary: Investments, Risks, 3
and Performance
3 Risk/Return Summary: Fee Table 5
4 Investment Objectives, Principal Investment 2
Strategies, and Related Risks
5 Management's Discussion of Fund Performance 4
6 Management, Organization, and Capital Structure 6
7 Shareholder Information 8
8 Distribution Arrangements 11
9 Financial Highlights Information 7
Items in
Part B of
Form N-1A
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10 Cover Page, Table of Contents Cover
11 Fund History B-2
12 Description of the Fund and its Investments
and Risks B-2
13 Management of the Fund B-8
14 Control Persons and Principal B-13
Holders of Securities
15 Investment Advisory and Other B-13
Services
16 Brokerage Allocation and Other Practices B-14
17 Capital Stock and Other Securities B-27
18 Purchase, Redemption and Pricing B-15
of Securities Being Offered
19 Tax Status *
20 Underwriters B-26
21 Calculations of Performance Data B-27
22 Financial Statement B-28
Items in
Part C of
Form N-1A
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23 Exhibits C-1
24 Persons Controlled by or Under C-2
Common Control with the Fund
25 Indemnification C-2
26 Business and Other Connections of C-2
Investment Adviser
27 Principal Underwriters C-8
28 Location of Accounts and Records C-11
29 Management Services C-11
30 Undertakings C-11
<PAGE>
SUBJECT TO COMPLETION DATED JULY 21, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
DREYFUS
STABLE VALUE MUTUAL FUND
Investing in fixed-income securities and money market instruments, and entering
into Wrapper Agreements to provide a high level of current income while
maintaining a stable net asset value per share.
PROSPECTUS September __, 1998
DREYFUS [LOGO]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, nor
has it judged this fund for investment
merit. It is a criminal offense to state otherwise.
<PAGE>
CONTENTS
THE FUND
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What every investor should 2 Who May Invest
know about the fund
3 Goal/Approach
5 Main Risks
6 Expenses
8 Management
INVESTOR ACCOUNT INFORMATION
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Information for managing 9 Account Policies
a fund account
13 Distributions and Taxes
14 Services for Fund Investors
16 Instructions for Accounts
FOR MORE INFORMATION
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Where to learn more about Back Cover
this and other
Dreyfus funds
<PAGE>
Dreyfus STABLE VALUE MUTUAL FUND THE FUND
Ticker Symbol: _____________
[ICON] WHO MAY INVEST
The fund is designed for investors seeking preservation of principal, a stable
net asset value per share and a level of current income higher than that of
money market funds over most time periods. For investors "rolling" over assets
from an employee benefit plan to individual retirement plan accounts (IRAs), the
fund is designed as a comparable investment to stable value investment options
offered in employee benefit plans.
The fund offers three classes of shares--Class P, Class S and Class Q.
Class P and Class S shares are offered only to:
* employee benefit plans qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
* employee benefit plans qualified under Section 403(b) of the Code.
* eligible deferred compensation plans as defined in Section 457 of
the Code.
* government plans as defined in Section 414(d) of the Code
(together with the employee benefit plans and deferred
compensation plans, "Plans").
* bank collective investment funds holding exclusively assets of
U.S. employee benefit plans qualified under Section 401(a) of the
Code and tax exempt under Section 501(a) of the Code and other
plans eligible to invest in bank maintained collective investment
funds ("Bank Collective Funds").
Class Q shares are offered only to investors investing in fund shares through a
tax-deferred retirement plan such as:
* traditional IRAs.
* IRAs set up under a Simplified Employee Pension Plan (SEP-IRAs).
* Roth IRAs.
* Keogh Plans.
* 403(b)(7) Plans with only one participant.
* other tax-deferred retirement accounts.
Class P, Class S and Class Q shares are identical, except as to the services
offered to and the expenses borne by each Class. Holders of Class S and Class Q
shares, for example, will receive certain account maintenance services that are
not provided to holders of Class P shares. Because of the differences in
expenses, absent fee waivers or expense reimbursements, the performance of Class
Q shares should be expected to be lower than that of Class S shares and the
performance of Class Q shares and Class S shares should be expected to be lower
than that of Class P shares.
[ICON] GOAL/APPROACH
The fund seeks to provide a high level of current income while maintaining a
stable net asset value per share. The fund is one of a relatively few "stable
value" mutual funds. It is designed to provide a stable net asset value per
share while generating returns higher than money market funds over time and,
thus, may be an attractive investment alternative to money market funds,
short-term bond funds and other high quality fixed-income funds. Like a typical
high quality fixed-income fund, the fund invests in investment grade debt
instruments in pursuit of its objective of current income. What is different is
that the fund's net asset value, while not fixed at $1.00 per share like a money
market fund, should be considerably more stable than a typical high quality
fixed-income fund. This is because the fund will trade the ability to obtain
market value capital appreciation and some yield from its portfolio for
protection from a decline in the value of its portfolio caused by changes in
interest rates. To do so, the fund will purchase Wrapper Agreements from
financial institutions, such as banks and insurance companies ("Wrap
Providers"). Under a typical Wrapper Agreement, if the fund sells a portfolio
security at less than its cost plus interest, the Wrap Provider will pay the
fund the difference. If the fund sells a portfolio security for more than this
amount, the fund will pay the Wrap Provider the difference.
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CONCEPTS TO UNDERSTAND
WRAPPER AGREEMENTS: are designed to stabilize the fund's net asset value per
share ("NAV") by offsetting fluctuations in the value of the fund's portfolio
securities. The Wrap Provider agrees to maintain the "Book Value" of fund assets
covered by the Wrapper Agreement ("Covered Assets") up to a specified maximum
dollar amount. For example, if the fund has to sell Covered Assets to meet
redemption requests, and their fair market value is less than Book Value, the
Wrap Provider will be obligated to pay the fund all or a portion of the
difference between the fair market value and corresponding Book Value of the
Covered Assets sold. If fair market value of the Covered Assets sold exceeds the
corresponding Book Value, the fund will be obligated to pay all or a portion of
the difference to the Wrap Provider.
BOOK VALUE: the purchase price of the Covered Assets, (i) plus interest at a
rate specified in the Wrapper Agreement ("Crediting Rate," which is less than
the rate on the Covered Assets because it reflects costs payable to the Wrap
Provider under the Wrapper Agreement), and (ii) less an adjustment to reflect
any defaulted securities.
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The fund expects to invest at least 65% of its assets in fixed-income securities
including: securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities (Government Securities); U.S. dollar denominated
debt securities and securities with debt-like characteristics of domestic and
foreign issuers, including corporations, partnerships, trusts or similar
entities, and sovereign or supranational entities; mortgage-related securities,
including collateralized mortgage obligations (CMOs) and real estate mortgage
investment conduits (REMICs); and asset-backed securities.
In addition, the fund may invest up to 35% and, under normal conditions, expects
to invest at least 10% of its assets in short-term money market instruments for
purposes of liquidity. Up to 100% of its assets may be invested in such
instruments for temporary defensive purposes.
Under normal market conditions, the fund will invest in a portfolio of
securities that has an effective duration ranging between 2 and 4.5 years. The
average dollar-weighted credit rating of the fund's portfolio securities will be
at least AA/Aa by a rating agency.
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CONCEPTS TO UNDERSTAND
DURATION: a way of measuring a security's maturity in terms of the average time
required to receive the present value of all interest and principal payments,
which incorporates the security's yield, coupon interest payments, final
maturity and option features into one measure. Duration is an alternative to the
concept of "term to maturity" in assessing the price volatility associated with
a 1% change in interest rates. Generally, the longer the duration, the more
volatility an investor should expect. For example, the market price of a bond
with a duration of two years would be expected to decline 2% if interest rates
rose 1%.
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. Securities rated in the
highest category (AAA/Aaa) have extremely strong capacity to pay interest and
principal and carry the smallest degree of investment risk. Securities with the
second highest credit rating have very strong capacity to make all payments, but
the margins of protection may not be as large as in the highest category.
Securities rated in the lowest investment grade category (BBB/Baa) are
considered to lack outstanding investment characteristics and may have
speculative characteristics as well.
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The fund's managers will select fixed-income securities for the fund's portfolio
either actively or on an indexed basis. Fixed-income securities selected
actively must be rated AAA/Aaa by a rating agency. In selecting fixed-income
securities on an indexed basis, the fund's managers will seek to overweight
sectors of the Lehman Brothers Aggregate Bond Index that have positive yield
spreads. The Index represents the entire U.S. taxable bond market, including
U.S. Government securities, mortgage-related securities and investment grade
corporate bonds. The managers will use a statistically based "sampling"
technique to select securities from the Index to achieve the desired sector
weightings. Once established, sector weightings will be adjusted at least
quarterly. The manager may use futures contracts instead of buying securities
directly.
The fund will seek to cover all of its portfolio of fixed-income securities with
Wrapper Agreements by investing not more than 15% of its net assets in such
agreements. The fund will enter into Wrapper Agreements with Wrap Providers that
are rated, at the time of purchase, in one of the two highest long-term rating
categories by a rating agency. If a Wrap Provider's credit rating is downgraded
below investment grade, the fund will terminate the Wrapper Agreement and
replace the Wrap Provider.
[ICON] MAIN RISKS
While the combination of portfolio securities and Wrapper Agreements held by the
fund is expected to provide a constant NAV and a current rate of return that is
higher than most money market mutual funds, there can be no guarantee that
either will be accomplished. The fund will incur certain costs in connection
with its Wrapper Agreements which may reduce the fund's investment return as
compared to a direct investment in the Covered Assets. In addition, the Wrap
Provider might default on its obligations, or the fund might not obtain Wrapper
Agreements for all its assets, potentially resulting in a decline in NAV.
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CONCEPTS TO UNDERSTAND
The fund's net asset value, while not fixed at $1.00 per share like a money
market fund, should be considerably more stable than a typical high quality
fixed-income fund. Nevertheless, it is possible to lose money by investing in
the fund.
----------------------------------
Among the risks that potentially could reduce the fund's return or NAV are:
* any of the fund's portfolio securities could have its
credit rating downgraded or could default. Wrapper
Agreements usually do not require the Wrap Provider to
assume the credit risk associated with the issuer of
any Covered Assets. Downgrades below investment grade
and defaults by the issuer of Covered Assets usually
will cause such assets to be removed from the coverage
of a Wrapper Agreement.
* interest rates could rise sharply, causing the value of
the fund's portfolio securities, and NAV, to drop.
Alternatively, if interest rates decrease sharply and
the value of the fund's portfolio securities rises, the
value of the Wrapper Agreements is expected to
decrease proportionately and may have a negative value
and thus be a liability of the fund.
* failure to obtain a replacement Wrapper Agreement with
substantially the same terms as a maturing or
terminating Wrapper Agreement. If at such time the fair
market value of the Covered Assets is less than or
greater than Book Value, the fund may be required to
reduce or increase, respectively, the fund's NAV
accordingly. Further, if the new Wrapper Agreement
contains unfavorable terms, such as a higher fee, the
fund's return may be adversely affected.
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OTHER POTENTIAL RISKS
There is no active trading market for Wrapper Agreements, and none is expected
to develop; therefore, the fund will consider them to be illiquid.
The fund may engage in options and futures transactions primarily to hedge its
portfolio but also as a substitute for taking a market position in the
underlying securities. Such practices may reduce returns or increase volatility.
The fund may buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the fund's gains or losses. The fund also
may lend its portfolio securities to brokers, dealers and other financial
institutions, which could subject the fund to risk of loss if the institution
breaches its agreement with the fund.
The fund may invest in mortgage-related securities that are complex derivative
instruments, subject to both credit and prepayment risk, and may be more
volatile and less liquid than more traditional debt securities. During periods
of rapidly rising interest rates, prepayments of mortgage-related securities may
occur at slower than expected rates. Slower prepayments effectively may lengthen
a mortgage-related security's expected maturity which generally would cause the
value of such security to fluctuate more widely in response to changes in
interest rates. Were prepayments to decrease broadly, the fund's effective
duration, and thus sensitivity to interest rate fluctuations, would increase.
------------------------------------------------
The fund is NOT a money market mutual fund. The fund's portfolio securities will
have a longer average maturity than those of money market funds and,
consequently, its yield will not track the movement of current market rates of
return as closely as a money market fund.
An investment in the fund is not a bank deposit. It is not FDIC-insured or
government endorsed. It is not a complete investment program.
[ICON] EXPENSES
Fund investors pay certain fees and expenses in connection with the fund, which
are described in the table below. Shareholder transaction fees are paid from the
investor's account. Annual fund operating expenses are paid out of fund assets,
so their effect is included in the fund's share price.
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FEE TABLE
CLASS P CLASS S CLASS Q
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee 2.00% 2.00% 2.00%
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ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.35% 0.35% 0.35%
Shareholder Service Plan expenses None 0.25% 0.25%
Other expenses 0.40% 0.40% 0.60%
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TOTAL 0.75% 1.00% 1.20%
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EXPENSE EXAMPLE
ASSUMING REDEMPTION
AT THE END OF EACH PERIOD
SUBJECT TO THE
REDEMPTION FEE: 1 year $____ $____ $____
3 years $____ $____ $____
ASSUMING NO REDEMPTION
AT THE END OF EACH PERIOD: 1 year $____ $____ $____
3 years $____ $____ $____
This example shows what an investor 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.
Because actual returns and expenses will be different, the example is for
comparison only.
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CONCEPTS TO UNDERSTAND
REDEMPTION FEE: the fee retained by the fund primarily to offset the transaction
costs in connection with certain redemptions. Redemptions made upon less than 6
months' prior written notice to the fund are subject to a 2% redemption fee and
those made upon 6 to 12 months' prior written notice to the fund are subject to
a 1% redemption fee. Redemptions made upon at least 12 months' prior written
notice to the fund and certain other redemptions as described herein are not
subject to any redemption fee.
MANAGEMENT FEE: the fee paid to the investment adviser for supervising and
assisting in the fund's management.
SHAREHOLDER SERVICE PLAN EXPENSES: the fund has adopted a Shareholder Services
Plan with respect to Class S and Class Q shares pursuant to which it pays the
fund's distributor for shareholder account service and maintenance provided to
the holders of such shares.
OTHER EXPENSES: estimated fees to be paid by the fund for the current fiscal
year for purchasing Wrapper Agreements and for miscellaneous items such as
transfer agency, custody, professional and registration fees.
FEE WAIVERS AND EXPENSE REIMBURSEMENTS: The Dreyfus Corporation has agreed that
if certain fund expenses, including the management fee, exceed 0.55% with
respect to Class P, 0.80% with respect to Class S or 1.00% with respect to Class
Q of the fund's average daily net assets, The Dreyfus Corporation will waive its
management fee or bear certain other fund expenses to the extent of the excess.
This undertaking is voluntary and may be terminated at any time.
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[ICON] MANAGEMENT
The fund's investment adviser is The Dreyfus Corporation, 200 Park Avenue, New
York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $100 billion in over 150 mutual
fund portfolios. Dreyfus is the mutual fund business of Mellon Bank Corporation,
a broad-based financial services company with a bank at its core. With more than
$325 billion of assets under management and $1.6 trillion of assets under
administration, Mellon provides a full range of banking, investment and trust
products and services to individuals, businesses and institutions. Its mutual
fund companies place Mellon as the leading bank manager of mutual funds. Mellon
is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity, and offers the potential for measuring
performance and volatility in consistent ways.
The fund's primary portfolio managers are Eric W. Baumhoff and Laurie A.
Carroll. Mr. Baumhoff and Ms. Carroll have been employed by Dreyfus as portfolio
managers since ____________ and October 1994, respectively. Mr. Baumhoff is the
Chief Investment Officer of Certus Asset Advisors, an affiliate of Dreyfus,
where he has been employed since 1990. Ms. Carroll is a Senior Vice President
and portfolio manager at Mellon Bank where she has been employed since 1986.
[LEFT SIDE BAR]
CONCEPT TO UNDERSTAND
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
fund, Dreyfus is working to avoid such problems and to obtain assurances from
service providers that they are taking similar steps.
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INVESTOR ACCOUNT INFORMATION
[ICON] ACCOUNT POLICIES
BUYING SHARES
Fund shares are sold at NAV, which generally is calculated as of the close of
trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time) every
day the exchange is open. Purchase orders will be priced at the next NAV
calculated after the order is accepted by the fund or other entity authorized to
accept orders on behalf of the fund. The fund's investments are valued generally
by using available market quotations or at fair value which may be determined by
one or more pricing services approved by the fund's board. The fair value of a
Wrapper Agreement generally will be equal to the difference between the Book
Value and the market value of the applicable Covered Assets after consideration
is given to the credit rating of the Wrap Provider and its ability to pay
amounts due under the Wrapper Agreement. If the board determines that a Wrap
Provider is unable to make such payments, the board may assign a value to the
Wrapper Agreement that is less than the difference between the Book Value and
the market value of the Covered Assets, which might adversely affect the fund's
ability to maintain a stable NAV.
MINIMUM INVESTMENTS
Initial Additional
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CLASS P $2,500 $100
CLASS S $2,500 $100
CLASS Q $2,500 no minimum
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
An investor may be charged a fee for any check that does not clear.
From time to time, the fund may discontinue offering Class Q shares for certain
periods of time upon notice to investors.
[LEFT SIDE BAR]
TRANSFER RESTRICTIONS
A Plan or Bank Collective Fund investing in the fund must restrict participants
in such Plan or in the employee benefit plans investing in the Bank Collective
Fund, respectively, from transferring any of their investment in the fund to a
different fixed-income investment having a targeted average duration of 3.5
years or less, or seeking to maintain a stable value per unit or share
("Competing Fund"). Such participants may, however, transfer their investment to
a non- Competing Fund and, after at least a three-month period in such
non-Competing Fund, transfer to a Competing Fund without restriction.
-------------------------------------
SELLING SHARES
Investors may sell (redeem) shares at any time. Shares will be redeemed at the
next NAV calculated after the investor's order is accepted by the fund's
transfer agent or other entity authorized to accept orders on behalf of the
fund. However, shares of investors giving prior written notice of a redemption,
will be redeemed at the next NAV calculated after the applicable notice period
has expired. Redemption orders will be processed promptly after receipt of a
redemption request (or, if prior written notice has been given, after the notice
period has expired), and investors generally will receive the redemption
proceeds within a week. Any certificates representing fund shares being redeemed
must be returned with the redemption request. A copy of the form of written
notice required for shareholders who desire to give prior notice of a redemption
may be obtained from the fund.
The fund will deduct a redemption fee of 2% (1% for redemptions made upon at
least 6 but less than 12 months' prior written notice to the fund) of the NAV of
fund shares redeemed or exchanged, except upon the redemption or exchange of
shares of (1) any Class for which at least 12 months' prior written notice has
been given to the fund, (2) Class P or Class S in connection with a redemption
directed by a Plan participant, (3) Class Q because of death or disability, or
(4) Class Q by an investor who has attained the age of 59 1/2 and held the
shares for at least 12 consecutive months.
BEFORE REDEEMING RECENTLY PURCHASED SHARES, please note that:
* if the fund has not yet collected payment for the shares
being redeemed, it may delay sending the proceeds until it
has collected payment, which may take up to eight business
days.
[LEFT SIDE BAR]
WRITTEN SELL (REDEMPTION) ORDERS
Some circumstances require that written sell orders be signature guaranteed.
These include:
* amounts of $100,000 or more
* amounts of $1,000 or more on Class Q accounts if the
investor's address has been changed within the last 30
days
* requests to send the proceeds to a different payee
or address
A SIGNATURE GUARANTEE helps protect against fraud. Investors can obtain one from
most banks or securities dealers, but not from a notary public. Please call us
to ensure that the signature guarantee will be processed correctly.
--------------------------------
GENERAL POLICIES
IF AN ACCOUNT FALLS BELOW $2,500, the fund may ask the account holder to
increase the account balance. If it is still below $2,500 after 45 days, the
fund may close the account and send the proceeds to the account holder.
UNLESS THE INVESTOR DECLINES TELEPHONE PRIVILEGES, the investor may be
responsible for any fraudulent telephone orders as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could
adversely affect the fund or its operations (such as
requests in excess of 1% of the fund's total assets).
* change or discontinue its exchange privilege, or
temporarily suspend the privilege during unusual market
conditions.
* change its minimum investment amounts.
* delay sending out redemption proceeds for up to seven days
(generally applies only in cases of very large redemptions
or during unusual market conditions).
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PLAN AND BANK COLLECTIVE FUND INVESTMENTS
Plan participant-directed purchases, exchanges and redemptions of fund shares
are made in accordance with the specific provisions of the relevant Plan or Bank
Collective Fund, subject to the fund's restrictions. Plans and Bank Collective
Funds may have different policies about the timing and method of effecting
transactions in fund shares, and may charge transaction fees. Plan participants
should contact their Plan administrator for details. The Bank Collective Fund
and Plan are responsible for transmitting orders to the fund in proper form.
Contact your Plan administrator or recordkeeper if you have questions about your
account.
--------------------------------
The fund also may make a "redemption in kind" -- payment in portfolio securities
or Wrapper Agreements, rather than cash -- if the amount the investor is
redeeming is large enough to affect fund operations (for example, if it
represents more than 1% of the fund's assets).
[ICON] DISTRIBUTIONS AND TAXES
The fund pays its shareholders dividends from its net investment income, and
distributes any net capital gains that it has realized. Dividends will be
declared daily and paid monthly, and any net capital gains will be distributed
annually. An additional annual distribution ("Additional Distribution") may be
paid to satisfy the tax requirement that the fund distribute each year
substantially all of its investment company taxable income. Distributions will
be reinvested in fund shares, unless the investor instructs the fund otherwise.
There are no fees or sales charges on reinvested distributions.
Dividends paid by each Class will be calculated at the same time and in the same
manner and will be of the same amount, except that the expenses attributable
solely to a particular Class will be borne exclusively by such Class. Class Q
shares will receive lower per share dividends than Class S shares which will
receive lower per share dividends than Class P shares because of the higher
expenses borne by the relevant Class.
The fund may declare and pay dividends in amounts which are not equal to the
amount of the net investment income it actually earns. If distributions exceed
the income earned, the excess may be considered a return of capital. If the
income earned exceeds the amount of the dividends distributed, the fund may make
an Additional Distribution of the excess. From time to time, to maintain a
stable NAV, the fund may reverse split shares in an amount that will cause the
total number of shares held by each shareholder that reinvests dividends to
remain the same as before that distribution was paid.
[LEFT SIDE BAR]
CONCEPT TO UNDERSTAND
REVERSE SHARE SPLIT: if the fund declares an Additional Distribution of $0.10
per share when NAV is $10.00, a shareholder holding one share would receive 0.01
additional shares on reinvestment of that distribution. If no reverse split were
declared, NAV would be approximately $9.90 and the total value of the 1.01
shares held by the shareholder would be $10.00. If a 1.01 for 1 reverse share
split were declared, however, the shareholder's 1.01 shares would become one
share having an NAV of $10.00. The reverse share split would not affect the
total value of the shareholder's shares.
-----------------------
Dividends paid by the fund to Plans, certain IRAs and other tax-deferred
accounts ordinarily will not be subject to taxation until the proceeds are
distributed from the Plan or IRA. Plan participants should consult with their
Plan administrator and other investors should consult with a professional tax
adviser regarding the tax consequences associated with an investment in the
fund.
[ICON] SERVICES FOR FUND INVESTORS
EXCHANGE PRIVILEGE
INVESTORS CAN EXCHANGE from one Dreyfus fund into another. Investors can request
an exchange in writing or, for Class Q shares only, by phone. Investors are
urged to read the current prospectus for any fund into which an exchange is
being made. Any new account established through an exchange will have the same
privileges as the original account (as long as they are available). The fund
will impose any applicable redemption fee on the shares being exchanged.
Investors may be charged a sales load on any fund that has one.
ACCOUNT STATEMENTS
EVERY DREYFUS INVESTOR automatically receives regular account statements.
[LEFT SIDE BAR]
RETIREMENT PLANS
Dreyfus offers a variety of retirement plans, including traditional, Roth and
Education IRAs. Here's where to call for information:
* for traditional, rollover and Roth IRAs, call 1-800-645-6561
* for SEP-IRAs, 401(k) and 403(b) accounts, call 1-800-322-7880
* for Keogh accounts, call 1-800-358-5566
DREYFUS FINANCIAL CENTERS
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning. Our
experienced financial consultants can help investors make informed choices and
provide personalized attention in handling account transactions. The Financial
Centers also offer informative seminars and events. To find the nearest
Financial Center, call 1-800-499-3327.
--------------------------------------
INSTRUCTIONS FOR ACCOUNTS
TO OPEN AN ACCOUNT
[ICON] In Writing
Complete the appropriate application.
Mail the application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
* * *
For Dreyfus retirement plan accounts:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
[ICON] By Telephone
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* DDA# ______________
* the fund name
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number.
Return your application.
(Not available for Class Q.)
[ICON] Via the Internet
COMPUTER Visit the Dreyfus Web site, http://www.dreyfus.com and follow the
instructions to download an account application.
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
* * *
For Dreyfus retirement plan accounts:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* the date the request is to be effective (if 6 months or more)
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see "Account
Policies--Selling Shares").
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
* * *
For Dreyfus retirement plan accounts:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
(Not available for Class Q.)
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
[RIGHT SIDE BAR]
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. call 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
* * *
For Dreyfus retirement plan accounts:
THE DREYFUS TRUST COMPANY, CUSTODIAN
Investors also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when the account will be
credited or debited.
CONCEPTS TO UNDERSTAND
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although banks may charge a fee to send
or receive wire transfers.
ELECTRONIC CHECK: for transferring money out of a bank account. The transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
---------------------------------------
<PAGE>
FOR MORE INFORMATION
DREYFUS STABLE VALUE MUTUAL FUND
SEC file number: 811-________
More information on this fund is available free upon request, including the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the fund and its policies. A current
SAI is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference (is legally considered part of this prospectus).
[LEFT SIDE BAR]
TO OBTAIN INFORMATION:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online
or downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(C) 1998, Dreyfus Service Corporation
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 21, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
ANY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE A PROSPECTUS.
DREYFUS STABLE VALUE MUTUAL FUND
CLASS P, CLASS S AND CLASS Q
STATEMENT OF ADDITIONAL INFORMATION
______________, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus STABLE VALUE Mutual Fund (the "Fund"), dated _________, 1998, as it may
be revised from time to time. To obtain a copy of the Fund's Prospectus, please
write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
TABLE OF CONTENTS
PAGE
Description of the Fund....................................................B-2
Management of the Fund.....................................................B-16
Management Agreement.......................................................B-19
How to Buy Shares..........................................................B-21
Shareholder Services Plan..................................................B-21
How to Redeem Shares.......................................................B-21
Shareholder Services.......................................................B-24
Determination of Net Asset Value...........................................B-26
Dividends, Distributions and Taxes.........................................B-26
Portfolio Transactions.....................................................B-28
Performance Information....................................................B-29
Information About the Fund.................................................B-30
Counsel and Independent Auditors...........................................B-31
Appendix...................................................................B-32
Financial Statement and Report of Independent Auditors.....................B-46
DESCRIPTION OF THE FUND
The Fund is a Massachusetts business trust formed on May 14, 1993, and has
not commenced operations as of the date hereof. The Fund is an open-end
management investment company. The Fund is a diversified fund, which generally
means that, with respect to 75% of its total assets, the Fund will not invest
more than 5% of its assets in the securities of any single issuer.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") serves as the
distributor of the Fund's shares.
WRAPPER AGREEMENTS
A central feature of the Fund's investment program is its ability to
purchase Wrapper Agreements. A Wrapper Agreement is a contract between the Fund
and a bank, insurance company or other financial institution (a "Wrap
Provider"), under which the Wrap Provider agrees to make payments to the Fund
upon the occurrence of certain events. Wrapper Agreements will be purchased by
the Fund to stabilize the Fund's net asset value per share by offsetting
fluctuations in the value of the Fund's portfolio securities under certain
conditions. Under normal circumstances, the value of the Fund's Wrapper
Agreements is expected to vary inversely with the value of the Fund's assets
covered by such Wrapper Agreements (the "Covered Assets"). When the value of the
Covered Assets is less than their "Book Value" (essentially the purchase price
of the Covered Assets plus any accrued net income thereon), the Wrapper
Agreements will be assets of the Fund with a value equal to such deficiency.
Alternatively, when the value of the Covered Assets is more than their Book
Value, the Wrapper Agreements will be liabilities of the Fund with a value equal
to such excess. Under normal conditions, the sum of the total value of the
Fund's Wrapper Agreements plus the total value of all of the Fund's Covered
Assets is expected to equal the purchase price of the Covered Assets, plus
interest on the Covered Assets at the rate determined in the Wrapper Agreements
("Crediting Rate").
The Crediting Rate is the yield on the Covered Assets, adjusted to reflect
amortization of the difference between market value and Book Value of the
Covered Assets over the duration of such Covered Assets, minus Wrap Provider
fees and Fund expenses. The Crediting Rate is reset at least quarterly.
Therefore, among other things, the Crediting Rate may be affected by defaulted
securities and by increases and decreases in the Covered Assets as a result of
purchases and redemptions of Fund shares. In addition, since the Crediting Rate
reflects the amortization of unrealized and realized gains and losses on the
Covered Assets, such rate may not reflect the actual returns achieved by the
Covered Assets. Further, such rate may be significantly greater or less than
current market interest rates; provided, that under each Wrapper Agreement the
Crediting Rate will never be less than zero.
Wrapper Agreements are structured with a number of different features.
Wrapper Agreements which may be purchased by the Fund are of three basic types:
(1) non-participating, (2) participating and (3) "hybrid." In addition, the
Wrapper Agreements will either be of fixed- maturity or open-end maturity
("evergreen"). The Fund enters into particular types of Wrapper Agreements
depending upon their respective cost to the Fund and the Wrap Provider's
creditworthiness, as well as upon other factors.
Under a non-participating Wrapper Agreement, the Wrap Provider becomes
obligated to make a payment to the Fund whenever the Fund sells Covered Assets
at a price below Book Value to meet withdrawals of a type covered by the Wrapper
Agreement (a "Benefit Event"). Conversely, the Fund becomes obligated to make a
payment to the Wrap Provider whenever the Fund sells Covered Assets at a price
above their Book Value in response to a Benefit Event. Accordingly, under this
type of Wrapper Agreement, while the Fund is protected against decreases in the
market value of the Covered Assets below Book Value, it does not realize
increases in the market value of the Covered Assets above Book Value; those
increases are realized by the Wrap Provider.
Under a participating Wrapper Agreement, the obligation of the Wrap
Provider or the Fund to make payments to each other typically does not arise
until all of the Covered Assets have been liquidated. Instead of payments being
made on the occurrence of each Benefit Event, the payment obligations are a
factor in the periodic adjustment of the Crediting Rate.
Under a hybrid Wrapper Agreement, the obligation of the Wrap Provider or
the Fund to make payments does not arise until withdrawals exceed a specified
percentage of the Covered Assets, after which time payment covering the
difference between market value and Book Value will occur.
A fixed-maturity Wrapper Agreement terminates at a specified date, at which
time settlement of any difference between Book Value and market value of the
Covered Assets occurs. A fixed-maturity Wrapper Agreement tends to ensure that
the Covered Assets provide a relatively fixed rate of return over a specified
period of time through bond immunization, which targets the duration of the
Covered Assets to the remaining life of the Wrapper Agreement.
An evergreen Wrapper Agreement has no fixed maturity date on which payment
must be made, and the rate of return on the Covered Assets accordingly tends to
vary. Unlike the rate of return under a fixed-maturity Wrapper Agreement, the
rate of return on assets covered by an evergreen Wrapper Agreement tends to more
closely track prevailing market interest rates and thus tends to rise when
interest rates rise and fall when interest rates fall. An evergreen Wrapper
Agreement may be converted into a fixed-maturity Wrapper Agreement that will
mature in the number of years equal to the duration of the Covered Assets.
The number of Wrap Providers has been increasing in recent years. As of
[November 1996], there were approximately [15] Wrap Providers rated in the top
two long-term rating categories by a rating agency. The cost of Wrapper
Agreements is typically 0.10% to 0.25% per annum of the value of the Covered
Assets. The Fund currently intends to maintain Wrapper Agreements with four or
more Wrap Providers. If the Fund maintains more than one Wrapper Agreement,
coverage of the Covered Assets will be allocated among such Wrapper Agreements.
However, there is no guarantee that the Fund will be able to obtain more than
one Wrapper Agreement, and therefore, it is possible that the Fund may be
totally dependent upon one Wrap Provider for coverage of all of the Covered
Assets.
It is currently contemplated that all of the Fund's fixed-income securities
will be covered by Wrapper Agreements. The Fund, however, may not be able to
purchase or maintain Wrapper Agreements with respect to all portfolio
securities. Moreover, the Fund may determine not to enter into Wrapper
Agreements with respect to certain of its portfolio securities. Further, a
large, sudden increase in the amount of share purchases could result in the Fund
being unable to obtain sufficient Wrapper Agreements to cover all its Covered
Assets. In that event, the Fund may not be able to achieve its investment policy
of maintaining a stable net asset value, because fluctuations in the market
value of assets that are not covered by Wrapper Agreements may affect the Fund's
net asset value per share.
In the event of the default of a Wrap Provider, the Fund could potentially
lose the Book Value protections provided by the Wrapper Agreements with that
Wrap Provider. However, the impact of such a default on the Fund as a whole may
be minimal or non-existent if the market value of the Covered Assets thereunder
is greater than their Book Value at the time of the default, because the Wrap
Provider would have no obligation to make payments to the Fund under those
circumstances. In addition, the Fund may be able to obtain another Wrapper
Agreement from another Wrap Provider to provide Book Value protections with
respect to those Covered Assets. The cost of the replacement Wrapper Agreement
might be higher than the initial Wrapper Agreement due to market conditions or
if the market value (plus accrued interest on the underlying securities) of
those Covered Assets is less than their Book Value at the time of entering into
the replacement agreement. Such cost would be in addition to any premiums
previously paid to the defaulting Wrap Provider. If the Fund were unable to
obtain a replacement Wrapper Agreement, participants redeeming fund shares might
experience losses if the market value of the Fund' s assets no longer covered by
the Wrapper Agreement is below Book Value.
The combination of the default of a Wrap Provider and an inability to
obtain a replacement agreement could adversely affect the Fund's ability to
achieve its investment objective of seeking to maintain a stable value per
share. With respect to payments made under the Wrapper Agreements between the
Fund and the Wrap Provider, some Wrapper Agreements provide that payments may be
due upon disposition of the Covered Assets, while others provide for payment
only upon the total liquidation of the Covered Assets or upon termination of the
Wrapper Agreement. In none of these cases, however, would the terms of the
Wrapper Agreements specify which portfolio securities are to be disposed of or
liquidated. Moreover, because it is anticipated that each Wrapper Agreement will
cover all Covered Assets up to a specified dollar amount, if more than one Wrap
Provider becomes obligated to pay to the Fund the difference between Book Value
and market value (plus accrued interest on the underlying securities), each Wrap
Provider will pay a pro rata amount in proportion to the maximum dollar amount
of coverage provided. Thus, the Fund will not have the option of choosing which
Wrapper Agreement to draw upon in any such payment situation. Under the terms of
most Wrapper Agreements, the Wrap Provider will have the right to terminate the
Wrapper Agreement in the event that material changes are made to the Fund's
investment objective or investment restrictions or to the nature of the Fund's
operations. In such event, the Fund may be obligated to pay the Wrap Provider
termination fees equal in amount to the premiums that would have been due had
the Wrapper Agreement continued through the predetermined period. The Fund will
have the absolute right to terminate a Wrapper Agreement at any time. Such
right, however, may be subject to the payment of termination fees. In the event
of termination of a Wrapper Agreement or conversion of an evergreen Wrapper
Agreement to a fixed-maturity, some Wrapper Agreements may require that the
duration of some portion of the Fund's portfolio securities be reduced to
correspond to the fixed-maturity or termination date and that such securities
maintain a higher credit rating than is ordinarily required, either of which
requirements might adversely affect the Fund's return.
For a description of Wrap Provider ratings, see the Appendix.
CERTAIN PORTFOLIO SECURITIES
The Fund may purchase the securities described below.
VARIABLE AND FLOATING RATE SECURITIES. Variable and floating rate
securities provide for a periodic adjustment in the interest rate paid on the
obligations. The terms of such obligations must provide that interest rates are
adjusted periodically based upon an interest rate adjustment index as provided
in the respective obligations. The adjustment intervals may be regular, and
range from daily up to annually, or may be event based, such as being based on a
change in the prime rate.
The Fund may invest in floating rate debt instruments ("floaters"). The
interest rate on a floater is a variable rate which is tied to another interest
rate, such as a money-market index or Treasury bill rate. The interest rate on a
floater resets periodically, typically every six months. Because of the interest
rate reset feature, floaters provide the Fund with a certain degree of
protection against rises in interest rates, although the Fund will participate
in any declines in interest rates as well.
The Fund also may invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse floater
is indexed or inversely to a multiple of the applicable index. An inverse
floating rate security may exhibit greater price volatility than a fixed rate
obligation of similar credit quality.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are a form of
derivative collateralized by pools of commercial or residential mortgages. Pools
of mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations. These securities may
include complex instruments such as collateralized mortgage obligations
("CMOs"), mortgage pass-through securities, real estate mortgage investment
conduits ("REMICs"), adjustable rate mortgages, as well as other real
estate-related securities.
In certain instances, the credit risk associated with mortgage-related
securities can be reduced by third party guarantees or other forms of credit
support. Improved credit risk does not reduce prepayment risk which is unrelated
to the rating assigned to the mortgage-related security. Prepayment risk can
lead to fluctuations in value of the mortgage-related security which may be
pronounced. If a mortgage-related security is purchased at a premium, all or
part of the premium may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or prepayments on the
underlying mortgage collateral. Certain mortgage-related securities that may be
purchased by the Fund, such as inverse floating rate CMOs, have coupons that
move inversely to a multiple of a specific index which may result in a form of
leverage. As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest rates.
However, although the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the security are more likely
to be prepaid. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return to the Fund.
GOVERNMENT-AGENCY SECURITIES--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA to
borrow funds from the U.S. Treasury to make payments under its guarantee.
GOVERNMENT-RELATED SECURITIES--Mortgage-related securities issued by the Federal
National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of FNMA and are not backed by or entitled to the full faith and
credit of the United States. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as "Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the
United States created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Bank and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder
to timely payment of interest, which is guaranteed by FHLMC. FHLMC guarantees
either ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
COMMERCIAL MORTGAGE-RELATED SECURITIES--Commercial mortgage-related securities
generally are multi-class debt or pass-through certificates secured by mortgage
loans on commercial properties. These mortgage-related securities generally are
structured to provide protection to the senior classes' investors against
potential losses on the underlying mortgage loans. This protection generally is
provided by having the holders of subordinated classes of securities
("Subordinated Securities") take the first loss if there are defaults on the
underlying commercial mortgage loans. Other protection, which may benefit all of
the classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross- collateralization and
over-collateralization.
The Fund may invest in Subordinated Securities issued or sponsored by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Subordinated
Securities have no governmental guarantee, and are subordinated in some manner
to the payment of principal and/or interest to the holders of more senior
mortgage-related securities arising out of the same pool of mortgages. The
holders of Subordinated Securities typically are compensated with a higher
stated yield than are the holders of more senior mortgage-related securities. On
the other hand, Subordinated Securities typically subject the holder to greater
risk than senior mortgage-related securities and tend to be rated in a lower
rating category, and frequently a substantially lower rating category, than the
senior mortgage-related securities issued in respect of the same pool of
mortgages. Subordinated Securities generally are more sensitive to changes in
prepayment and interest rates and the market for such securities may be less
liquid than is the case for traditional fixed-income securities and senior
mortgage-related securities.
The market for commercial mortgage-related securities developed more
recently and in terms of total outstanding principal amount of issues is
relatively small compared to the market for residential single-family
mortgage-related securities. In addition, commercial lending generally is viewed
as exposing the lender to a greater risk of loss than one- to four-family
residential lending. Commercial lending, for example, typically involves larger
loans to single borrowers or groups of related borrowers than residential one-
to four-family mortgage loans. In addition, the repayment of loans secured by
income producing properties typically is dependent upon the successful operation
of the related real estate project and the cash flow it generates. Consequently,
adverse changes in economic conditions and circumstances are more likely to have
an adverse impact on mortgage-related securities secured by loans on commercial
properties than on those secured by loans on residential properties.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")--A CMO is a multiclass bond backed
by a pool of mortgage pass-through certificates or mortgage loans. CMOs may be
collateralized by (a) Ginnie Mae, Fannie Mae or Freddie Mac pass-through
certificates, (b) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans' Affairs, (c)
unsecuritized conventional mortgages, (d) other mortgage-related securities, or
(e) any combination thereof. Each class of CMOs, often referred to as a
"tranche," is issued at a specific coupon rate and has a stated maturity or
final distribution date. Principal prepayments on collateral underlying a CMO
may cause it to be retired substantially earlier than the stated maturities or
final distribution dates. The principal and interest on the underlying mortgages
may be allocated among the several classes of a series of a CMO in many ways.
One or more tranches of a CMO may have coupon rates which reset periodically at
a specified increment over an index, such as the London Interbank Offered Rate
("LIBOR") (or sometimes more than one index). These floating rate CMOs typically
are issued with lifetime caps on the coupon rate thereon. The Fund also may
invest in inverse floating rate CMOs. Inverse floating rate CMOs constitute a
tranche of a CMO with a coupon rate that moves in the reverse direction to an
applicable index such as LIBOR. Accordingly, the coupon rate will increase as
interest rates decrease. Inverse floating rate CMOs are typically more volatile
than fixed or floating rate tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. When the coupon varies inversely to a
multiple of an applicable index, it creates a leverage factor. Inverse floaters
based on multiples of a stated index are designed to be highly sensitive to
changes in interest rates and can subject the holders thereof to extreme
reductions of yield and loss of principal. The markets for inverse floating rate
CMOs with highly leveraged characteristics at times may be very thin. The Fund's
ability to dispose of its positions in such securities will depend on the degree
of liquidity in the markets for such securities. It is impossible to predict the
amount of trading interest that may exist in such securities, and therefore, the
future degree of liquidity.
ADJUSTABLE-RATE MORTGAGE LOANS ("ARMS")--ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest rate
for a specified period of time, generally for either the first three, six,
twelve, thirteen, thirty-six or sixty scheduled monthly payments. Thereafter,
the interest rates are subject to periodic adjustment based on changes in an
index. ARMs typically have minimum and maximum rates beyond which the mortgage
interest rate may not vary over the lifetime of the loans. Certain ARMs provide
for additional limitations on the maximum amount by which the mortgage interest
rate may adjust for any single adjustment period. Negatively amortizing ARMs may
provide limitations on changes in the required monthly payment. Limitations on
monthly payments can result in monthly payments that are greater or less than
the amount necessary to amortize a negatively amortizing ARM by its maturity at
the interest rate in effect during any particular month.
OTHER MORTGAGE-RELATED SECURITIES--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including CMO residuals. Other mortgage-related securities may
be equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.
ASSET-BACKED SECURITIES. Asset-backed securities are a form of derivative.
These securities include debt securities and securities with debt-like
characteristics. The collateral for these securities has included home equity
loans, automobile and credit card receivables, boat loans, computer leases,
airplane leases, mobile home loans, recreational vehicle loans and hospital
account receivables. The Fund may invest in these and other types of
asset-backed securities that may be developed in the future.
The securitization techniques used for asset-backed securities are similar
to those used for mortgage-backed securities. Asset-backed securities present
certain risks that are not presented by mortgage-backed securities. Primarily,
these securities may provide the Fund with a less effective security interest in
the related collateral than do mortgage-backed securities. Therefore, there is
the possibility that recoveries on the underlying collateral may not, in some
cases, be available to support payments on these securities.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES. The
Fund may invest in U.S. dollar denominated obligations issued or guaranteed by
one or more foreign governments or any of their political subdivisions, agencies
or instrumentalities that are determined by the Manager to be of comparable
quality to the other obligations in which the Fund may invest. Such securities
also include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
ILLIQUID SECURITIES. The Fund may invest up to 15% of the value of its net
assets in Wrapper Agreements and other securities as to which a liquid trading
market does not exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Fund is subject to a risk that should it
desire to sell them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of the Fund's net assets could be
adversely affected.
ZERO COUPON SECURITIES. The Fund may invest in zero coupon U.S. Treasury
securities, which are Treasury Notes and Bonds that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. Zero
coupon securities are issued by corporations and financial institutions and
constitute a proportionate ownership of the issuer's pool of underlying U.S.
Treasury securities. A zero coupon security pays no interest to its holder
during its life and is sold at a discount to its face value at maturity. The
amount of the discount fluctuates with the market price of the security. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
MONEY MARKET INSTRUMENTS. Under normal conditions, the Fund may invest up
to 35%, and will invest at least 10%, of its assets in money market instruments,
consisting of U.S. Government securities, certificates of deposit, time
deposits, bankers' acceptances, short-term investment grade corporate bonds and
other short-term debt instruments, and repurchase agreements. When the Manager
determines that adverse market conditions exist, the Fund may adopt a temporary
defensive position and invest up to 100% of its assets in money market
instruments, including U.S. Government securities, repurchase agreements, bank
obligations and commercial paper.
INVESTMENT TECHNIQUES
The Fund may engage in the investment techniques described below.
LEVERAGE. Leveraging (that is, buying securities using borrowed money)
exaggerates the effect on net asset value of any increase or decrease in the
market value of the Fund's portfolio. These borrowings will be subject to
interest costs which may or may not be recovered by appreciation of the
securities purchased; in certain cases, interest costs may exceed the return
received on the securities purchased. For borrowings for investment purposes,
the Investment Company Act of 1940, as amended (the "1940 Act"), requires the
Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the required coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of its
portfolio securities within three days to reduce the amount of its borrowings
and restore the 300% asset coverage, even though it may be disadvantageous from
an investment standpoint to sell securities at that time. The Fund also may be
required to maintain minimum average balances in connection with such borrowing
or pay a commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.
The Fund may enter into reverse repurchase agreements with banks, brokers
or dealers. This form of borrowing involves the transfer by the Fund of an
underlying debt instrument in return for cash proceeds based on a percentage of
the value of the security. The Fund retains the right to receive interest and
principal payments on the security. At an agreed upon future date, the Fund
repurchases the security at principal plus accrued interest. Except for these
transactions, the Fund's borrowings generally will be unsecured.
DERIVATIVES. The Fund may invest in, or enter into, derivatives
("Derivatives") for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular securities
or to increase potential income gain. Derivatives may provide a cheaper, quicker
or more specifically focused way for the Fund to invest than "traditional"
securities would. The Derivatives the Fund may use include options and futures,
mortgage- related securities, asset-backed securities and Wrapper Agreements.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inopportune times or judges market
conditions incorrectly, such investments may lower the Fund's return or result
in a loss. The Fund also could experience losses if its Derivatives were poorly
correlated with its other investments, or if the Fund were unable to liquidate
its position because of an illiquid secondary market. The market for many
Derivatives is, or suddenly can become, illiquid. Changes in liquidity may
result in significant, rapid and unpredictable changes in the prices for
Derivatives.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over- the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, the Manager will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS--IN GENERAL. The Fund may enter into futures contracts in
U.S. domestic markets, such as the Chicago Board of Trade and the International
Monetary Market of the Chicago Mercantile Exchange. Engaging in these
transactions involves risk of loss to the Fund which could adversely affect the
value of the Fund's net assets. Although the Fund intends to purchase or sell
futures contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of trade
limit the amount of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond that limit or trading
may be suspended for specified periods during the trading day. Futures contract
prices could move to the limit for several consecutive trading days with little
or no trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the ability of the
Manager to predict correctly movements in the direction of the relevant market
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate permissible liquid
assets in connection with its commodities transactions in an amount generally
equal to the value of the underlying commodity. The segregation of such assets
will have the effect of limiting the Fund's ability otherwise to invest those
assets.
SPECIFIC FUTURES TRANSACTIONS. The Fund may purchase and sell interest rate
futures contracts. An interest rate future obligates the Fund to purchase or
sell an amount of a specific debt security at a future date at a specific price.
INTEREST RATE SWAPS. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed-rate payments). The
exchange commitments can involve payments to be made in the same currency or in
different currencies. The use of interest rate swaps is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If the Manager is
incorrect in its forecasts of market values, interest rates and other applicable
factors, the investment performance of the Fund would diminish compared with
what it would have been if these investment techniques were not used. Moreover,
even if the Manager is correct in its forecasts, there is a risk that the swap
position may correlate imperfectly with the price of the asset or liability
being hedged. There is no limit on the amount of interest rate swap transactions
that may be entered into by the Fund. These transactions do not involve the
delivery of securities or other underlying assets or principal. Accordingly, the
risk of loss with respect to interest rate swaps is limited to the net amount of
interest payments that the Fund is contractually obligated to make. If the other
party to an interest rate swap defaults, the Fund's risk of loss consists of the
net amount of interest payments that the Fund contractually is entitled to
receive.
OPTIONS--IN GENERAL. The Fund may purchase and write (i.e., sell) call or put
options with respect to specific securities. A call option gives the purchaser
of the option the right to buy, and obligates the writer to sell, the underlying
security or securities at the exercise price at any time during the option
period, or at a specific date. Conversely, a put option gives the purchaser of
the option the right to sell, and obligates the writer to buy, the underlying
security or securities at the exercise price at any time during the option
period, or at a specific date.
A covered call option written by the Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by the Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are placed in a segregated
account with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. The Fund receives a premium from writing covered
call or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of specific
securities) or indices listed on national securities exchanges or traded in the
over-the-counter market. An option on an index is similar to an option in
respect of specific securities, except that settlement does not occur by
delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the index upon which the
option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. Thus, the effectiveness of
purchasing or writing index options will depend upon price movements in the
level of the index rather than the price of a particular security.
The Fund may purchase cash-settled options on swaps in pursuit of its
investment objective. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of the
Manager to predict correctly movements in the prices of individual securities,
the market generally, or interest rates. To the extent such predictions are
incorrect, the Fund may incur losses.
FUTURE DEVELOPMENTS. The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and any
other Derivatives which are not presently contemplated for use by the Fund or
which are not currently available but which may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions or
making any such investment, the Fund will provide appropriate disclosure in its
Prospectus or Statement of Additional Information.
LENDING PORTFOLIO SECURITIES. The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities which affords the Fund an opportunity to earn
interest on the amount of the loan and on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33-1/3% of the value of the Fund's
total assets, and the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities. Such loans are terminable by the Fund at any time upon
specified notice. The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund.
FORWARD COMMITMENTS. The Fund may purchase or sell securities on a forward
commitment, when-issued or delayed-delivery basis, which means that delivery and
payment take place a number of days after the date of the commitment to purchase
or sell the securities at a predetermined price and/or yield. Typically, no
interest accrues to the purchaser until the security is delivered. When
purchasing a security on a forward commitment basis, the Fund assumes the rights
and risks of ownership of the security, including the risk of price and yield
fluctuations, and takes such fluctuations into account when determining its net
asset value. Because the Fund is not required to pay for these securities until
the delivery date, these risks are in addition to the risks associated with the
Fund's other investments. If the Fund is fully or almost fully invested when
forward commitment purchases are outstanding, such purchases may result in a
form of leverage. The Fund intends to engage in forward commitments to increase
its portfolio's financial exposure to the types of securities in which it
invests. Leveraging the portfolio in this manner will increase the Fund's
exposure to changes in interest rates and will increase the volatility of its
returns. The Fund will set aside in a segregated account permissible liquid
assets at least equal at all times to the amount of the Fund's purchase
commitments.
FORWARD ROLL TRANSACTIONS. To enhance current income, the Fund may enter
into forward roll transactions with respect to mortgage-related securities. In a
forward roll transaction, the Fund sells a mortgage-related security to a
financial institution, such as a bank or broker-dealer, and simultaneously
agrees to repurchase a similar security from the institution at a later date at
an agreed upon price. The securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by different
pools of mortgages with different pre- payment histories than those sold. During
the period between the sale and repurchase, the Fund will not be entitled to
receive interest and principal payments on the securities sold. Proceeds of the
sale will be invested in short-term instruments, particularly repurchase
agreements, and the income from these investments, together with any additional
fee income received on the sale will generate income for the Fund exceeding the
yield on the securities sold. Forward roll transactions involve the risk that
the market value of the securities sold by the Fund may decline below the
purchase price of those securities. The Fund will establish a segregated account
consisting of permissible liquid assets at least equal to the amount of the
repurchase price (including accrued interest).
INVESTMENT RESTRICTIONS
The Fund's investment objective is a fundamental policy, which cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, the Fund has adopted
investment restrictions numbered 1 through 10 as fundamental policies.
Investment restrictions numbered 11 and 12 are not fundamental policies and may
be changed by a vote of a majority of the Fund's Board members at any time. The
Fund may not:
1. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Fund's total assets may be
invested, and securities issued or guaranteed by the U.S. Government, or its
agencies or instrumentalities may be purchased, without regard to any such
limitation.
2. Hold more than 10% of the outstanding voting securities of any single
issuer. This Investment Restriction applies only with respect to 75% of the
Fund's total assets.
3. Invest more than 25% of the value of its total assets in the securities
of issuers in any single industry, provided that there shall be no limitation on
the purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
4. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
5. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but the Fund may purchase and
sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
6. Borrow money, except to the extent permitted under the 1940 Act (which
currently limits borrowing to no more than 33-1/3% of the value of the Fund's
total assets). For purposes of this Investment Restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
7. Make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements. However, the Fund may lend its
portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Fund's
Board.
8. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
9. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 4, 6 and 11 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but the Fund may make margin deposits in
connection with transactions in options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when- issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
12. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid, if, in the
aggregate, more than 15% of the value of the Fund's net assets would be so
invested.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of the
Fund. The Board approves all significant agreements between the Fund and those
companies that furnish services to the Fund. These companies are as follows:
The Dreyfus Corporation..................................Investment Adviser
Premier Mutual Fund Services, Inc........................Distributor
Dreyfus Transfer, Inc....................................Transfer Agent
Mellon Bank, N.A.........................................Custodian
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years, are
shown below.
BOARD MEMBERS OF THE FUND
JOSEPH S. DiMARTINO, CHAIRMAN OF THE BOARD. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He also is a
director of The Muscular Dystrophy Association, The Noel Group, Inc., a
venture capital company (for which, from February 1995 until November 1997,
he was Chairman of the Board), Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway Company, Inc.), a button packager and
distributor, and Century Business Services, Inc. (formerly, International
Alliance Services, Inc.), a provider of various outsourcing functions for
small and medium sized companies. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager. From
August 1994 until December 31, 1994, he was a director of Mellon Bank
Corporation. He is 55 years old and his address is 200 Park Avenue, New
York, New York 10166.
CLIFFORD L. ALEXANDER, JR., BOARD MEMBER. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander served
as Secretary of the Army and Chairman of the Board of the Panama Canal
Company, and from 1975 to 1977, he was a member of the Washington, D.C. law
firm of Verner, Liipfert, Bernhard, McPherson and Alexander. He is a
director of American Home Products Corporation, Cognizant Corporation, a
service provider of marketing information and information technology, The
Dun & Bradstreet Corporation, MCI Communications Corporation, Mutual of
America Life Insurance Company and TLC Beatrice International Holdings,
Inc. He is 64 years old and his address is 400 C Street, N.E., Washington,
D.C. 20002.
LUCY WILSON BENSON, BOARD MEMBER. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of COMSAT
Corporation, General Re Corporation and Logistics Management Institute. She
is also a Trustee of the Alfred P. Sloan Foundation, Vice Chairman of the
Board of Trustees of Lafayette College, Vice Chairman of the Citizens
Network for Foreign Affairs, and a member of the Council on Foreign
Relations. Mrs. Benson served as a consultant to the U.S. Department of
State and to SRI International from 1980 and 1981. From 1977 to 1980, she
was Under Secretary of State for Security Assistance, Science and
Technology. She is 69 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
There ordinarily will be no meetings of shareholders for the purpose of
electing Board members unless and until such time as less than a majority of the
Board members holding office have been elected by shareholders, at which time
the Board members then in office will call a shareholders' meeting for the
election of Board members. Under the 1940 Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Fund may remove a Board
member through a declaration in writing or by vote cast in person or by proxy at
a meeting called for that purpose. The Board members are required to call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Board member when requested in writing to do so by the shareholders of
record of not less than 10% of the Fund's outstanding shares.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. The aggregate amount of
compensation estimated to be paid to each Board member by the Fund and paid by
all other funds in The Dreyfus Family of Funds for which such person is a Board
member (the number of which is set forth in parenthesis next to each Board
member's total compensation) for the year ending December 31, 1998, is as
follows:
TOTAL COMPENSATION FROM
AGGREGATE ESTIMATED FUND AND FUND
NAME OF BOARD COMPENSATION FROM COMPLEX PAID TO
MEMBER FUND BOARD MEMBER
Joseph S. DiMartino $3,750 $600,878(95)
Clifford L. Alexander, Jr. $3,000 $ 91,350(18)
Lucy Wilson Benson $3,000 $ 77,055(16)
OFFICERS OF THE FUND
MARIE E. CONNOLLY, PRESIDENT AND TREASURER. President, Chief Executive Officer,
Chief Compliance Officer and a director of the Distributor and Funds
Distributor, Inc., the ultimate parent of which is Boston Institutional
Group, Inc., and an officer of other investment companies advised or
administered by the Manager. She is 40 years old.
MARGARET W. CHAMBERS, VICE PRESIDENT AND SECRETARY. Senior Vice President and
General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From August
1996 to March 1998, she was Vice President and Assistant General Counsel
for Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was
an associate with the law firm of Ropes & Gray. She is 38 years old.
MICHAEL S. PETRUCELLI, VICE PRESIDENT, ASSISTANT TREASURER AND ASSISTANT
SECRETARY. Senior Vice President of Funds Distributor, Inc., and an officer
of certain other investment companies advised or administered by the
Manager. From December 1989 through November 1996, he was employed by GE
Investment Services where he held various financial, business development
and compliance positions. He also served as Treasurer of the GE Funds and
as a Director of GE Investment Services. He is 36 years old.
STEPHANIE D. PIERCE, VICE PRESIDENT, ASSISTANT TREASURER AND ASSISTANT
SECRETARY. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. She is 29 years old.
MARY A. NELSON, VICE PRESIDENT AND ASSISTANT TREASURER. Vice President of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From September 1989 to
July 1994, she was an Assistant Vice President and Client Manager for The
Boston Company, Inc. She is 34 years old.
GEORGE A. RIO, VICE PRESIDENT AND ASSISTANT TREASURER. Executive Vice President
and Client Service Director of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by the Manager. From
June 1995 to March 1998, he was Senior Vice President and Senior Key
Account Manager for Putnam Mutual Funds. From May 1994 to June 1995, he was
Director of Business Development for First Data Corporation. From September
1983 to May 1994, he was Senior Vice President & Manager of Client Services
and Director of Internal Audit at The Boston Company, Inc. He is 43 years
old.
JOSEPH F. TOWER, III, VICE PRESIDENT AND ASSISTANT TREASURER. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From July 1988 to August
1994, he was employed by The Boston Company, Inc. where he held various
management positions in the Corporate Finance and Treasury areas. He is 35
years old.
DOUGLAS C. CONROY, VICE PRESIDENT AND ASSISTANT SECRETARY. Assistant Vice
President of Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank & Trust
Company. From December 1991 to March 1993, he was employed as a Fund
Accountant at The Boston Company, Inc. He is 29 years old.
CHRISTOPHER J. KELLEY, VICE PRESIDENT AND ASSISTANT SECRETARY. Vice President
and Senior Associate General Counsel of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From April 1994 to July 1996, he was Assistant Counsel at Forum
Financial Group. From October 1992 to March 1994, he was employed by Putnam
Investments in legal and compliance capacities. He is 33 years old.
KATHLEEN K. MORRISEY, VICE PRESIDENT AND ASSISTANT SECRETARY. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an officer
of other investment companies advised or administered by the Manager. From
July 1994 to November 1995, she was a Fund Accountant for Investors Bank &
Trust Company. She is 25 years old.
ELBA VASQUEZ, VICE PRESIDENT AND ASSISTANT SECRETARY. Assistant Vice President
of Funds Distributor, Inc., and an officer of other investment companies
advised or administered by the Manager. From March 1990 to May 1996, she
was employed by U.S. Trust Company of New York where she held various sales
and marketing positions. She is 36 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
MANAGEMENT AGREEMENT
The Manager is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets.
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated July __, 1998 with the Fund, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided that in either event its continuance also is approved by a majority of
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund or the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Agreement was approved by the Fund's
sole shareholder on _______, 1998. The Agreement is terminable without penalty,
on not more than 60 days' notice, by the Fund's Board or by vote of the holders
of a majority of the Fund's outstanding voting shares, or, on not less than 90
days' notice, by the Manager. The Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E. Canter,
Vice Chairman, Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman-Distribution and a director; J. David Officer, Vice Chairman and a
director; Ronald P. O'Hanley III, Vice Chairman; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President-Corporate Communications; Mary Beth Leibig, Vice President-Human
Resources; Andrew S. Wasser, Vice President-Information Systems; William V.
Healey, Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Frank V.
Cahouet and Richard F. Syron, directors.
The Manager manages the Fund's portfolio of investments in accordance with
the stated policies of the Fund, subject to the approval of the Fund's Board.
The Manager is responsible for investment decisions, and provides the Fund with
portfolio managers who are authorized by the Board to execute purchases and
sales of securities. The Fund's portfolio managers are Eric W. Baumhoff and
Laurie A. Carroll. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for the Fund and for other funds advised by the Manager.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and promotional
expenditures using its own resources, as it from time to time deems appropriate.
All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by the Manager. The expenses borne by
the Fund include: taxes, interest, brokerage fees and commissions, if any, fees
of Board members who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of the Manager, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of independent
pricing services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of printing prospectuses
and statements of additional information for regulatory purposes and for
distribution to existing stockholders, costs of shareholder reports and
corporate meetings and any extraordinary expenses. In addition, Class S and
Class Q shares are subject to an annual shareholder service fee. See
"Shareholder Services Plan."
As compensation for the Manager's services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .35 of 1% of the value of
the Fund's average daily net assets.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
THE DISTRIBUTOR. Premier Mutual Fund Services, Inc., located at 60 State
Street, Boston, Massachusetts 02109, serves as the Fund's distributor on a best
efforts basis pursuant to an agreement which is renewable annually. The Manager
may pay the Distributor for shareholder services from the Manager's own assets,
including past profits but not including the management fee paid by the Fund.
The Distributor may use part or all of such payments to pay Service Agents (as
defined below) in respect of these services.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, is the Fund's custodian (the "Custodian"). Under
a custody agreement with the Fund, the Custodian holds the Fund's securities and
keeps all necessary accounts and records. For its custody services, the
Custodian receives a monthly fee based on the market value of the Fund's assets
held in custody and receives certain securities transactions charges.
HOW TO BUY SHARES
The initial investment must be accompanied by the Account Application.
Fund shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form is received by the Transfer Agent
or other entity authorized to receive orders on behalf of the Fund.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Fund shares may be transmitted, and
must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution could
be held liable for resulting fees and/or losses.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant to
which the Fund pays the Distributor for providing certain services to the
holders of Class S and Class Q shares. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of such shareholder
accounts. Under the Plan, the Distributor may make payments to certain financial
institutions (which include banks), securities dealers and other financial
industry professionals (collectively, "Service Agents") in respect of these
services.
A quarterly report of the amounts expended under the Plan, and the purposes
for which such expenditures were incurred, must be made to the Board members for
their review. In addition, the Plan provides that material amendments to the
Plan must be approved by the Fund's Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan, by vote cast in person at a meeting
called for the purpose of considering such amendments. The Plan is subject to
annual approval by such vote of the Board members cast in person at a meeting
called for the purpose of voting on the Plan. The Plan is terminable, as to each
such Class, at any time by vote of a majority of the Board members who are not
"interested persons" and who have no direct or indirect financial interest in
the operation of the Plan.
HOW TO REDEEM SHARES
REDEMPTION FEE. The Fund will deduct a redemption fee equal to 2% (1% for
redemptions made upon at least 6 but less than 12 months' prior written notice
to the Fund) of the net asset value of Fund shares redeemed (including
redemptions through the use of the Fund Exchanges service). Redemptions made
upon at least 12 months' prior written notice to the Fund and certain other
redemptions as described in the Fund's Prospectus are not subject to any
redemption fee. The redemption fee will be deducted from the redemption proceeds
and retained by the Fund.
WIRE REDEMPTION PRIVILEGE. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions from
any person representing himself or herself to be you, or a representative of
your Service Agent acting on your behalf, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, the Fund will initiate payment for
shares redeemed pursuant to the Privilege on the next business day after receipt
by the Transfer Agent of a redemption request in proper form. Redemption
proceeds ($1,000 minimum) will be transferred by Federal Reserve wire only to
the commercial bank account specified by you on the Account Application or
Shareholder Services Form, or to a correspondent bank if your bank is not a
member of the Federal Reserve System. Fees ordinarily are imposed by such bank
and borne by you. Immediate notification by the correspondent bank to your bank
is necessary to avoid a delay in crediting the funds to the investor's bank
account.
If you have access to telegraphic equipment, you may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
Transfer Agent's
TRANSMITTAL CODE ANSWER BACK SIGN
144295 144295 TSSG PREP
If you do not have direct access to telegraphic equipment, you may have the
wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. You should advise the operator that the above transmittal code must be
used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as described
below under "Stock Certificates; Signatures."
STOCK CERTIFICATES; SIGNATURES. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on the
cover.
REDEMPTION COMMITMENT. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commis sion. In the case of
requests for redemption in excess of such amount, the Fund's Board reserves the
right to make payments in whole or part in securities or other assets of the
Fund, including Wrapper Agreements, in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. To the extent that any such payment in
kind includes a Wrapper Agreement, the Fund will assign a portion of one or more
Wrapper Agreements to the redeeming shareholder. The economic terms and
conditions of each assigned Wrapper Agreement will be substantially similar to
the Wrapper Agreements held by the Fund. By purchasing shares in the Fund the
shareholders agree that they will accept an assignment of a Wrapper Agreement as
part of an in-kind redemption, provided that at the time of the redemption
payment such assignment would not violate applicable law.
If a payment in kind is made with securities, a shareholder may incur
transaction expenses in disposing of the securities. Therefore, a shareholder
receiving securities may incur costs that may exceed such shareholder's share of
the operating expenses incurred by the Fund. In addition, Wrapper Agreements
assigned to a shareholder as a payment in kind are illiquid and will require the
shareholder to pay fees directly to the Wrap Provider rather than through the
Fund. Further, the Wrapper Agreement may contain restrictions on the securities
subject to such agreement, including, but not limited to the types, maturities,
duration and credit quality of each security. Therefore, to obtain the benefits
of a Wrapper Agreement, the shareholder may not be able to freely trade the
securities underlying the agreement. Also, Wrapper Agreements assigned to a
shareholder will not provide protection against the credit risk associated with
the issuer of any Covered Assets.
The Fund does not anticipate exercising its rights to redeem in-kind if a
request for redemption is received in connection with a benefit responsive
payment event or with 12 months notice. A Wrap Provider, prior to the assignment
of a Wrapper Agreement to a Class P or Class S shareholder, may require the
shareholder to represent and warrant that such assignment does not violate any
applicable laws. Moreover, the Wrap Provider may require the shareholder to
obtain at its own expense the services of a qualified professional asset manager
("QPAM") acceptable to the Wrap Provider to manage the securities distributed in
kind in conformity with the Wrapper Agreement provisions. If a Wrapper Agreement
cannot be assigned to the shareholder, the Fund in its discretion may satisfy
the redemption request through (a) a cash payment, (b) a redemption in-kind
consisting entirely of securities, (c) a combination of cash and securities, or
(d) the Fund may give the redeeming shareholder the opportunity to choose
between one of the foregoing options or providing the Fund with 12 months'
notice of its request for such redemption (which 12-month notice option would
cause the redemption not to be subject to the redemption fee).
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings), (b) when trading
in the markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
FUND EXCHANGES. You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by the Manager, to the
extent such shares are offered for sale in your state of residence. A redemption
fee as described under "How to Redeem Shares" will be charged upon an exchange
of Fund shares, except under certain circumstances described in the Fund's
Prospectus. Shares of other funds purchased by exchange will be purchased on the
basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales load will
be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable sales load will
be deducted.
C. Shares of funds purchased with a sales load may be exchanged without a
sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds acquired by
a previous exchange from shares purchased with a sales load and additional
shares acquired through reinvestment of dividends or distributions of any such
funds (collectively referred to herein as "Purchased Shares") may be exchanged
for shares of other funds sold with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load that could have been imposed in connection with
the Purchased Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you must notify the Transfer
Agent of your prior ownership of fund shares and your account number.
To request an exchange, you or your Service Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing or by
telephone. The ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this Privilege.
By using the Telephone Exchange Privilege, you authorize the Transfer Agent to
act on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be you, and
reasonably believed by the Transfer Agent to be genuine. Telephone exchanges may
be subject to limitations as to the amount involved or the number of telephone
exchanges permitted. Shares issued in certificate form are not eligible for
telephone exchange.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
SYSTEMATIC WITHDRAWAL PLAN. A Systematic Withdrawal Plan permits you with a
$5,000 minimum account to request withdrawal of a specified dollar amount
(minimum of $50) on either a monthly or quarterly basis. Withdrawal payments are
the proceeds from sales of Fund shares, not the yield on the shares. If
withdrawal payments exceed reinvested dividends and distributions, your shares
will be reduced and eventually may be depleted. Automatic Withdrawal may be
terminated at any time by you, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
MONTHLY OR QUARTERLY DISTRIBUTION PLANS. The Distribution Plans permit you
to receive monthly or quarterly payments from the Fund consisting of proceeds
from the redemption of shares purchased for your account through the automatic
reinvestment of dividends declared on your account during the preceding month or
calendar quarter.
CORPORATE PENSION/PROFIT-SHARING AND PERSONAL RETIREMENT PLANS. The Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In addition, the
Fund makes available Keogh Plans, IRAs, (including regular IRAs, spousal IRAs
for a non-working spouse, Roth IRAs, IRA's set up under a Simplified Employee
Pension Plan ("SEP-IRAs"), Education IRAs and "Rollover Accounts") and 403(b)(7)
Plans. Plan support services are also available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs may
charge a fee, payment of which could require the liquidation of shares. All fees
charged are described in the appropriate form.
SHARES MAY BE PURCHASED IN CONNECTION WITH THESE PLANS ONLY BY DIRECT
REMITTANCE TO THE ENTITY ACTING AS CUSTODIAN. PURCHASES FOR THESE PLANS MAY NOT
BE MADE IN ADVANCE OF RECEIPT OF FUNDS.
The minimum initial investment for corporate plans, Salary Reduction Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, is $2,500 with no
minimum for subsequent purchases. The minimum initial investment is $750 for
Dreyfus-sponsored Keogh plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant and $500 for Dreyfus-sponsored Education IRAs, with no
minimum for subsequent purchases.
Each shareholder should read the prototype retirement plan and the
appropriate form of custodial agreement for further details as to eligibility,
service fees and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
VALUATION OF PORTFOLIO SECURITIES. The Fund's investments are valued each
business day using available market quotations or at fair value as determined by
one or more independent pricing services (collectively, the "Service") approved
by the Board. The Service may use available market quotations, employ electronic
data processing techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the Fund's officers under the general
supervision of the Board.
The value of a Wrapper Agreement ("Wrapper Value") generally will be equal
to the difference between the Book Value and the market value (plus accrued
interest on the underlying securities) ("Market Value") of the Covered Assets.
If the Market Value of the Covered Assets is greater than their Book Value, the
Wrapper Value will be reflected as a liability of the Fund in the amount of the
difference, i.e., a negative value, reflecting the potential liability of the
Fund to the Wrap Provider. If the Market Value of the Covered Assets is less
than their Book Value, the Wrapper Value will be reflected as an asset of the
Fund in the amount of the difference, i.e., a positive value, reflecting the
potential liability of the Wrap Provider to the Fund. The Fund will consider the
creditworthiness and ability of a Wrap Provider to pay amounts due under the
Wrapper Agreement. If the Wrap Provider is unable to make such payments, the
Wrapper Agreement will be assigned a fair value that is less than the difference
between the Book Value and the Market Value of the applicable Covered Assets and
the Fund might be unable to maintain a stable net asset value.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"), if such qualification is
in the best interests of its shareholders. As a regulated investment company,
the Fund will pay no Federal income tax on net investment income and net
realized securities gains to the extent that such income and gains are
distributed to shareholders in accordance with applicable provisions of the
Code. To qualify as a regulated investment company, the Fund must distribute at
least 90% of its net income (consisting of net investment income and net
short-term capital gain) to its shareholders, and meet certain asset
diversification and other requirements. The term "regulated investment company"
does not imply the supervision of management or investment practices or policies
by any government agency.
Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the aggregate net asset value of the shares below
the cost of the investment. Such a dividend or distribution would be a return of
investment in an economic sense, although taxable as stated in the Fund's
Prospectus. In addition, the Code provides that if a shareholder holds shares of
the Fund for six months or less and has received a capital gain distribution
with respect to such shares, any loss incurred on the sale of such shares will
be treated as long-term capital loss to the extent of the capital gain
distribution received. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S. corporate shareholders.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains or losses. However, a portion of the gain or loss
realized from the disposition of foreign currencies (including foreign currency
denominated bank deposits) and non-U.S. dollar denominated securities (including
debt instruments and certain forward contracts and options) may be treated as
ordinary income or loss under Section 988 of the Code. In addition, all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds will be treated as ordinary income under Section 1276 of
the Code. Finally, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section 1258
of the Code. "Conversion transactions" are defined to include certain forward,
futures, options and straddle transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund from
certain forward contracts and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such contracts and options as well as
from closing transactions. In addition, any such contract or option remaining
unexercised at the end of the Fund's taxable year will be treated as sold for
its then fair market value, resulting in additional gain or loss to the Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving certain foreign currency
forward contracts or options may constitute "straddles." "Straddles" are defined
to include "offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Sections 1256 and 988 of the Code. As such, all or a portion of any short- or
long-term capital gain from certain "straddle" transactions may be
recharacterized as ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such "straddles"
would be characterized as "mixed straddles" if the forward contracts or options
transactions comprising a part of such "straddles" were governed by Section 1256
of the Code. The Fund may make one or more elections with respect to "mixed
straddles." Depending on which election is made, if any, the results to the Fund
may differ. If no election is made, to the extent the "straddle" and conversion
transaction rules apply to positions established by the Fund, losses realized by
the Fund will be deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the "straddle" and conversion transaction
rules, short-term capital loss on "straddle" positions may be recharacterized as
long-term capital loss, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions that
generally apply if the Fund either (1) holds an appreciated financial position
with respect to stock, certain debt obligations or partnership interests
("appreciated financial position") and then enters into a short sale, futures,
forward or offsetting notional principal contract (collectively, a "Contract")
respecting the same or substantially identical property or (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as, or substantially identical to, the underlying property. In
each instance, with certain exceptions, the Fund generally will be taxed as if
the appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.
PORTFOLIO TRANSACTIONS
The Manager supervises the placement of orders on behalf of the Fund for
the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the best judgment of the
Manager and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders at the most favorable net price.
Subject to this consideration, the brokers selected include those that
supplement the Manager's research facilities with statistical data, investment
information, economic facts and opinions. Information so received is in addition
to and not in lieu of services required to be performed by the Manager and the
Manager's fee is not reduced as a consequence of the receipt of such
supplemental information. Such information may be useful to the Manager in
serving both the Fund and other funds which it manages and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to the Manager in carrying out its obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades may, in certain
cases, result from two or more funds in the Dreyfus Family of Funds being
engaged simultaneously in the purchase or sale of the same security. Certain of
the Fund's transactions in securities of foreign issuers may not benefit from
the negotiated commission rates available to the Fund for transactions in
securities of domestic issuers. When transactions are executed in the
over-the-counter market, the Fund will deal with the primary market makers
unless a more favorable price or execution otherwise is obtainable. Foreign
exchange transactions are made with banks or institutions in the intrabank
market at prices reflecting a mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year, as well as within a year. In
periods in which extraordinary market conditions prevail, the Manager will not
be deterred from changing the Fund's investment strategy as rapidly as needed,
in which case, higher turnover rates can be anticipated which would result in
greater brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by the Manager based upon its knowledge of available
information as to the general level of commissions paid by other institutional
investors for comparable services.
PERFORMANCE INFORMATION
Current yield is computed pursuant to a formula which operates as follows:
The amount of the Fund's expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned by the Fund during the period. That result is then divided by the product
of: (a) the average daily number of shares outstanding during the period that
were entitled to receive dividends, and (b) the maximum offering price per share
on the last day of the period less any undistributed earned income per share
reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying the
result by 2.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of the Fund's net
asset value per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and dividing the
result by the net asset value per share at the beginning of the period. From
time to time, advertising materials for the Fund may refer to Morningstar
ratings and related analysis supporting such ratings.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio managers and may refer to, or
include commentary by a portfolio manager relating to investment strategy, asset
growth, current or past business, political, economic or financial conditions
and other matters of general interest to investors. Fund advertisements also,
from time to time, may include statistical data or general discussions about the
growth and development of Dreyfus Retirement Services ( in terms of new
customers, assets under management, market share, etc.) and its presence in the
defined contribution plan market.
INFORMATION ABOUT THE FUND
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and nonassessable. Fund shares
have no preemptive, subscription or conversion rights and are freely
transferable.
Under Massachusetts law, shareholders, under certain circumstances, could
be held personally liable for the obligations of the Fund. However, the Fund's
Trust Agreement disclaims shareholder liability for acts or obligations of the
Fund and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or a Trustee. The
Trust Agreement provides for indemnification from the Fund's property for all
losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Fund intends to conduct its operations
in such a way so as to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of the Fund.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office. Fund
shareholders may remove a Board member by the affirmative vote of two-thirds of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
The Fund is intended to be a long-term investment vehicle. A pattern of
frequent purchases and exchanges can be disruptive to efficient portfolio
management and, consequently, can be detrimental to the Fund's performance and
its shareholders. Accordingly, if the Fund's management determines that an
investor is following a market-timing strategy or is otherwise engaging in
excessive trading, the Fund, with or without prior notice, may temporarily or
permanently terminate the availability of Fund Exchanges, or reject in whole or
part any purchase or exchange request, with respect to such investor's account.
Such investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges out
of the Fund during a calendar year or who makes exchanges that appear to
coincide with a market-timing strategy may be deemed to be engaged in excessive
trading. Accounts under common ownership or control will be considered as one
account for purposes of determining a pattern of excessive trading. In addition,
the Fund may refuse or restrict purchase or exchange requests by any person or
group if, in the judgment of the Fund's management, the Fund would be unable to
invest the money effectively in accordance with its investment objective and
policies or could otherwise be adversely affected or if the Fund receives or
anticipates receiving simultaneous orders that may significantly affect the Fund
(e.g., amounts equal to 1% or more of the Fund's total assets). If an exchange
request is refused, the Fund will take no other action with respect to the
shares until it receives further instructions from the investor. The Fund may
delay forwarding redemption proceeds for up to seven days if the investor
redeeming shares is engaged in excessive trading or if the amount of the
redemption request otherwise would be disruptive to efficient portfolio
management or would adversely affect the Fund. The Fund's policy on excessive
trading applies to investors who invest in the Fund directly or through
financial intermediaries, but does not apply to any automatic investment or
withdrawal privilege described herein, or to participants in employer-sponsored
retirement plans.
During times of drastic economic or market conditions, the Fund may suspend
Fund Exchanges temporarily without notice and treat exchange requests based on
their separate components -- redemption orders with a simultaneous request to
purchase the other fund's shares. In such a case, the redemption request would
be processed at the Fund's next determined net asset value but the purchase
order would be effective only at the net asset value next determined after the
fund being purchased receives the proceeds of the redemption, which may result
in the purchase being delayed.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the Fund.
<PAGE>
APPENDIX
Description of certain rating categories of Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc.
("Fitch"), and Duff & Phelps Credit Rating Co. ("Duff"):
S&P
BOND RATINGS
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently have
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default and
are dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within the
major rating categories, except in the AAA (Prime Grade) category.
COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Issues assigned an A rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the numbers 1, 2 and
3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3
Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B
Issues carrying this designation are regarded as having only speculative
capacity for timely payment.
C
This designation is assigned to short-term obligations with doubtful
capacity for payment.
D
Issues carrying this designation are in default, and payment of interest
and/or repayment of principal is in arrears.
CLAIMS PAYING ABILITY RATINGS
AAA
Superior financial security on an absolute and relative basis. Capacity to
meet policyholder obligations is overwhelming under a variety of economic and
underwriting conditions.
AA
Excellent financial security. Capacity to meet policyholder obligations is
strong under a variety of economic and underwriting conditions.
A
Good financial security, but capacity to meet policyholder obligations is
somewhat susceptible to adverse economic and underwriting conditions.
BBB
Adequate financial security, but capacity to meet policyholder obligations
is susceptible to adverse economic and underwriting conditions.
BB
Financial security may be adequate, but capacity to meet policyholder
obligations, particularly with respect to long-term or "long-tail" policies, is
vulnerable to adverse economic and underwriting conditions.
B
Vulnerable financial security. Currently able to meet policyholder
obligations, but capacity to meet policyholder obligations is particularly
vulnerable to adverse economic and underwriting conditions.
CCC
Extremely vulnerable financial security. Continued capacity to meet
policyholder obligations is highly questionable unless favorable economic and
underwriting conditions prevail.
R
Regulatory action. As of the date indicated, the insurer is under
supervision of insurance regulators following rehabilitation, receivership,
liquidation, or any other action that reflects regulatory concern about the
insurer's financial condition. Information on this status is provided by the
National Association of Insurance Commissioners and other regulatory bodies.
Although believed to be accurate, this information is not guaranteed. The "R"
rating does not apply to insurers subject only to nonfinancial actions such as
market conduct violations.
Plus (+) or minus (-) Ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Moody's
BOND RATINGS
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and generally are referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what generally are known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and, therefore, not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a ranking for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
COMMERCIAL PAPER RATINGS
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirements for relatively
high financial leverage. Adequate alternate liquidity is maintained.
INSURANCE FINANCIAL STRENGTH RATINGS
Aaa
Exceptional financial security. While the financial strength of these
companies is likely to change, such changes as can be visualized are most
unlikely to impair their fundamentally strong position.
Aa
Excellent financial security. Together with the Aaa group they constitute
what are generally known as high grade companies. They are rated lower than Aaa
companies because long-term risks appear somewhat larger.
A
Good financial security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa
Adequate financial security. However, certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Ba
Questionable financial security. Often the ability of these companies to
meet policyholder obligations maybe very moderate and thereby not well
safeguarded in the future.
B
Poor financial security. Assurance of punctual payment of policyholder
obligations over any long period of time is small.
Caa
Very poor financial security. They may be in default on their policyholder
obligations or there may be present elements of danger with respect to punctual
payment of policyholder obligations and claims.
Ca
Extremely poor financial security. Such companies are often in default on
their policyholder obligations or have other marked shortcomings.
C
Lowest rated class of insurance company. Such companies can be regarded as
having extremely poor prospects of ever offering financial security.
Numeric modifiers; Numeric modifiers are used to refer to the ranking
within the group -- one being the highest and three being the lowest. However,
the financial strength of companies within a generic rating symbol (Aa, for
example) is broadly the same.
Fitch
BOND RATINGS
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take into
consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or reorganization of
the obligor. DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA category covering 12-36 months.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the existence
of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+
EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2
GOOD CREDIT QUALITY. Issues carrying this rating have a satisfactory degree
of assurance for timely payments, but the margin of safety is not as great as
the F-1+ and F-1 categories.
F-3
FAIR CREDIT QUALITY. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate; however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-S
WEAK CREDIT QUALITY. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D
DEFAULT. Issues assigned this rating are in actual or imminent payment
default.
Duff
BOND RATINGS
AAA
Bonds rated AAA are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection factors but
still considered sufficient for prudent investment. There may be considerable
variability in risk for bonds in this category during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as likely
to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds may
be in default or have considerable uncertainty as to timely payment of interest,
preferred dividends and/or principal. Protection factors are narrow and risk can
be substantial with unfavorable economic or industry conditions and/or with
unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled principal
and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except AAA) to
indicate the relative position of a credit within the rating category.
COMMERCIAL PAPER RATINGS
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small. Paper rated Duff 3 is regarded
as having satisfactory liquidity and other protection factors. Risk factors are
larger and subject to more variation. Nevertheless, timely payment is expected.
Paper rated Duff 4 is regarded as having speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation. Paper rated Duff 5 is in default. The issuer has failed to meet
scheduled principal and/or interest payments.
CLAIMS PAYING ABILITY RATINGS
AAA
Highest claims paying ability. Risk factors are negligible.
AA
Very high claims paying ability. Protection Factors are st4rong. Risk is
modest, but may vary slightly over time due to economic and/or underwriting
conditions.
A
High claims paying ability. Protection factors are average and there is an
expectation of variability in risk over time due to economic and/or underwriting
conditions.
BBB
Adequate claims paying ability. Protection factors are adequate. There is
considerable variability in risk over time due to economic and/or underwriting
conditions.
BB
Uncertain claims paying ability and less than investment grade quality.
However, the company is deemed likely to meet these obligations when due.
Protection factors will vary widely with changes in economic and/or underwriting
conditions.
B
Possessing risk that policyholder and contractholder obligations will not
be paid when due. Protection factors will vary widely with changes in economic
and underwriting conditions or company fortunes.
CCC
There is substantial risk that policyholder and contractholder obligations
will not be paid when due. Company has been or is likely to be placed under
state insurance department supervision.
DD
Company is under an order of liquidation.
<PAGE>
FINANCIAL STATEMENT AND REPORT OF INDEPENDENT AUDITORS
STATEMENT OF ASSETS AND LIABILITIES
________, 1998
<TABLE>
<CAPTION>
CLASS P CLASS S CLASS Q
ASSETS
<S> <C> <C> <C>
Cash $ $ $
Total Assets
LIABILITIES
Accrued organization
expenses $ $ $
NET ASSETS applicable to
the
shares of beneficial
interest ($.001 par value)
issued and outstanding
(unlimited number of
shares authorized) $ $ $
SHARES OUTSTANDING
NET ASSET VALUE PER SHARE $ $ $
</TABLE>
NOTE - Dreyfus STABLE VALUE Mutual Fund (the "Fund") is organized as a
Massachusetts business trust and has had no operations as of the date hereof
other than matters relating to its organization and registration as an open-end
investment company under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and the sale and issuance of _______ shares
of beneficial interest each of Class P, Class S and Class Q, respectively, to
Premier Mutual Fund Services, Inc. ("Initial Shares").
Pursuant to a management agreement with The Dreyfus Corporation, the
management fee is computed at the annual rate of .35 of 1% of the value of the
average daily net assets of the Fund and is payable monthly.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
[TO BE PROVIDED]
<PAGE>
DREYFUS STABLE VALUE MUTUAL FUND
PART C. OTHER INFORMATION
-------------------------
Item 23. Exhibits. - List
- ------- ------------------
Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration of Trust.
(2) Registrant's By-Laws.
(4) Management Agreement.
(5) Distribution Agreement.
(7) Custody Agreement.
(9) Opinion and consent of Registrant's counsel.*
(10) Consent of Independent Auditors.*
(15) Rule 18f-3 Plan.
_________________________
* To be filed by amendment.
Item 24. Persons Controlled by or under Common Control with Registrant.
- ------- --------------------------------------------------------------
Not Applicable
Item 25. Indemnification
- ------- ---------------
Reference is made to Article EIGHTH of the Registrant's Agreement and
Declaration of Trust filed as Exhibit 1 hereto. The application of these
provisions is limited by Article 10 of the Registrant's By-Laws filed as
Exhibit 2 hereto and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Board members, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a Board member, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such Board member, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference is also made to the Distribution Agreement filed as
Exhibit 5 hereto.
Item 26. Business and Other Connections of Investment Adviser.
- ------- ----------------------------------------------------
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise
a financial service organization whose business consists primarily of
providing investment management services as the investment adviser,
manager and distributor for sponsored investment companies registered
under the Investment Company Act of 1940 and as an investment adviser
to institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-
investment adviser or administrator. Dreyfus Investment Advisors,
Inc., another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser (continued)
- -------- ----------------------------------------------------------------
Officers and Directors of Investment Adviser
--------------------------------------------
Name and Position
with Dreyfus Other Businesses
- ----------------- ----------------
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.****;
President:
Boston Safe Deposit and Trust Company****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Formerly, Chairman and Chief Executive Officer:
Officer, and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.**;
Director:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
RICHARD F. SYRON Chairman of the Board and
Director Chief Executive Officer:
American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company John
Hancock Place, Box 111 Boston, Massachusetts
02117; Thermo Electron Corporation 81 Wyman
Street, Box 9046 Waltham, Massachusetts
02254-9046; American Business Conference 1730 K
Street, NW, Suite 120 Washington, D.C. 20006;
Trustee:
Boston College - Board of Trustees
140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
J. DAVID OFFICER Vice Chairman:
Vice Chairman and The Dreyfus Corporation*;
a Director Director:
Dreyfus Financial Services Corporation*****;
Dreyfus Investment Services Corporation*****;
Mellon Trust of Florida 2875 Northeast 191st
Street North Miami Beach, Florida 33180; Mellon
Preferred Capital Corporation****; Boston Group
Holdings, Inc.****; Mellon Trust of New York 1301
Avenue of the Americas - 41st Floor New York, New
York 10019; Mellon Trust of California 400 South
Hope Street Los Angeles, California 90071-2806;
Executive Vice President:
Mellon Bank, N.A.***;
Vice Chairman and Director:
The Boston Company, Inc.****;
President and Director:
RECO, Inc.****;
The Boston Company Financial Services,
Inc.****;
Boston Safe Deposit and Trust Company****;
RONALD P. O'HANLEY Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
The Boston Company Asset Management, LLC****;
TBCAM Holding, Inc.****; Franklin Portfolio
Holdings, Inc. Two International Place - 22nd
Floor Boston, Massachusetts 02110; Mellon Capital
Management Corporation 595 Market Street, Suite
#3000 San Francisco, California 94105; Certus
Asset Advisors Corporation One Bush Street, Suite
450 San Francisco, California 94104; Mellon-France
Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.****;
Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP***;
Mellon Equity Associates, LLP***;
Trustee:
Laurel Capital Advisors, LLP***;
Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.***;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President Dreyfus Partnership Management, Inc.*;
and Chief Financial Seven Six Seven Agency, Inc.*;
Officer Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus America Fund+++;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
ANDREW S. WASSER Vice President:
Vice President- Mellon Bank Corporation***
Information Services
- --------------------------------------
* The address of the business so indicated is 200 Park Avenue, New York,
New York 10166.
** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
***** The address of the business so indicated is Union Trust Building, 501
Grant Street, Room 179, Pittsburgh, Pennsylvania 15259;
+ The address of the business so indicated is Atrium Building, 80 Route 4
East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
+++ The address of the business so indicated is 69, Route `d'Esch, L- 1470
Luxembourg.
++++ The address of the business so indicated is 69, Route `d'Esch, L- 2953
Luxembourg.
+++++ The address of the business so indicated is 53 State Street, Boston,
Massachusetts 02103.
Item 27. Principal Underwriters
- -------- ----------------------
(a) Other investment companies for which Registrant's principal underwriter
(exclusive distributor) acts as principal underwriter or exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus 100% U.S. Treasury Intermediate Term Fund
59) Dreyfus 100% U.S. Treasury Long Term Fund
60) Dreyfus 100% U.S. Treasury Money Market Fund
61) Dreyfus 100% U.S. Treasury Short Term Fund
62) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
63) Dreyfus Pennsylvania Municipal Money Market Fund
64) Dreyfus Premier California Municipal Bond Fund
65) Dreyfus Premier Equity Funds, Inc.
66) Dreyfus Premier International Funds, Inc.
67) Dreyfus Premier GNMA Fund
68) Dreyfus Premier Worldwide Growth Fund, Inc.
69) Dreyfus Premier Insured Municipal Bond Fund
70) Dreyfus Premier Municipal Bond Fund
71) Dreyfus Premier New York Municipal Bond Fund
72) Dreyfus Premier State Municipal Bond Fund
73) Dreyfus Premier Value Fund
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund, Inc.
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) General California Municipal Bond Fund, Inc.
85) General California Municipal Money Market Fund
86) General Government Securities Money Market Fund, Inc.
87) General Money Market Fund, Inc.
88) General Municipal Bond Fund, Inc.
89) General Municipal Money Market Fund, Inc.
90) General New York Municipal Bond Fund, Inc.
91) General New York Municipal Money Market Fund
<PAGE>
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
- ------------------ --------------------------- -------------
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial Officer and Assistant
Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
- --------------------------------
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
Item 28. Location of Accounts and Records
--------------------------------
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
- ------- -------------------
Not Applicable
Item 30. Undertakings
- -------- ------------
Not Applicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York on the 21st day of
July, 1998
BY: /s/Marie E. Connolly*
-----------------------
MARIE E. CONNOLLY, PRESIDENT
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to Registration
Statement hereby constitutes and appoints Marie E. Connolly, Michael S.
Petrucelli, Stephanie D. Pierce and Douglas C. Conroy, and each of them, with
full power to act without the other, his/her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him/her and
in his/her name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to this Registration Statement
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his/her substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signatures Title Date
- -------------------------- ------------------------------ ----------
/s/ Marie E. Connolly* President and Treasurer 07/21/98
- ------------------------- (Principal Executive Officer)
Marie E. Connolly
/s/ Joseph F. Tower, III* Assistant Treasurer (Principal 07/21/98
- -------------------------- Financial and Accounting Officer)
Joseph F. Tower, III
/s/ Joseph S. DiMartino* Chairman of the Board 07/21/98
- --------------------------
Joseph S. DiMartino
/s/ Lucy Wilson Benson* Board Member 07/21/98
- --------------------------
Lucy Wilson Benson
/s/ Clifford L. Alexander, Jr. Board Member 07/21/98
- ------------------------------
Clifford L. Alexander, Jr.
*BY: /s/ Douglas C. Conroy
---------------------
Douglas C. Conroy,
Attorney-in-Fact
<PAGE>
Index of Exhibits
-----------------
(1) Amended and Restated Agreement and Declaration of Trust.
(2) By-Laws
(4) Management Agreement
(5) Distribution Agreement
(7) Custody Agreement
(15) Rule 18f-3 Plan
EXHIBIT 1
Dreyfus STABLE VALUE Mutual Fund
(formerly, SSL-1993-8)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST, made this
30th day of June, 1998 hereby amends and restates in its entirety the Agreement
and Declaration of Trust made at Boston, Massachusetts, dated May 14, 1993 by
the Trustee hereunder (hereinafter with any additional and successor trustees
referred to as the "Trustees") and by the holders of shares of beneficial
interest to be issued hereunder as hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as hereinafter set
forth.
ARTICLE I
Name and Definitions
SECTION 1. NAME. This Trust shall be known as "Dreyfus STABLE VALUE Mutual
Fund."
SECTION 2. DEFINITIONS. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(c) "Shareholder" means a record owner of Shares of the Trust;
(d) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series or class of Shares is authorized by the
Trustees, the equal proportionate transferable units into which each series or
class of Shares shall be divided from time to time, and includes a fraction of a
Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The term "Manager" is defined in Article IV, Section 5;
(g) The term "Person" shall mean an individual or any corporation,
partnership, joint venture, trust or other enterprise;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(i) "By-Laws" shall mean the By-Laws of the Trust, as amended from time to
time;
(j) The term "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust representing
the beneficial interest of Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the division of Shares
representing any series into two or more classes as provided in Article III,
Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an investment company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without limitation of the
generality of the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or non- negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or created by
or guaranteed as to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the laws of any state,
the United States or any territory or possession thereof or under the laws of
any foreign country, bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash or by the issue of
stock, including treasury stock, bonds or notes of the Trust or otherwise; and
to exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in, Shares including
Shares in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or other
assets of the appropriate series or class of Shares, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts;
(e) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within and
without The Commonwealth of Massachusetts, in any and all States of the United
States of America, in the District of Columbia, and in any other parts of the
world; and
(f) to do all and everything necessary, suitable, convenient, or proper for
the conduct, promotion, and attainment of any of the businesses and purposes
herein specified or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust organized under
the Massachusetts General Laws, and to have and exercise all of the powers
conferred by the laws of The Commonwealth of Massachusetts upon a Massachusetts
business trust.
The foregoing provisions of this Article II shall be construed both as
purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
SECTION 1. SHARES OF BENEFICIAL INTEREST. The Shares of the Trust shall be
issued in one or more series as the Trustees may, without Shareholder approval,
authorize. Each series shall be preferred over all other series in respect of
the assets allocated to that series and shall represent a separate investment
portfolio of the Trust. The beneficial interest in each series at all times
shall be divided into Shares, with or without par value as the Trustees may from
time to time determine, each of which shall, except as provided in the following
sentence, represent an equal proportionate interest in the series with each
other Share of the same series, none having priority or preference over another.
The Trustees may, without Shareholder approval, divide Shares of any series into
two or more classes, Shares of each such class having such preferences and
special or relative rights and privileges (including conversion rights, if any)
as the Trustees may determine. The number of Shares authorized shall be
unlimited, and the Shares so authorized may be represented in part by fractional
shares. From time to time, the Trustees may divide or combine the Shares of any
series or class into a greater or lesser number without thereby changing the
proportionate beneficial interests in the series or class.
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares will be recorded in
the books of the Trust or a transfer agent. The record books of the Trust or any
transfer agent, as the case may be, shall be conclusive as to who are the
holders of Shares of each series and class and as to the number of Shares of
each series and class held from time to time by each. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time.
SECTION 3. ISSUANCE OF SHARES. The Trustees are authorized, from time to
time, to issue or authorize the issuance of Shares at not less than the par
value thereof, if any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum consideration
for such Shares. Anything herein to the contrary notwithstanding, the Trustees
may issue Shares pro rata to the Shareholders of a series at any time as a stock
dividend, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall belong irrevocably to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to the same extent as
whole Shares, and Shares in fractional denominations shall be Shares having
proportionately to the respective fractions represented thereby all the rights
of whole Shares, including, without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Trust or of a particular series of Shares.
SECTION 4. NO PREEMPTIVE RIGHTS; DERIVATIVE SUITS. Shareholders shall have
no preemptive or other right to subscribe for any additional Shares or other
securities issued by the Trust. No action may be brought by a Shareholder on
behalf of the Trust or a series unless a prior demand regarding such matter has
been made on the Trustees and the Shareholders of the Trust or such series.
SECTION 5. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind any Shareholder or Trustee personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder at any time personally may agree to pay by way of
subscription for any Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its assets or the
assets of a particular series (but the omission of such a recitation shall not
operate to bind any Shareholder or Trustee personally).
ARTICLE IV
Trustees
SECTION 1. ELECTION. A Trustee may be elected either by the Trustees or the
Shareholders. The Trustees named herein shall serve until the first meeting of
the Shareholders or until the election and qualification of their successors.
Prior to the first meeting of Shareholders the initial Trustees hereunder may
elect additional Trustees to serve until such meeting and until their successors
are elected and qualified. The Trustees also at any time may elect Trustees to
fill vacancies in the number of Trustees. The number of Trustees shall be fixed
from time to time by the Trustees and, at or after the commencement of the
business of the Trust, shall be not less than three. Each Trustee, whether
referred to hereinafter or hereafter becoming a Trustee, shall serve as a
Trustee during the lifetime of this Trust, until such Trustee dies, resigns,
retires, or is removed, or, if sooner, until the next meeting of Shareholders
called for the purpose of electing Trustees and the election and qualification
of his successor. Subject to Section 16(a) of the 1940 Act, the Trustees may
elect their own successors and, pursuant to this Section, may appoint Trustees
to fill vacancies.
SECTION 2. POWERS. The Trustees shall have all powers necessary or
desirable to carry out the purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without limiting the generality of
the foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that they do not reserve that right to
the Shareholders; they may fill vacancies in their number, including vacancies
resulting from increases in their own number, and may elect and remove such
officers and employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and terminate any
one or more committees; they may employ one or more custodians of the assets of
the Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities, retain a transfer agent and a Shareholder servicing
agent, or both, provide for the distribution of Shares through a principal
underwriter or otherwise, set record dates, and in general delegate such
authority as they consider desirable (including, without limitation, the
authority to purchase and sell securities and to invest funds, to determine the
net income of the Trust for any period, the value of the total assets of the
Trust and the net asset value of each Share, and to execute such deeds,
agreements or other instruments either in the name of the Trust or the names of
the Trustees or as their attorney or attorneys or otherwise as the Trustees from
time to time may deem expedient) to any officer of the Trust, committee of the
Trustees, any such employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees shall have
full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
(b) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not indicating any trust
whether in bearer, unregistered or other negotiable form or in the name of the
Trust or a custodian, subcustodian or other depository or a nominee or nominees
or otherwise;
(d) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(f) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(g) Subject to the provisions of Article III, Section 3, to allocate
assets, liabilities, income and expenses of the Trust to a particular series of
Shares or to apportion the same among two or more series, provided that any
liabilities or expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or relative rights and
privileges of any classes of Shares, to allocate assets, liabilities, income and
expenses of a series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of that series;
(h) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(i) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers or Managers, principal underwriters, or independent
contractors of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer, employee, agent, investment
adviser or Manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability; and
(j) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
Further, without limiting the generality of the foregoing, the Trustees
shall have full power and authority to incur and pay out of the principal or
income of the Trust such expenses and liabilities as may be deemed by the
Trustees to be necessary or proper for the purposes of the Trust; PROVIDED,
HOWEVER, that all expenses and liabilities incurred by or arising in connection
with a particular series of Shares, as determined by the Trustees, shall be
payable solely out of the assets of that series.
Any determination made in good faith and, so far as accounting matters are
involved, in accordance with generally accepted accounting principles by or
pursuant to the authority granted by the Trustees, as to the amount of the
assets, debts, obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged); the price or closing bid or asked price of
any investment owned or held by the Trust or a particular series; the market
value of any investment or fair value of any other asset of the Trust or a
particular series; the number of Shares outstanding; the estimated expense to
the Trust or a particular series in connection with purchases of its Shares; the
ability to liquidate investments in an orderly fashion; and the extent to which
it is practicable to deliver a cross-section of the portfolio of the Trust or a
particular series in payment for any such Shares, or as to any other matters
relating to the issue, sale, purchase and/or other acquisition or disposition of
investments or Shares of the Trust or a particular series, shall be final and
conclusive, and shall be binding upon the Trust or such series and its
Shareholders, past, present and future, and Shares are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid.
SECTION 3. MEETINGS. At any meeting of the Trustees, a majority of the
Trustees then in office shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice.
When a quorum is present at any meeting, a majority of the Trustees present
may take any action, except when a larger vote is required by this Declaration
of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of the Trustees
or of any committee thereof may be taken without a meeting, if a written consent
to such action is signed by a majority of the Trustees or members of any such
committee then in office, as the case may be, and such written consent is filed
with the minutes of proceedings of the Trustees or any such committee.
The Trustees or any committee designated by the Trustees may participate in
a meeting of the Trustees or such committee by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
SECTION 4. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the assets of
each series of Shares of the Trust at all times shall be considered as vested in
the Trustees.
SECTION 5. INVESTMENT ADVICE AND MANAGEMENT Services. The Trustees shall
not in any way be bound or limited by any present or future law or custom in
regard to investments by trustees. The Trustees from time to time may enter into
a written contract or contracts with any person or persons (herein called the
"Manager"), including any firm, corporation, trust or association in which any
Trustee or Shareholder may be interested, to act as investment advisers and/or
managers of the Trust and to provide such investment advice and/or management as
the Trustees from time to time may consider necessary for the proper management
of the assets of the Trust, including, without limitation, authority to
determine from time to time what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. Any such contract
shall be subject to the requirements of the 1940 Act with respect to its
continuance in effect, its termination and the method of authorization and
approval of such contract, or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be associated
also may act as broker for the Trust in making purchases and sales of securities
for or to the Trust for its investment portfolio, and may charge and receive
from the Trust the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as broker for the
Trust shall be responsible only for the proper execution of transactions in
accordance with the instructions of the Trust and shall be subject to no further
liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor for the
sale of Shares by separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a person in which any Trustee
or any distributor is interested financially, subject only to applicable
provisions of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving compensation
for services rendered as such distributor.
SECTION 6. REMOVAL AND RESIGNATION OF TRUSTEES. The Trustees or the
Shareholders (by vote of 66-2/3% of the outstanding Shares entitled to vote
thereon) may remove at any time any Trustee with or without cause, and any
Trustee may resign at any time as Trustee, without penalty by written notice to
the Trust.
ARTICLE V
Shareholders' Voting Powers and Meetings
SECTION 1. VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Article IV, Section 1, of this
Declaration of Trust; PROVIDED, HOWEVER, that no meeting of Shareholders is
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in Article IV,
Section 6, (iii) with respect to any Manager as provided in Article IV, Section
5, (iv) with respect to any amendment of this Declaration of Trust as provided
in Article IX, Section 8, (v) with respect to the termination of the Trust or a
series of Shares as provided in Article IX, Section 5, and (vi) with respect to
such additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, or the By- Laws of the Trust or any registration of the
Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote (except that in the election of Trustees said vote
may be cast for as many persons as there are Trustees to be elected), and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted in the aggregate as a single class without regard to series
or classes of Shares, except (i) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or more series or
classes differently Shares shall be voted by individual series or class and (ii)
when the Trustees have determined that the matter affects only the interests of
one or more series or classes then only Shareholders of such series or classes
shall be entitled to vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them, unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Whenever no Shares of any series or
class are issued and outstanding, the Trustees may exercise with respect to such
series or class all rights of Shareholders and may take any action required by
law, this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
SECTION 2. MEETINGS. Meetings of the Shareholders may be called by the
Trustees or such other person or persons as may be specified in the By-Laws and
shall be called by the Trustees upon the written request of Shareholders owning
at least thirty percent (30%) of the outstanding Shares entitled to vote.
Shareholders shall be entitled to at least ten days' prior notice of any
meeting.
SECTION 3. QUORUM AND REQUIRED VOTE. Thirty percent (30%) of the
outstanding Shares shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series or class
shall vote as a series or class, then thirty percent (30%) of the aggregate
number of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class. Any
lesser number, however, shall be sufficient for adjournment and any adjourned
session or sessions may be held within 90 days after the date set for the
original meeting without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust or the By-Laws of
the Trust and subject to any applicable requirements of law, a majority of the
Shares voted shall decide any question and a plurality shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust permits
or requires that the holders of any series or class shall vote as a series or
class, then a majority of the Shares of that series or class voted on the matter
(or a plurality with respect to the election of a Trustee) shall decide that
matter insofar as that series or class is concerned.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at any meeting may be taken without a meeting if a consent in writing,
setting forth such action, is signed by a majority of Shareholders entitled to
vote on the subject matter thereof (or such larger proportion thereof as shall
be required by any express provision of this Declaration of Trust) and such
consent is filed with the records of the Trust.
SECTION 5. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
SECTION 1. DISTRIBUTIONS. The Trustees shall distribute periodically to the
Shareholders of each series of Shares an amount approximately equal to the net
income of that series, determined by the Trustees or as they may authorize and
as herein provided. Distributions of income may be made in one or more payments,
which shall be in Shares, cash or otherwise, and on a date or dates and as of a
record date or dates determined by the Trustees. At any time and from time to
time in their discretion, the Trustees also may cause to be distributed to the
Shareholders of any one or more series as of a record date or dates determined
by the Trustees, in Shares, cash or otherwise, all or part of any gains realized
on the sale or disposition of the assets of the series or all or part of any
other principal of the Trust attributable to the series. Each distribution
pursuant to this Section 1 shall be made ratably according to the number of
Shares of the series held by the several Shareholders on the record date for
such distribution, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, and any distribution to the Shareholders of a particular
class of Shares shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them. No distribution need be
made on Shares purchased pursuant to orders received, or for which payment is
made, after such time or times as the Trustees may determine.
SECTION 2. DETERMINATION OF NET INCOME. In determining the net income of
each series or class of Shares for any period, there shall be deducted from
income for that period (a) such portion of all charges, taxes, expenses and
liabilities due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier period and (b)
whatever reasonable reserves the Trustees shall consider advisable for possible
future charges, taxes, expenses and liabilities which the Trustees shall
consider properly chargeable and fairly applicable to income for that period or
any earlier period. The net income of each series or class for any period may be
adjusted for amounts included on account of net income in the net asset value of
Shares issued or redeemed or repurchased during that period. In determining the
net income of a series or class for a period ending on a date other than the end
of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the discretionary powers of the
Trustees. Any amount contributed to the Trust which is received as income
pursuant to a decree of any court of competent jurisdiction shall be applied as
required by the said decree.
SECTION 3. REDEMPTIONS. Any Shareholder shall be entitled to require the
Trust to redeem and the Trust shall be obligated to redeem at the option of such
Shareholder all or any part of the Shares owned by said Shareholder, at the
redemption price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be presented for redemption
in proper form for transfer to the Trust or the agent of the Trust appointed for
such purpose, and these shall be presented with a written request that the Trust
redeem all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net asset value per Share
when next determined by the Trust at such time or times as the Trustees shall
designate, following the time of presentation of certificates for Shares, if
issued, and an appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the 1940 Act, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as amended, as determined by the
Trustees, less any applicable charge or fee imposed from time to time as
determined by the Trustees.
(c) Net asset value of each series or class of Shares (for the purpose of
issuance of Shares as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series or class determined
as provided in paragraph (d) below less, to the extent determined by or
pursuant to the direction of the Trustees in accordance with generally
accepted accounting principles, all debts, obligations and liabilities of
such series or class (which debts, obligations and liabilities shall
include, without limitation of the generality of the foregoing, any and all
debts, obligations, liabilities, or claims, of any and every kind and
nature, fixed, accrued and otherwise, including the estimated accrued
expenses of management and supervision, administration and distribution and
any reserves or charges for any or all of the foregoing, whether for taxes,
expenses, or otherwise, and the price of Shares redeemed but not paid for)
but excluding the Trust's liability upon its Shares and its surplus, by
(ii) the total number of Shares of such series or class outstanding.
The Trustees are empowered, in their absolute discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by them to be necessary to enable the Trust to comply with applicable
law, or are deemed by them to be desirable, provided they are not inconsistent
with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration of Trust the total
value of the assets of each series or class of Shares at any time, investments
and any other assets of such series or class shall be valued in such manner as
may be determined from time to time by or pursuant to the order of the Trustees.
(e) Payment of the redemption price by the Trust may be made either in cash
or in securities or other assets at the time owned by the Trust or partly in
cash and partly in securities or other assets at the time owned by the Trust.
The value of any part of such payment to be made in securities or other assets
of the Trust shall be the value employed in determining the redemption price.
Payment of the redemption price shall be made on or before the seventh day
following the day on which the Shares are properly presented for redemption
hereunder, except that delivery of any securities included in any such payment
shall be made as promptly as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made and, except as postponement of
the date of payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct from the
payment made for any Shares redeemed a liquidating charge not in excess of an
amount determined by the Trustees from time to time.
(f) The right of any holder of Shares redeemed by the Trust as provided in
this Article VI to receive dividends or distributions thereon and all other
rights of such Shareholder with respect to such Shares shall terminate at the
time as of which the redemption price of such Shares is determined, except the
right of such Shareholder to receive (i) the redemption price of such Shares
from the Trust in accordance with the provisions hereof, and (ii) any dividend
or distribution to which such Shareholder previously had become entitled as the
record holder of such Shares on the record date for such dividend or
distribution.
(g) Redemption of Shares by the Trust is conditional upon the Trust having
funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may repurchase its
Shares, out of funds legally available therefor, upon such terms and conditions
and for such consideration as the Trustees shall deem advisable, by agreement
with the owner at a price not exceeding the net asset value per Share as
determined by or pursuant to the order of the Trustees at such time or times as
the Trustees shall designate, less any applicable charge, if and as fixed by the
Trustees from time to time, and to take all other steps deemed necessary or
advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be cancelled or held by
the Trust for reissue, as the Trustees from time to time may determine.
(j) The obligations set forth in this Article VI may be suspended or
postponed, (1) for any period (i) during which the New York Stock Exchange is
closed other than for customary weekend and holiday closings, or (ii) during
which trading on the New York Stock Exchange is restricted, (2) for any period
during which an emergency exists as a result of which (i) the disposal by the
Trust of investments owned by it is not reasonably practicable, or (ii) it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (3) for such other periods as the Commission or any successor
governmental authority by order may permit.
Notwithstanding any other provision of this Section 3 of Article VI, if
certificates representing such Shares have been issued, the redemption or
repurchase price need not be paid by the Trust until such certificates are
presented in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
SECTION 4. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall have the
right at its option and at any time to redeem Shares of any Shareholder at the
net asset value thereof as determined in accordance with Section 3 of Article VI
of this Declaration of Trust: (i) if at such time such Shareholder owns fewer
Shares than, or Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to the extent that
such Shareholder owns Shares of a particular series or class of Shares equal to
or in excess of a percentage of the outstanding Shares of that series or class
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
SECTION 5. DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES. No
dividend or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
SECTION 1. COMPENSATION. The Trustees shall be entitled to reasonable
compensation from the Trust and may fix the amount of their compensation.
SECTION 2. LIMITATION OF LIABILITY. The Trustees shall not be responsible
or liable in any event for any neglect or wrongdoing of any officer, agent,
employee or Manager of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, share, or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust, shall be
deemed conclusively to have been executed or done only in their or his or her
capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
ARTICLE VIII
Indemnification
SECTION 1. INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS.
Each person who is or was a Trustee, officer, employee or agent of the Trust or
who serves or has served at the Trust's request as a director, officer or
trustee of another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to indemnification out of
the assets of the Trust to the extent provided in, and subject to the provisions
of, the By-Laws, provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
SECTION 2. MERGED CORPORATIONS. For the purposes of this Article VIII
references to "the Trust" include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents as well as the resulting
or surviving entity; so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee, director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving entity as he or she
would have with respect to such a constituent corporation if its separate
existence had continued.
SECTION 3. SHAREHOLDERS. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the particular series of Shares of which he or she
is or was a Shareholder to be held harmless from and indemnified against all
losses and expenses arising from such liability. Upon request, the Trust shall
cause its counsel to assume the defense of any claim which, if successful, would
result in an obligation of the Trust to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
SECTION 1. TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Share-
holders. All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the assets
of the Trust or the assets of that particular series for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
otherwise would be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
SECTION 2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY.
The exercise by the Trustees of their powers and discretion hereunder under the
circumstances then prevailing, shall be binding upon everyone interested. A
Trustee shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and subject to the provisions of Section 1 of this Article IX shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
SECTION 3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
SECTION 4. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. All
persons extending credit to, contracting with or having any claim against the
Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
SECTION 5. TERMINATION OF TRUST. Unless terminated as provided herein, the
Trust shall continue without limitation of time. The Trust may be terminated at
any time by vote of Shareholders holding at least a majority of the Shares of
each series entitled to vote or by the Trustees by written notice to the
Shareholders. Any series of Shares may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of such series entitled
to vote or by the Trustees by written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated as may be determined by the Trustees, the
Trust shall reduce, in accordance with such procedures as the Trustees consider
appropriate, the remaining assets to distributable form in cash or shares or
other securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the series involved, ratably according to the number of Shares
of such series held by the several Shareholders of such series on the date of
termination, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
SECTION 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a copy
of this instrument and of each amendment hereto and of each Declaration of Trust
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall be filed by the Trust with
the Secretary of State of The Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any such amendments or supplemental
Declarations of Trust have been made and as to matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may rely
on a copy certified by an officer of the Trust to be a copy of this instrument
or of any such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration of Trust,
references to this instrument, and all expressions like "herein," "hereof," and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such amendment or supplemental Declaration of Trust. Headings are placed
herein for convenience of reference only and in case of any conflict, the text
of this instrument, rather than the headings, shall control. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 7. APPLICABLE LAW. The Trust set forth in this instrument is made
in The Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
SECTION 8. AMENDMENTS. This Declaration of Trust may be amended at any time
by an instrument in writing signed by a majority of the then Trustees when
authorized so to do by a vote of Shareholders holding a majority of the Shares
outstanding and entitled to vote, except that an amendment which shall affect
the holders of one or more series or class of Shares but not the holders of all
outstanding series or classes of Shares shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of the series or
classes affected and no vote of Shareholders of a series or class not affected
shall be required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned Trustee has hereunto set his hand and
seal for himself and his assigns as of the day and year first above written.
------------------------------
Michael S. Petrucelli, Trustee
Address: 200 Park Avenue
New York, NY 10166
ADDRESS OF TRUST:
200 Park Avenue
New York, NY 10166
ADDRESS OF RESIDENT AGENT:
CT Corporation System
2 Oliver Street
Boston, MA 02109
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 30th day of June 1998, before me personally came the above-named
Trustee of the Fund, to me known, and known to me to be the person described in
and who executed the foregoing instrument, and who duly acknowledged to me that
he had executed the same.
Notary Public
EXHIBIT 2
BY-LAWS
OF
DREYFUS STABLE VALUE MUTUAL FUND
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the above-captioned Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2. PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall
be located in New York, New York. Its resident agent in Massachusetts shall be
CT Corporation System, 2 Oliver Street, Boston, Massachusetts 02109, or such
other person as the Trustees from time to time may select.
ARTICLE 2
Meetings of Trustees
2.1. REGULAR MEETINGS. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees from time to
time may determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees.
2.2. SPECIAL MEETINGS. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
President or the Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant Secretary or by the
officer or the Trustees calling the meeting.
2.3. NOTICE OF SPECIAL MEETINGS. It shall be sufficient notice to a Trustee
of a special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to the Trustee
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.4. NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. An officer may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2. ELECTION. The President, the Treasurer and the Secretary shall be
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3. TENURE. The President, Treasurer and Secretary shall hold office in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4. POWERS. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as commonly are incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation or such other duties and powers as the Trustees may from
time to time designate.
3.5. PRESIDENT. Unless the Trustees otherwise provide, the President shall
preside at all meetings of the shareholders and of the Trustees. Unless the
Trustees otherwise provide, the President shall be the chief executive officer.
3.6. TREASURER. The Treasurer shall be the chief financial and accounting
officer of the Trust, and, subject to the provisions of the Declaration of Trust
and to any arrangement made by the Trustees with a custodian, investment adviser
or manager, or transfer, shareholder servicing or similar agent, shall be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the President.
3.7. SECRETARY. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8. RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the President
or Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the Trust, no Trustee
or officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1. APPOINTMENT. The Trustees may appoint from their number an executive
committee and other committees. Except as the Trustees otherwise may determine,
any such committee may make rules for conduct of its business.
4.2. QUORUM; VOTING. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall be subject to
change, by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with the word
"Massachusetts," together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and in its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases may authorize the
execution thereof in some other manner, all deeds, leases, contracts, notes and
other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. SALE OF SHARES. Except as otherwise determined by the Trustees, the
Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share, as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these By- Laws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
Shares shall not be sold to individuals and entities other than
Participating Insurance Companies, as defined by the Trustees, pursuant to
variable annuity and variable life insurance contracts, and Eligible Plans, as
defined by the Trustees. Sales of shares to individuals or entities other than
Participating Insurance Companies or Eligible Plans are unauthorized and shall
be deemed invalid and void AB IBNITIO.
9.2. SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent either may issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case, for all purposes hereunder, be deemed to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him or her, in such form as shall be prescribed from
time to time by the Trustees. Such certificate shall be signed by the President
or Vice President and by the Treasurer or Assistant Treasurer. Such signatures
may be facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issue.
9.3. LOSS OF CERTIFICATES. The Trust, or if any transfer agent is appointed
for the Trust, the transfer agent with the approval of any two officers of the
Trust, is authorized to issue and countersign replacement certificates for the
shares of the Trust which have been lost, stolen or destroyed subject to the
deposit of a bond or other indemnity in such form and with such security, if
any, as the Trustees may require.
9.4. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees at any time
may discontinue the issuance of share certificates and by written notice to each
shareholder, may require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
ARTICLE 10
Indemnification
10.1. TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the merits
in any such action, suit or other proceeding not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust and except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid from time to
time by the Trust in advance of the final disposition or any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, PROVIDED
THAT (a) such Covered Person shall provide security for his or her undertaking,
(b) the Trust shall be insured against losses arising by reason of such Covered
Person's failure to fulfill his or her undertaking, or (c) a majority of the
Trustees who are disinterested persons and who are not Interested Persons (as
that term is defined in the Investment Company Act of 1940) (provided that a
majority of such Trustees then in office act on the matter), or independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled to
indemnification.
10.2. COMPROMISE PAYMENT. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination, based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
10.3 INDEMNIFICATION NOT EXCLUSIVE. The right of indemnification hereby
provided shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 10, the term "Covered
Person" shall include such person's heirs, executors and administrators, and a
"disinterested person" is a person against whom none of the actions, suits or
other proceedings in question or another action, suit, or other proceeding on
the same or similar grounds is then or has been pending. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of such person.
10.4. LIMITATION. Notwithstanding any provisions in the Declaration of
Trust and these By-Laws pertaining to indemnification, all such provisions are
limited by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is
asserted by a Trustee, officer or controlling person of the
Trust in connection with the registered securities of the
Trust, the Trust will not make such indemnification unless (i)
the Trust has submitted, before a court or other body, the
question of whether the person to be indemnified was liable by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final
decision on the merits that such person was not liable by
reason of such conduct or (ii) in the absence of such
decision, the Trust shall have obtained a reasonable
determination, based upon a review of the facts, that such
person was not liable by virtue of such conduct, by (a) the
vote of a majority of Trustees who are neither interested
persons as such term is defined in the
Investment Company Act of 1940, nor parties to the proceeding
or (b) an independent legal counsel in a written opinion.
The Trust will not advance attorneys' fees or other
expenses incurred by the person to be indemnified unless the
Trust shall have (i) received an undertaking by or on behalf
of such person to repay the advance unless it is ultimately
determined that such person is entitled to indemnification and
one of the following conditions shall have occurred: (x) such
person shall provide security for his undertaking, (y) the
Trust shall be insured against losses arising by reason of any
lawful advances or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an independent legal
counsel in a written opinion, shall have determined that based
on a review of readily available facts there is reason to
believe that such person ultimately will be found entitled to
indemnification.
ARTICLE 11
Shareholders
11.1. MEETINGS. A meeting of the shareholders shall be called by the
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series or class of shares, but not a meeting of all shareholders of the Trust,
then only the shareholders of such one or more series or classes shall be
entitled to notice of and to vote at the meeting. If the Secretary, when so
ordered or requested, refuses or neglects for more than five days to call such
meeting, the Trustees, or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2. ACCESS TO SHAREHOLDER LIST. Shareholders of record may apply to the
Trustees for assistance in communicating with other shareholders for the purpose
of calling a meeting in order to vote upon the question of removal of a Trustee.
When ten or more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 or at least 1% of the outstanding
shares, whichever is less, so apply, the Trustees shall within five business
days either:
(i) afford to such applicants access to a list of names and addresses of
all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders of
record and the approximate cost of mailing material to them and, within a
reasonable time thereafter, mail materials submitted by the applicants to all
such shareholders of record. The Trustees shall not be obligated to mail
materials which they believe to be misleading or in violation of applicable law.
11.3. RECORD DATES. For the purpose of determining the shareholders of any
series or class who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any dividend or
of any other distribution, the Trustees from time to time may fix a time, which
shall be not more than 90 days before the date of any meeting of shareholders or
the date of payment of any dividend or of any other distribution, as the record
date for determining the shareholders of such series or class having the right
to notice of and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right notwithstanding
any transfer of shares on the books of the Trust after the record date; or
without fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or part of such period.
11.4. PLACE OF MEETINGS. All meetings of the shareholders shall be held at
the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
11.5. NOTICE OF MEETINGS. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least ten days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the Secretary or an Assistant Secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
11.6. BALLOTS. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and entitled to
vote in the election.
11.7. PROXIES. Shareholders entitled to vote may vote either in person or
by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. The placing of a
shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by such shareholder shall
constitute execution of such proxy by or on behalf of such shareholder.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
Dated: June 30, 1998
EXHIBIT 4
MANAGEMENT AGREEMENT
DREYFUS STABLE VALUE MUTUAL FUND
200 Park Avenue
New York, New York 10166
July 29, 1998
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund") herewith confirms its
agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
investment adviser.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of the Fund's portfolio in accordance with the
Fund's investment objectives and policies as stated in its Prospectus and
Statement of Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment research and will
supervise the Fund's investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's assets. You
will furnish to the Fund such statistical information, with respect to the
investments which the Fund may hold or contemplate purchasing, as the Fund may
reasonably request. The Fund wishes to be informed of important developments
materially affecting its portfolio and shall expect you, on your own initiative,
to furnish to the Fund from time to time such information as you may believe
appropriate for this purpose.
In addition, you will supply office facilities (which may be in your own
offices), data processing services, clerical, accounting and bookkeeping
services, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; prepare reports to
the Fund's stockholders, tax returns, reports to and filings with the Securities
and Exchange Commission and state Blue Sky authorities; calculate the net asset
value of the Fund's shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to engage other entities
to assist you in performing some or all of the obligations set forth in this
paragraph, provided each such entity enters into an agreement with you in form
and substance reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as if you had acted
or failed to act under the circumstances.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by the Fund, provided that
nothing herein shall be deemed to protect or purport to protect you against any
liability to the Fund or to its security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement, the Fund
will pay you on the first business day of each month a fee at the annual rate of
.35 of 1% of the value of the Fund's average daily net assets. Net asset value
shall be computed on such days and at such time or times as described in the
Fund's then-current Prospectus and Statement of Additional Information. The fee
for the period from the date of the commencement of the public sale of the
Fund's shares to the end of the month during which such sale shall have been
commenced shall be pro-rated according to the proportion which such period bears
to the full monthly period, and upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of the Fund's
net assets shall be computed in the manner specified in the Fund's charter
documents for the computation of the value of the Fund's net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not your
officers, directors or employees or holders of 5% or more of your outstanding
voting securities, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
The Fund understands that you now act, and that from time to time hereafter
you may act, as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of the same issuer
is suitable for the investment objectives of two or more companies or accounts
managed by you which have available funds for investment, the available
securities will be allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtainable for or disposed of by the Fund.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
You shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under this Agreement.
Any person, even though also your officer, director, partner, employee or agent,
who may be or become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on any business
of the Fund, to be rendering such services to or acting solely for the Fund and
not as your officer, director, partner, employee or agent or one under your
control or direction even though paid by you.
This Agreement shall continue until July 29, 2000, and thereafter shall
continue automatically for successive annual periods ending on July 29th of each
year, provided such continuance is specifically approved at least annually by
(i) the Fund's Board or (ii) vote of a majority (as defined in the Investment
Company Act of 1940) of the Fund's outstanding voting securities, provided that
in either event its continuance also is approved by a majority of the Fund's
Board members who are not "interested persons" (as defined in said Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board or by vote of holders of a
majority of the Fund's shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically in the event of its assignment
(as defined in said Act).
The Fund recognizes that from time to time your directors, officers and
employees may serve as directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other entities (including
other investment companies) and that such other entities may include the name
"Dreyfus" as part of their name, and that your corporation or its affiliates may
enter into investment advisory or other agreements with such other entities. If
you cease to act as the Fund's investment adviser, the Fund agrees that, at your
request, the Fund will take all necessary action to change the name of the Fund
to a name not including "Dreyfus" in any form or combination of words.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Board member, officer or shareholder of the
Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS STABLE VALUE
MUTUAL FUND
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:____________________________
EXHIBIT 5
DISTRIBUTION AGREEMENT
DREYFUS STABLE VALUE MUTUAL FUND
200 Park Avenue
New York, New York 10166
July 29, 1998
Premier Mutual Fund Services, Inc.
60 State Street
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that you
shall be, for the period of this agreement, the distributor of (a) shares of
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series are set forth
on such Exhibit, shares of the Fund. For purposes of this agreement the term
"Shares" shall mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by, and in
accordance with, the registration statement and prospectus then in effect under
the Securities Act of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you will enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market, economic
or political conditions, or by abnormal circumstances of any kind, the Fund's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all expenses which may be
incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.7 The Fund shall furnish you from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as you may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
you upon request with: (a) semi-annual reports and annual audited reports of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as you may reasonably request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an 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 not misleading. The Fund may
but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form furnished to
you from time to time, in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and directors, and any
person who controls you within the meaning of Section 15 of the Securities Act
of 1933, as amended, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling person, may incur under the Securities Act of 1933, as amended, or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph
1.9. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Fund and approved
by you. In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by you or them. The Fund's indemnification agreement
contained in this paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Fund or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several officers
and Board members, and any person who controls the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers or
Board members, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its officers or
Board members, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.10. This agreement of
indemnity will inure exclusively to the Fund's benefit, to the benefit of the
Fund's officers and Board members, and their respective estates, and to the
benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any litigation or
proceedings against you or any of your officers or directors in connection with
the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any of the
provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or
for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement of
a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which
may from time to time be filed with the Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be offered
for sale at a price per share (the "offering price") approximately equal to (a)
their net asset value (determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those persons set forth
in the then-current prospectus, which shall be the percentage of the offering
price of such Shares as set forth in the Fund's then-current prospectus. The
offering price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund offered for sale by
you may be subject to a contingent deferred sales charge as set forth in the
Fund's then-current prospectus. You shall be entitled to receive any sales
charge or contingent deferred sales charge in respect of the Shares. Any
payments to dealers shall be governed by a separate agreement between you and
such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date") set
forth on Exhibit A hereto (and, if the Fund has Series, a separate Reapproval
Date shall be specified on Exhibit A for each Series), and thereafter shall
continue automatically for successive annual periods ending on the day (the
"Reapproval Day") of each year set forth on Exhibit A hereto, provided such
continuance is specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may be, provided that
in either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any party
to this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable without penalty, on 60
days' notice, by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities or by the Fund's
Board as to the Fund or the relevant Series, as the case may be. This agreement
is terminable by you, upon 270 days' notice, effective on or after the fifth
anniversary of the date hereof. This agreement also will terminate
automatically, as to the Fund or relevant Series, as the case may be, in the
event of its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you shall not perform any
services for any entity other than investment companies advised or administered
by The Dreyfus Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this agreement may not
devote their full time to such service and nothing contained in this agreement
shall be deemed to limit or restrict your or any of your affiliates right to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The obligations
of this agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Board member, officer or shareholder of the
Fund individually.
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon it shall become
a binding agreement between us.
Very truly yours,
DREYFUS STABLE VALUE MUTUAL FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:_______________________________
<PAGE>
EXHIBIT A
REAPPROVAL DATE REAPPROVAL DAY
July 29, 2000 July 29th
EXHIBIT 7
CUSTODY AGREEMENT
AGREEMENT dated as of July 29, 1998 between DREYFUS STABLE VALUE MUTUAL
FUND (the "Fund"), an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts, having its principal office and place of
business at 200 Park Avenue, New York, New York 10166, and MELLON BANK, N.A.
(the "Custodian"), a national banking association, having its principal place of
business at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, with respect
to the Fund's series named on Schedule 1 hereto, as such Schedule may be revised
from time to time (each, a "Series").
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and the Custodian agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within Section
2(a)(3) of the 1940 Act.
(b) "Authorized Person" shall mean those persons duly authorized by the
Fund's Board to give Oral Instructions and Written Instructions on behalf
of the Fund and listed in the certification annexed hereto as Appendix A or
such other certification as may be received by the Custodian from time to
time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its successor or
successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized and instructed on a continuous and on-going basis
to deposit all Securities eligible for deposit therein, and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder.
(d) "Business Day" shall mean each day on which the Fund is required to
determine its net asset value, and any other day on which the Securities
and Exchange Commission may require the Fund to be open for business.
(e) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf
of the Fund by any two Authorized Persons or any two officers of the Fund.
(f) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the Custodian
is hereby specifically authorized and instructed on a continuous and
on-going basis to deposit all Securities eligible for deposit therein, and
to utilize the Depository to the extent possible in connection with its
performance hereunder. The term "Depository" shall further mean and include
any other person to be named in a Certificate authorized to act as a
depository under the 1940 Act, its successor or successors and its nominee
or nominees.
(g) "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to interest and principal by the
government of the United States or agencies or instrumentalities thereof
("U.S. government securities"), commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations, where
the purchase or sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale, and repurchase and
reverse repurchase agreements with respect to any of the foregoing types of
securities and bank time deposits.
(h) "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from a person reasonably believed by the Custodian to be an
Authorized Person.
(i) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(j) "Shares" shall mean all or any part of each class of shares of
beneficial interest of the Fund, allocated to a particular Series, listed
in the Certificate annexed hereto as Appendix B, as it may be amended from
time to time, which from time to time are authorized and/or issued by the
Fund.
(k) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time owned
by the Fund.
(l) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions
for the Fund.
(m) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex, whereby the
receiver of such communication is able to verify by codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication.
(n) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. APPOINTMENT OF CUSTODIAN.
(a) The Fund hereby constitutes and appoints the Custodian as custodian of
all the Securities and monies at the time owned by or in the possession of
the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
3. COMPENSATION.
(a) The Fund will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein. Such Fee Schedule
does not include out-of-pocket disbursements of the Custodian for which the
Custodian shall be entitled to bill separately. Out-of-pocket disbursements
shall consist of the items specified in the Schedule of Out-of-pocket
charges annexed hereto as Schedule B and incorporated herein, which
schedule may be modified by the Custodian upon not less than thirty days
prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer or authorized representative of each
party hereto.
(c) The Custodian will bill the Fund as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance
with Schedule A, as amended from time to time. The Fund will promptly pay
to the Custodian the amount of such billing. The Custodian may charge
against any monies held on behalf of the Fund pursuant to this Agreement
such compensation and disbursements incurred by the Custodian in the
performance of its duties pursuant to this Agreement. The Custodian shall
also be entitled to charge against any money held on behalf of the Fund
pursuant to this Agreement the amount of any loss, damage, liability or
expense incurred with respect to the Fund, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement.
4. CUSTODY OF CASH AND SECURITIES.
(a) RECEIPT AND HOLDING OF ASSETS. The Fund will deliver or cause to be
delivered to the Custodian or its permitted Sub-Custodians all Securities
and monies owned by the Series at any time during the period of this
Agreement and shall specify the Series to which the same are to be
specifically allocated. The Custodian will not be responsible for such
Securities and monies until actually received by it. The Fund shall
instruct the Custodian from time to time in its sole discretion, by means
of Written Instructions, or, in connection with the purchase or sale of
Money Market Securities, by means of Oral Instructions confirmed in writing
in accordance with Section 11(h) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies are to be
deposited on behalf of the Series in the Book-Entry System or the
Depository. Securities and monies of such Series deposited in the
Book-Entry System or the Depository will be represented in accounts which
include only assets held by the Custodian for customers, including but not
limited to accounts for which the Custodian acts in a fiduciary or
representative capacity.
(b) ACCOUNTS AND DISBURSEMENTS. The Custodian shall establish and maintain
a separate account for the Fund with respect to each Series and shall
credit to the separate account all monies received by it for the account of
the Fund with respect to such Series and shall disburse the same only:
1. In payment for Securities purchased for the Series, as provided in
Section 5 hereof;
2. In payment of dividends or distributions with respect to the
Shares, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the
Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund, as
provided in Section 8 hereof;
5. Pursuant to a Certificate setting forth the name and address of the
person to whom the payment is to be made, the Series account from
which payment is to be made, the amount to be paid and the purpose for
which payment is to be made, provided that in the event of
disbursements pursuant to this paragraph 5 of Section 4(b), the Fund
shall indemnify and hold the Custodian harmless from any claims or
losses arising out of such disbursements in reliance on such
Certificate; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided in
Sections 3 and 11(i).
(c) CONFIRMATION AND STATEMENTS. Promptly after the close of business on
each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of each Series during said
day. Where securities purchased by a Series are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Depository or the
Book-Entry System, the Custodian shall by book-entry or otherwise identify
the quantity of those securities belonging to such Series. At least
monthly, the Custodian shall furnish the Fund with a detailed statement of
the Securities and monies held for each Series under this Agreement.
(d) REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION. All Securities held
for a Series which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held for a Series may be
registered in the name of such Series, in the name of the Custodian, in the
name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor or successors, or their nominee
or nominees. The Fund reserves the right to instruct the Custodian as to
the method of registration and safekeeping of the Securities. The Fund
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the Book-Entry System
or the Depository, any Securities which it may hold for the account of a
Series and which may from time to time be registered in the name of such
Series. The Custodian shall hold all such Securities specifically allocated
to a Series which are not held in the Book-Entry System or the Depository
in a separate account for the Fund in the name of such Series physically
segregated at all times from those of any other person or persons.
(e) SEGREGATED ACCOUNTS. Upon receipt of a Certificate, the Custodian will
establish segregated accounts on behalf of each Series to hold liquid or
other assets as it shall be directed by a Certificate and shall increase or
decrease the assets in such segregated accounts only as it shall be
directed by subsequent Certificate.
(f) COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES. Unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all
Securities held for each Series in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired or
otherwise become payable. Notwithstanding the foregoing, the Custodian
only shall have such responsibility to the Fund for Securities which
are called if either (i) the Custodian received a written notice of
such call; or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five (5) Business Days prior
notification to the Fund;
3. Surrender Securities in temporary form for definitive Securities;
4. Execute any necessary declarations or certificates of ownership
under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the
account of each Series all rights and similar Securities issued
with respect to any Securities held by the Custodian hereunder
for the Series.
(g) DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon receipt of a
Certificate, the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Certificate, proxies, consents,
authorizations, and any other instruments whereby the authority of the
Fund as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for the Series
in exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise
of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the Series
to any protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement in
the separate account for the Series such certificates of deposit,
interim receipts or other instruments or documents as may be issued to
it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of the Series and take
such other steps as shall be stated in a Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;
5. Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into by
the Fund;
6. Deliver Securities owned by the Series to the issuer thereof or its
agent when such Securities are called or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall have no
responsibility for monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds which are owned by the
Series and held by the Custodian or its nominees. Nor shall the
Custodian have any responsibility or liability to the Fund for any
loss by the Series for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely notification from the
Fund specifying the time, place and manner for the presentment of any
such put bond owned by the Series and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect to put
bonds;
7. Deliver Securities for delivery in connection with any loans of
Securities made by the Series but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and the
Fund which may be in the form of cash or U.S. government securities or
a letter of credit;
8. Deliver Securities for delivery as security in connection with any
borrowings by the Series requiring a pledge of Fund assets, but only
against receipt of amounts borrowed;
9. Deliver Securities upon receipt of a Certificate from the Fund for
delivery to the Transfer Agent or to the holders of Shares in
connection with distributions in kind, as may be described from time
to time in the Fund's Prospectus, in satisfaction of requests by
holders of Shares for repurchase or redemption;
10. Deliver Securities as collateral in connection with short sales by
the Series of common stock for which the Series owns the stock or owns
preferred stocks or debt securities convertible or exchangeable,
without payment or further consideration, into shares of the common
stock sold short;
11. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in the Fund's Prospectus; and
12. Deliver Securities for any other proper business purpose, but only
upon receipt of, in addition to Written Instructions, a certified copy
of a resolution of the Fund's Board signed by an Authorized Person and
certified by the Secretary of the Fund, specifying the Securities to
be delivered, setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper business purpose, and
naming the person or persons to whom delivery of such Securities shall
be made.
(h) ENDORSEMENT AND COLLECTION OF CHECKS, ETC. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the account of the
Series.
5. PURCHASE AND SALE OF INVESTMENTS.
(a) Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Certificate; and (ii) with respect
to each purchase of Money Market Securities, either a Written Instruction
or Oral Instruction, in either case specifying with respect to each
purchase: (1) the Series to which the Securities purchased are to be
specifically allocated; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or the principal amount purchased and
accrued interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such purchase;
(7) the name of the person from whom or the broker through whom the
purchase was made, if any; and (8) whether or not such purchase is to be
settled through the Book-Entry System or the Depository. The Custodian
shall receive the Securities purchased by or for such Series and upon
receipt of Securities shall pay out of the monies held for the account of
such Series the total amount payable upon such purchase, provided that the
same conforms to the total amount payable as set forth in such Certificate,
Written or Oral Instruction.
(b) Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which
are not Money Market Securities, a Certificate, and (ii) with respect to
each sale of Money Market Securities, either Written Instruction or Oral
Instructions, in either case specifying with respect to such sale: (1) the
Series to which such Securities sold were specifically allocated; (2) the
name of the issuer and the title of the Securities; (3) the number of
shares or principal amount sold, and accrued interest, if any; (4) the date
of sale; (5) the sale price per unit; (6) the total amount payable to such
Series upon such sale; (7) the name of the broker through whom or the
person to whom the sale was made; and (8) whether or not such sale is to be
settled through the Book-Entry System or the Depository. The Custodian
shall deliver or cause to be delivered the Securities to the broker or
other person designated by the Fund upon receipt of the total amount
payable to such Series upon such sale, provided that the same conforms to
the total amount payable to the Series as set forth in such Certificate,
Written or Oral Instruction. Subject to the foregoing, the Custodian may
accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
6. LENDING OF SECURITIES.
If the Fund is permitted by the terms of its organization documents and as
disclosed in its Prospectus to lend securities, within 24 hours after each
loan of Securities, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such loan: (a) the Series to which the
Securities to be loaned are specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount loaned; (d) the date of loan and delivery; (e) the total
amount to be delivered to the Custodian, and specifically allocated against
the loan of the Securities, including the amount of cash collateral and the
premium, if any, separately identified; and (f) the name of the broker,
dealer or financial institution to which the loan was made.
Promptly after each termination of a loan of Securities, the Fund shall
deliver to the Custodian a Certificate specifying with respect to each such
loan termination and return of Securities: (a) the Series to which the
Securities to be returned are specifically allocated; (b) the name of the
issuer and the title of the Securities to be returned; (c) the number of
shares or the principal amount to be returned; (d) the date of termination;
(e) the total amount to be delivered by the Custodian (including the cash
collateral for such Securities minus any offsetting credits as described in
said Certificate); and (f) the name of the broker, dealer or financial
institution from which the Securities will be returned. The Custodian shall
receive all Securities returned from the broker, dealer or financial
institution to which such Securities were loaned and upon receipt thereof
shall pay the total amount payable upon such return of Securities as set
forth in the Certificate. Securities returned to the Custodian shall be
held as they were prior to such loan.
7. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
(a) For each Series, the Fund shall furnish to the Custodian a Certificate
specifying the date of payment of any dividend or distribution, and the
total amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such Certificate, the Custodian
shall pay out of the monies held for the account of the Series the total
amount payable to the Transfer Agent of the Fund.
8. SALE AND REDEMPTION OF SHARES.
(a) Whenever the Fund shall sell any Shares, or whenever any Shares are
redeemed, the Fund shall deliver or cause to be delivered to the Custodian
a Written Instruction from the Transfer Agent duly specifying:
1. The net amount of money to be received by the Custodian, where the
sale of such Shares exceeds redemption; and
2. The net amount of money to be paid for such Shares, where
redemptions exceed purchases.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares and that the information
contained therein will be derived from the sales of Shares as reported to
the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Series.
(c) Upon issuance of any Shares in accordance with the foregoing provisions
of this Section 8, the Custodian shall pay all original issue or other
taxes required to be paid for the account of the Series in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Upon receipt from the Transfer Agent of Written Instructions setting
forth the net amount of money to be paid for Shares received by the
Transfer Agent for redemption, the Custodian shall make payment to the
Transfer Agent of such net amount out of the monies held for the account of
the Series.
9. INDEBTEDNESS.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for investment
or for temporary administrative or emergency purposes using Securities as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a Certificate
stating with respect to each such borrowing: (1) the Series to which the
borrowing relates; (2) the name of the bank; (3) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other loan
agreement; (4) the time and date, if known, on which the loan is to be
entered into (the "borrowing date"); (5) the date on which the loan becomes
due and payable; (6) the total amount payable to the Fund for the account
of such Series on the borrowing date; (7) the market value of Securities to
be delivered as collateral for such loan, including the name of the issuer,
the title and the number of shares or the principal amount of any
particular Securities; and (8) a statement that such loan is in conformance
with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Certificate referred to in subparagraph (a) above,
the Custodian shall deliver on the borrowing date the specified collateral
and the executed promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all rights therein
given the lending bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver as additional collateral in the manner directed
by the Fund from time to time such Securities as may be specified in the
Certificate to collateralize further any transaction described in this
Section 9. The Fund shall cause all Securities released from collateral
status to be returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in the Certificate all of
the information required by this Section 9, the Custodian shall not be
under any obligation to deliver any Securities. Collateral returned to the
Custodian shall be held hereunder as it was prior to being used as
collateral.
10. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
(a) No Board member or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any sub-investment
adviser of the Fund, or of the Fund's administrator, shall have physical
access to the assets of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with the
Fund's investment adviser, with any sub-investment adviser of the Fund or
with the Fund's administrator shall have access to the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer, director,
employee or agent of the investment adviser, of any sub-investment adviser
of the Fund or of the Fund's administrator, from giving Oral Instructions
or Written Instructions to the Custodian or executing a Certificate so long
as it does not result in delivery of or access to assets of the Fund
prohibited by Section 10(a).
11. CONCERNING THE CUSTODIAN.
(a) STANDARD OF CONDUCT. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising
out of the negligence, misfeasance or willful misconduct of the Custodian
or any of its employees, Sub- Custodians or agents. The Custodian may, with
respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the Fund, and
shall be fully protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion. The Custodian shall
not be liable to the Fund for any loss or damage resulting from the use of
the Book-Entry System or the Depository, except to the extent such loss or
damage arises by reason of any negligence, misfeasance or willful
misconduct on the part of the Custodian or any of its employees or agents.
(b) LIMIT OF DUTIES. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the Fund,
the legality of the purchase thereof, or the propriety of the amount
paid therefor;
2. The legality of the sale of any Securities by the Fund or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the sufficiency
of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor;
5. The legality of the declaration or payment of any distribution of
the Fund; or
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) NO LIABILITY UNTIL RECEIPT. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by
it on behalf of the Fund until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing
the Fund's interest in the Book-Entry System or the Depository.
(d) AMOUNTS DUE FROM TRANSFER AGENT. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount due to
the Fund from the Transfer Agent nor to take any action to effect payment
or distribution by the Transfer Agent of any amount paid by the Custodian
to the Transfer Agent in accordance with this Agreement.
(e) COLLECTION WHERE PAYMENT REFUSED. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (a)
it shall be directed to take such action by a Certificate and (b) it shall
be assured to its satisfaction of reimbursement of its costs and expenses
in connection with any such action.
(f) APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Custodian may appoint one
or more banking institutions, including but not limited to banking
institutions located in foreign countries, to act as Depository or
Depositories or as Sub-Custodian or as Sub-Custodians of Securities and
monies at any time owned by the Fund. The Custodian shall use reasonable
care in selecting a Depository and/or Sub-Custodian located in a country
other than the United States ("Foreign Sub-Custodian"), which selection
shall be in accordance with the requirements of Rule 17f-5 under the 1940
Act, and shall oversee the maintenance of any Securities or monies of the
Fund by any Foreign Sub-Custodian. In addition, the Custodian shall hold
the Fund harmless from, and indemnify the Fund against, any loss, action,
claim, demand, expense and proceeding, including counsel fees, that occurs
as a result of the failure of any Foreign Sub-Custodian or Depository to
exercise reasonable care with respect to the safekeeping of Securities and
monies of the Fund. Notwithstanding the generality of the foregoing,
however, the Custodian shall not be liable for any losses resulting from
the general risk of investing or holding Securities and monies in a
particular country, including, but not limited to, losses resulting from
nationalization, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting the Fund's
property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
(g) NO DUTY TO ASCERTAIN AUTHORITY. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held by
the Fund under the provisions of its organization documents and the
Prospectus.
(h) RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the Custodian
to be genuine and to be signed by an officer or Authorized Person of the
Fund. The Custodian shall be entitled to rely upon any Written Instructions
or Oral Instructions actually received by the Custodian pursuant to the
applicable Sections of this Agreement and reasonably believed by the
Custodian to be genuine and to be given by an Authorized Person. The Fund
agrees to forward to the Custodian Written Instructions from an Authorized
Person confirming such Oral Instructions in such manner so that such
Written Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business on the same day that
such Oral Instructions are given to the Custodian. The Fund agrees that the
fact that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or enforceability
of the transactions hereby authorized by the Fund. The Fund agrees that the
Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from a
duly Authorized Person.
(i) OVERDRAFT FACILITY AND SECURITY FOR PAYMENT. In the event that the
Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(h) hereof) to make any
payment or transfer of monies on behalf of a Series for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of such Series, the
Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of
such payment or transfer. Any Overdraft provided hereunder: (a) shall be
payable on the next Business Day, unless otherwise agreed by the Fund and
the Custodian; and (b) shall accrue interest from the date of the Overdraft
to the date of payment in full by the Fund at a rate agreed upon in
writing, from time to time, by the Custodian and the Fund. The Custodian
and the Fund acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt delivery in
accordance with the terms hereof, to meet unanticipated or unusual
redemption, to allow the settlement of foreign exchange contracts or to
meet other emergency expenses not reasonably foreseeable by the Fund. The
Custodian shall promptly notify the Fund in writing (an "Overdraft Notice")
of any Overdraft by facsimile transmission or in such other manner as the
Fund and the Custodian may agree in writing. To secure payment of any
Overdraft, the Fund hereby grants to the Custodian a continuing security
interest in and right of setoff against the Securities and cash in the
Series' account from time to time in the full amount of such Overdraft.
Should the Fund fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the Series' account
and to liquidate Securities in the account as is necessary to meet the
Fund's obligations under the Overdraft. In any such case, and without
limiting the foregoing, the Custodian shall be entitled to take such other
actions(s) or exercise such other options, powers and rights as the
Custodian now or hereafter has as a secured creditor under the Pennsylvania
Uniform Commercial Code or any other applicable law.
(j) INSPECTION OF BOOKS AND RECORDS. The books and records of the Custodian
shall be open to inspection and audit at reasonable times by officers and
auditors employed by the Fund and by the appropriate employees of the
Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
12. TERM AND TERMINATION.
(a) This Agreement shall become effective on the date first set forth above
(the "Effective Date") and shall continue in effect thereafter until such
time as this Agreement may be terminated in accordance with the provisions
hereof.
(b) Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of receipt
of such notice. In the event such notice is given by the Fund, it shall be
accompanied by a certified vote of the Fund's Board, electing to terminate
this Agreement and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a certified vote of
the Fund's Board, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a
successor custodian, which shall be a person qualified to so act under the
1940 Act. If the Fund fails to designate a successor custodian, the Fund
shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other
than Securities held in the Book-Entry System which cannot be delivered to
the Fund) and monies then owned by the Fund, be deemed to be its own
custodian and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System which cannot be
delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the successor
custodian all Securities and monies then held by the Custodian on behalf of
the Fund, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
13. LIMITATION OF LIABILITY.
The Fund and the Custodian agree that the obligations of the Fund under
this Agreement shall not be binding upon any of the Board members,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon the
assets and property of the Fund. The execution and delivery of this
Agreement have been authorized by the Fund's Board members, and signed by
an authorized officer of the Fund, acting as such, and neither such
authorization by such Board members nor such execution and delivery by such
officer shall be deemed to have been made by any of them or any shareholder
of the Fund individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets and
property of the Fund.
14. MISCELLANEOUS.
(a) Annexed hereto as Appendix A is a certification signed by the Secretary
of the Fund setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last
delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the Secretary
of the Fund setting forth the names and the signatures of the present
officers of the Fund. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event any such present officer ceases
to be an officer of the Fund or in the event that other or additional
officers are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signature of an officer as set forth
in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 or at such other
place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 200
Park Avenue, New York, New York 10166 or at such other place as the Fund
may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement, (i) authorized, or ratified and approved by a vote of the Fund's
Board, including a majority of the Board members who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized, or
ratified and approved by such other procedures as may be permitted or
required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent
of the Fund authorized or approved by a vote of the Fund's Board. Nothing
in this Agreement shall give or be construed to give or confer upon any
third party any rights hereunder.
(g) The Fund represents that copies of its organization documents are on
file with the Secretary of the Commonwealth of Massachusetts.
(h) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
(i) The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
year first above written.
DREYFUS STABLE VALUE MUTUAL FUND
By:________________________________
Name:
Title:
MELLON BANK, N.A.
By:________________________________
Name:
Title:
<PAGE>
SCHEDULE 1
NAME OF SERIES
<PAGE>
CUSTODIAN ACCOUNT FOR PORTFOLIO SECURITIES TRANSACTIONS
APPENDIX A
Margaret W. Chambers, Secretary of the Fund, do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Fund and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
NAME SIGNATURE
Margaret W. Chambers, Secretary
Dated: _________________
<PAGE>
APPENDIX A
AUTHORIZED SIGNATORIES: CASH ACCOUNT
GROUP I Group II
Paul R. Casti, Jr., Thomas Paul R. Casti, Jr.,
Durante, Jean Farley, Christopher Condron, Joseph
Gregory Gruber, Paul Molloy, Connolly, Gregory Gruber,
James Windels, Phyllis Thomas Durante, James
Meiner, Laura Sanderson, Windels, Paul Molloy, William
Bill Maeder, Bill McDowell, T. Sandalls, Jr. and Jean
Lisa Waldman and Mike Farley
Stalzer
1. Fees payable to Mellon Bank, N.A. or Boston Safe Deposit and Trust Company
pursuant to written agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to Dreyfus Transfer, Inc. in
its capacity as Transfer Agent or agent of the Fund: Two (2) signatures
required, one of which must be from Group II, except that no individual
shall be authorized to sign more than once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either Group I or Group II,
or both such Groups, except that no individual shall be authorized to
sign more than once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be from Group II,
except that no individual shall be authorized to sign more than once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or Group II, including
any one of the following: Paul R. Casti, Jr., Christopher Condron,
James Windels, Joseph Connolly or William T. Sandalls, Jr., except
that no individual shall be authorized to sign more than once.
CUSTODIAN ACCOUNT FOR PORTFOLIO SECURITIES TRANSACTIONS
Two (2) signatures required from any of the following:
Joseph Connolly, Paul R. Casti, Jr., Thomas Durante, Jean Farley,
Gregory Gruber, Paul Molloy, James Windels, Bill Maeder, Bill
McDowell, Lisa Waldman and Mike Stalzer.
<PAGE>
APPENDIX B
DREYFUS STABLE VALUE MUTUAL FUND
I, ________________, Vice President and Assistant Secretary of the Fund, do
hereby certify that the only classes of shares of the Fund issued and/or
authorized by the Fund as of the date of this Custody Agreement are shares of
beneficial interest, $.001 par value, as follows:
Class P
Class S
Class Q
_______________, Vice President
and Assistant Secretary
Dated:
<PAGE>
APPENDIX C
The following are designated publications for purposes of paragraph 2 of
Section 4 (f):
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
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SCHEDULE A
I. ASSET BASED CHARGES
A. U.S. SECURITIES (NET ASSET VALUE)
First $1 Billion 0.70 Basis Points
Next $1 Billion 0.50 Basis Points
Excess 0.25 Basis Points
B. INTERNATIONAL SECURITIES (MARKET VALUE)
Foreign Assets in all funds will be totaled by country and charged a
basis point fee by category.
Euroclear 5.00 Basis Points
Category I 8.00 Basis Points
Category II 14.00 Basis Points
Category III 16.00 Basis Points
Category IV 45.00 Basis Points
(A complete listing of countries is on page 2 of this fee schedule)
II. TRANSACTION CHARGES
A. DOMESTIC
U.S. Buy/Sell transaction (DTC, PTC, Fed) $-----
Physical U.S. Buy/Sell transaction $20
B. INTERNATIONAL
Euroclear $ 25
Category I $ 35
Category II $ 60
Category III $ 80
Category IV $100
C. OTHER TRANSACTIONS
Futures Transaction $ 8
Paydown Transaction $ 5
Margin Variation Wire $ 10
F/X not executed at BSDT $ 20
Options Round Trip $ 20
Wire Transfer $ 5
III. OUT-OF-POCKET EXPENSES
The Custodian will pass through to the client any out-of-pocket expenses
including, but not limited to, postage, courier expense, registration fees,
stamp duties telex charges, custom reporting or custom programming,
internal/external tax, legal or consulting costs, proxy voting expenses,
etc.
The Custodian reserves the right to amend its fees if the service
requirements change in a way that materially affects our responsibilities
or costs. Support of other derivative investment strategies or special
processing requirements (e.g., external cash sweep, third party securities
lending etc.) may result in additional fees.
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IV. COUNTRY BY COUNTRY CATEGORIES:
CATEGORY I CATEGORY II CATEGORY III CATEGORY IV
Australia Argentina Austria Bangladesh
Belgium Denmark Indonesia Brazil
Canada Finland Israel Colombia
France Hong Kong South Korea China
Germany Malaysia Philippines Czech Republic
Ireland Mexico Singapore Greece
Italy Norway Thailand India
Japan Spain Jordan
Netherlands Luxembourg
New Zealand Pakistan
South Africa Peru
Sweden Poland
Switzerland Portugal
United Kingdom Sri Lanka
Cedel Taiwan
Turkey
Uruguay
Venezuela
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SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of
each month all out-of-pocket expenses reasonably incurred in connection with the
assets of the Fund.
EXHIBIT 15
DREYFUS STABLE VALUE MUTUAL FUND
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940
Act"), requires that the Board of an investment company desiring to offer
multiple classes pursuant to said Rule adopt a plan setting forth the separate
arrangement and expense allocation of each class, and any related conversion
features or exchange privileges.
The Board, including a majority of the non-interested Board members, of
Dreyfus STABLE VALUE Mutual Fund (the "Fund") which desires to offer multiple
classes has determined that the following plan is in the best interests of each
class individually and the Fund as a whole:
CLASS DESIGNATION: Fund shares shall be divided into Class P, Class S and
Class Q shares.
DIFFERENCES IN SERVICES: The services offered to shareholders of each Class
shall be substantially the same, except for certain services provided to holders
of Class S and Class Q shares pursuant to a Shareholder Services Plan.
DIFFERENCES IN DISTRIBUTION ARRANGEMENTS: Each Class of shares shall be
offered at net asset value. Class P and Class S shares shall be offered to
employee benefit plans, eligible deferred compensation plans, government plans
and certain bank collective investment funds. Class Q shares shall be offered to
investors investing through a tax-deferred retirement plan such as individual
retirement accounts and Keogh Plans. No Class shall be subject to any front-end
or contingent deferred sales charges.
Class S and Class Q shares shall be subject to an annual service fee at the
rate of up to .25% of the value of the average daily net assets of the
respective Class pursuant to a Shareholder Services Plan.
EXPENSE ALLOCATION: The following expenses shall be allocated, to the
extent practicable, on a Class-by-Class basis: (a) fees under the Shareholder
Services Plan; (b) printing and postage expenses related to preparing and
distributing materials, such as shareholder reports, prospectuses and proxies,
to current shareholders of a specific Class; (c) the expense of administrative
personnel and services as required to support the shareholders of a specific
Class; (d) litigation or other legal expenses relating solely to a specific
Class; (e) transfer agent fees identified by the Fund's transfer agent as being
attributable to a specific Class; and (f) Board members' fees incurred as a
result of issues relating to a specific Class.
EXCHANGE PRIVILEGES: Shares of a Class shall be exchangeable only for (a)
shares of the same Class of other investment companies managed or administered
by The Dreyfus Corporation and (b) shares of certain other investment companies
specified from time to time.
Dated: July 29, 1998
