FOR USE BY BANKS ONLY
May 1, 1995
DREYFUS LIQUID ASSETS, INC.
Supplement to Prospectus Dated May 1, 1995
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
039/s050195IST
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PROSPECTUS MAY 1, 1995
DREYFUS LIQUID ASSETS, INC.
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DREYFUS LIQUID ASSETS, INC. (THE "FUND") IS AN OPEN-END, DIVERSIFIED,
MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MONEY MARKET MUTUAL FUND. ITS GOAL
IS TO PROVIDE YOU WITH AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT
WITH THE PRESERVATION OF CAPITAL.
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 MAY 1, 1995, 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. FOR A FREE COPY, 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.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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.
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TABLE OF CONTENTS
Page
Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 3
Yield Information................................. 4
Description of the Fund........................... 4
Management of the Fund............................ 7
How to Buy Fund Shares............................ 8
Shareholder Services.............................. 9
How to Redeem Fund Shares......................... 12
Shareholder Services Plan......................... 15
Dividends, Distributions and Taxes................ 15
General Information............................... 17
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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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[This Page Intentionally Left Blank]
Page 2
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees .............................................. .47%
Other Expenses................................................ .29%
Total Fund Operating Expenses................................. .76%
<TABLE>
<CAPTION>
Example: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
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: $8 $24 $42 $94
</TABLE>
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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%.
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The purpose of the foregoing table is to assist you in understanding
the various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. You can
purchase Fund shares without charge directly from the Fund's distributor; you
may be charged a nominal fee if you effect transactions in Fund shares
through a securities dealer, bank or other financial institution. See
"Management of the Fund" and "Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in 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 DECEMBER 31,
__________________________________________________________________________________________________
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
----- ------ ------ ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year.... $.9998 $.9999 $.9999 $.9994 $.9997 $.9997 $.9992 $.9991 $.9991 $.9990
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
INVESTMENT OPERATIONS:
Investment income_net.... .0783 .0629 .0609 .0691 .0871 .0764 .0570 .0341 .0261 .0348
Net realized gain (loss)
on investments...... .0001 -- (.0005) .0001 (.0002) -- (.0001) -- (.0001) .0001
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
TOTAL FROM INVESTMENT
OPERATIONS.... .0784 .0629 .0604 .0692 .0869 .0764 .0569 .0341 .0260 .0349
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net..... (.0783) (.0629) (.0609) (.0689) (.0869) (.0769) (.0570) (.0341) (.0261) (.0347)
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Net asset value,
end of year..... $.9999 $.9999 $.9994 $.9997 $.9997 $.9992 $.9991 $.9991 $.9990 $.9992
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
TOTAL INVESTMENT
RETURN....... 8.14% 6.50% 6.28% 7.11% 9.07% 7.99% 5.87% 3.47% 2.64% 3.53%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net assets.... .66% .65% .67% .69% .66% .65% .67% .72% .77% .76%
Ratio of net investment
income to average
net assets...... 7.84% 6.32% 6.11% 6.92% 8.72% 7.66% 5.75% 3.43% 2.62% 3.49%
Net Assets, end of year
(000's Omitted). $7,991,133 $7,388,400 $7,446,635 $7,304,277 $7,835,754 $7,521,291 $6,200,255 $5,502,100 $4,828,134 $4,863,374
</TABLE>
page 3
YIELD INFORMATION
From time to time, the Fund advertises its yield and effective yield.
Both yield figures are based on historical earnings and are not intended to
indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of the Fund refers to the income generated
by an investment in the Fund over a seven-day period (which period will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The Fund's
yield and effective yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Fund."
Yield information is useful in reviewing the Fund's performance, but
because yields will fluctuate, under certain conditions such information may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., IBC/Donoghue's Money Fund ReportRegistration Mark,
Morningstar, Inc., Bank Rate Monitortrademark, N. Palm Beach, Fla. 33408 and
other industry publications.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to provide you with as high a level of current
income as is consistent with the preservation of capital. 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) of the Fund's
outstanding voting shares. There can be no assurance that the Fund's
objective will be achieved. Securities in which the Fund will invest may not
earn as high a level of current income as long-term or lower quality
securities which generally have less liquidity, greater market risk and more
fluctuation in market value.
MANAGEMENT POLICIES
To achieve its goal, the Fund invests in short-term money market
instruments, consisting exclusively of securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, certificates of
deposit, time deposits, bankers' acceptances and other short-term obligations
issued by domestic banks and London branches of domestic banks, repurchase
agreements, high grade commercial paper and other short-term corporate
obligations. The Fund will invest at least 25% of its assets in bank
obligations. See "Investment Considerations" below.
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method
of valuing its securities pursuant to Rule 2a-7 under the Investment Company
Act of 1940, certain requirements of which are summarized below.
In accordance with Rule 2a-7, the Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 13 months or less and invest only
in U.S. dollar denominated securities determined in accordance with
procedures established by the Board of Directors to present minimal credit
risks and which are rated in one of the two highest rating categories for
debt obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated by only
one such organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Board of
Directors.
Page 4
Moreover, the Fund will purchase only securities so rated in the
highest rating category or, if unrated, of comparable quality as determined
in accordance with such procedures. The nationally recognized statistical
rating organizations currently rating instruments of the type the Fund may
purchase are Moody's Investors Service, Inc., Standard & Poor's Corporation,
Duff & Phelps Credit Rating Co., Fitch Investors Service, Inc., IBCA Limited
and IBCA Inc. and Thomson BankWatch, Inc. and their rating criteria are
described in the Appendix to the Fund's Statement of Additional Information.
In addition, the Fund will not invest more than 5% of its total
assets in the securities (including the securities collateralizing a
repurchase agreement) of, or subject to puts issued by, a single issuer,
except that (i) the Fund may invest more than 5% of its total assets in a
single issuer for a period of up to three business days in certain limited
circumstances, (ii) the Fund may invest in obligations issued or guaranteed
by the U.S. Government without any such limitation, and (iii) the limitation
with respect to puts does not apply to unconditional puts if no more than 10%
of the Fund's total assets is invested in securities issued or guaranteed by
the issuer of the unconditional put. As to each security, these percentages
are measured at the time the Fund purchases the security. For further
information regarding the amortized cost method of valuing securities, see
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information. There can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
PORTFOLIO SECURITIES
Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities include U.S. Treasury securities, which differ
in their interest rates, maturities and times of issuance. Some obligations
issued or guaranteed by U.S. Government agencies and instrumentalities, for
example, Government National Mortgage Association pass-through certificates,
are supported by the full faith and credit of the U.S. Treasury; others, such
as those of the Federal Home Loan Banks, by the right of the issuer to borrow
from the Treasury; others, such as those issued by the Federal National
Mortgage Association, by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others,
such as those issued by the Student Loan Marketing Association, only by the
credit of the agency or instrumentality. These securities bear fixed,
floating or variable rates of interest. Interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While the
U.S. Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will always
do so since it is not so obligated by law. The Fund will invest in such
securities only when the Fund is satisfied that the credit risk with respect
to the issuer is minimal.
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. Investments in time deposits generally are
limited to London branches of domestic banks that have total assets in excess
of one billion dollars. Time deposits which may be held by the Fund will not
benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
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 of 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 rates of
interest.
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 issued by domestic entities.
The other corporate obligations in which the Fund may invest consist of high
quality,
Page 5
short-term bonds and notes issued by domestic corporations.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price usually
not more than one week after its purchase. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be delayed or
limited.
CERTAIN FUNDAMENTAL POLICIES
The Fund (i) may borrow money from banks for temporary or emergency
(not leveraging) purposes in an amount up to 5% of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made; (ii) may pledge its assets in an amount up to 15% of the
value of its total assets but only to secure borrowings for temporary or
emergency purposes; (iii) may invest up to 5% of its assets in the commercial
paper of any one issuer; (iv) as to 25% of its assets, may invest up to 15%
of its assets in the obligations of any one bank and, as to the remainder,
may invest not more than 5% of its assets in the obligations of any one bank
(in each case, subject to the provisions of Rule 2a-7); and (v) will invest
at least 25% of its assets in obligations issued by banks and may invest up
to 25% of its assets in the securities of issuers in a single industry,
provided that there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies of the Fund
which cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding
voting shares. See "Investment Objective and Management Policies _ Investment
Restrictions" in the Fund's Statement of Additional Information.
While not fundamental policies, the Fund may not invest more than 10%
of its total assets in time deposits maturing from two business days through
seven calendar days or more than 10% of its net assets in repurchase
agreements providing for settlement in more than seven days after notice.
INVESTMENT CONSIDERATIONS
Since the Fund's portfolio may contain securities issued by London
branches of domestic banks, the Fund may be subject to additional investment
risks with respect to such securities that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include future political and economic
developments, the possible imposition of United Kingdom withholding taxes on
interest income payable on the securities, the possible establishment of
exchange controls, the possible seizure or nationalization of foreign
deposits or the adoption of other foreign governmental restrictions which
might adversely affect the payment of principal and interest on such
securities.
To the extent the Fund's investments are concentrated in the banking
industry, the Fund will have correspondingly greater exposure to the risk
factors which are characteristic of such investments. Sustained increases in
interest rates can adversely affect the availability or liquidity and cost of
capital funds for a bank's lending activities, and a deterioration in general
economic conditions could increase the exposure to credit losses. In
addition, the value of and the investment return on the Fund's shares could
be affected by economic or regulatory developments in or related to the
banking industry, which industry also is subject to the effects of the
concentration of loan portfolios in leveraged transactions and in particular
businesses, and competition within the banking industry as well as with other
types of financial institutions. The Fund, however, will seek to minimize its
exposure to such risks by investing only in debt securities which are
determined to be of the highest quality.
The Fund attempts to increase yields by trading to take advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect the Fund since
Page 6
the Fund usually does not pay brokerage commissions when it purchases
short-term debt obligations. The value of the portfolio securities held by
the Fund will vary inversely to changes in prevailing interest rates. Thus,
if interest rates have increased from the time a security was purchased, such
security, if sold, might be sold at a price less than its purchase cost.
Similarly, if interest rates have declined from the time a security was
purchased, such security, if sold, might be sold at a price greater than its
purchase cost. In either instance, if the security was purchased at face value
and held to maturity, no gain or loss would be realized.
Investment decisions for the Fund are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to
dispose of, money market instruments at the same time 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
price paid or received by the Fund or the size of the position obtained for
or disposed of by the Fund.
MANAGEMENT OF THE FUND
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 March 31, 1995, The Dreyfus Corporation managed or administered
approximately $72 billion in assets for approximately 1.9 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 of Directors in accordance with
Maryland law.
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
$193 billion in assets as of December 31, 1994, including approximately $70
billion in mutual fund assets. As of December 31, 1994, various subsidiaries
of Mellon provided non-investment services, such as custodial or
administration services, for approximately $654 billion in assets, including
approximately $74 billion in mutual fund assets.
For the fiscal year ended December 31, 1994, the Fund paid The
Dreyfus Corporation a monthly management fee at the annual rate of .47 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
overall expense ratio of the Fund and increasing yield to investors at the
time such amounts are waived or assumed, as the case may be. 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.
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 or others in respect to these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of FDI
Page 7
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal 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.
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 has
made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment must be
accompanied by the Fund's 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 ad
vised 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 Fund account, the minimum
initial investment is $50. In addition, the Fund reserves the right to offer
Fund shares without regard to minimum purchase requirements to employees
participating in certain qualified and non-qualified employee benefit plans
or other programs where contributions or account information may be
transmitted in a manner and form acceptable to the Fund. The Fund reserves
the right to vary further the initial and subsequent minimum investment
requirements at any time.
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 #8900051795/Dreyfus Liquid
Assets, 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 Fund's
Account Application and promptly mail the Account Application
Page 8
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. 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."
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 and 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 one million dollars. All
present holdings of shares of funds in the Dreyfus Family of Funds by such
employee benefit plans or programs will be aggregated to determine the fee
payable with respect to each such purchase of Fund shares. 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.
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 agent or entity subject to the direction of such
agents. 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 or the Transfer Agent is open for
business. 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. See "Determination of Net Asset Value" in
the Fund's Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's 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 (the "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 Fund's 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 Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
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 sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If
Page 9
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.
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 an 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 Fund 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, or by a separate signed Shareholder Services
Form, also available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund 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 of the fund from
which 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 your
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 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. The availability of Fund Exchanges may be modified or terminated at any
time upon notice to shareholders.
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.
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 other funds in the
Dreyfus Family of Funds of which you are currently an investor. 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 writing to The
Page 10
Dreyfus Family of Funds, P.O. 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. 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. 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.
DREYFUS-AUTOMATIC ASSET BUILDER Registration Mark - Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund 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.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. 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 your participation in this Privilege or change the amount of
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, and 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. No such fee
currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE - Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund 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.
MONTHLY OR QUARTERLY DISTRIBUTION PLANS _ The Distribution Plans permit you
to receive monthly or quarterly payments from the Fund consisting of proceeds
from the redemption of shares purchased for your account through the
automatic reinvestment of dividends declared on your account during the
preceding month or calendar quarter.
You may open a Distribution Plan by submitting a request to the
Transfer Agent. A Plan may be ended at any time by you, the Fund or the
Transfer Agent. Shares for which certificates have been issued must be
presented before redemption under the Plans.
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
application for Automatic Withdrawal can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which stock certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Page 11
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
prices 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 purchased shares. 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 9671, Providence, Rhode Island 02940-9671. 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 of the Fund held under Keogh Plans, IRAs or
other retirement plans are not eligible for Dreyfus Dividend Sweep.
DREYFUS PAYROLL SAVINGS PLAN - Dreyfus Payroll Savings Plan permits you to
purchase Fund 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.
Shares of the Fund held under Keogh Plans, IRAs or other retirement plans are
not eligible for this Privilege.
RETIREMENT PLANS - The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers: for Keogh Plans, please call 1-800-358-5566; for IRAs and
IRA "Rollover Accounts," please call 1-800-645-6561; and for SEP-IRAs, 401(k)
Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL - You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
Page 12
The Fund imposes no charges when shares are redeemed. Securities
dealers, banks and other financial institutions may charge a nominal fee for
effecting redemptions of Fund shares. Any stock 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 of 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 BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, YOUR
REDEMPTION WILL BE EFFECTIVE AND 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.
Ordinarily the Fund will initiate payment for all shares redeemed
pursuant to the regular redemption procedure, by wire or telephone or through
the Dreyfus TELETRANSFER Privilege on the next business day after receipt by
the Transfer Agent of a redemption request in proper form.
The Fund reserves the right to redeem your account at its option
upon not less than 45 days' written notice if your account's net asset value
is $500 or less and remains so during the notice period.
PROCEDURES - You may redeem shares by using the regular redemption procedure
through the Transfer Agent, the Check Redemption Privilege, the Wire
Redemption Privilege, the Telephone Redemption Privilege, or the Dreyfus
TELETRANSFER Privilege. The Fund makes available to certain large institutions
the ability to issue redemption instructions through compatible computer
facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions 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 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.
Page 13
REGULAR REDEMPTION - Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. 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 request on the Account Application,
Shareholder Services Form or by later written request that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. 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 Che
ck due to 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. Shares for which stock
certificates have been issued may not be redeemed by Redemption Check. Shares
held under Keogh Plans, IRAs or other retirement plans are not eligible for
this Privilege. This Privilege may be modified or terminated at any time by
the Fund or the Transfer Agent upon notice to shareholders.
Wire Redemption Privilege - You may request by wire or telephone 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. To establish the Wire Redemption Privilege, you
must check the appropriate box and supply the necessary information on the
Fund's Account Application or file a Shareholder Services Form with the
Transfer Agent. You may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to
your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. 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
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any redemption request, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. This Privilege may be modified or terminated at
any time by the Transfer Agent or the Fund. The Fund's Statement of
Additional Information sets forth instructions for transmitting redemption
requests by wire. Shares of the Fund held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE - You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and
Page 14
mailed to your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares of the Fund held under Keogh Plans, IRAs or other retirement plans,
and shares for which certificates have been issued, are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE - You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so 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 or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. 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. The
Fund reserves the right to refuse any request made by 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
this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee is currently contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares of the Fund held under Keogh Plans, IRAs or other retirement plans,
and shares issued in certificate form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund 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 declares and pays dividends from its net
investment income on each day the New York Stock Exchange or the Transfer
Agent is open for business. The Fund's earnings for Saturdays, Sundays and
holidays are paid as dividends on the next business day. Shares begin
accruing dividends on the day following the date of purchase. Distributions
from net realized securities gains, if any, generally are declared and paid
once a year, but the Fund 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 Investment Company Act of 1940. 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 and distributions in cash or to reinvest in
additional Fund shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
Page 15
Dividends derived from net investment income, together with
distributions from any 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 shareholders as
ordinary income whether received in cash or reinvested in additional Fund
shares. No dividend will qualify for the dividends received deduction
allowable to certain U.S. corporations. Distributions from net realized long-t
erm securities gains of the Fund will be taxable to U.S. shareholders as
long-term capital gains regardless of how long shareholders have held their
Fund shares and whether such distributions are received in cash or reinvested
in additional Fund shares. The Code provides that the net capital gains of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and distributions may be subject to certain state
and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gain and all or a
portion of any gain realized from the sale 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
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 generally will not be subject to U.S. nonresident
withholding tax. However, such distributions 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.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and
distributions from net realized securities gains of the Fund 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 that 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 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 believes that the Fund has qualified for the fiscal year
ended December 31, 1994 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 taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a nondeductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable income and capital gains, if any.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on September 6, 1973,
and commenced operations on January 28, 1974. The Fund is authorized to issue
25 billion shares of Common Stock, par value $.10 per share. Each share has
one vote.
Page 16
Unless otherwise required by the Investment Company Act of 1940,
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 Directors or the appointment of auditors. However, pursuant to
the Fund's By-Laws, 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 the purpose of removing a Director from office and the
holders of at least 25% of such shares may require the Fund to hold a special
meeting of shareholders for any other purpose. Fund shareholders may remove a
Director by the affirmative vote of a majority of the Fund's outstanding
voting shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors 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
United States and Canada, call 516-794-5452.
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 FUNDS. 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 17
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Page 19
DREYFUS
Liquid
Assets, Inc.
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995, Dreyfus Service Corporation
039p15050195
DREYFUS LIQUID ASSETS, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Liquid Assets, Inc. (the "Fund"), dated May 1, 1995, as it may
be revised from time to time. To obtain a copy of the Fund's Prospectus,
please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the United States and Canada -- 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-4
Management Agreement. . . . . . . . . . . . . . . . . . B-7
Purchase of Fund Shares . . . . . . . . . . . . . . . . B-9
Shareholder Services Plan . . . . . . . . . . . . . . . B-10
Redemption of Fund Shares . . . . . . . . . . . . . . . B-11
Shareholder Services. . . . . . . . . . . . . . . . . . B-13
Determination of Net Asset Value. . . . . . . . . . . . B-16
Dividends, Distributions and Taxes. . . . . . . . . . . B-17
Yield Information . . . . . . . . . . . . . . . . . . . B-17
Portfolio Transactions. . . . . . . . . . . . . . . . . B-18
Information About the Fund. . . . . . . . . . . . . . . B-18
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . B-19
Financial Statements. . . . . . . . . . . . . . . . . . B-20
Report of Independent Auditors. . . . . . . . . . . . . B-29
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Portfolio Securities
Bank Obligations. Investments in time deposits ("TDs") and
certificates of deposit ("CDs") are limited to domestic banks having total
assets in excess of one billion dollars and London branches of such
domestic banks; investments in bankers' acceptances are limited to domestic
banks having total assets in excess of one billion dollars. The Fund also
is authorized to buy CDs issued by banks, savings and loan associations and
similar institutions with less than one billion dollars in assets, the
deposits of which are insured by the Federal Deposit Insurance Corporation
("FDIC"), provided the Fund purchases any such CD in the principal amount
of no more than $100,000, which amount would be fully insured by the Bank
Insurance Fund or the Savings Association Insurance Fund administered by
the FDIC. Interest payments on such a CD are not insured by the FDIC. The
Fund would not own more than one such CD per such issuer.
Both domestic banks and London branches of domestic banks are subject
to extensive but different governmental regulations which may limit both
the amount and types of loans which may be made and interest rates which
may be charged. In addition, the profitability of the banking industry is
dependent largely upon the availability and cost of funds for the purpose
of financing lending operations under prevailing money market conditions.
General economic conditions as well as exposure to credit losses arising
from possible financial difficulties of borrowers play an important part in
the operations of the banking industry.
As a result of Federal or state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amounts which they can loan to a single borrower and subject
to other regulations designed to promote financial soundness. However, not
all of such laws and regulations apply to the foreign branches of domestic
banks.
CDs held by the Fund, other than those issued by banks with less than
one billion dollars in assets as described above, do not benefit
materially, and TDs do not benefit at all, from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by
the FDIC.
Repurchase Agreements. The Fund's custodian or subcustodian 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 one billion dollars 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 resale price.
The Manager will monitor on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. The Fund
will consider on an ongoing basis the creditworthiness of the institutions
with which it enters into repurchase agreements.
Investment Restrictions
The Fund has adopted the following investment restrictions as
fundamental policies. These restrictions cannot be changed without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940, as amended (the "Act")) of the outstanding voting shares of
the Fund. The Fund may not:
1. Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or debentures, state bonds, municipal bonds or
industrial revenue bonds (except through the purchase of debt obligations
referred to above and in the Prospectus).
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 5% of the value of the Fund's total
assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time
the borrowing is made.
3. Pledge its assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for temporary or emergency
purposes.
4. Sell securities short.
5. Write or purchase put or call options.
6. Underwrite the securities of other issuers, purchase
securities subject to restrictions on disposition under the Securities Act
of 1933 (so called "restricted securities") or purchase securities which
are not freely marketable.
7. Purchase or sell real estate, real estate investment trust
securities, commodities, or oil and gas interests.
8. Make loans to others, except through the purchase of debt
obligations and through repurchase agreements referred to in the
Prospectus.
9. Invest more than 15% of its assets in the obligations of any
one bank or invest more than 5% of its assets in the commercial paper of
any one issuer. Notwithstanding the foregoing, to the extent required by
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank.
10. Invest less than 25% of its assets in obligations issued by banks
or invest more than 25% of its assets in the securities of issuers in any
other industry.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values
or assets will not constitute a violation of that 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
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
LUCY WILSON BENSON, Director. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation, General RE Corporation and
Logistics Management Institute. She is also a Trustee of the Alfred
P. Sloan Foundation, Vice Chairman of the Board of Trustees of
Lafayette College, Vice Chairman of the Citizens Network for Foreign
Affairs and a member of the Council on Foreign Relations. Mrs. Benson
served as a consultant to the U.S. Department of State and to SRI
International from 1980 to 1981. From 1977 to 1980, she was Under
Secretary of State for Security Assistance, Science and Technology.
She is also a Board member of 13 other funds in the Dreyfus Family of
Funds. Mrs. Benson is 67 years old and her address is 46 Sunset
Avenue, Amherst, Massachusetts 01002.
*DAVID W. BURKE, Director. Consultant to the Manager since August 1994.
From October 1990 to August 1994, he was Vice President and Chief
Administrative Officer of the Manager. From 1977 to 1990, Mr. Burke
was involved in the management of national television news, as Vice
President and Executive Vice President of ABC News, and subsequently
as President of CBS News. He is also a Board member of 51 other funds
in the Dreyfus Family of Funds. Mr. Burke is 59 years old and his
address is 200 Park Avenue, New York, New York 10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, 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, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino is a director and former Treasurer of The Muscular Dystrophy
Association; a trustee of Bucknell University; Chairman of the Board
of Directors of Noel Group, Inc.; a director of HealthPlan
Corporation, a director of Belding Heminway Company, Inc.; and a
director of Curtis Industries, Inc. Mr. DiMartino is also a Board
member of 93 other funds in the Dreyfus Family of Funds. Mr.
DiMartino is 51 years old and his address is 200 Park Avenue, New
York, New York 10166.
MARTIN D. FIFE, Director. President of Fife Associates, Inc. and other
related companies engaged in the chemical and plastics industries. He
is also a Board member of 11 other funds in the Dreyfus Family of
Funds. Mr. Fife is 68 years old and his address is 405 Lexington
Avenue, New York, New York 10174.
WHITNEY I. GERARD, Director. Partner of the New York City law firm of
Chadbourne & Parke. He is also a Board member of 11 other funds in
the Dreyfus Family of Funds. Mr. Gerard is 60 years old and his
address is 30 Rockefeller Plaza, New York, New York 10112.
ARTHUR A. HARTMAN, Director. Senior consultant with APCO Associates Inc.
From 1981 to 1987, he was United States Ambassador to the former
Soviet Union. He is also a director of the ITT Hartford Insurance
Group, Ford Meter Box Corporation, Lauter International and a member
of the advisory councils of several other companies, research
institutes and foundations. He is a former President of the Harvard
Board of Overseers. He is also a Board member of 11 other funds in
the Dreyfus Family of Funds. Mr. Hartman is 69 years old and his
address is 2738 McKinley Street, N.W., Washington, D.C. 20015.
GEORGE L. PERRY, Director. An economist and Senior Fellow at the Brookings
Institution since 1969. He is co-director of the Brookings Panel on
Economic Activity and editor of its journal, The Brookings Papers. He
is also a director of the State Farm Mutual Automobile Association,
State Farm Life Insurance Company and Federal Realty Investment Trust.
He is also a Board member of 11 other funds in the Dreyfus Family of
Funds. Mr. Perry is 61 years old and his address is 1775
Massachusetts Avenue, N.W., Washington, D.C. 20036.
PAUL D. WOLFOWITZ, Director. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to 1993,
he was Under Secretary of Defense for Policy. From 1986 to 1989, he
was the U.S. Ambassador to the Republic of Indonesia. From 1982 to
1986, he was Assistant Secretary of State for East Asian and Pacific
Affairs of the Department of State. He is also a Board member of 10
other funds in the Dreyfus Family of Funds. Mr. Wolfowitz is 51 years
old and his address is 1740 Massachusetts Avenue, N.W., Washington,
D.C. 20036.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.
The Fund typically pays its Directors an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. The aggregate
amount of compensation paid to each Director by the Fund for the fiscal
year ended December 31, 1994, and by all other funds in the Dreyfus Family
of Funds for which such person is a Board member for the year ended
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Members
- --------------- ----------------- ------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Lucy Wilson Benson $8,500 none none $ 64,459
David W. Burke $3,297 none none $ 27,898
Joseph S. DiMartino** $9,902 none none $445,000
Martin D. Fife $8,500 none none $ 51,750
Whitney I. Gerard $8,500 none none $ 52,000
Arthur A. Hartman $8,500 none none $ 52,000
George L. Perry $8,000 none none $ 52,000
Paul D. Wolfowitz $7,536 none none $ 32,631
_____________________
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $665 for all Directors
as a group.
** Estimated amounts for the current fiscal year ending December 31,
1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray, and prior to August 1990, he was employed
as an Associate at Sidley & Austin. He is 30 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.
JOSEPH F. TOWER,III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor 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 32 years old.
JOHN J. PYBURN, Assistant Treasurer, Vice President of the Distributor and
an officer of other investment companies advised or administered by
the Manager. From 1984 to July 1994, he was Assistant Vice President
in the Mutual Fund Accounting Department of the Manager. He is 59
years old.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and, from January 1990 to January 1992,
he was a mutual fund accountant, for The Boston Company Advisors, Inc.
He is 28 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's Common Stock outstanding on April 14, 1995.
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 of Directors or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested persons"
(as defined in the Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Agreement was last approved by shareholders on August 4, 1994 and was last
approved by the Fund's Board of Directors, including a majority of the
Directors who are not "interested persons" of any party to the Agreement,
at a meeting held on August 25, 1994. The Agreement is terminable without
penalty on 60 days' notice by the Fund's Board of Directors, by vote of a
majority of the outstanding voting securities of the Fund or by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board; W. Keith Smith, Vice Chairman of the
Board and a director; Robert E. Riley, President, Chief Operating Officer
and a director; Lawrence S. Kash, Vice Chairman--Distribution and a
director; Philip L. Toia, Vice Chairman--Operations and Administration;
Paul H. Snyder, Vice President and Chief Financial Officer; Daniel C.
Maclean, Vice President and General Counsel; Elie M. Genadry, Vice
President--Institutional Sales; Henry D. Gottmann, Vice President--Retail
Sales and Service; William F. Glavin, Jr., Vice President--Product
Management; Andrew S. Wasser, Vice President--Information Services; Jeffrey
N. Nachman, Vice President--Mutual Fund Accounting; Diane M. Coffey, Vice
President--Corporate Communications; Barbara E. Casey, Vice President--
Retirement Services; Katherine C. Wickham, Vice President--Human Resources;
Mark N. Jacobs, Vice President--Fund Legal and Compliance and Secretary;
Elvira Oslapas, Assistant Secretary; Maurice Bendrihem, Controller; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling and David B. Truman, 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 of Directors. The Manager is responsible for investment decisions,
and provides the Fund with portfolio managers who are authorized by the
Board to execute purchases and sales of securities. The Fund's portfolio
managers are Robert P. Fort, Jr., Bernard Kiernan, Jr., Garitt Kono and
Patricia A. Larkin. The Manager also maintains a research department with
a professional staff of portfolio managers and securities analysts who
provide research services for the Fund as well as for other funds advised
by the Manager. All purchases and sales of securities are reported for the
Board's review at the meeting subsequent to such transactions.
All expenses incurred in the Fund's operations 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, registrar,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
investor services (including allocable telephone and personnel expenses),
costs of shareholder reports and meetings, costs of maintaining corporate
existence, costs of printing prospectuses and statements of additional in-
formation used for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses.
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 services, and certain other
required services to the Fund. The Fund does not bear any of its
advertising or promotional costs.
As compensation for its services to the Fund, the Fund has agreed to
pay the Manager a monthly management fee, as provided in the Agreement, at
the following annual rate: 1/2 of 1% of the Fund's average daily net
assets up to $1.5 billion; 48/100ths of 1% of such net assets between $1.5
billion and $2 billion; 47/100ths of 1% of such net assets between $2
billion and $2.5 billion; and 45/100ths of 1% of average net assets over
$2.5 billion. All fees and expenses are accrued daily and deducted before
payment of dividends to investors. The management fees paid by the Fund
for the fiscal years ended 1992, 1993 and 1994 were $27,854,105,
$24,284,199 and $22,824,684, respectively.
The Manager has agreed that if in any fiscal year the Fund's aggregate
expenses, exclusive of taxes, brokerage, interest and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed 1% of the
value of the Fund's average net assets for the fiscal year, the Manager
will refund to the Fund, or bear, the excess over 1%. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis. No expense reimbursement was required as a result of the expense
limitation for the fiscal years ended December 31, 1992, 1993 or 1994.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
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 between the hours of 8:00 A.M. and 4:00 P.M., New York time, on
any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to use
the Dreyfus TeleTransfer Privilege, the initial payment for purchase of Fund
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 Fund Shares--Dreyfus TeleTransfer
Privilege."
Transactions Through Securities Dealers. Fund shares may be purchased
and redeemed through securities dealers which may charge a nominal
transaction fee for such services. Some dealers will place the Fund's
shares in an account with their firm. Dealers also may require that the
customer invest more than the $1,000 minimum investment; 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 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 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.
In some states, banks or other institutions effecting transactions in Fund
shares may be required to register as dealers pursuant to state law.
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 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 Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Directors for their review. In addition, the
Shareholder Services Plan provides that material amendments of the
Shareholder Services Plan must be approved by the Board of Directors, and
by the Directors who are not "interested persons" (as defined in the Act)
of the Fund and have no direct or indirect financial interest in the
operation of the Shareholder Services Plan by vote cast in person at a
meeting called for the purpose of considering such amendments. The
Shareholder Services Plan is subject to annual approval by such vote of the
Directors cast in person at a meeting called for the purpose of voting on
the Shareholder Services Plan. The Shareholder Services Plan is terminable
at any time by vote of a majority of the Directors who are not "interested
persons" and have no direct or indirect financial interest in the operation
of the Shareholder Services Plan.
For the fiscal year ended December 31, 1994, the Fund was charged
$3,822,518 pursuant to the Shareholder Services Plan.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application or later written request must be manually signed by
the registered owner(s). Checks 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. Investors 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.
Wire Redemption Privilege. By using this Privilege, an investor
authorizes the Transfer Agent to act on wire or telephone 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 by the Transfer Agent
of a redemption request in proper form. Redemption proceeds 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. Redemption proceeds, if wired, must be in the amount of
$1,000 or more and will be wired to the investor's account at the bank of
record designated in the investor's file at the Transfer Agent, if the
investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees ordinarily
are imposed by such bank and usually are 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 Code 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 transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
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
Fund 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 holder 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 Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchange's 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, ad-
ministrators, 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 Board of Directors reserves the right to make payments in whole
or in 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 would be
incurred.
Suspension of Redemption. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
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 relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect
to any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, 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 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.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund 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 as described above under "Fund
Exchanges." Investors may cancel this Privilege at any time by writing to
The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-
9671. 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 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 may legally 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
the Dreyfus Auto-Exchange Privilege may be modified or terminated at 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. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which stock certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically on the payment date 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 funds purchased pursuant to the 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 SEP-IRAs
and IRA "Rollover Accounts," and 403(b)(7) Plans. Plan support services
are also available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adopting such plans.
A fee may be charged by the entity acting as custodian for Keogh
Plans, 403(b)(7) Plans or IRAs, 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 which acts 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 on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans, with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a
non-working spousal IRA with a minimum investment of $250.
The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details as to
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Amortized Cost Pricing. The valuation of the Fund's portfolio
securities is based upon their amortized cost which does not take into
account unrealized gains or losses. This involves valuing an instrument at
its cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument. While this method provides cer-
tainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Fund
would receive if it sold the instrument.
The Board of Directors has established, as a particular responsibility
within the overall duty of care owed to the Fund's investors, procedures
reasonably designed, taking into account current market conditions and the
Fund's investment objective, to stabilize the Fund's price per share as
computed for purposes of purchases and redemptions at $1.00. Such
procedures include review of the Fund's portfolio holdings by the Board of
Directors, at such intervals as it may deem appropriate, to determine
whether the Fund's net asset value calculated by using available market
quotations or market equivalents deviates from $1.00 per share based on
amortized cost. In such review, investments for which market quotations
are readily available are valued at the most recent bid price or yield
equivalent for such securities or for securities of comparable maturity,
quality and type, as obtained from one or more of the major market makers
for the securities to be valued. Other investments and assets are valued
at fair value as determined in good faith by the Board of Directors.
The extent of any deviation between the Fund's net asset value based
upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board of Directors. If
such deviation exceeds 1/2 of 1%, the Board of Directors will consider
promptly what action, if any, will be initiated. In the event the Board of
Directors determines that a deviation exists which may result in material
dilution or other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market equivalents.
New York Stock Exchange and Transfer Agent Closings. The holidays (as
observed) on which the New York Stock Exchange and the Transfer Agent are
closed currently are: New Year's 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 Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, 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 Internal
Revenue Code of 1986, as amended.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Yield
Information."
For the seven-day period ended December 31, 1994, the Fund's yield was
4.78% and effective yield was 4.89%. Yield is computed in accordance with
a standardized method which involves determining the net change in the
value of a hypothetical pre-existing Fund account having a balance of one
share at the beginning of a seven calendar day period for which yield is to
be quoted, dividing the net change by the value of the account at the
beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding one to
the base period return (calculated as described above), raising that sum to a
power equal to 365 divided by 7, and subtracting 1 from the result.
Yields will fluctuate and are not necessarily representative of future
results. An investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund
is not guaranteed. See "Determination of Net Asset Value" for a discussion
of the manner in which the Fund's price per share is determined.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the issuer
or an underwriter or a market maker for the securities. Ordinarily no
brokerage commissions are paid by the Fund for such purchases. Purchases
from underwriters of portfolio securities include a 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 have been paid by the Fund to date.
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.
Securities transactions are not directed to securities firms in
consideration of sales of Fund shares or of shares of other funds advised
by the Manager.
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.
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."
In 1973, the Fund was incorporated as a money market mutual fund and
it commenced operations in 1974 as the first money market fund to be widely
offered on a retail basis. Money market mutual funds have subsequently
grown into a multibillion dollar industry.
Each share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of Common Stock 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.
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--10.9% AMOUNT VALUE
---------------- --------------
<S> <C> <C>
Chase Manhattan Bank N.A. (London)
5.50%-6.56%, 1/6/95-5/22/95............................................. $ 140,000,000 $ 140,000,000
Fleet Bank of Massachusetts (London)
6.55%, 4/13/95.......................................................... 75,000,000 75,000,000
Harris Trust & Savings Bank (London)
5.55%-6.50%, 1/10/95-5/22/95............................................ 185,000,000 185,000,000
NationsBank of Texas N.A. (London)
5.13%, 3/17/95-3/20/95.................................................. 130,000,000 130,000,000
----------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $530,000,000)..................................................... $ 530,000,000
================
BANKERS' ACCEPTANCES--.2%
Bank of New York, Co. Inc.
6.55%, 4/27/95
(cost $9,793,456)....................................................... $ 10,000,000 $ 9,793,456
================
COMMERCIAL PAPER--67.5%
BHF Finance (Delaware) Inc.
5.58%, 1/11/95.......................................................... $ 50,000,000 $ 49,923,611
Bankers Trust New York Corp.
5.02%-5.58%, 1/6/95-2/17/95............................................. 190,000,000 189,575,592
Bear Stearns & Co. Inc.
5.84%-5.92%, 1/24/95-3/17/95............................................ 75,000,000 74,303,514
CS First Boston Inc.
5.11%, 1/11/95.......................................................... 50,000,000 49,930,556
Chase Manhattan Corp.
6.50%, 4/27/95.......................................................... 100,000,000 97,950,667
Ciesco L.P.
5.14%-6.48%, 1/20/95-4/10/95............................................ 51,000,000 50,553,330
Corporate Asset Funding Co. Inc.
5.47%, 1/10/95.......................................................... 24,500,000 24,466,925
Den Danske Corp. Inc.
5.09%-6.61%, 1/9/95-4/28/95............................................. 185,000,000 182,965,008
Ford Motor Credit Co.
6.44%-6.46%, 4/4/95-4/20/95............................................. 110,000,000 108,043,383
General Electric Capital Corp.
5.07%-6.56%, 1/9/95-4/28/95............................................. 221,000,000 218,734,216
General Electric Capital Services Inc.
5.14%-6.43%, 1/10/95-5/1/95............................................. 225,000,000 223,717,468
General Motors Acceptance Corp.
5.61%-6.49%, 1/10/95-4/20/95............................................ 240,000,000 237,725,439
Generale Bank Inc.
5.15%-5.23%, 1/12/95-3/17/95............................................ 95,000,000 94,675,542
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
---------------- --------------
Goldman Sachs Group L.P.
5.12%-6.48%, 1/5/95-4/20/95............................................. $ 233,000,000 $ 230,725,848
ITT Corp.
5.93%, 2/16/95.......................................................... 35,000,000 34,738,822
ITT Financial Corp.
5.51%-6.29%, 1/5/95-4/5/95.............................................. 195,000,000 193,182,624
Internationale Nederlanden (U.S.) Funding Corp.
5.41%, 2/2/95........................................................... 60,000,000 59,716,800
Lehman Brothers Holdings Inc.
5.14%-6.63%, 1/9/95-5/26/95............................................. 235,000,000 232,392,780
Merrill Lynch & Co. Inc.
5.51%-5.58%, 1/6/95-2/17/95............................................. 125,000,000 124,785,290
NYNEX Corp.
5.13%-6.29%, 1/13/95-4/7/95............................................. 210,000,000 207,602,169
Preferred Receivables Funding Corp.
5.46%, 1/18/95.......................................................... 48,100,000 47,977,572
Prudential Home Mortgage Company
5.08%, 1/31/95.......................................................... 25,000,000 24,896,875
Sears Roebuck Acceptance Corp.
5.45%-5.61%, 1/11/95-2/21/95............................................ 140,000,000 139,285,319
SwedBank Inc.
5.55%-6.53%, 1/23/95-5/22/95............................................ 235,000,000 232,202,669
Toronto-Dominion Holdings U.S.A. Inc.
6.49%-6.55%, 4/12/95-4/28/95............................................ 80,000,000 78,482,669
UBS Finance (Delaware) Inc.
6.25%, 1/3/95........................................................... 75,000,000 74,973,958
---------------
TOTAL COMMERCIAL PAPER (cost $3,283,528,646)................................ $3,283,528,646
================
CORPORATE NOTES--2.7%
Ford Motor Credit Co.
4.99%, 1/17/95.......................................................... $ 19,000,000 $ 19,003,112
General Electric Capital Corp.
3.54%, 1/19/95.......................................................... 25,000,000 24,999,179
Merrill Lynch & Co. Inc.
5.67%, 2/23/95-3/17/95 (a).............................................. 86,000,000 86,000,000
----------------
TOTAL CORPORATE NOTES (cost $130,002,291)................................... $ 130,002,291
================
SHORT-TERM BANK NOTES--8.0%
Comerica Bank
5.72%, 3/14/95 (a)...................................................... $ 25,000,000 $ 25,000,000
FCC National Bank (Delaware)
3.62%-3.70%, 1/19/95-2/3/95............................................. 150,000,000 149,998,161
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM BANK NOTES (CONTINUED) AMOUNT VALUE
---------------- --------------
First National Bank of Chicago
5.06%, 1/9/95........................................................... $ 25,000,000 $ 25,000,000
Huntington National Bank
3.66%, 1/10/95.......................................................... 59,000,000 59,000,573
NationsBank of North Carolina N.A.
6.25%-6.53%, 3/31/95-4/28/95............................................ 105,000,000 105,000,000
PNC Bank N.A.
5.25%, 2/13/95.......................................................... 25,000,000 25,000,000
----------------
TOTAL SHORT-TERM BANK NOTES (cost $388,998,734)............................. $ 388,998,734
================
U.S. GOVERNMENT AGENCIES--1.9%
Federal National Mortgage Association
Floating Rate Notes
5.97% 2/14/97(a)
(cost $90,000,000)...................................................... $ 90,000,000 $ 90,000,000
================
U.S. TREASURY BILLS--.5%
3.69%, 2/9/95
(cost $24,903,583)...................................................... $ 25,000,000 $ 24,903,583
================
TIME DEPOSITS--4.9%
Chemical Bank (London)
5.37%, 1/3/95........................................................... $ 201,000,000 $ 201,000,000
Republic National Bank of New York (London)
4.68%, 1/3/95........................................................... 38,459,000 38,459,000
----------------
TOTAL TIME DEPOSITS (cost $239,459,000)..................................... $ 239,459,000
================
REPURCHASE AGREEMENTS--3.7%
Eastbridge Capital Inc., 6.25%
dated 12/30/94, due 1/3/95 in the amount of $150,104,167
(fully collateralized by $159,215,000 U.S. Treasury Bills
due from 6/1/95-6/15/95, value $154,680,460)............................ $ 150,000,000 $ 150,000,000
Yamaichi International America Inc., 6.15%
dated 12/30/94, due 1/3/95 in the amount of $30,654,933
(fully collateralized by $30,000,000 U.S. Treasury Notes
7 3/4%, due 2/15/95, value $30,946,875)................................. 30,634,000 30,634,000
--------------
TOTAL REPURCHASE AGREEMENTS (cost $180,634,000)............................. $ 180,634,000
================
TOTAL INVESTMENTS (cost $4,877,319,710)............................ 100.3% $4,877,319,710
===== ================
LIABILITIES, LESS CASH AND RECEIVABLES............................. (.3%) $ (13,945,829)
===== ================
NET ASSETS......................................................... 100.0% $4,863,373,881
===== ================
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate - subject to periodic change.
See notes to financial statements.
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
Investments in securities, at value-Note 1(a,b)......................... $4,877,319,710
Cash.................................................................... 63,669,997
Interest receivable..................................................... 16,595,220
Prepaid expenses........................................................ 1,906,900
----------------
4,959,491,827
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 1,991,917
Payable for Common Stock redeemed....................................... 92,279,372
Accrued expenses........................................................ 1,846,657 96,117,946
------------- --------------
NET ASSETS ................................................................ $4,863,373,881
==============
REPRESENTED BY:
Paid-in capital......................................................... $4,866,273,824
Accumulated undistributed investment income-net......................... 652,902
Accumulated net realized (loss) on investments.......................... (3,552,845)
----------------
NET ASSETS at value applicable to 4,867,149,462 shares outstanding
(25 billion shares of $.10 par value Common Stock authorized)........... $4,863,373,881
==============
NET ASSET VALUE, offering and redemption price per share
($4,863,373,881 / 4,867,149,462 shares)................................. $1.00
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 206,207,936
EXPENSES:
Management fee-Note 2(a).............................................. $22,824,684
Shareholder servicing costs-Note 2(b)................................. 12,908,462
Prospectus and shareholders' reports.................................. 382,644
Custodian fees........................................................ 318,893
Professional fees..................................................... 94,157
Registration fees..................................................... 63,650
Directors' fees and expenses-Note 2(c)................................ 44,825
Miscellaneous......................................................... 294,557
-------------
TOTAL EXPENSES.................................................... 36,931,872
--------------
INVESTMENT INCOME--NET...................................................... 169,276,064
NET REALIZED GAIN ON INVESTMENTS--Note 1(b)................................. 329,169
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 169,605,233
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994
---------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 135,373,883 $ 169,276,064
Net realized gain on investments........................................ 178,144 329,169
---------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 135,552,027 169,605,233
---------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (135,373,883) (168,623,162)
---------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 15,561,021,427 14,805,667,408
Dividends reinvested.................................................... 134,811,058 167,952,577
Cost of shares redeemed................................................. (16,369,977,245)(14,939,362,012)
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... (674,144,760) 34,257,973
---------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (673,966,616) 35,240,044
NET ASSETS:
Beginning of year....................................................... 5,502,100,453 4,828,133,837
---------------- --------------
End of year (including undistributed investment
income-net; $652,902 in 1994)......................................... $4,828,133,837 $4,863,373,881
================ ==============
See notes to financial statements.
</TABLE>
DREYFUS LIQUID ASSETS, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated May 1, 1995.
See notes to financial statements.
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
and pay dividends from investment income-net on each business day. Dividends
from net realized capital gain are normally declared and paid annually, but
the Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code. To the extent that
net realized capital gain can be offset by capital loss carryovers, it is the
policy of the Fund not to distribute such gain.
On January 3, 1995, the Fund declared a cash dividend of approximately
$.0001 per share from undistributed investment income-net which includes
investment income-net for Saturday, December 31, 1994.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of approximately $3,553,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1994. If not
applied, $1,356,000 of the carryover expires in 1995, $2,126,000 expires in
1997 and $71,000 expires in 1998.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is based on the average daily value of the Fund's net
assets and is computed at the following annual rates: 1/2 of 1% of the first
$1.5 billion; 48/100ths of 1% of the next $500 million; 47/100ths of 1% of
the next $500 million; and 45/100ths of 1% over $2.5 billion. The fee is
payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage commissions and extraordinary expenses, exceed 1% of
the average value of the Fund's net assets for any full year. No expense
reimbursement was required pursuant to the Agreement for the year ended
December 31, 1994.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service 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 servicing
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. During the year ended
December 31, 1994, the Fund was charged an aggregate of $3,822,518 pursuant
to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $6,500 and an attendance fee of $500 per meeting.
DREYFUS LIQUID ASSETS, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS LIQUID ASSETS, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Liquid Assets, Inc., including the statement of investments, as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Liquid Assets, Inc. at December 31, 1994, and the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
January 27, 1995
