File Nos. 2-55614
811-2625
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 35 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 35 [ X ]
(Check appropriate box or boxes.)
Dreyfus A Bonds Plus, Inc.
(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)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on August 1, 1998 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a
previously filed post-effective amendment.
----
Dreyfus A Bonds Plus, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis *
3 Condensed Financial Information *
4 General Description of Registrant 5
5 Management of the Fund 7
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 8
7 Purchase of Securities Being Offered 8
8 Redemption or Repurchase 13
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-*
13 Investment Objectives and Policies B-2
14 Management of the Fund B-14
15 Control Persons and Principal B-17
Holders of Securities
16 Investment Advisory and Other B-20
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus A Bonds Plus, Inc.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-*
19 Purchase, Redemption and Pricing B-23
of Securities Being Offered
20 Tax Status B-29
21 Underwriters B-32
22 Calculations of Performance Data B-
23 Financial Statements B-33
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-2
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-10
30 Location of Accounts and Records C-13
31 Management Services C-13
32 Undertakings C-13
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS August 1, 1998
Dreyfus A Bonds Plus, Inc.
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DREYFUS A BONDS PLUS, INC. (THE "FUND") IS AN OPEN-END, DIVERSIFIED,
MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. THE FUND'S INVESTMENT
OBJECTIVE IS TO PROVIDE YOU WITH THE MAXIMUM AMOUNT OF CURRENT INCOME TO THE
EXTENT CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY. AT LEAST 80% OF THE FUND'S PORTFOLIO IS INVESTED IN BONDS RATED AT
LEAST A BY MOODY'S INVESTORS SERVICE, INC. OR STANDARD & POOR'S RATINGS
GROUP.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO EARN INCOME
ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN PURCHASE OR REDEEM SHARES
BY TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED AUGUST 1, 1998, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK
FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL
FLUCTUATE FROM TIME TO TIME.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
Annual Fund Operating Expenses.......... 3
Condensed Financial Information......... 4
Description of the Fund................. 5
Management of the Fund.................. 7
How to Buy Shares....................... 8
Shareholder Services.................... 10
How to Redeem Shares.................... 13
Shareholder Services Plan............... 16
Dividends, Distributions and Taxes...... 16
Performance Information................. 17
General Information..................... 18
Appendix................................ 19
[This Page Intentionally Left Blank]
[Page 2]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees........................................................................... .65%
Other Expenses ........................................................................... .30%
Total Fund Operating Expenses............................................................. .95%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $10 $30 $53 $117
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN
AN ACTUAL RETURN GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. You can purchase Fund shares without charge
directly from the Fund's distributor; you may be charged a fee if you effect
transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund," "How to Buy Shares" and
"Shareholder Services Plan."
[Page 3]
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors. Further financial data, related
notes and report of independent auditors accompany the Statement of
Additional Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of common stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
_________________________________________________________________________________________
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year... $13.78 $13.24 $13.45 $13.65 $14.35 $15.43 $14.38 $13.75 $14.47 $14.13
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
INVESTMENT OPERATIONS:
Investment income_net 1.19 1.18 1.15 1.11 1.05 .98 .94 .92 .88 .89
Net realized and
unrealized gain
(loss) on investments (.53) .21 .20 .70 1.29 (.46) (.56) .73 (.34) .79
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
Total from
Investment Operations .66 1.39 1.35 1.81 2.34 .52 .38 1.65 .54 1.68
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
DISTRIBUTIONS:
Dividends from investment
income-net.......... (1.20) (1.18) (1.15) (1.11) (1.05) (.99) (.94) (.93) (.88) (.89)
Dividends from net realized
gain on investments..... __ __ __ __ (.21) (.58) (.07) __ __ (.17)
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
Total Distributions (1.20) (1.18) (1.15) (1.11) (1.26) (1.57) (1.01) (.93) (.88) (1.06)
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
Net asset value,
end of year $13.24 $13.45 $13.65 $14.35 $15.43 $14.38 $13.75 $14.47 $14.13 $14.75
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN... 5.03% 10.66% 10.60% 13.75% 17.09% 3.09% 3.01% 12.12% 3.88% 12.20%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.......... .94% .86% .85% .88% .93% .90% .99% .93% .96% .95%
Ratio of net investment income
to average net assets 8.90% 8.52% 8.59% 7.88% 7.07% 6.30% 6.89% 6.32% 6.12% 6.07%
Portfolio Turnover Rate 65.72% 39.77% 25.90% 66.82% 81.15% 93.67% 172.60% 165.50% 415.69% 374.30%
Net Assets, end of year
(000's omitted)..... $262,367 $299,783 $339,935 $446,869 $574,431 $593,615 $539,140 $598,551 $571,580 $648,372
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
DEBT OUTSTANDING
YEAR ENDED MARCH 31,
_____________________________
PER SHARE DATA: 1997(1) 1998
_____ _____
<S> <C> <C>
Amount of debt outstanding at end of year (in thousands)...................... 0 0
Average amount of debt outstanding throughout year (in thousands)(2).......... $422 $0
Average number of shares outstanding throughout year (in thousands)(3)........ 41,624 $0
Average amount of debt per share throughout year.............................. $ .01 $0
(1)From April 1, 1987 through March 31, 1996, the Fund had no outstanding debt.
(2)Based upon daily outstanding borrowings.
(3)Based upon month-end balances.
</TABLE>
[Page 4]
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with the maximum
amount of current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The Fund's investment objective
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MANAGEMENT POLICIES
The Fund invests principally in debt obligations and securities with
debt-like characteristics. These securities include bonds, debentures, notes,
money market instruments, mortgage-related securities, asset-backed
securities, municipal obligations, zero coupon securities, preferred stocks,
convertible debt obligations and convertible preferred stocks. The issuers of
these obligations may include corporations, partnerships, trusts or similar
entities, governments or their political subdivisions, agencies or
instrumentalities, and supranational entities. At least 65% of the value of
the Fund's net assets (except when maintaining a temporary defensive
position) will be invested in bonds, debentures and other debt instruments.
The Fund may invest up to 10% of its assets in securities of foreign issuers.
See "Investment Considerations and Risks _ Foreign Securities" below. The
Fund also may invest in the securities of other investment companies as
described herein. See "Appendix _ Certain Portfolio Securities."
At least 80% of the value of the Fund's net assets will consist of
obligations of corporations which, at the time of purchase by the Fund, are
rated at least A by Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Ratings Group ("S&P"), or determined to be of comparable quality by
The Dreyfus Corporation, and securities issued or guaranteed as to principal
and interest by the U.S. Government or its agencies or instrumentalities. The
Fund may invest up to 20% of the value of its net assets in obligations rated
below A and as low as the lowest rating assigned by Moody's and S&P or, if
unrated, deemed to be of comparable quality by The Dreyfus Corporation.
Obligations rated Baa by Moody's or BBB by S&P are considered investment
grade obligations which lack outstanding investment characteristics and may
have speculative characteristics as well. Investments rated Ba or lower by
Moody's and BBor lower by S&P ordinarily provide higher yields but involve
greater risk because of their speculative characteristics. The Fund may
invest in obligations rated C by Moody's or D by S&P which is such rating
organizations' lowest rating and indicates that the obligation is in default
and interest and/or repayment of principal is in arrears. See "Investment
Considerations and Risks _ Lower Rated Securities" below for a discussion of
certain risks and "Appendix" in the Statement of Additional Information.
The Fund may invest 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, as set forth under "Appendix _
Certain Portfolio Securities _ Money Market Instruments." Under normal
market conditions, the Fund does not expect to have more than 20% of its net
assets invested in money market instruments and does not intend to invest
more than 5% of its assets in any one of these types of instruments. However,
when The Dreyfus Corporation determines that adverse market conditions exist,
the Fund may adopt a temporary defensive posture and invest all of its assets
in money market instruments.
The Fund's annual portfolio turnover rate for the current fiscal year
is not expected to exceed 300%. A turnover rate of 100% is equivalent to the
Fund buying and selling all of the securities in its portfolio once in the
course of a year. Higher portfolio turnover rates usually generate additional
brokerage commissions and transaction costs and the short-term gains realized
from these transactions are taxable to shareholders as ordinary income. The
Fund may engage in various investment techniques, such
[Page 5]
as transactions in foreign currency, options and futures, leveraging,
short-selling and lending portfolio securities. For a discussion of the
investment techniques and their related risks, see "Investment Considerations
and Risks" and "Appendix_Investment Techniques" below and "Investment
Objective and Management Policies" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL _ The net asset value per share of the Fund should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management Policies" in the
Statement of Additional Information for a further discussion of certain
risks.
FIXED-INCOME SECURITIES _ Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities generally are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. Certain
securities that may be purchased by the Fund, such as those with interest
rates that fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in interest rates and
can subject the holders thereof to extreme reductions of yield and possibly
loss of principal. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuer. Certain
securities purchased by the Fund, such as those rated Baa or lower by Moody's
and BBB or lower by S&P, may be subject to such risk with respect to the
issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. Once the rating of a portfolio
security has been changed, the Fund will consider all circumstances deemed
relevant in determining whether to continue to hold the security. See "Lower
Rated Securities" and "Appendix_Certain Portfolio Securities_Ratings" below
and "Appendix" in the Statement of Additional Information.
MORTGAGE-RELATED SECURITIES _ Mortgage-related securities in which the Fund
may invest include those with fixed, floating or variable interest rates,
those with interest rates that change based on multiples of changes in a
specified index of interest rates and those with interest rates that change
inversely to changes in interest rates, as well as those that do not bear
interest. Mortgage-related securities are complex derivative instruments,
subject to both credit and prepayment risk, and may be more volatile and less
liquid than more traditional debt securities. Mortgage-related securities are
subject to credit risks associated with the performance of the underlying
mortgage properties. Adverse changes in economic conditions and circumstances
are more likely to have an adverse impact on mortgage-related securities
secured by loans on certain types of commercial properties than on those
secured by loans on residential properties. In addition, these securities are
subject to prepayment risk, although commercial mortgages typically have
shorter maturities than residential mortgages and prepayment protection
features. Some mortgage-related securities have structures that make their
reactions to interest rate changes and other factors difficult to predict,
making their value highly volatile. See "Appendix_Certain Portfolio
Securities_Mortgage-Related Securities."
LOWER RATED SECURITIES _ The Fund may invest up to 20% of the value of its
net assets in higher yielding (and, therefore, higher risks) debt securities
such as those rated Ba by Moody's or BBby S&P, or as low as the lowest rating
assigned by Moody's or S&P. They may be subject to certain risks with respect
to the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. The retail secondary market
for these securities may be less liquid than that of higher rated securities;
adverse conditions could make it difficult at times for the Fund to sell
certain securities or could result in lower prices than those used in
calculating the Fund's net asset value. See "Appendix _ Certain Portfolio
Securities _ Ratings" below.
FOREIGN SECURITIES _ The Fund may invest up to 10% of its assets in foreign
securities. Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some
[Page 6]
foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Fund will be subject to additional risks which
include possible adverse political and economic developments, seizure or
nationalization of foreign deposits or adoption of governmental restrictions
which might adversely affect or restrict the payment of principal and
interest on the foreign securities to investors located outside the country
of the issuer, whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
USE OF DERIVATIVES _ The Fund may invest in, or enter into, derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. The Derivatives the Fund may use include options and
futures, mortgage-related securities and asset-backed securities. While
Derivatives can be used effectively in furtherance of the Fund's investment
objective, under certain market conditions, they can increase the volatility
of the Fund's net asset value, decrease the liquidity of the Fund's portfolio
and make more difficult the accurate pricing of the Fund's portfolio. See
"Appendix _ Investment Techniques _ Use of Derivatives" below and
"Investment Objective and Management Policies _ Management Policies _
Derivatives"in the Statement of Additional Information.
SIMULTANEOUS INVESTMENTS _ Investment decisions for the Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
Year 2000 Risks _ Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by The Dreyfus Corporation and the
Fund's other service providers do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Dreyfus Corporation is taking
steps to address the Year 2000 Problem with respect to the computer systems
that it uses and to obtain assurances that comparable steps are being taken
by the Fund's other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of June 30, 1998, The Dreyfus Corporation managed
or administered approximately $110 billion in assets for approximately 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall management
of the Fund's affairs under a Management Agreement with the Fund, subject to
the authority of the Fund's Board in accordance with Maryland law. The
investment decisions of the Fund are made by the Taxable Fixed-Income Committee
of The Dreyfus Corporation, and no person is primarily responsible for making
recommendations to that Committee. The portfolio managers comprising the
Taxable Fixed-Income Committee are identified in the Statement of Additional
Information. The Dreyfus
[Page 7]
Corporation also provides research services for the Fund and for other funds
advised by The Dreyfus Corporation through a professional staff of portfolio
managers and securities analysts.
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. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$328 billion in assets as of March 31, 1998, including approximately $113
billion in proprietary mutual fund assets. As of March 31, 1998, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.6 trillion in assets,
including approximately $67 billion in mutual fund assets.
For the fiscal year ended March 31, 1998, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .65 of 1% of the
value of the Fund's average daily net assets. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the expense
ratio of the Fund and increasing yield to investors. The Fund will not pay
The Dreyfus Corporation at a later time for any amounts it may waive, nor
will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume.
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation or its affiliates as factors in the selection of broker-dealers
to execute portfolio transactions for the Fund.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers, banks or other financial institutions in respect of these services.
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN _ Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). Mellon Bank, N.A., One Mellon
Center, Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be charged a fee
if you effect transactions in Fund shares through a securities dealer, bank
or other financial institution. Stock certificates are issued only upon your
written request. No certificates are issued for fractional shares. The Fund
reserves the right to reject any purchase order. See "Appendix_Additional
Information About Purchases, Exchanges and Redemptions."
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, bank or other financial institution which
maintains an omnibus account in the Fund and has made an aggregate minimum
initial purchase for its customers of $2,500. Subsequent investments must be
at least $100. However, the minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, SEP-IRAs and rollover
[Page 8]
IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
The initial investment must be accompanied by the Account Application. For
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing, the
minimum initial investment is $1,000. For full-time or part-time employees of
The Dreyfus Corporation or any of its affiliates or subsidiaries who elect to
have a portion of their pay directly deposited into their accounts, the
minimum initial investment is $50. The Fund reserves the right to offer Fund
shares without regard to minimum purchase requirements to employees
participating in certain qualified or non-qualified employee benefit plans or
other programs where contributions or account information can be transmitted
in a manner and form acceptable to the Fund. The Fund reserves the right to
vary further the initial and subsequent investment minimum requirements at
any time. Fund shares also are offered without regard to the minimum initial i
nvestment requirements through Dreyfus-AUTOMATIC Asset BuilderRegistration
Mark, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan pursuant to the Dreyfus Step Program described under "Shareholder
Services." These services enable you to make regularly scheduled investments
and may provide you with a convenient way to invest for long-term financial
goals. You should be aware, however, that periodic investment plans do not
guarantee a profit and will not protect an investor against loss in a
declining market.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to
"The Dreyfus Trust Company, Custodian." Payments to open new accounts which
are mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to The Dreyfus
Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For Dreyfus
retirement plan accounts, both initial and subsequent investments should be
sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Neither initial nor subsequent investments should be
made by third party check. Purchase orders may be delivered in person only to
a Dreyfus Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest
Dreyfus Financial Center, please call one of the telephone numbers listed
under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900051868/Dreyfus A Bonds
Plus, Inc., for purchase of Fund shares in your name. The wire must include
your Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and dealer
number, if applicable. If your initial purchase of Fund shares is by wire,
please call 1-800-645-6561 after completing your wire payment to obtain your
Fund account number. Please include your Fund account number on the Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member.
[Page 9]
You must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify your
Fund account registration and your Fund account number PRECEDED BY THE DIGITS
"1111."
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. Net asset value per share is determined as of the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value per share, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the New York Stock Exchange. Net asset value per share is computed by
dividing the value of the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding. The Fund's
investments are valued generally by using available market quotations or at
fair value which may be determined by one or more independent pricing
services approved by the Fund's Board. Each pricing service's procedures are
reviewed under the general supervision of the Fund's Board. For further
information regarding the methods employed in valuing the Fund's investments,
see "Determination of Net Asset Value" in the Statement of Additional
Information.
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.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in the Dreyfus Family of Funds then held by Eligible
Benefit Plans will be aggregated to determine the fee payable. The
Distributor reserves the right to cease paying these fees at any time. The
Distributor will pay such fees from its own funds, other than amounts
received from the Fund, including past profits or any other source available
to it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service ("IRS").
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES _ You may purchase, in exchange for shares of the Fund, shares
of certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for
[Page 10]
sale in your state of residence. These funds have different investment
objectives which may be of interest to you. If you desire to use this
service, please call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed on its use. If you are calling from
overseas, call 516-794-5452.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all shareholders automatically, unless you check the
applicable "No" box on the Account Application indicating that you
specifically refuse this privilege. The Telephone Exchange Privilege may be
established for an existing account by written request signed by all
shareholders on the account, by a separate signed Shareholder Services Form,
or by oral request from any of the authorized signatories on the account. If
you have established the Telephone Exchange Privilege, you may telephone
exchange instructions (including over The Dreyfus TouchRegistration Mark
automated telephone system) by calling one of the telephone numbers set forth
above. See "How to Redeem Shares _ Procedures." Upon an exchange into a new
account, the following shareholder services and privileges, as applicable and
where available, will be automatically carried over to the fund into which
the exchange is made: Telephone Exchange Privilege, Check Redemption
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege, and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the exchange you must notify the
Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. See
"Appendix_Additional Information About Purchases, Exchanges and Redemptions."
The availability of Fund Exchanges may be modified or terminated at any time
upon notice to shareholders. See "Dividends, Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE _ Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of the Fund, in shares of certain other funds
in the Dreyfus Family of Funds of which you are a shareholder. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth of the month according to the schedule you have selected.
Shares will be exchanged at the then-current net asset value; however a sales
load may be charged with respect to exchanges into funds sold with a sales
load. See "Shareholder Services" in the Statement of Additional Information.
The right to exercise this Privilege may be modified or cancelled by the Fund
or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by mailing written notification to The Dreyfus Family
of Funds, P.O.
[Page 11]
Box 9671, Providence, Rhode Island 02940-9671. The Fund may charge a service
fee for the use of this Privilege. No such fee currently is contemplated. For
more information concerning this Privilege and the funds in the Dreyfus
Family of Funds eligible to participate in this Privilege, or to obtain a
Dreyfus Auto-Exchange Authorization Form, please call toll free
1-800-645-6561. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark _ Dreyfus-Automatic Asset
Builder permits you to purchase shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish a Dreyfus-
Automatic Asset Builder account you must file an authorization form with the
Transfer Agent. You may obtain the necessary authorization form by calling
1-800-645-6561. You may cancel this Privilege or change the amount of your
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. The notification will be effective
three business days following receipt. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE _ Dreyfus Government Direct
Deposit Privilege enables you to purchase shares (minimum of $100 and maximum
of $50,000 per transaction) by having Federal salary, Social Security, or
certain veterans', military or other payments from the Federal government
automatically deposited into your Fund account. You may deposit as much of
such payments as you elect. To enroll in Dreyfus Government Direct Deposit,
you must file with the Transfer Agent a completed Direct Deposit Sign-Up Form
for each type of payment that you desire to include in this Privilege. The
appropriate form may be obtained by calling 1-800-645-6561. Death or legal
incapacity will terminate your participation in this Privilege. You may elect
at any time to terminate your participation by notifying in writing the
appropriate Federal agency. Further, the Fund may terminate your
participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN _ Dreyfus Payroll Savings Plan permits you to
purchase shares (minimum of $100 per transaction) automatically on a regular
basis. Depending upon your employer's direct deposit program, you may have
part or all of your paycheck transferred to your existing Dreyfus account
electronically through the Automated Clearing House system at each pay
period. To establish a Dreyfus Payroll Savings Plan account, you must file an
authorization form with your employer's payroll department. Your employer
must complete the reverse side of the form and return it to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You may
obtain the necessary authorization form by calling 1-800-645-6561. You may
change the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the Fund, the
Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
DREYFUS STEP PROGRAM _ Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-Automatic Asset BuilderRegistration Mark, Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a
Dreyfus Step Program account, you must supply the necessary information on
the Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll
[Page 12]
Savings Plan, as the case may be, or as provided under the terms of such
Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through the Dreyfus Step Program
in conjunction with a Dreyfus-sponsored retirement plan may do so only for
IRAs, SEP-IRAs and IRA "Rollover Accounts."
DREYFUS DIVIDEND OPTIONS _ Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share price
s which do not include the sales load or which reflect a reduced sales load.
If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the shares purchased. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACH permits you to transfer electronically dividends or dividends
and capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an Automated Clearing House member may be so designated. Banks may charge
a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 6527, Providence, Rhode Island 02940-6527. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or
terminate these privileges at any time or charge a service fee. No such fee
currently is contemplated. Shares held under Keogh Plans, IRAs or other
retirement plans are not eligible for DreyfusDividend Sweep.
AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An Automatic
Withdrawal Plan may be established by filing an Automatic Withdrawal Plan
application with the Transfer Agent or by oral request from any of the
authorized signatories on the account by calling 1-800-645-6561. The
Automatic Withdrawal Plan may be ended at any time by you, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
RETIREMENT PLANS _ The Fund offers a variety of prototype pension and
profit-sharing plans, including Keogh Plans, IRAs (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, Rollover IRAs and
Education IRAs), 401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan
support services are also available. You can obtain details on the various
plans by calling the following numbers toll free: for Keogh Plans, please
call 1-800-358-5566; for IRAs (except SEP-IRAs ), please call 1-800-645-6561;
or for SEP-IRAs, 401(k) Salary Reduction Plans and 403(b)(7) Plans, please
call 1-800-322-7880.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. See
"Appendix_Additional Information About Purchases, Exchanges and
Redemptions." When a request is received in proper form by the Transfer Agent
or other entity authorized to receive orders on behalf of the Fund, the Fund
will redeem the shares at the next determined net asset value.
[Page 13]
The Fund imposes no charges when shares are redeemed. Securities
dealers, banks and other financial institutions may
charge their clients a fee for effecting redemptions of Fund shares. Any
certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Fund's then-current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDERRegistration
Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER
AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK
CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-
AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE
CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET
BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES
WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU
OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the number of shares held in your
account is 50 shares or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or through the Check Redemption Privilege or the
Telephone Redemption Privilege, which are granted automatically unless you
specifically refuse them by checking the applicable "No" box on the Account
Application. The Check Redemption Privilege and the Telephone Redemption
Privilege may be established for an existing account by a separate signed
Shareholder Services Form or, with respect to the Telephone Redemption
Privilege by oral request from any of the authorized signatories on the
account by calling 1-800-645-6561. You also may redeem shares through the
Wire Redemption Privilege or the Dreyfus TELETRANSFER Privilege, if you have
checked the appropriate box and supplied the necessary information on the
Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities. The Fund reserves the right to refuse any request made by wire or
telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Fund may modify
or terminate any redemption Privilege at any time or charge a service fee
upon notice to shareholders. No such fee is contemplated. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for the Check Redemption,
Wire Redemption, Telephone Redemption or DreyfusTELETRANSFER Privilege.
The Telephone Redemption Privilege or Telephone Exchange Privilege
authorizes the Transfer Agent to act on telephone instructions (including
over The Dreyfus TouchRegistration Mark automated telephone system) from any
person representing himself or herself to be you, and reasonably believed by
the Transfer Agent to be genuine. The Fund will require the Transfer Agent to
employ reasonable procedures, such
[Page 14]
as requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. Redemption requests may be delivered in person only
to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED TO THE FUND
AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the
nearest Dreyfus Financial Center, please call one of the telephone numbers
listed under "General Information." Redemption requests must be signed by
each shareholder, including each owner of a joint account, and each signature
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. If you
have any questions with respect to signature-guarantees, please call one of
the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Potential fluctuations in the net
asset value of the Fund's shares should be considered in determining the
amount of the check. Redemption Checks should not be used to close your
account. Redemption Checks are free, but the Transfer Agent will impose a fee
for stopping payment of a Redemption Check upon your request or if the
Transfer Agent cannot honor a Redemption Check because of insufficient funds
or other valid reason. You should date your Redemption Checks with the
current date when you write them. Please do not postdate your Redemption
Checks. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all postdated Redemption Checks which
are dated within six months of presentment for payment, if they are otherwise
in good order. If you hold shares in a Dreyfus-sponsored IRA account, you may
be permitted to make withdrawals from your IRA account using checks furnished
to you by The Dreyfus Trust Company. This Privilege will be terminated
immediately, without notice, with respect to any account which is, or
becomes, subject to backup withholding on redemptions (see "Dividends,
Distributions and Taxes"). Any Redemption Check written on an account which
has become subject to backup withholding on redemptions will not be honored
by the Transfer Agent. The Check Redemption Privilege is granted
automatically unless you refuse it.
WIRE REDEMPTION PRIVILEGE _ You may request by wire, telephone or letter
that redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank if
your bank is not a member. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of not more than $250,000 wired within
any 30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from over
[Page 15]
seas, call 516-794-5452. The Statement of Additional Information sets forth
instructions for transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE _ You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Telephone Redemption Privilege is granted automatically unless you refuse it.
DREYFUS TELETRANSFER PRIVILEGE _ You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only such an account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request. Holders of jointly registered Fund or bank accounts may
redeem through the Dreyfus TELETRANSFER Privilege for transfer to their bank
account not more than $250,000 within any 30-day period.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which it
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of The
Dreyfus Corporation, an amount not to exceed an annual rate of .25 of 1% of
the value of the Fund's average daily net assets for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays monthly dividends from net investment income
and makes distributions from net realized securities gains, if any, once a
year, but it may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), in all events in a manner consistent with the
provisions of the 1940 Act. The Fund will not make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive dividends or
distributions in cash or to reinvest in additional Fund shares at net asset
value. If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividend or distribution and all future dividends and distributions payable
to you in additional Fund shares at net asset value. No interest will accrue
on amounts represented by uncashed distribution or redemption checks. All
expenses are accrued daily and deducted before declaration of dividends to
investors.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gain realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income whether received in cash or reinvested in additional
shares. No dividend paid by the Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions from net
realized long-term securities gains of the Fund will be taxable to U.S.
shareholders as long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Fund shares and whether
such distributions are received in cash or reinvested in additional shares.
The Code provides that an individual generally will be taxed on his or her
net capital gain at a maximum rate of 28% with respect
[Page 16]
to capital gains from securities held for more than one year but not more
than 18 months and at a maximum rate of 20% with respect to capital gains
from securities held for more than 18 months. Dividends and distributions may
be subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gain realized from the sale of or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions and redemption proceeds may be
subject to backup withholding, as described below, unless the foreign
investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number, IRS individual taxpayer
identification number, or employer identification number of the record owner
of the account. Any tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the record owner of the account, and
may be claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended March 31, 1998 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify, if such qualification
is in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains, if any.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, average annual total return and/or total
return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a
[Page 17]
second six-month period which, when added to the result for the first six
months, provides an "annualized" yield for an entire one-year period.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Consumer
Price Index, Lipper Analytical Services, Inc., Moody's Bond Survey Bond
Index, Lehman Brothers Corporate Bond Index, Salomon Smith Barney High Grade
Index, Morningstar, Inc., IBC Bond Fund Report and other industry
publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on February 23, 1976.
The Fund is authorized to issue 100 million shares of Common Stock, par value
$.01 per share. Each share has one vote.
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 a majority of the Fund's outstanding voting shares. In addition, the
Fund's 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 Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call
1-718-895-1206; outside the U.S., call 516-794-5452.
[Page 18]
APPENDIX
INVESTMENT TECHNIQUES
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 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 331\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.
LEVERAGE _ Leveraging exaggerates the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money
borrowed for leveraging will be limited to 331\3% of the value of the Fund's
total assets. These borrowings would 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.
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.
Use of Derivatives _ The Fund may invest in, or enter into, the types of
Derivatives enumerated under "Description of the Fund _ Investment
Considerations and Risks _ Use of Derivatives." These instruments and certain
related risks are described more specifically under "Investment Objective and
Management Policies _ Management Policies _ Derivatives" in the Statement of
Additional Information.
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 risks, 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 correalated 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.
Although the Fund will not be a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in such Derivatives. The
Fund may invest in futures contracts and options with respect thereto for
hedging purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such
[Page 19]
contracts and options; provided, however, that in the case of an option that
is in-the-money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5% limitation.
The Fund may purchase call and put options and write (i.e., sell)
covered call and put option contracts. When required by the Securities and
Exchange Commission, the Fund will set aside permissible liquid assets in a
segregated account to cover its obligations relating to its transactions in
Derivatives. To maintain this required cover, the Fund may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
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 purchase a similar security from the institution at a later date at
an agreed upon price. The securities that are purchased 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 purchase, the Fund will not be
entitled to receive interest and principal payments on the securities sold.
Proceeds of the sale typically will be invested in short-term instruments,
particularly repurchase agreements, and the income from these investments,
together with any additional fee income received on the sale, will generate
income for the Fund exceeding the yield on the securities sold. Forward roll
transactions involve the risk that the market value of the securities sold by
the Fund may decline below the purchase price of those securities. The Fund
will set aside in a segregated account permissible liquid assets at least
equal to the amount of the repurchase price (including accrued interest).
FORWARD COMMITMENTS _ The Fund may purchase or sell securities on a forward
commitment, when-issued or delayed delivery basis, which means 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 may 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 commitments. At no time will the Fund have more than 33 1\3%
of its assets committed to purchase securities on a forward commitment basis.
SHORT SELLING _ In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery
to the buyer. The Fund is obligated to replace the security borrowed by
purchasing it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Fund, which would result in a loss or gain,
respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Fund's net assets.
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns. At no time will more
than 15% of the value of the Fund's net assets be in deposits on short sales
against the box.
[Page 20]
FOREIGN CURRENCY TRANSACTIONS _ The Fund may enter into foreign currency
transactions for a variety of purposes, including: to fix in U.S. dollars,
between trade and settlement date, the value of a security the Fund has
agreed to buy or sell; to hedge the U.S. dollar value of securities the Fund
already owns, particularly if it expects a decrease in the value of the
currency in which the foreign security is denominated; or to gain exposure to
the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Fund's success in these transactions will depend principally on
The Dreyfus Corporation's ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.
Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and
other complex factors, as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the United States or abroad.
CERTAIN PORTFOLIO SECURITIES
U.S. TREASURY SECURITIES _ U.S. Treasury securities include Treasury
Inflation-Protection Securities ("TIPS"), which are newly created securities
issued by the U.S. Treasury designed to provide investors a long term
investment vehicle that is not vulnerable to inflation. The interest rate
paid by TIPS is fixed, while the principal value rises or falls semi-annually
based on changes in a published Consumer Price Index. Thus, if inflation
occurs, the principal and interest payments on the TIPS are adjusted
accordingly to protect investors from inflationary loss. During a
deflationary period, the principal and interest payments decrease, although
the TIPS' principal will not drop below its face amount at maturity.
In exchange for the inflation protection, TIPS generally pay lower
interest rates than typical Treasury securities. Only if inflation occurs
will TIPS offer a higher real yield than a conventional Treasury bond of the
same maturity. In addition, it is not possible to predict with assurance how
the market for TIPS will develop; initially, the secondary market for these
securities may not be as active or liquid as the secondary market for
conventional Treasury securities. Principal appreciation and interest
payments on TIPS will be taxed annually as ordinary interest income for
Federal income tax calculations. As a result, any appreciation in principal
must be counted as interest income in the year the increase occurs, even
though the investor will not receive such amounts until the TIPS are sold or
mature. Principal appreciation and interest payments will be exempt from
state and local income taxes.
MUNICIPAL OBLIGATIONS _ Municipal obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. Municipal obligations bear fixed,
floating or variable rates of interest. Certain municipal obligations are
subject to redemption at a date earlier than their stated maturity pursuant
to call options, which may be separated from the related municipal
obligations and purchased and sold separately. The Fund also may acquire call
options on specific municipal obligations. The Fund generally would purchase
these call options to protect the Fund from the issuer of the related
municipal obligation redeeming, or other holder of the call option from
calling away, the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than,
the yields available on
[Page 21]
other permissible Fund investments. Dividends received by shareholders on
Fund shares which are attributable to interest income received by the Fund
from municipal obligations generally will be subject to Federal income tax.
The Fund will invest in municipal obligations, the ratings of which
correspond with the ratings of other permissible Fund investments. The Fund
currently intends to invest no more than 25% of its total assets in municipal
obligations. However, this percentage may be varied from time to time without
shareholder approval.
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, stripped mortgage-backed securities, mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs"),
adjustable rate mortgages, real estate investment trusts ("REITs"), including
debt and preferred stock issued by REITs, as well as other real
estate-related securities.
In certain instances, the credit risk associated with
mortgage-related securities can be reduced by third party guarantees or other
forms of credit support. Improved credit risk does not reduce prepayment risk
which is unrelated to the rating assigned to the mortgage-related security.
Prepayment risk can lead to fluctuations in value of the mortgage-related
security which may be pronounced. If a mortgage-related security is purchased
at a premium, all or part of the premium may be lost if there is a decline in
the market value of the security, whether resulting from changes in interest
rates or prepayments on the underlying mortgage collateral. Certain
mortgage-related securities that may be purchased by the Fund, such as
inverse floating rate collateralized mortgage obligations, have coupons that
move inversely to a multiple of a specific index which may result in a form
of leverage. As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest
rates. However, although the value of a mortgage-related security may decline
when interest rates rise, the converse is not necessarily true, since in
periods of declining interest rates the mortgages underlying the security are
more likely to be prepaid. For this and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages, and, therefore, it is not possible to predict
accurately the security's return to the Fund. Moreover, with respect to
certain stripped mortgage-backed securities, if the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Fund may fail to fully recoup its initial investment even if the securities
are rated in the highest rating category by a nationally recognized
statistical rating organization. During periods of rapidly rising interest
rates, prepayments of mortgage-related securities may occur at slower than
expected rates. Slower prepayments effectively may lengthen a
mortgage-related security's expected maturity which generally would cause the
value of such security to fluctuate more widely in response to changes in
interest rates. Were the prepayments on the Fund's mortgage-related securities
to decrease broadly, the Fund's effective duration, and thus sensitivity to
interest rate fluctuations, would increase.
RESIDENTIAL MORTGAGE-RELATED SECURITIES. The Fund may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), and the Federal Home Loan Mortgage Corporation ("FHLMC"), or issued
by private entities. Similar to commercial mortgage-related securities,
residential mortgage-related securities have been issued using a variety of
structures, including multi-class structures featuring senior and
subordinated classes.
COMMERCIAL MORTGAGE-RELATED SECURITIES. The Fund may invest in
commercial mortgage-related securities, which generally are multi-class debt
or pass-through certificates secured by mortgage loans on commercial
properties. These mortgage-related securities generally are structured to
[Page 22]
provide protection to the senior classes' investors against potential losses
on the underlying mortgage loans. This protection is generally 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.
SUBORDINATED SECURITIES. 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 as 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 likely to be 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.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS PASS-THROUGH
SECURITIES. Collateralized mortgage obligations or "CMOs" are multiclass
bonds backed by pools of mortgage pass-through certificates or mortgage
loans. CMOs may be collateralized by (a) pass-through certificates issued or
guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured
by the Federal Housing Administration or guaranteed by the Department of
Veterans' Affairs, (c) unsecuritized conventional mortgages, (d) other
mortgage-related securities or (e) any combination thereof.
Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be
retired substantially earlier than the stated maturities or final
distribution dates. The principal and interest on the underlying mortgages
may be allocated among the several classes of a series of a CMO in many ways.
One or more tranches of a CMO may have coupon rates which reset periodically
at a specified increment over an index, such as the London Interbank Offered
Rate ("LIBOR") (or sometimes more than one index). These floating rate CMOs
typically are issued with lifetime caps on the coupon rate thereon. The Fund
also may invest in inverse floating rate CMOs. Inverse floating rate CMOs
constitute a tranche of a CMO with a coupon rate that moves in the reverse
direction to an applicable index such as the LIBOR. Accordingly, the coupon
rate thereon will increase as interest rates decrease. Inverse floating rate
CMOs are typically more volatile than fixed or floating rate tranches of
CMOs.
STRIPPED MORTGAGE-BACKED SECURITIES. The Fund also may invest in
stripped mortgage-backed securities which are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or
more new securities, each with a specified percentage of the underlying
security's principal or interest payments. Mortgage securities may be
partially stripped so that each investor class receives some interest and
some principal. When securities are completely stripped, however, all of the
interest is distributed to holders of one type of security, known as an
interest-only security, or IO, and all of the principal is distributed to
holders of another type of security known as a principal-only security, or
PO. Strips can be created in a pass-through structure or as tranches of a
CMO. The yields to maturity on IOs and POs are very sensitive to the rate of
principal payments (including prepayments) on the related underlying mortgage
assets. If the underlying mortgage assets experience greater than anticipated
pre
[Page 23]
payments of principal, the Fund may not fully recoup its initial investment
in IOs. Conversely, if the underlying mortgage assets experience less than
anticipated prepayments of principal, the yield on POs could be materially
and adversely affected.
REAL ESTATE INVESTMENT TRUSTS. A REIT is a corporation, or a business
trust that would otherwise be taxed as a corporation, which meets the
definitional requirements of the Code. The Code permits a qualifying REIT to
deduct dividends paid, thereby effectively eliminating corporate level
Federal income tax and making the REIT a pass-through vehicle for Federal
income tax purposes. To meet the definitional requirements of the Code, a
REIT must, among other things, invest substantially all of its assets in
interests in real estate (including mortgages and other REITs) or cash and
government securities, derive most of its income from rents from real
property or interest on loans secured by mortgages on real property, and
distribute to shareholders annually a substantial portion of its otherwise
taxable income. REITs are subject to heavy cash flow dependency, defaults by
borrowers or tenants, self-liquidation and the possibility of failing to
qualify for tax-free status under the Code or to maintain exemption from the
1940 Act.
PRIVATE ENTITY SECURITIES. These mortgage-related securities are
issued by commercial banks, savings and loan institutions, mortgage bankers,
private mortgage insurance companies and other non-governmental issuers.
Timely payment of principal and interest on mortgage-related securities
backed by pools created by non-governmental issuers often is supported
partially by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance.
ASSET-BACKED SECURITIES _ Asset-backed securities are a form of Derivative.
The securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. 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.
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.
CONVERTIBLE SECURITIES _ Convertible securities may be converted at either a
stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although
convertible bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
non-convertible securities.
MONEY MARKET INSTRUMENTS _ The Fund may invest in the following types of
money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the U.S. Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S.
[Page 24]
Government provides financial support to such U.S. Government-sponsored
agencies and instrumentalities, no assurance can be given that it will always
do so since it is not so obligated by law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund _ Investment Considerations and Risks
_ Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's,
or A-1 by S&P, (b) issued by companies having an outstanding unsecured debt
issue currently rated at least A by Moody's or S&P, or if (c) unrated, determi
ned by The Dreyfus Corporation to be of comparable quality to those rated
obligations which may be purchased by the Fund.
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 also are issued by corporations and financial
institutions which 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 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.
INVESTMENT COMPANIES _ The Fund may invest in securities issued by other
investment companies to the extent consistent with its investment objective.
Under the 1940 Act, the Fund's investment in such securities, subject to
certain exceptions, currently is limited to (i) 3% of the total voting stock
of any one investment company, (ii) 5% of the Fund's total assets with
respect to any one investment company and (iii) 10% of the Fund's total
assets in the aggregate. Investments in the securities of other investment
companies may involve duplication of advisory fees and certain other
expenses.
[Page 25]
ILLIQUID SECURITIES _ The Fund may invest up to 15% of the value of its net
assets in 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 mortgage-related
securities. As to these securities, the Fund is subject to a risk that should
the Fund 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.
RATINGS _ Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BBby S&P are regarded as having predominately speculative
characteristics and, while such obligations have less near-term vulnerability
to default than other speculative grade debt, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. Securities rated Caa by Moody's are of poor standing
and may be in default or there may be present elements of danger with respect
to principal or interest. S&P typically assigns a CCC rating to debt which
has a current identifiable vulnerability to default and is dependent upon
favorable business, financial and economic conditions to meet timely payments
of interest and repayment of principal. Securities rated C by Moody's are
regarded as having extremely poor prospects of ever attaining any real
investment standing. Securities rated D by S&P are in default, and payment of
interest and/or repayment of principal is in arrears. Such securities, though
high yielding, are characterized by great risk. See "Appendix" in the
Statement of Additional Information for a general description of securities
ratings.
The ratings of Moody's and S&P represent their opinions as to the
quality of the obligations which they undertake to rate. Ratings are relative
and subjective and, although ratings may be useful in evaluating the safety
of interest and principal payments, they do not evaluate the market value
risk of such obligations. Although these ratings may be an initial criterion
for selection of portfolio investments, The Dreyfus Corporation also will
evaluate these securities and the ability of the issuers of such securities
to pay interest and principal. The Fund's ability to achieve its investment
objective may be more dependent on The Dreyfus Corporation's credit analysis
than might be the case for a fund that invested in higher rated securities.
Additional Information About Purchases, Exchanges and Redemptions. The Fund
is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculation on short-term market movements.
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 engaged 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 any calendar year (for calendar year 1998, beginning on January
15th) or who makes exchanges that appear to coincide with an active
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
[Page 26]
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 the Dreyfus Auto-Exchange Privilege, to
any automatic investment or withdrawal privilege described herein, or to
employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange requests
based on their separate components _ redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Fund's next determined net asset value but
the purchase order would be effective only at the net asset value next
determined after the fund being purchased receives the proceeds of the
redemption, which may result in the purchase being delayed.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
[Page 27]
A Bonds
Plus, Inc.
Prospectus
Copy Rights 1998 Dreyfus Service Corporation
084p0898
[Page 28]
__________________________________________________________________________
DREYFUS A BONDS PLUS, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 1, 1998
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus A Bonds Plus, Inc. (the "Fund"), dated August 1, 1998, as 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
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies................ B-2
Management of the Fund...................................... B-14
Management Agreement........................................ B-19
Purchase of Shares.......................................... B-21
Shareholder Services Plan................................... B-22
Redemption of Share......................................... B-23
Shareholder Services........................................ B-25
Portfolio Transactions...................................... B-28
Determination of Net Asset Value............................ B-29
Dividends, Distributions and Taxes.......................... B-29
Performance Information..................................... B-31
Information About the Fund.................................. B-32
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors.................. B-32
Financial Statements and Report of Independent Auditors..... B-33
Appendix.................................................... B-34
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Portfolio Securities
Repurchase Agreements. The Fund's custodian or sub-custodian will have
custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements are considered
by the staff of the Securities and Exchange Commission to be loans by the
Fund. In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Fund will enter into repurchase agreements only with domestic
banks with total assets in excess of $1 billion, or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the value of the
securities purchased should decrease below the resale price.
Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that such instruments
generally will be traded, and there generally is no established secondary
market for these obligations, although they are redeemable at face value,
plus accrued interest, at any time. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements,
the Fund's right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies, and the Fund may invest in them only if at
the time of an investment the borrower meets the criteria set forth in the
Fund's Prospectus for other commercial paper issuers.
Municipal Obligations. Municipal obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Industrial development bonds, in most cases,
are revenue bonds and generally do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity
on whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or
equipment issued by municipalities.
Convertible Securities. Although to a lesser extent than with fixed-
income securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion feature, the
market value of convertible securities tends to vary with fluctuations in
the market value of the underlying common stock. A unique feature of
convertible securities is that as the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent as
the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities
generally entail less risk than investments in common stock of the same
issuer.
Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation. In
connection with the purchases of convertible securities, the Fund from time
to time may hold common stock received upon the conversion of the security.
The Fund does not intend to retain the common stock in its portfolio and
will sell it as promptly as it can and in a manner which it believes will
reduce the risk to the Fund of loss in connection with the sale.
Mortgage-Related Securities. Mortgage-related securities are a form of
Derivative collaterialized 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 collaterialized mortgage
obligations and stripped mortgage-backed securities, mortgage pass-through
securities, interests in REMICs or other kinds of mortgage-backed
securities, including those with fixed, floating and variable interest
rates, those with interests rates that change based on multiples of changes
in a specified index of interest rates and those with interest rates that
change inversely to changes in interest rates.
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.
Private Entity Securities -- These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance. The insurance and guarantees are issued by
government entities, private insurers and the mortgage poolers. There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss. No insurance
or guarantee covers the Fund or the price of the Fund's shares. Mortgage-
related securities issued by non-governmental issuers generally offer a
higher rate of interest than government-agency and government-related
securities because there are no direct or indirect government guarantees of
payment. The Fund will not invest more than 5% of its assets in such
private entity securities issued by any one issuer, including any one bank
or savings and loan institution.
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
class 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 as 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 likely to be 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 generated therefrom. 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) pass-through certificates issued or
guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured
by the Federal housing Administration or guaranteed by the Department of
Veterans Affairs, (c) unsecuritized conventional mortgages, (d) other
mortgage-related securities or (e) any combination thereof. Each class of
CMOs, often referred to as a "tranche," is issued at a specific coupon rate
and has a stated maturity or final distribution date. Principal prepayments
on collateral underlying a CMO may cause it to be retired substantially
earlier than the stated maturities or final distribution dates. The
principal and interest on the underlying mortgages may be allocated among
the several classes of a series of a CMO in many ways. One or more tranches
of a CMO may have coupon rates which reset periodically at a specified
increment over an index, such as the London Interbank Offered Rate
("LIBOR")(or sometimes more than one index). These floating rate CMOs
typically are issued with lifetime caps on the coupon rate thereon. The
Fund also may invest in inverse floating rate CMOs. Inverse floating rate
CMOs constitute a tranche of a CMO with a coupon rate that moves in the
reverse direction to an applicable index such as the LIBOR. Accordingly,
the coupon rate thereon will increase as interest rates decrease. Inverse
floating rate CMOs are typically more volatile than fixed or floating rate
tranches of CMOs.
Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying
inversely to a multiple of an applicable index creates a leverage factors.
The markets for inverse floating rate CMOs with highly leveraged
characteristics may at times be very thin. The Funds ability to dispose of
its positions in such securities will depend on the degree of liquidity in
the markets for such securities. It is impossible to predict the amount of
trading interest that may exist in such securities, and therefore the future
degree of liquidity. It should be noted that inverse floaters based on
multiples of a stated index are designed to be highly sensitive to changes
in interest rates and can subject the holders thereof to extreme reductions
of yield and loss of principal.
Stripped Mortgage-Backed Securities -- The Fund also my invest in stripped
mortgage-backed securities. Stripped mortgage-backed securities are created
by segregating the cash flows from underlying mortgage loans or mortgage
securities to create two or more new securities, each with a specified
percentage of the underlying security's principal or interest payments.
Mortgage securities may be partially stripped so that each investor class
receives some interest and some principal. When securities are completely
stripped, however, all of the interest is distributed to holders of one type
of security, known as an interest-only security, or IO, and all of the
principal is distributed to holders of another type of security known as a
principal-only security, or PO. Strips can be created in a pass-through
structure or as tranches of a CMO. The yields to maturity on IOs and POs
are very sensitive to the rate of principal payments (including prepayments)
on the related underlying mortgage assets. If the
underlying mortgage assets experience greater than anticipated prepayments
of principal, the Fund may not fully recoup its initial investment in IOs.
Conversely, if the underlying mortgage assets experience less than
anticipated prepayments of principal, the yield on POs could be materially
and adversely affected.
Real Estate Investment Trusts--A REIT is a corporation, or a business trust
that would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code").
The Code permits a qualifying REIT to deduct dividends paid, thereby
effectively eliminating corporate level Federal income tax and making the
REIT a pass-through vehicle for Federal income tax purposes. To meet the
definitional requirements of the Code, a REIT must, among other things,
invest substantially all of its assets in interests in real estate
(including mortgages and other REITs) or cash and government securities,
derive most of its income form rents from real property or interest on loans
secured by mortgages on real property, and distribute to shareholders
annually a substantial portion of its otherwise taxable income.
REITs are characterized as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs, which may include operating or finance companies, own
real estate directly and the value of, and income earned by, the REITs
depend upon the income of the underlying properties and the rental income
they earn. Equity REITs also can realize capital gains (or losses) by
selling properties that have appreciated (or depreciated) in value.
Mortgage REITs can make construction, development or long-term mortgage
loans and are sensitive to the credit quality of the borrower. Mortgage
REITs derive their income from interest payments on such loans. Hybrid
REITs combine the characteristics of both equity and mortgage REITs,
generally by holding both ownership interests and mortgage interests in real
estate. The value of securities issued by REITs are affected by tax and
regulatory requirements and by perceptions of management skill. They also
are subject to heavy cash flow dependency, defaults by borrowers or tenants,
self-liquidation and the possibility of failing to qualify for tax-free
status under the Code or to maintain exemption from the Investment Company
Act of 1940, as amended (the "1940 Act").
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
instrumentality's 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.
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. Receipts include "Treasury Receipts" ("TRs"),
"Treasury Investment Growth Receipts" ("TIGRs"), "Liquid Yield Option Notes"
("LYONs"), and "Certificates of Accrual on Treasury Securities" ("CATS").
TIGRs, LYONs and CATS are interests in private proprietary accounts while
TRs are interests in accounts sponsored by the U.S. Treasury.
Foreign Government Obligations; Securities of Supranational Entities.
The Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentality's 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. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
marketable, the Fund will endeavor, to the extent practicable, to obtain the
right to registration at the expense of the issuer. Generally, there will
be a lapse of time between the Fund's decision to sell any such security and
the registration of the security permitting sale. During any such period,
the price of the securities will be subject to market fluctuations.
However, where a substantial market of qualified institutional buyers has
developed for certain unregistered securities purchased by the Fund pursuant
to Rule 144A under the Securities Act of 1933, as amended, the Fund intends
to treat such securities as liquid securities in accordance with procedures
approved by the Fund's Board. Because it is not possible to predict with
assurance how the market for specific restricted securities sold pursuant to
Rule 144A will develop, the Fund's Board has directed the Manager to monitor
carefully the Fund's investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to Rule
144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in its investment portfolio during such
period.
Management Policies
- -------------------
Leverage Through Borrowing. 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 holdings within three days to reduce
the debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell at that time. The
Fund also may be required to maintain minimum average balances in connection
with such borrowing or to pay a commitment or other fee to maintain a line
of credit; either of those requirements would increase the cost of borrowing
over the stated interest rate. To the extent the Fund enters into a reverse
repurchase agreement, the Fund will maintain in a segregated account
permissible liquid assets at least equal to the aggregate amount of its
reverse repurchase obligations, plus accrued interest, in certain cases, in
accordance with releases promulgated by the Securities and Exchange
Commission. The Securities and Exchange Commission views reverse repurchase
transactions as collateralized borrowings by the Fund.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in connection
with the loan.
Short-Selling. The Fund may engage in short-selling. Until the Fund
closes its short position or replaces the borrowed security, the Fund will:
(a) maintain a segregated account, containing permissible liquid assets, at
such a level that the amount deposited in the account plus the amount
deposited with the broker as collateral always equals the current value of
the security sold short, or (b) otherwise cover its short position.
Derivatives. The Fund may invest in, or enter into, Derivatives (as
defined in the Fund's Prospectus) 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. See also
"Portfolio Securities--Mortgage-Related Securities" above.
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. The Fund may enter into futures contracts in U.S.
domestic markets. 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 Manager's
ability 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.
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.
Options. 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 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.
The Fund may purchase cash-settled options on interest rate 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 Managers
ability to predict correctly movements in interest rates and prices of
securities underlying options. To the extent the Managers 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 contract
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.
Forward Commitments. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in the
same way, i.e., appreciating when interest rates decline and depreciating
when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a forward commitment or
when-issued basis may expose the Fund to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on
a when-issued basis can involve the additional risk that the yield available
in the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when the Fund is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Fund's net assets and its net asset value per share.
Investment Considerations and Risks
- -----------------------------------
Lower Rated Securities. The Fund may invest up to 20% of its assets in
higher yielding (and therefore higher risk) debt securities such as those
rated Ba by Moody's Investors Service, Inc. ("Moody's") or BB by Standard &
Poor's Ratings Group ("S&P"), or as low as the lowest rating assigned by
Moody's or S&P. Such securities, though higher yielding, are characterized
by risk. See "Appendix" for a general description of Moody's and S&P
ratings. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk
of these securities. The Fund will rely on the Manager's judgment, analysis
and experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by S&P and
Moody's to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher rated
securities. For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
not have sufficient revenues to meet their interest payment obligations.
The issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, or the issuer's
inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss because of default
by the issuer is significantly greater for the holders of these securities
because such securities generally are unsecured and often are subordinated
to other creditors of the issuer.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet liquidity needs or in response to a
specific economic event such as a deterioration in the creditworthiness of
the issuer. The lack of a liquid secondary market for certain securities
also may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's portfolio and calculating its
net asset value. Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of
these securities. In such cases, judgment may play a greater role in
valuation because less reliable, objective data may be available.
These securities may be particularly susceptible to economic downturns.
It is likely that an economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon securities and pay-in-kind bonds, in which the
Fund may invest up to 5% of its total assets. Pay-in-kind bonds pay
interest through the issuance of additional securities. Zero coupon
securities and pay-in-kind bonds carry an additional risk in that, unlike
bonds which pay interest throughout the period to maturity, the Fund will
realize no cash until the cash payment date unless a portion of such
securities are sold and, if the issuer defaults, the Fund may obtain no
return at all on its investment.
Investment Restrictions
- -----------------------
The Fund has adopted investment restrictions numbered 1 through 8 as
fundamental policies, 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. Investment restrictions numbered 9 through 12 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Board members at any time. The Fund may not:
1. 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.
2. Underwrite the 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, and except that the
Fund may bid separately or as part of a group for the purchase of municipal
obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
3. Purchase or sell real estate, commodities or oil and gas
interests, provided that the Fund may purchase and sell securities that are
secured by real estate or interests therein or issued by companies that
invest or deal in real estate or interests therein or real estate investment
trusts and hold and sell real estate as a result of ownership of such
securities or instruments, and provided further that the Fund may purchase
and sell options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
4. Make loans to others, except through the purchase of debt
obligations or 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 the Fund's 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.
5. With respect to 75% of the value of its total assets, invest more
than 5% of its assets in the securities of any one issuer or hold more than
10% of the outstanding voting securities of such issuer, except for
securities issued or guaranteed by the U.S. Government or any of its
agencies or institutions which may be purchased without limitation.
6. Invest more than 25% of its assets in any particular industry,
provided that there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentality's.
7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities permitted
in Investment Restriction Nos. 1, 3, 8 and 12 may be deemed to give rise to
a senior security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indices, and options on
futures contracts or indices.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
11. 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.
12. Pledge, mortgage, hypothecate or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values of assets will
not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
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 Noel Group, Inc., a venture capital company (for which,
from February 1995 until November 1997, he was Chairman of the Board),
The Muscular Dystrophy Association, 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,
Century Business Services, Inc., a provider of various outsourcing
functions for small and medium sized companies, and Career Blazers Inc.
(formerly, Staffing Resources), a temporary placement firm. 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 and, until August 24, 1994,
the Fund's distributor. 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.
DAVID P. FELDMAN, Board Member. A Trustee of Corporate Property Investors,
a real estate investment company, and a director of several mutual
funds in the 59 Wall Street Mutual Funds Group, and of the Jeffrey
Company, a private investment company. He was employed by AT&T from
July 1961 to his retirement in April 1997, most recently serving as
Chairman and Chief Executive Officer of AT&T Investment Management
Corporation. He is 59 years old and his address is c/o AT&T, One Oak
Way, Berkeley Heights, New Jersey 07922.
JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a
service company for planning and arranging corporate meetings and other
events. From September 1975 to June 1978, he was Executive Vice
President of Flagship Cruises Ltd.. Prior thereto, he was Senior Vice
President and Resident Director of the Swedish-American Line for the
United States and Canada. Mr. Fraser is 77 years old and his address
is 133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. He was Under Secretary of the Treasury
for Finance at the U.S. Treasury Department from May 1989 to January
1992. For more than five years prior thereto, he was a Professor of
Finance at the Graduate School of Business Administration of Harvard
University, and from 1985 to 1989, Chairman of its Advancement
Management Program. He is also a director of MidOcean Reinsurance Co.,
Ltd., Cooke & Bieler, investment counselors, NASD Regulation, Inc. and
the Federal Reserve Bank of Boston. Mr. Glauber is 59 years old and
his address is 79 John F. Kennedy Street, Cambridge, Massachusetts
02138.
JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, a non-profit organization principally engaged in the
development of alternatives to business litigation. He was of counsel
to the law firm of Lovejoy, Wasson & Ashton from October 1975 to
December 1976 and from October 1979 to June 1983, and was a partner of
that firm from January 1977 to September 1979. He was President and
director of the Edna McConnell Clark Foundation, a philanthropic
organization, from September 1971 to December 1976. Mr. Henry is 67
years old and his address is c/o CPR Institute for Dispute Resolution,
366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing of Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a merchandise
and marketing consulting firm. Prior to 1974, she was a Vice President
of Macy's, New York. Mrs. Jacobs is 72 years old and her address is
c/o Corporate Property Investors, 305 East 47th Street, New York, New
York 10017.
IRVING KRISTOL, Board Member. John M. Olin Distinguished Fellow of American
Enterprise Institute for Public Policy Research, co-editor of The
Public Interest magazine, and an author or co-editor of several books.
From May 1981 to December 1994, he was a consultant to the Manager on
economic matters; from 1969 to 1988, he was Professor of Social
Thought at the Graduate School of Business Administration, New York
University; from September 1969 to August 1979, he was Henry R. Luce
Professor of Urban Values at New York University; from 1975 to 1990, he
was a director of Lincoln National Corporation, an insurance company;
and from 1977 to 1990, he was a director of Warner-Lambert Company, a
pharmaceutical and consumer products company. Mr. Kristol is 78 years
old and his address is c/o The Public Interest, 1112 16th Street, N.W.,
Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Board Member. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He was Vice President for
Health Sciences and director of the Cancer Center at Columbia
University from 1973 to 1980, and Professor of Medicine and of Human
Genetics and Development at Columbia University from 1968 to 1982. He
was a director of Pfizer, Inc., a pharmaceutical company from 1978 to
1996, and Life Technologies, Inc., a life science company producing
products for cell and molecular biology and microbiology, from 1986 to
1996. He is a director of Tularik, Inc., a biotechnology company, and
Genos, Inc., a genomics company, and a limited partner of LINC Venture
Lease Partners II, L.P., a limited partnership engaged in leasing. Dr.
Marks is 71 years old and his address is c/o Memorial Sloan-Kettering
Cancer Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Board Member. Editor-in-Chief of The New Republic
magazine and a lecturer in Social Studies at Harvard University, where
he has been a member of the faculty since 1965. He is a trustee of The
Center for Blood Research at the Harvard Medical School, and of the
Academy for Liberal Education, an accrediting agency for colleges and
universities certified by the U.S. Department of Education; and a
director of LeukoSite Inc., a biopharmaceutical company. Dr. Peretz is
also Co-chairman of The Street.Com, a financial daily on the Web. From
1988 to 1989, he was a director of Bank Leumi Trust Company of New
York; and from 1988 to 1991 he was a director of Carmel Container
Corporation. Dr. Peretz is 58 years old and his address is c/o The New
Republic, 1220 19th Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Board Member. Financial Consultant. From January 1990
to March 1995, Executive Vice President and Chief Financial Officer,
and from January 1990 to March 1993 a director, of Time Warner Inc.;
from 1981 to 1990, he was a member of the office of the President and a
director of Warner Communications, Inc. He is also a director of The
New Germany Fund, Mountasia Entertainment International, Inc., the
Lillian Vernon Corporation, Winstar Communications, Inc. and
International Telecommunications Corp. Mr. Wasserman is 65 years old
and his address is 126 East 57th Street, Suite 12 North, New York, New
York 10022-3613.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board members who are not "interested
persons" of the Fund.
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. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year ended
March 31, 1998 and 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, were as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members
- ------------ ----------------- ----------------
Joseph S. DiMartino $10,625 $597,128 (94)
David P. Feldman $ 8,500 $129,375 (37)
John M. Fraser, Jr. $ 8,000 $ 76,750 (14)
Robert R. Glauber $ 8,500 $102,500 (20)
James F. Henry $ 8,500 $ 57,500 (10)
Rosalind Gersten Jacobs $ 8,500 $ 95,250 (10)
Irving Kristol $ 8,500 $ 57,500 (10)
Dr. Paul A. Marks $ 7,500 $ 57,500 (10)
Dr. Martin Peretz $ 8,500 $ 57,500 (10)
Bert W. Wasserman $ 8,000 $ 56,000 (10)
___________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $6,794 for all Board members as a group.
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 other investment companies advised or administered by the
Manager. From December 1989 through November 1996, he was employed by
GE Investments 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. of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. Vice
President, Client Development Manager. From April 1997 to March, 1998,
she was employed as a Relationship Manager with Citibank, N.A. She is
29 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 33 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. From September 1983 to May 1994, he was Senior Vice
President & Manager of Client Services and Director of Internal Audit
at The Boston Company, Inc. He is 43 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 35 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. From December 1991 to March 1993, he
was employed as a Fund Accountant at The Boston Company, Inc. He is 28
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.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on July 27, 1998.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994, 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.
Shareholders approved the Agreement on August 2, 1994. The Fund's Board,
including a majority of its members who are not "interested persons" of any
party to the Agreement, last voted to renew the Agreement at a meeting held
on September 9, 1997. The Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board or by vote of a majority of the Fund's
shares or, upon 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 officer 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; Ronald P. O'Hanley III,
Vice Chairman; J. David Officer, Vice Chairman and a director; 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; and
Mandell L. Berman, Burton C. Borgelt, Frank V. Cahouet and Richard F. Syron,
directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions and provides the
Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The Fund's portfolio managers, who
comprise the Manager's Taxable Fixed-Income Committee, are Kevin M.
McClintock, Michael Hoeh, Roger King, C. Matthew Olson and Gerald E.
Thunelius. 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 may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
The Manager, from time to time, from its own funds, other than the
management fee paid by the Fund, but including past profits, may make
payments to the Distributor for shareholder servicing. The Distributor in
turn may pay part or all of such compensation to securities dealers or other
persons for their servicing assistance.
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 directors 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 independent
pricing services, costs of maintaining corporate existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs
of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses.
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .65 of 1% of the
value of the Fund's average daily net assets. All expenses are accrued
daily and deducted before declaration of dividends to investors. The
management fees paid by the Fund to the Manager for the fiscal years ended
March 31, 1996, 1997 and 1998 amounted to $3,798,630, $3,885,766 and
$3,914,925, respectively.
The Manager has agreed that if the aggregate expenses of the Fund,
excluding taxes, brokerage commissions and, with the prior written consent
of the necessary state securities commissions, extraordinary expenses, but
including the management fee, exceed 1-1/2% of the average value of the Fund's
net assets for the fiscal year, the Fund may deduct from the fees to be paid
to the Manager, or the Manager will bear such excess expenses. No expense
reimbursement was required under the Agreement for fiscal 1996, 1997 and
1998.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day the
Transfer Agent and the New York Stock Exchange are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the New York
Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the Account
Application or Shareholder Services Form on file. If the proceeds of a
particular redemption are to be wired to an account at any other bank, the
request must be in writing and signature-guaranteed. See "Redemption of
Shares--Dreyfus TeleTransfer Privilege."
Transactions Through Securities Dealers. Fund shares may be purchased
and redeemed through securities dealers which may charge a fee for such
services. Some dealers will place the Fund's shares in an account with
their firm. Dealers also may require the following: that the customer
invest more than the $1,000 minimum investment through dealers; the customer
not take physical delivery of stock certificates; the customer not request
redemption checks to be issued in the customer's name; fractional shares not
be purchased; monthly income distributions be taken in cash; or other
conditions.
There is no sales or service charge by the Fund or the Distributor,
although investment dealers, banks and other financial institutions may make
reasonable charges to investors for their services. The services provided
and the applicable fees are established by each dealer or other institution
acting independently of the Fund. The Fund has been given to understand
that these fees may be charged for customer services including, but not
limited to, same-day investment of client funds; same-day access to client
funds; advice to customers about the status of their accounts, yield
currently being paid or income earned to date; provision of periodic account
statements showing security and money market positions; other services
available from the dealer, bank or other institution; and assistance with
inquiries related to their investment. Any such fees will be deducted
monthly from the investor's account, which on smaller accounts could
constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the best
interest of investors. Investors should be aware that they may purchase
shares of the Fund directly from the Fund without imposition of any
maintenance or service charges, other than those already described herein.
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services
Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
related to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts.
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 for its review. In addition, the Plan provides that material
amendments of the Plan must be approved by the 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 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 was last so approved on December 8, 1997.
The Plan is terminable at any time by vote of a majority of the Board
members who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan.
For the fiscal year ended March 31, 1998, the Fund was charged
$1,005,032 pursuant to the Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege. The Fund provides Redemption Checks
("Checks") automatically upon opening an account, unless the investor
specifically refuses the Check Redemption Privilege by checking the
applicable "No" box on the Account Application. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Check Redemption Privilege may be established for an existing account by
a separate signed Shareholder Services Form. The Account Application or
Shareholder Services Form must be manually signed by the registered
owner(s). Checks are drawn on the investor's Fund account and may be made
payable to the order of any person in an amount of $500 or more. When a
Check is presented to the Transfer Agent for payment, the Transfer Agent, as
the investor's agent, will cause the Fund to redeem a sufficient number of
shares in the investor's account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of the
Check will be returned to the investor. Shareholders generally will be
subject to the same rules and regulations that apply to checking accounts,
although the election of this Privilege creates only a shareholder-transfer
agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
the investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the 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 the investor on the Account Application or
Shareholder Services Form, or to a correspondent bank if the investor's bank
is not a member of the Federal Reserve System. Fees ordinarily are imposed
by such bank and borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment 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 Answer Back Sign
---------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmitted 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."
Dreyfus TeleTransfer Privilege. Investors should be aware that if they
have selected the Dreyfus TeleTransfer Privilege, any request for a wire
redemption will be effected as a Dreyfus TeleTransfer transaction through
the Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Shares--Dreyfus
TeleTransfer Privilege."
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
Commission. 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 in case of an emergency or
any time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In such event, the securities would
be valued in the same manner as the Fund's portfolio is valued. If the
recipient sold such securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any periods 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 by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of 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 previously 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, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions (including
over The Dreyfus Touchr automated telephone system) from any person
representing himself or herself to be the investor, and reasonably believed
by the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of certain other funds in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the basis
of relative net asset value set forth above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. An investor
will be notified if his account falls below the amount designated to be
exchanged under this Privilege. In this case, an investor's account will
fall to zero unless additional investments are made in excess of the
designated amount prior to the next Dreyfus Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and
from regular accounts to IRA accounts, but not from IRA accounts to regular
accounts. With respect to all other retirement accounts, exchanges may be
made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired legally may be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
Dreyfus Auto-Exchange Privilege may be modified or terminated any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in 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 charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In addition,
the Fund makes available Keogh Plans, IRAs (including regular IRA, spousal
IRAs for a non-working spouse, Roth IRAs, IRAs set up under a Simplified
Employee Pension Plan (SEP-IRAs), Education IRAs and IRA Rollover Accounts)
and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request forms for
adoption of such plans from the Distributor.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may
not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum for subsequent purchases. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs, (including
regular IRAs, for a non-working spouse, Roth IRAs SEP-IRAs and Rollover
IRAs) and 403(b)(7) Plans with only one participant and $500 for Dreyfus-
sponsored Education IRAs, with no minimum for subsequent purchases.
The investor should read the Prototype Retirement Plan and the form of
Custodial Agreement for further details on eligibility, service fees and tax
implications, and should consult a tax adviser.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities ordinarily are purchased directly from
the issuer or from an underwriter or a market maker for the securities.
Usually no brokerage commissions are paid by the Fund for such purchases.
Purchases of portfolio securities from underwriters include a commission or
concession paid by the issuer to the underwriter and the purchase price paid
to market makers for the securities may include the spread between the bid
and asked price. No brokerage commissions or concessions were paid by the
Fund during the 1996, 1997 and 1998 fiscal years.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms. Sales of
shares of the Fund and other funds in the Dreyfus Family of Funds by a
broker may be taken into consideration in allocating brokerage transactions.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses of
its research department.
The Fund anticipates that its annual portfolio turnover rate for the
current fiscal year will not exceed 300%. For the fiscal years ended March
31, 1997 and 1998, the Fund's portfolio turnover rate was 165.50% and
374.30%, respectively. The increase in the Fund's portfolio turnover rate
in fiscal 1998 was attributable to the restructuring of the Fund's portfolio
and to the volatile interest rate environment which necessitated more
frequent adjustments to the duration of the Fund's portfolio.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
Valuation of Portfolio Securities. Substantially all of the Fund's
investments (excluding short-term investments) are valued each business day
by an independent pricing service (the "Service") approved by the Fund's
Board. Securities valued by the Service for which quoted bid prices in the
judgment of the Service are readily available and are representative of the
bid side of the market are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Other investments (which constitute a majority of the
portfolio of securities) valued by the Service are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
Short-term investments are not valued by the Service and are carried at
amortized cost, which approximates value. Other investments that are not
valued by the Service are valued at the average of the most recent bid and
asked prices in the market in which such investments are primarily traded,
or at the last sales price for securities traded primarily on an exchange.
In the absence of reported sales of investments traded primarily on an
exchange, the average of the most recent bid and asked prices is used. Bid
price is used when no asked price is available. Investments traded in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Expenses and fees, including the management fee (reduced by the
expense limitation, if any), are accrued daily and are taken into account
for the purpose of determining the net asset value of Fund shares.
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 following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions
and Taxes."
Management believes that the Fund qualified as a "regulated investment
company" under the Code for the fiscal year ended March 31, 1998. The Fund
intends to continue to so qualify 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 its net investment income and net realized
capital gains to the extent such income and gains are distributed to
shareholders in accordance with applicable provisions of the Code. 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 from net realized long-term securities
gains (i.e., "capital gain distribution") paid shortly after an investor's
purchase may have the effect of reducing the aggregate net asset value of
his shares below the cost of his investment. Such a dividend or capital
gain distribution would be a return on 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
shorter period as the Internal Revenue Service may prescribe by regulation)
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.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, a portion of the gain or
loss realized from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial futures and options, and
certain preferred stock) 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, option 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 the Fund realizes 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 contracts or
options remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their 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 be considered, for tax purposes,
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, override or modify the provisions of Sections 1256
and 988 of the Code.
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 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
rules, short-term capital loss on straddle positions may be recharacterized
as long-term capital loss, and long-term capital gain may be recharacterized
as short-term capital gain or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally will 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.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, the Fund could be
required to recognize annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such
portion in order to maintain its qualification as a regulated investment
company. In such case, the Fund may be required to dispose of securities
which it might otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's current yield for the 30-day period ended March 31, 1998 was
5.63%. 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 is
subtracted from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) 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 net asset value 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.
The Fund's average annual total return for the one, five and ten year
periods ended March 31, 1998 was 12.62%, 6.77% and 9.04%, respectively.
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.
The Fund's total return for the period June 25, 1976 to March 31, 1998
was 662.60%. 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.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
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 are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights
and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., 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. For the fiscal year ended March 31, 1998, the Fund paid
the Transfer Agent $257,559.
Mellon Bank, N.A. (the "Custodian"), the Manager's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, serves as custodian of the
Fund's investments. 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. For the fiscal year ended March 31, 1998,
the Fund paid the Custodian $60,552.
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, independent auditors, 787 Seventh Avenue, New York,
New York 10019, have been selected as the Fund's auditors.
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS
The Fund's Annual Report to Shareholders for the fiscal year ended
March 31, 1998 is a separate document supplied with this Statement of
Additional Information, and the financial statement, accompanying notes and
report of independent auditors appearing therein are incorporated by
reference into this Statement of Additional Information.
APPENDIX
Description of certain Standard & Poor's Ratings Group ("S&P") and
Moody's Investors Service, Inc. ("Moody's") ratings:
S&P
Debt Ratings
AAA
Bonds rated AAA have the highest rating assigned to a debt obligation.
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 bonds in higher
rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to
pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC-debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to issues
that 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. Paper rated A-1 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 (+) sign designation. Paper rated
A-1 must have the following characteristics: liquidity ratios are adequate
to meet cash requirements, long-term senior debt is rated "A" or better, the
issuer has access to at least two additional channels of borrowing, and
basic earnings and cash flow have an upward trend with allowance made for
unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry; the reliability
and quality of management are unquestioned.
Moody's
Debt Rating
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally 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 are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and therefore not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desired
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category and
in categories below B. The modifier 1 indicates a ranking for the security
in the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
Commercial Paper Rating
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
will normally 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.
DREYFUS A BONDS PLUS, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for each of the ten years in
the period ended March 31, 1998.*
Included in Part B of the Registration Statement:
Financial Highlights for the fiscal year ended March 31,
1998.
Statement of Investments March 31, 1998.*
Statement of Assets and Liabilities March 31, 1998.*
Statement of Operations--year ended March 31, 1998.*
Statement of Changes in Net Assets--for each of the two
years ended March 31, 1998.*
Notes to Financial Statements.*
Report of Ernst & Young LLP, Independent Auditors, dated
May 11, 1998.
* Incorporated by reference to Registrant's Annual Report to
Shareholders on Form N-30D filed with the Securities and
Exchange Commission on May 28, 1998.
All Schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are
incorporated by reference to Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits
________ __________________________________
(b) Exhibits:
(1)(a) Registrant's Certificate of Incorporation is incorporated by
reference to Exhibit (1)(a) of Post-Effective Amendment No.
32 to the Fund's Registration Statement on Form N-14, filed
on July 24, 1996.
(b) Articles Supplementary are incorporated by reference to
Exhibit (1)(b) of Post-Effective Amendment No. 32 to the
Fund's Registration Statement on Form N-1A, filed on July 24,
1996.
(2) Registrant's By-Laws are incorporated by reference to Exhibit
(2) of Post-Effective Amendment No. 32 to the Fund's
Registration Statement on Form N-14, filed on July 24, 1996.
(5) Management Agreement is incorporated by reference to Exhibit
(5) of Post-Effective No. 30 to the Fund's Registration
Statement on Form N-1A, filed on July 27, 1995.
(6) Distribution Agreement is incorporated by reference to
Exhibit (6) of Post-Effective No. 30 to the Fund's
Registration Statement on Form N-1A, filed on July 27, 1995.
(8) Custody Agreement is incorporated by reference to Exhibit (8)
of Post-Effective Amendment No. 32 to the Fund's Registration
Statement on Form N-14, filed on July 24, 1996.
(9) Shareholder Services Plan is incorporated by reference to
Exhibit (9) of Post-Effective No. 30 to the Fund's
Registration Statement on Form N-1A, filed on July 27, 1995.
(10) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No.
32 to the Fund's Registration Statement on Form N-14, filed
on July 24, 1996.
(11) Consent of Independent Auditors.
(12) Financial Data Schedule to be filed by Amendment.
(16) Schedules of Computation of Performance Data are incorporated
herein by reference to Exhibit 16 of Post-Effective Amendment
No. 29 to the Registration Statement on Form N-1A, filed on
May 24, 1994.
Item 24. Financial Statements and Exhibits (continued)
________ __________________________________
Other Exhibits:
(a) Powers of Attorney.
(b) Certificate of Secretary
Item 25. Persons Controlled by or Under Common Control with Registrant
Not Applicable
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders as of July 27, 1998
Common Stock, 17,785
par value $.01
per share
Item 27. Indemnification
Reference is made to Article SEVENTH of the Registrant's Article
of Incorporation filed as Exhibit 1(a), incorporated by reference
to Exhibit 1(a) of Post-Effective Amendment No. 32, filed on July
24, 1996, and to Section 2-418 of the Maryland General
Corporation law. The application of these provisions is limited
by Article VIII of the Registrant's By-Laws filed as Exhibit 2,
incorporated by reference to Exhibit (2) of Post-Effective
Amendment No. 32, filed on July 24, 1996, 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 directors,
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
director, officer or controlling person of the registrant
in the successful defense of any action, suit or
proceeding) is asserted by such director, 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, as amended,
and is incorporated herein by reference to Exhibit (6), filed on
July 27, 1995.
Item 28. 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
Management, Inc., another wholly-owned subsidiary, provides
investment management services to various pension plans,
institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.****;
President:
Boston Safe Deposit and Trust Company****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.**;
Director:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
RICHARD F. SYRON Chairman of the Board and
Director Chief Executive Officer:
American Stock Exchange
86 Trinity Place
New York, New York 10006;
Director:
John Hancock Mutual Life Insurance Company
John Hancock Place, Box 111
Boston, Massachusetts 02117;
Thermo Electron Corporation
81 Wyman Street, Box 9046
Waltham, Massachusetts 02254-9046;
American Business Conference
1730 K Street, NW, Suite 120
Washington, D.C. 20006;
RICHARD F. SYRON Trustee:
Director Boston College - Board of Trustees
(continued) 140 Commonwealth Ave.
Chestnut Hill, Massachusetts 02167-3934
J. DAVID OFFICER Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
and a Director Director:
Dreyfus Financial Services Corporation*****;
Dreyfus Investment Services Corporation*****;
Mellon Trust of Florida
2875 Northeast 191st Street
North Miami Beach, Florida 33180;
Mellon Preferred Capital Corporation****;
Boston Group Holdings, Inc.****;
Mellon Trust of New York
1301 Avenue of the Americas - 41st Floor
New York, New York 10019;
Mellon Trust of California
400 South Hope Street
Los Angeles, California 90071-2806;
Executive Vice President:
Mellon Bank, N.A.***;
Vice Chairman and Director:
The Boston Company, Inc.****;
President and Director:
RECO, Inc.****;
The Boston Company Financial Services,
Inc.****;
Boston Safe Deposit and Trust Company****;
RONALD P. O'HANLEY Vice Chairman:
Vice Chairman The Dreyfus Corporation*;
Director:
The Boston Company Asset Management, LLC****;
TBCAM Holding, Inc.****;
Franklin Portfolio Holdings, Inc.
Two International Place - 22nd Floor
Boston, Massachusetts 02110;
Mellon Capital Management Corporation
595 Market Street, Suite #3000
San Francisco, California 94105;
Certus Asset Advisors Corporation
One Bush Street, Suite 450
San Francisco, California 94104;
Mellon-France Corporation***;
Chairman and Director:
Boston Safe Advisors, Inc.****;
Partner Representative:
Pareto Partners
271 Regent Street
London, England W1R 8PP;
Chairman and Trustee:
Mellon Bond Associates, LLP***;
Mellon Equity Associates, LLP***;
RONALD P. O'HANLEY Trustee:
Vice Chairman Laurel Capital Advisors, LLP***;
(continued) Chairman, President and Chief Executive Officer:
Mellon Global Investing Corp.***;
Partner:
McKinsey & Company, Inc.
Boston, Massachusetts
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus America Fund+++;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
WILLIAM V. HEALEY President:
Assistant Secretary The Truepenny Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
Secretary and Director:
Dreyfus Partnership Management Inc.*;
Director:
The Dreyfus Trust Company++;
Assistant Secretary:
Dreyfus Service Corporation*;
Dreyfus Investment Advisors, Inc.*;
Assistant Clerk:
Dreyfus Insurance Agency of Massachusetts,
Inc.+++++
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York,
New York 10166.
** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
***** The address of the business so indicated is Union Trust Building,
501 Grant Street, Room 179, Pittsburgh, Pennsylvania 15259;
+ The address of the business so indicated is Atrium Building,
80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard,
Uniondale, New York 11556-0144.
+++ The address of the business so indicated is 69, Route `d'Esch, L-
1470 Luxembourg.
++++ The address of the business so indicated is 69, Route `d'Esch, L-
2953 Luxembourg.
+++++ The address of the business so indicated is 53 State Street, Boston,
Massachusetts 02103.
Item 29. 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) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Insured Municipal Bond Fund
71) Dreyfus Premier Municipal Bond Fund
72) Dreyfus Premier New York Municipal Bond Fund
73) Dreyfus Premier State Municipal Bond Fund
74) Dreyfus Premier Value Fund
75) Dreyfus Short-Intermediate Government Fund
76) Dreyfus Short-Intermediate Municipal Bond Fund
77) The Dreyfus Socially Responsible Growth Fund, Inc.
78) Dreyfus Stock Index Fund, Inc.
79) Dreyfus Tax Exempt Cash Management
80) The Dreyfus Third Century Fund, Inc.
81) Dreyfus Treasury Cash Management
82) Dreyfus Treasury Prime Cash Management
83) Dreyfus Variable Investment Fund
84) Dreyfus Worldwide Dollar Money Market Fund, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Fund, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(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.
++ Principal business address is 200 Park Avenue, New York, New York
10166.
Item 30. 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, Pennsylvania 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 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Amendment to the 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 29th day of July, 1998.
Dreyfus A Bonds Plus, Inc.
BY: /s/Marie E. Connolly*
-----------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the 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 7/30/98
______________________________ (Principal Executive Officer
Marie E. Connolly and Financial Officer)
/s/Joseph F. Tower* Assistant Treasurer (Principal 7/30/98
______________________________ Accounting Officer)
Joseph F. Tower
/s/Joseph S. DiMartino* Director 7/30/98
______________________________
Joseph S. DiMartino
/s/David P. Feldman* Director 7/30/98
______________________________
David P. Feldman
/s/John M. Fraser, Jr.* Director 7/30/98
______________________________
John M. Fraser, Jr.
/s/Robert R. Glauber* Director 7/30/98
______________________________
Robert R. Glauber
/s/James F. Henry* Director 7/30/98
______________________________
James F. Henry
/s/Rosalind Gersten Jacobs* Director 7/30/98
______________________________
Rosalind Gersten Jacobs
/s/Irving S. Kristol* Director 7/30/98
______________________________
Irving S. Kristol
/s/Paul A. Marks* Director 7/30/98
______________________________
Paul A. Marks
/s/Martin Peretz* Director 7/30/98
______________________________
Martin Peretz
/s/Bert W. Wasserman* Director 7/30/98
______________________________
Bert W. Wasserman
*BY: __________________________
Michael S. Petrucelli
Attorney-in-Fact
INDEX OF EXHIBITS
(2) Amended By-laws
(11) Consent of Independent Auditors
(17) Financial Data Schedule
OTHER EXHIBITS
(a) Powers of Attorney
(b) Certificate of Secretary
BY-LAWS
OF
DREYFUS A BONDS PLUS, INC.
(A Maryland Corporation)
___________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing
shares of stock shall set forth thereon the statements prescribed by
Section 2-211 of the Maryland General Corporation Law ("General Corporation
Law") and by any other applicable provision of law and shall be signed by
the Chairman of the Board or the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer and may be sealed with the corporate seal. The
signatures of any such officers may be either manual or facsimile signatures
and the corporate seal may be either facsimile or any other form of seal.
In case any such officer who has signed manually or by facsimile any such
certificate ceases to be such officer before the certificate is issued, it
nevertheless may be issued by the corporation with the same effect as if the
officer had not ceased to be such officer as of the date of its issue.
No certificate representing shares of stock shall be issued for
any share of stock until such share is fully paid, except as otherwise
authorized in Section 2-206 of the General Corporation Law.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Board of Directors may require, in its discretion, the
owner of any such certificate or the owner's legal representative to give
bond, with sufficient surety, to the corporation to indemnify it against any
loss or claim that may arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions restricting
the transferability of shares of stock, if any, transfers of shares of stock
of the corporation shall be made only on the stock transfer books of the
corporation by the record holder thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary
of the corporation or with a transfer agent or a registrar, if any, and on
surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may
fix, in advance, a date as the record date for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or
the allotment of any rights or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall be
not more than 90 days, and in case of a meeting of stockholders not less
than 10 days, prior to the date on which the meeting or particular action
requiring such determination of stockholders is to be held or taken. In
lieu of fixing a record date, the Board of Directors may provide that the
stock transfer books shall be closed for a stated period but not to exceed
20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock transfer
books are not closed for the determination of stockholders: (1) The record
date for the determination of stockholders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business on the day
on which the notice of meeting is mailed or the day 30 days before the
meeting, whichever is the closer date to the meeting; and (2) The record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on
the day on which the resolution of the Board of Directors declaring the
dividend or allotment of rights is adopted, provided that the payment or
allotment date shall not be more than 60 days after the date on which the
resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share of stock" or "shares of stock"
or "stockholder" or "stockholders" refers to an outstanding share or shares
of stock and to a holder or holders of record of outstanding shares of stock
when the corporation is authorized to issue only one class of shares of
stock and said reference also is intended to include any outstanding share
or shares of stock and any holder or holders of record of outstanding shares
of stock of any class or series upon which or upon whom the Charter confers
such rights where there are two or more classes or series of shares or upon
which or upon whom the General Corporation Law confers such rights
notwithstanding that the Charter may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder.
5. STOCKHOLDER MEETINGS.
ANNUAL MEETINGS. If a meeting of the stockholders of the
corporation is required by the Investment Company Act of 1940, as amended,
to elect the directors, then there shall be submitted to the stockholders at
such meeting the question of the election of directors, and a meeting called
for that purpose shall be designated the annual meeting of stockholders for
that year. In other years in which no action by stockholders is required
for the aforesaid election of directors, no annual meeting need be held.
SPECIAL MEETINGS. Special stockholder meetings for any
purpose may be called by the Board of Directors or the President and shall
be called by the Secretary for the purpose of removing a Director whenever
the holders of shares entitled to at least ten percent of all the votes
entitled to be cast at such meeting shall make a duly authorized request
that such meeting be called.
The Secretary shall call a special meeting of stockholders
for all other purposes whenever the holders of shares entitled to at least a
majority of all the votes entitled to be cast at such meeting shall make a
duly authorized request that such meeting be called. Such request shall
state the purpose of such meeting and the matters proposed to be acted on
thereat, and no other business shall be transacted at any such special
meeting.
The Secretary shall inform such stockholders of the reasonably estimated
costs of preparing and mailing the notice of the meeting, and upon payment
to the corporation of such costs, the Secretary shall give notice in the
manner provided for below.
PLACE AND TIME. Stockholder meetings shall be held at such
place, either within the State of Maryland or at such other place within the
United States, and at such date or dates as the directors from time to time
may fix.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written or
printed notice of all meetings shall be given by the Secretary and shall
state the time and place of the meeting. The notice of a special meeting
shall state in all instances the purpose or purposes for which the meeting
is called. Written or printed notice of any meeting shall be given to each
stockholder either by mail or by presenting it to the stockholder personally
or by leaving it at his or her residence or usual place of business not less
than 10 days and not more than 90 days before the date of the meeting,
unless any provisions of the General Corporation Law shall prescribe a
different elapsed period of time, to each stockholder at his or her address
appearing on the books of the corporation or the address supplied by the
stockholder for the purpose of notice. If mailed, notice shall be deemed to
be given when deposited in the United States mail addressed to the
stockholder at his or her post office address as it appears on the records
of the corporation with postage thereon prepaid. Whenever any notice of the
time, place or purpose of any meeting of stockholders is required to be
given under the provisions of these by-laws or of the General Corporation
Law, a waiver thereof in writing, signed by the stockholder and filed with
the records of the meeting, whether before or after the holding thereof, or
actual attendance or representation at the meeting shall be deemed
equivalent to the giving of such notice to such stockholder. The foregoing
requirements of notice also shall apply, whenever the corporation shall have
any class of stock which is not entitled to vote, to holders of stock who
are not entitled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
STATEMENT OF AFFAIRS. The President of the corporation or,
if the Board of Directors shall determine otherwise, some other executive
officer thereof, shall prepare or cause to be prepared annually a full and
correct statement of the affairs of the corporation, including a balance
sheet and a financial statement of operations for the preceding fiscal year,
which shall be filed at the principal office of the corporation in the State
of Maryland.
QUORUM. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast one-third of the votes
thereat shall constitute a quorum. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without
notice other than by announcement, may adjourn the meeting from time to
time, but not for a period exceeding 120 days after the original record date
until a quorum shall attend.
ADJOURNED MEETINGS. A meeting of stockholders convened on
the date for which it was called (including one adjourned to achieve a
quorum as provided in the paragraph above) may be adjourned from time to
time without further notice to a date not more than 120 days after the
original record date, and any business may be transacted at any adjourned
meeting which could have been transacted at the meeting as originally
called.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and
if present and acting: the President, a Vice President or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation or, in his or her
absence, an Assistant Secretary, shall act as secretary of every meeting,
but if neither the Secretary nor an Assistant Secretary is present the
chairman of the meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether for the purposes of
determining the stockholder's presence at a meeting, or whether by waiving
notice of any meeting, voting or participating at a meeting, expressing
consent or dissent without a meeting or otherwise. Every proxy shall be
executed in writing by the stockholder or by his or her duly authorized
attorney-in-fact or be in such other form as may be permitted by the
Maryland General Corporation Law, including documents conveyed by electronic
transmission and filed with the Secretary of the corporation. A copy,
facsimile transmission or other reproduction of the writing or transmission
may be substituted for the original writing or transmission for any purpose
for which the original transmission could be used. No unrevoked proxy shall
be valid after 11 months from the date of its execution, unless a longer
time is expressly provided therein. The placing of a stockholder's name on
a proxy pursuant to telephonic or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify that such
instructions have been authorized by such stockholder shall constitute
execution of such proxy by or on behalf of such stockholder.
INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by appointment
made by the directors in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully
the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the
person presiding at the meeting or any stockholder, the inspector or
inspectors, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of
any fact found by him or them.
VOTING. Each share of stock shall entitle the holder thereof
to one vote, except in the election of directors, at which each said vote
may be cast for as many persons as there are directors to be elected.
Except for election of directors, a majority of the votes cast at a meeting
of stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may come before
a meeting, unless more than a majority of votes cast is required by the
corporation's Articles of Incorporation. A plurality of all the votes cast
at a meeting at which a quorum is present shall be sufficient to elect a
director.
6. INFORMAL ACTION. Any action required or permitted to be
taken at a meeting of stockholders may be taken without a meeting if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and any other
stockholders entitled to notice of a meeting of stockholders (but not to
vote thereat) have waived in writing any rights which they may have to
dissent from such action and such consent and waiver are filed with the
records of the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed under the direction of a Board of Directors.
The use of the phrase "entire board" herein refers to the total number of
directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural
person of full age. A director need not be a stockholder, a citizen of the
United States or a resident of the State of Maryland. The initial Board of
Directors shall consist of one person. Thereafter, the number of directors
constituting the entire board shall never be less than three or the number
of stockholders, whichever is less. At any regular meeting or at any
special meeting called for that purpose, a majority of the entire Board of
Directors may increase or decrease the number of directors, provided that
the number thereof shall never be less than three or the number of
stockholders, whichever is less, nor more than twelve and further provided
that the tenure of office of a director shall not be affected by any
decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors shall
consist of the director named in the Articles of Incorporation and shall
hold office until the first meeting of stockholders or until his or her
successor has been elected and qualified. Thereafter, directors who are
elected at a meeting of stockholders, and directors who are elected in the
interim to fill vacancies and newly created directorships, shall hold office
until their successors have been elected and qualified. Newly created
directorships and any vacancies in the Board of Directors, other than
vacancies resulting from the removal of directors by the stockholders, may
be filled by the Board of Directors, subject to the provisions of the
Investment Company Act of 1940, as amended. Newly created directorships
filled by the Board of Directors shall be by action of a majority of the
entire Board of Directors then in office. All vacancies to be filled by the
Board of Directors may be filled by a majority of the remaining members of
the Board of Directors, although such majority is less than a quorum
thereof.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board of
Directors shall fix, except that the first meeting of a newly elected Board
of Directors shall be held as soon after its election as the directors
conveniently may assemble.
PLACE. Meetings shall be held at such place within or
without the State of Maryland as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called by
or at the direction of the President or of a majority of the directors in
office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever any notice
of the time, place or purpose of any meeting of directors or any committee
thereof is required to be given under the provisions of the General
Corporation Law or of these by-laws, a waiver thereof in writing, signed by
the director or committee member entitled to such notice and filed with the
records of the meeting, whether before or after the holding thereof, or
actual attendance at the meeting shall be deemed equivalent to the giving of
such notice to such director or such committee member.
QUORUM AND ACTION. A majority of the entire Board of
Directors shall constitute a quorum except when a vacancy or vacancies
prevents such majority, whereupon a majority of the directors in office
shall constitute a quorum, provided such majority shall constitute at least
one-third of the entire Board and, in no event, less than two directors. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as otherwise
specifically provided by the Articles of Incorporation, the General
Corporation Law or these by-laws, the action of a majority of the directors
present at a meeting at which a quorum is present shall be the action of the
Board of Directors.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any
and if present and acting, or the President or any other director chosen by
the Board, shall preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed for cause or without cause by the stockholders, who may elect a
successor or successors to fill any resulting vacancy or vacancies for the
unexpired term of the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint from among
its members an Executive Committee and other committees composed of one or
more directors and may delegate to such committee or committees, in the
intervals between meetings of the Board of Directors, any or all of the
powers of the Board of Directors in the management of the business and
affairs of the corporation, except the power to amend the by-laws, to
approve any merger or share exchange which does not require stockholder
approval, to authorize dividends, to issue stock (except to the extent
permitted by law) or to recommend to stockholders any action requiring the
stockholders' approval. In the absence of any member of any such committee,
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in the place
of such absent member.
7. INFORMAL ACTION. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if a written consent to such action is
signed by all members of the Board of Directors or any such committee, as
the case may be, and such written consent is filed with the minutes of the
proceedings of the Board or any such committee.
Members of the Board of Directors or any committee designated
thereby may participate in a meeting of such Board or committee by means of
a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and shall have a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors, and may have such other officers, assistant officers and agents
as the Board of Directors shall authorize from time to time. Any two or
more offices, except those of President and Vice President, may be held by
the same person, but no person shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law
to be executed, acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of Directors
whenever, in its judgment, the best interests of the corporation will be
served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation in the
State of Maryland prescribed by the General Corporation Law is 300 East
Lombard Street, c/o The Corporation Trust Incorporated, Baltimore, Maryland
21202. The name and address of the resident agent in the State of Maryland
prescribed by the General Corporation Law are: The Corporation Trust
Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office in the
State of Maryland prescribed by the General Corporation Law or at the
business office or an agency of the corporation, an original or duplicate
stock ledger containing the names and addresses of all stockholders and the
number of shares of each class held by each stockholder. Such stock ledger
may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
The corporation shall keep at said principal office in the State
of Maryland the original or a certified copy of the by-laws, including all
amendments thereto, and shall duly file thereat the annual statement of
affairs of the corporation prescribed by Section 2-313 of the General
Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation or any series thereof shall be
fixed, and shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws is vested
exclusively in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the law. The corporation shall indemnify its
officers to the same extent as its directors and to such further extent as
is consistent with law. The corporation shall indemnify its directors and
officers who while serving as directors or officers also serve at the
request of the corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan to the same extent
as its directors and, in the case of officers, to such further extent as is
consistent with law. The indemnifi-cation and other rights provided by this
Article shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. This Article shall not protect any such
person against any liability to the corporation or any stockholder thereof
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
2. ADVANCES. Any current or former director or officer of the
corporation seeking indemnification within the scope of this Article shall
be entitled to advances from the corporation for payment of the reasonable
expenses incurred by him in connection with the matter as to which he is
seeking indemnification in the manner and to the fullest extent permissible
under the General Corporation Law. The person seeking indemnification shall
provide to the corporation a written affirmation of his good faith belief
that the standard of conduct necessary for indemnification by the
corporation has been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of conduct has not
been met. In addition, at least one of the following additional conditions
shall be met: (a) the person seeking indemnification shall provide a
security in form and amount acceptable to the corporation for his or her
undertaking; (b) the corporation is insured against losses arising by reason
of the advance; or (c) a majority of a quorum of directors of the
corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor
parties to the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall have determined,
based on a review of facts readily available to the corporation at the time
the advance is proposed to be made, that there is reason to believe that the
person seeking indemnification will ultimately be found to be entitled to
indemnification.
3. PROCEDURE. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine,
or cause to be determined, in a manner consistent with the General
Corporation Law, whether the standards required by this Article have been
met. Indemnification shall be made only following: (a) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling
conduct or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct by (i) the vote of
a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
agents who are not officers or directors of the corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by
contract, subject to any limitations imposed by the Investment Company Act
of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make further
provision consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or
otherwise. The indemnification provided by this Article shall not be deemed
exclusive of any other right, with respect to indemnification or otherwise,
to which those seeking indemnification may be entitled under any insurance
or other agreement or resolution of stockholders or disinterested non-party
directors or otherwise.
6. AMENDMENTS. References in this Article are to the General
Corporation Law and to the Investment Company Act of 1940 as from time to
time amended. No amendment of the by-laws shall affect any right of any
person under this Article based on any event, omission or proceeding prior
to the amendment.
Dated: June 8, 1998
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors" and to the use of our report dated May 11,
1998, which is incorporated by reference, in this Registration Statement
(Form N-1A No. 2-55614) of Dreyfus A Bonds Plus, Inc.
ERNST & YOUNG LLP
New York, New York
July 23, 1998
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<ARTICLE> 6
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<NAME> DREYFUS A BONDS PLUS, INC.
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<FISCAL-YEAR-END> MAR-31-1998
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<PER-SHARE-GAIN-APPREC> 0.79
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POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Christopher J. Kelly, Kathleen K. Morrisey, Michael S.
Petrucelli, Stephanie Pierce and Elba Vasquez, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or
her, and in his or her name, place and stead, in any and all capacities
(until revoked in writing) to sign any and all amendments to the
Registration Statement of Dreyfus Growth Opportunity Fund, Inc. (including
post-effective amendments and amendments thereto), and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/ Joseph S. DiMartino June 8, 19978
- -----------------------------
Joseph S. DiMartino
/s/ David P. Feldman June 8, 1998
- -----------------------------
David P. Feldman
/s/ John M. Fraser, Jr. June 8, 1998
- -----------------------------
John M. Fraser, Jr.
/s/ Robert R. Glauber June 8, 1998
- -----------------------------
Robert R. Glauber
/s/ James F. Henry June 8, 1998
- -----------------------------
James F. Henry
/s/ Rosalind Gersten Jacobs June 8, 1998
- -----------------------------
Rosalind Gersten Jacobs
/s/ Irving Kristol June 8, 1998
- -----------------------------
Irving Kristol
/s/ Paul A. Marks June 8, 1998
- -----------------------------
Paul A. Marks
/s/ Martin Peretz June 8, 1998
- -----------------------------
Martin Peretz
/s/ Bert W. Wasserman June 8, 1998
- -----------------------------
Bert W. Wasserman
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers
Christopher J. Kelley, Kathleen K. Morrisey, Michael S. Petrucelli,
Stephanie Pierce and Elba Vasquez, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her, and in
his or her name, place and stead, in any and all capacities (until revoked
in writing) to sign any and all amendments to the Registration Statement of
Dreyfus Growth Opportunity Fund, Inc. (including post-effective amendments
and amendments thereto), and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act
and thing ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ Marie E. Connolly June 8, 1998
- -----------------------------
Marie E. Connolly
ASSISTANT SECRETARY'S CERTIFICATE
I, __________________________, Assistant Secretary of Dreyfus A Bonds
Plus, Inc. (the "Fund," hereby certify the following resolution was adopted
at a Board Meeting held on June 8, 1998 and remains in full force and
effect:
RESOLVED, that the Registration Statement and any and all amendments and
supplements thereto may be signed by any one of Margaret W. Chambers, Marie
E. Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Michael S.
Petrucellli, Stephanie Pierce and Elba Vasquez, as the attorney-in-fact for
the proper officers of the Fund, with full power of substitution and re-
substitution; and that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such attorneys-
in-fact, and each of them, shall have full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection with such Registration Statement and any and all amendments and
supplements thereto, as whom he or she is acting as attorney-in-fact, might
or could do in person.
IN WITNESS WHEREOF, I have hereunto set my hand as Assistant Secretary
of the Funds and affixed the seal this day of July, 1998.
___________________________
Michael S. Petrucelli
(SEAL)
DREYFUS A BONDS PLUS, INC.
