File Nos. 333-59499
811-8889
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
DREYFUS RETIREMENT INCOME FUND
(FORMERLY, 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 RETIREMENT INCOME 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 OCTOBER 23, 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.
<PAGE>
DREYFUS
RETIREMENT INCOME FUND
Investing in fixed-income securities and money market instruments, and entering
into Wrapper Agreements to provide a high level of current income while seeking
to maintain a stable net asset value per share.
PROSPECTUS November __, 1998
DREYFUS [LOGO]
As with all mutual funds, the Securities and Exchange Commission doesn't
guarantee that the information in this prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
state otherwise.
<PAGE>
CONTENTS
THE FUND
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What every investor should 2 Goal/Approach
know about the fund
4 Main Risks
6 Past Performance
6 Expenses
7 Management
8 Financial Highlights
INVESTOR ACCOUNT INFORMATION
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Information for managing 8 Account Policies
a fund account
12 Distributions and Taxes
13 Services for Fund Investors
14 Instructions for Accounts
FOR MORE INFORMATION
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Where to learn more about Back Cover
this and other
Dreyfus funds
<PAGE>
Dreyfus RETIREMENT INCOME FUND
THE FUND
[ICON] GOAL/APPROACH
The fund's goal is to provide a high level of current income while seeking to
maintain a stable net asset value per share. 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 investment alternative to money market
funds, short-term bond funds and other fixed-income funds. Like many other
fixed-income funds, 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 more stable than a typical 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 may be obligated to pay the fund all or a portion of the difference. If
the fund sells a portfolio security for more than this amount, the fund may be
obligated to pay the Wrap Provider all or a portion of 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.
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 payable 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. Some Wrapper Agreements may require the fund to maintain
a specified percentage of its total assets in such instruments (a "liquidity
reserve") to pay fund expenses and certain withdrawals from the fund. 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.
Duration is a way of measuring a security's maturity in terms of the average
time required to receive the present value of all interest and principal
payments, which incorporates the security's yield, coupon interest payments,
final maturity and option features into one measure. The fund's portfolio
securities will have an average dollar-weighted credit rating of at least AA/Aa
from a rating agency. Securities with an AA/Aa 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.
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CONCEPTS TO UNDERSTAND
DURATION: an indication of how sensitive a bond or mutual fund portfolio may be
to changes in interest rates. Generally, the longer the duration, the more
volatility an investor should expect.
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 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 through "sampling." Fixed-income
securities selected actively must be rated AAA/Aaa by a rating agency.
Generally, if the fund's assets exceed $50 million, the managers will seek to
allocate between 40% and 60% of the fund's assets to fixed-income securities
selected on an indexed basis. In selecting fixed-income securities on an indexed
basis, the fund's managers will seek to overweight/underweight certain sectors
of the Lehman Brothers Intermediate Aggregate Bond Index. Once established,
sector weightings will be reviewed at least quarterly. The Lehman Brothers
Intermediate Aggregate Bond Index tracks a cross-section of the intermediate
duration U.S. taxable bond market, including U.S. Government securities,
mortgage-related securities, asset-backed securities and investment grade
corporate bonds. Once sector weightings are determined by the fund's managers,
the managers will use a statistical sampling technique to select securities
within each sector that have characteristics that closely match those of the
Index. The managers may use futures contracts instead of buying securities
directly.
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CONCEPT TO UNDERSTAND
OVERWEIGHTING/UNDERWEIGHTING: the proportion of the fund's assets invested in a
particular sector of the Index (e.g., U.S. Government securities or
mortgage-backed securities) will be more or less, respectively, than the
proportion of the Index such sector represents.
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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. Consequently, the fund's
return may be lower than that of fixed-income funds of comparable duration that
invest in investment grade debt securities. In addition, Wrapper Agreements do
not cover all possible losses or setbacks from the fund's investments and may
impose restrictions on the fund's selection and management of its investments.
There is no active trading market for Wrapper Agreements, and none is expected
to develop; therefore, the fund will consider them to be illiquid.
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The fund's net asset value, while not fixed at $1.00 per share like a money
market fund, should be more stable (go up less and go down less) than a typical
fixed-income fund of comparable duration that invests in investment grade debt
securities. 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:
* 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.
* 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.
* 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.
* certain employer-initiated actions that cause Plan participants to
initiate redemptions may cause the assets to be sold to meet such
redemption requests to be removed from the coverage of a Wrapper
Agreement. Under such circumstances, the fund may be required to
liquidate these assets at less than Book Value.
In addition, certain Wrapper Agreements may require the fund to maintain a
percentage of its assets in a liquidity reserve which may result in a lower
return for the fund than if such assets were invested in longer-term
fixed-income securities.
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. Slower
prepayments, for example, 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.
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OTHER POTENTIAL RISKS
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.
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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.
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WHAT THIS FUND IS AND ISN'T
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in the fund is not a bank deposit. It is not insured or guaranteed
by the FDIC or any other government agency. It is not a complete investment
program. You could lose money in this fund, but you also have the potential to
make money.
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[ICON] PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
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[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
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee 2.00% 2.00%
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ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fee 0.35% 0.35%
Shareholder services fee None 0.25%
Other expenses 0.40% 0.40%
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TOTAL 0.75% 1.00%
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EXPENSE EXAMPLE
ASSUMING REDEMPTION
AT THE END OF EACH PERIOD
SUBJECT TO THE REDEMPTION 1 year $277 $302
FEE:
3 years $440 $518
ASSUMING NO REDEMPTION
AT THE END OF EACH PERIOD: 1 year $ 77 $102
3 years $240 $318
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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The redemption fee is retained by the fund primarily to offset the transaction
costs (including costs to maintain or replace Wrapper Agreements) in connection
with certain redemptions and is designed, in part, to discourage redemptions
initiated by shareholders attempting to take advantage of short-term interest
rate movements. Redemptions made upon less than 12 months' prior written notice
to the fund are subject to the 2% redemption fee. Redemptions made upon at least
12 months' prior written notice to the fund and Plan participant initiated
redemptions are not subject to any redemption fee.
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CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: the fund has adopted a Shareholder Services Plan with
respect to Class S shares pursuant to which it pays the fund's distributor for
shareholder account service and maintenance provided to the holders of Class S
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, or 0.80% with respect to Class S, 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 $110 billion in over 160 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
$350 billion of assets under management and $1.7 trillion of assets under
administration and custody, 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.
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 September 1998 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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[ICON] FINANCIAL HIGHLIGHTS
As a new fund, financial highlights information is not available for the fund as
of the date of this prospectus.
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INVESTOR ACCOUNT INFORMATION
[ICON] ACCOUNT POLICIES
WHO MAY INVEST
By this Prospectus, the fund is offering two classes of shares--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 P and Class S shares are identical, except as to the services offered to
and the expenses borne by each Class. Holders of Class S 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 S shares should be
expected to be lower than that of Class P shares.
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. 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
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.
[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
money market fund or 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 shares at any time. Shares will be sold at the next NAV
calculated after the investor's order is accepted by the fund's transfer agent.
However, shares of investors giving prior written notice of a redemption, will
be sold 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 sold
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% of the NAV of fund shares redeemed
or exchanged, except upon the redemption or exchange of shares (1) for which at
least 12 months' prior written notice has been given to the fund, or (2) in
connection with a redemption directed by a Plan participant.
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 ORDERS
Some circumstances require that written sell orders be signature guaranteed.
These include:
* amounts of $100,000 or more
* 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, including those in excess of 1% of the
fund's total assets and those from any investor who, in the fund's
view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the fund within a calendar year)
* 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 the administrator of their Plan or Bank Collective Fund 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). 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.
[ICON] DISTRIBUTIONS AND TAXES
The fund pays its shareholders dividends from its net investment income monthly,
and distributes any net capital gains that it has realized annually. An
Additional Distribution may be paid annually 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.
Each share class will generate a different dividend because each has different
expenses.
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.
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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 and Bank Collective Funds ordinarily will
not be subject to taxation until the proceeds are distributed from the relevant
Plan or Bank Collective Fund. Plan participants should consult their plan
administrator regarding tax consequences associated with an investment in the
fund.
[ICON] SERVICES FOR FUND INVESTORS
EXCHANGE PRIVILEGE
PLAN SPONSORS CAN INITIATE AN EXCHANGE from one Dreyfus fund into another
Dreyfus fund offered by the Plan as an investment option. Exchange requests must
be in writing. 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
(OTHER THAN DREYFUS TRUST
COMPANY CUSTODIAL 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
[ICON] BY TELEPHONE
WIRE Transmit your investment to The Bank of New York, with these instructions:
* DDA# ______________
* the fund name
* the investor's tax ID or social security number
* account registration
Call us to obtain an account number.
Return a completed application.
[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 105, Newark, NJ 07101-0105
WIRE Transmit your investment to The Bank of New York, with these instructions:
* DDA #_________
* the fund name
* your account number
* account registration
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number and
add ABA #021000018
TO SELL SHARES
Write a letter of instruction that includes:
* name(s) and signature(s) of authorized persons
* your account number
* the fund name
* the dollar amount you want to sell
* the date the request is to be effective (if 12 months or more)
* how and where
to send the proceeds
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 9671, Providence, RI 02940-9671
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.
[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
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.
---------------------------------------
INSTRUCTIONS FOR DREYFUS TRUST
COMPANY CUSTODIAL ACCOUNTS
TO OPEN AN ACCOUNT
[ICON] IN WRITING
Complete the appropriate application.
Mail the application and a check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
[ICON] BY TELEPHONE
---- ----
[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 Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
WIRE Transmit your investment to The Bank of New York, with these instructions:
* DDA #_____________
* the fund name
* your account number
* name of investor
* account registration
TELEPHONE CONTRIBUTIONS Call to request us to move money from one Dreyfus
account to another registered in the investor's name
TO SELL SHARES
Write a letter of instruction that includes:
* name(s) and signature(s) of authorized persons
* your account number
* the fund name
* the dollar amount you want to sell
* the date the request is to be effective (if 12 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 Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
[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:
DREYFUS TRUST CO., 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.
CONCEPT 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.
---------------------------------------
<PAGE>
FOR MORE INFORMATION
DREYFUS RETIREMENT INCOME FUND
SEC file number: 811-8889
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>
DREYFUS RETIREMENT INCOME FUND CLASS P AND CLASS S
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER __, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Retirement Income Fund (the "Fund"), dated November __, 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-22
How to Redeem Shares.......................................................B-22
Shareholder Services.......................................................B-25
Determination of Net Asset Value...........................................B-26
Dividends, Distributions and Taxes.........................................B-27
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-40
<PAGE>
DESCRIPTION OF THE FUND
The Fund is a Massachusetts business trust formed on May 14, 1993. 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. 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; but 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 if there is a Benefit Event.
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.
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
yield on assets covered by an evergreen Wrapper Agreement tends to more closely
track prevailing market interest rates. An evergreen Wrapper Agreement may be
converted by either party into a fixed-maturity Wrapper Agreement that typically
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
October 1998, 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. Under such circumstances, the Fund may not be able to achieve its
objective 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.
In the event of the termination of a Wrapper Agreement, because it has
matured or the Wrap Provider has defaulted or otherwise, the cost of a
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 Wrap Provider of the terminated
Wrapper Agreement. 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 objective of maintaining 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 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.
Some Wrapper Agreements require that the Fund maintain a specified
percentage of its total assets in short-term investments ("liquidity reserve")
to pay for withdrawals from the Fund and Fund expenses. To the extent the
liquidity reserve falls below the specified percentage of total assets, the Fund
may be obligated to direct all net cash flow to the replenishment of the
liquidity reserve. The obligation to maintain a liquidity reserve may result in
a lower return for the Fund than if these assets were invested in longer-term
fixed income securities.
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 commitment under its
Wrapper Agreements, to the extent required to avoid the creation of a "senior
security" (as defined by the Investment Company Act of 1940, as amended (the
"1940 Act")).
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.
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. 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.
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 generally 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 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 their
purchase price. 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 by the Fund to each Board member for the
fiscal year ending August 31, 1999, 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 ended December 31, 1997, 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 $2,500 $600,878 (95)
Clifford L. Alexander, Jr. $2,000 $ 91,350 (18)
Lucy Wilson Benson $2,000 $ 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. From
August 1995 to April 1997, she was an Assistant Vice President with
Hudson Valley Bank, and from September 1990 to August 1995, she was a
Second Vice President with Chase Manhattan Bank. She is 30 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 and 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. 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 29, 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 September 28, 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; Richard Terres,
Vice President; Wendy Strutt, Vice President; William H. Maresca, Controller;
James Bitetto, Assistant Secretary; Steven F. Newman, 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 primary 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 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 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 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% of the
net asset value of Fund shares redeemed (including redemptions through the use
of the Fund Exchanges service), except upon the redemption or exchange of Fund
shares made upon at least 12 months' prior written notice to the Fund or in
connection with redemptions directed by a Plan participant. 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 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; if the
Fund assigns an entire Wrapper Agreement, it may incur costs to replace such
Wrapper Agreement. 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 Event or with 12
months' notice. A Wrap Provider, prior to the assignment of a Wrapper Agreement
to a 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. Plans 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 by the Plans as investment options to their
participants. 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.
CORPORATE PENSION/PROFIT-SHARING 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 403(b)(7)
Plans. Plan support services are also available.
Investors who wish to purchase Fund shares in conjunction with a 403(b)(7)
Plan may request from the Distributor forms for adoption of such plan.
The entity acting as custodian for 403(b)(7) Plans 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
and 403(b)(7) Plans with more than one participant is $2,500 with no minimum for
subsequent purchases. The minimum initial investment is $750 for
Dreyfus-sponsored 403(b)(7) Plans with only one participant 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. If the Fund did not qualify as a
regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. 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 generally would
result in greater transaction costs. 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 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, and may refer to Morningstar
ratings and related analysis supporting such ratings. 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.
Comparative performance may be used from time to time in advertising the
Fund's shares, including data from the IBC Averages, Lipper Averages, an
appropriate guaranteed interest contract ("GIC") average, or other various
unmanaged indices or results of other mutual funds or investment or saving
vehicles.
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
Agreement and Declaration of Trust ("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 as
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.
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.
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. Plus (+) or
minus (-) Ratings from "AA" to "BBB" 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.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category. 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.
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.
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.
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.
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.
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.
<PAGE>
FINANCIAL STATEMENT AND REPORT OF INDEPENDENT AUDITORS
STATEMENT OF ASSETS AND LIABILITIES
________, 1998
<TABLE>
<CAPTION>
CLASS P CLASS S
ASSETS
<S> <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 Retirement Income 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 and Class S, 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 RETIREMENT INCOME 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.*
Other Exhibit: Power of Attorney*
_________________________
* Previously filed.
** 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.
Officers and Directors of Investment Adviser
--------------------------------------------
Name and Position
with Dreyfus Other Businesses
- ----------------- ----------------
W. KEITH SMITH Senior Vice Chairman:
Chairman of the Mellon Bank, N.A.*;
Board President and Director:
The Bridgewater Land Co., Inc.**;
Mellon Preferred Capital Corporation**;
TBC Securities Co., Inc.**;
Wellington-Medford II Properties, Inc.**;
Chairman, President and Chief Executive Officer:
Shearson Summit Euromanagement, Inc.*;
Shearson Summit EuroPartners, Inc.*;
Shearson Summit Management, Inc.*;
Shearson Summit Partners, Inc.*;
Shearson Venture Capital, Inc.*;
Chairman and Chief Executive Officer:
The Boston Company, Inc.**;
Boston Safe Deposit and Trust Company**;
Boston Group Holdings, Inc.**;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
The Boston Company Asset Management, Inc.**;
Mellon Europe Limited
London, England;
Mellon Global Investing Corp.*;
Mellon Accounting Services, Inc.*;
MGIC-UK Ltd.;
Mellon Capital Management Corporation***;
Chairman:
Mellon Financial Company*;
Buck Consultants, Inc.
1 Pennsylvania Plaza, 29th Floor
New York, New York 10019;
Director and Vice Chairman:
Mellon Financial Services Corporation*;
Mellon Bank Corporation*;
Trustee:
Laurel Capital Advisors, LLP*;
Mellon Equity Associates, LLP*;
Mellon Bond Associates, LLP*;
Past Director:
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
Past Trustee:
Franklin Portfolio Associates Trust
2 International Place, 22nd Floor
Boston, MA 02110
MANDELL L. BERMAN Real estate consultant and private investor:
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034
BURTON C. BORGELT Director:
Director Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
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*;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Alleghany Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067;
Past Chairman, President and Chief Executive Officer:
Mellon Bank, N.A.*
STEPHEN E. CANTER Chairman and President:
Vice Chairman, Dreyfus Investment Advisors, Inc.****;
Chief Investment Director:
Officer, and a The Dreyfus Trust Company+;
Director Acting Chief Executive Officer:
Founders Asset Management, Inc.
2930 E. 3rd Avenue
Denver, CO 80206
CHRISTOPHER M. CONDRON President and Chief Operating Officer:
President, Chief Mellon Bank, N.A.*;
Executive Officer, President and Director:
Chief Operating Boston Safe Advisors, Inc.**;
Officer and a Vice-Chairman and Director:
Director Mellon Bank Corporation*;
The Boston Company, Inc.**;
Director:
Certus Asset Advisors Corporation++;
Mellon Capital Management Corporation***;
Boston Safe Deposit and Trust Company**;
Past President and Director:
The Boston Company Financial Services,
Inc.**;
Boston Safe Deposit and Trust Company**;
Past President:
The Boston Company Financial Strategies,
Inc.**;
Acting Chief Executive Officer:
Founders Asset Management, Inc.
Denver, CO
Past Director:
Mellon Preferred Capital Corporation**;
Access Capital Strategies Corp.
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138;
Past Chairman, President, and Chief Executive
Officer:
The Boston Company Asset Management, Inc.**;
Past Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Past Trustee:
Franklin Portfolio Associates Trust
2 International Place, 22nd Floor
Boston, MA 02710;
Mellon Bond Associates, LLP*;
Mellon Equity Associates, LLP*;
LAWRENCE S. KASH Executive Vice President:
Vice Chairman- Mellon Bank, N.A.*;
Distribution and a Chairman, President and Director:
Director The Dreyfus Consumer Credit Corporation****;
Trustee, President and Chief Executive Officer:
Laurel Capital Advisors, LLP*;
Director:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
President and Director:
Dreyfus Service Corporation+;
Dreyfus Precious Metals, Inc.+;
Dreyfus Service Organization, Inc.****;
The Boston Company, Inc.**;
Boston Group Holdings, Inc.**;
Chairman and Chief Executive Officer:
Dreyfus Brokerage Services, Inc.
401 North Maple Avenue
Beverly Hills, CA 90210;
Chairman, President and Chief Executive Officer:
The Dreyfus Trust Company+;
The Boston Company Advisors, Inc.
Wilmington, DE.
J. DAVID OFFICER Director:
Vice Chairman Dreyfus Financial Services Corporation*****;
and a Director 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; Dreyfus
Insurance Agency of
Massachusetts, Inc. 53
State Street Boston,
Massachusetts 02109;
Executive Vice President:
Dreyfus Service Corporation****;
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**;
RICHARD F. SYRON Chairman of the Board and Chief Executive Officer:
Director 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
RONALD P. O'HANLEY III Director:
Vice Chairman 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***;
Certus Asset Advisors Corporation++;
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. Chairman and Director:
Executive Vice President Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Dreyfus-Lincoln, Inc.
4500 New Linden Hill Rd.
Wilmington, DE 19808;
Executive Vice President and Chief Financial Officer:
Dreyfus Service Corporation****;
Executive Vice President, Treasurer and Director:
Dreyfus Service Organization, Inc.****;
Director and Treasurer:
Dreyfus Investment Advisors, Inc.****;
Seven Six Seven Agency, Inc.****;
Dreyfus Precious Metals, Inc.+;
Director, Vice President and Treasurer:
The Dreyfus Consumer Credit Corporation****;
The TruePenny Corporation****
Director, Treasurer and Chief Financial Officer:
The Dreyfus Trust Company+;
Past Director and President:
Lion Management, Inc.****;
Dreyfus Partnership Management, Inc.****;
Past Director and Executive Vice President:
Dreyfus Service Organization, Inc.****;
Past Director and Treasurer:
Dreyfus Personal Management, Inc.****
MARK N. JACOBS Director:
Vice President, Dreyfus Service Organization, Inc.****;
General Counsel The Dreyfus Trust Company+;
and Secretary Dreyfus Investment Advisors, Inc.****;
Director and President:
The TruePenny Corporation****;
Past Director, Vice President and Secretary:
Lion Management, Inc.****
Past Secretary:
The TruePenny Corporation****;
Dreyfus Investment Advisers****
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
JAMES BITETTO Secretary:
Assistant Secretary The TruePenny Corporation****;
Assistant Secretary:
Dreyfus Service Corporation****;
Dreyfus Investment Advisers, Inc.****;
Dreyfus Service Organization, Inc.****
STEVEN F. NEWMAN Vice President, Secretary and Director:
Assistant Secretary Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Secretary:
Dreyfus Service Organization, Inc.****
Wendy Strutt None
Vice President
Richard Terres None
Vice President
William H. Maresca Director:
Controller The Dreyfus Trust Company+;
Chief Financial Officer:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
Assistant Treasurer:
Dreyfus Service Organization, Inc.****
- ---------------------------
* The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
** The address of the business so indicated is One Mellon Bank Place,
Boston, Massachusetts, 02108.
*** The address of the business so indicated is 595 Market Street, Suite
3000, San Francisco, CA 94105.
**** The address of the business so indicated is 200 Park Avenue, New York,
New York 10166.
***** The address of the business so indicated is Union Trust Building, 501
Grant Street, Pittsburgh, PA 15259.
+ The address of the business so indicated is 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
++ The address of the business so indicated is One Bush Street, Suite 450,
San Francisco, CA 94104.
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 22nd day of
October, 1998
BY: /s/Marie E. Connolly*
-----------------------
MARIE E. CONNOLLY, PRESIDENT
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 10/22/98
- ------------------------- (Principal Executive Officer)
Marie E. Connolly
/s/ Joseph F. Tower, III* Assistant Treasurer (Principal 10/22/98
- -------------------------- Financial and Accounting Officer)
Joseph F. Tower, III
/s/ Joseph S. DiMartino* Chairman of the Board 10/22/98
- --------------------------
Joseph S. DiMartino
/s/ Lucy Wilson Benson* Board Member 10/22/98
- --------------------------
Lucy Wilson Benson
/s/ Clifford L. Alexander, Jr. Board Member 10/22/98
- ------------------------------
Clifford L. Alexander, Jr.
*BY: /s/ Douglas C. Conroy
---------------------
Douglas C. Conroy,
Attorney-in-Fact
