January 27, 2000
THE DREYFUS PREMIER THIRD
CENTURY FUND, INC.
SUPPLEMENT TO PROSPECTUS
DATED AUGUST 31, 1999
The following information supersedes and replaces the last sentence
of the first paragraph contained in the section of the Funds Prospectus
entitled "The Fund - Past Performance" and the sentence in the last bullet
point contained in the section of the Fund's Prospectus entitled "Your
Investment - Account Policies."
Class Z shares generally are not available for new accounts.
----------------------------------------
The following information supplements and supersedes any contrary
information contained in the sections of the Funds Prospectus entitled "Your
Investment - Account Policies" and "Your Investment - Services for Fund
Investors."
Right of Accumulation: lets you add the value of any shares in this
fund, any other Dreyfus Premier fund, or any other fund that is advised by
Founders Asset Management LLC ("Founders"), an affiliate of Dreyfus, sold
with a sales load (that you already own) to the amount of your next Class A
or Class T investment for purposes of calculating the sales charge.
Dreyfus Dividend Sweep: for automatically reinvesting the dividends
and distributions from the fund into another Dreyfus fund or certain
Founders-advised funds (not available for IRAs).
Dreyfus Auto-Exchange Privilege: for making regular exchanges from
the fund into another Dreyfus fund or certain Founders-advised funds.
Exchange Privilege: you can exchange shares worth $500 or more (no
minimum for retirement accounts) from one class of the fund into the same
class of another Dreyfus Premier fund or Founders-advised fund. You can also
exchange Class T shares into Class A shares of certain Dreyfus Premier
fixed-income funds.
035s0100
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THE DREYFUS PREMIER THIRD CENTURY FUND, INC.
CLASS A, CLASS B, CLASS C, CLASS R, CLASS T
AND CLASS Z SHARES
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 31, 1999
AS REVISED, JANUARY 27, 2000
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This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of The
Dreyfus Premier Third Century Fund, Inc. (the "Fund"), dated August 31, 1999, 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 1-800-554-4611
(Holders of Class Z shares should call 1-800-645-6561) In New York
City -- Call 718-895-1206 Outside the U.S. -- Call 516-794-5452
The Fund's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the fund..................................................B-2
Management of The Fund...................................................B-9
Management Arrangements..................................................B-13
Purchase of Shares.......................................................B-17
Distribution Plans and Shareholder Services Plans........................B-25
Redemption of Shares.....................................................B-27
Shareholder Services.....................................................B-32
Determination of Net Asset Value.........................................B-37
Dividends, Distributions and Taxes.......................................B-38
Portfolio Transactions...................................................B-41
Performance Information..................................................B-42
Information about the Fund...............................................B-43
Counsel and Independent Auditors.........................................B-44
<PAGE>
DESCRIPTION OF THE FUND
The Fund was incorporated under Delaware law on May 6, 1971 and commenced
operations on March 29, 1972. On July 30, 1982, the Fund changed its state of
incorporation to Maryland. The Fund is an open-end management investment
company, known as a mutual fund. Prior to August 31, 1999, the Fund's name was
The Dreyfus Third Century Fund, Inc. The Fund is a diversified fund, which means
that, with respect to 75% of the Fund's total assets, the Fund will not invest
more than 5% of its assets in the securities of any single issuer.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager has engaged NCM Capital Management Group, Inc. ("NCM") to
serve as the Fund's sub-investment adviser. NCM provides day-to-day management
of the Fund's portfolio, subject to the supervision of the Manager.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the Fund's Prospectus.
During a period when it becomes desirable to move the Fund toward a
defensive position because of adverse trends in the financial markets or the
economy, the Fund may invest some of or all its assets in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
corporate bonds, high grade commercial paper, repurchase agreements, time
deposits, bank certificates of deposit, bankers' acceptances and other
short-term bank obligations issued in this country as well as those issued in
dollar denominations by the foreign branches of U.S. banks, and cash or cash
equivalents, without limit as to amount, as long as such investments are made in
securities of eligible companies and domestic banks. The Fund also may purchase
these types of securities when it has cash reserves or in anticipation of taking
a market position.
U.S. Government Securities. U.S. Government securities include a variety
of U.S. Treasury Securities, which differ in their interest rates, maturities
and times of issuance: Treasury Bills have initial maturities of one year or
less; Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, such as 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 U.S. 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 instrumentality. These securities bear fixed, floating or variable
rates of interest. Principal and 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.
Foreign Securities. The Fund may invest in foreign securities. Foreign
securities markets generally are not as developed or efficient as those in the
United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly, volume and
liquidity in most foreign securities markets are less than in the United States
and, at times, volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually are held outside
the United States, the Fund will be subject to additional risks which include
possible adverse political and economic developments, seizure or nationalization
of foreign deposits and adoption of governmental restrictions which might
adversely affect or restrict the payment of principal and interest on the
foreign securities to investors located outside the country of the issuer,
whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations.
Illiquid Securities. The Fund may invest up to 15% of the value of its net
assets in securities which are illiquid securities, provided such investments
are consistent with the Fund's investment objectives. Illiquid securities are
securities which are not readily marketable, including those with legal or
contractual restrictions on resale. Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"), permits certain resales of restricted
securities to qualified institutional buyers without registration under the
Securities Act ("Rule 144A Securities"). The Fund's Board has directed the
Manager to monitor the Fund's investments in such securities with particular
regard to trading activity, availability of reliable price information and other
relevant information, and has approved procedures to determine whether a readily
available market exists. Rule 144A Securities for which there is a readily
available market are not illiquid. Investment in illiquid securities subjects
the Fund to the risk that it will not be able to sell such securities when it
may be opportune to do so, which could adversely affect the Fund's net asset
value.
When the Fund purchases securities that are illiquid due to the fact that
such securities have not been registered under the Securities Act, the Fund will
endeavor to obtain the right to registration at the expense of the issuer.
Generally, there will be a lapse of time between the Fund's decision to sell any
such securities and the registration of the securities permitting sale. The
valuation of illiquid securities will be monitored by the Manager subject to the
supervision of the Fund's Board.
Repurchase Agreements. 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. The Fund's custodian will have
custody of, and will hold in a segregated account, securities acquired by the
Fund under a repurchase agreement. Repurchase agreements are considered by the
staff of the Securities and Exchange Commission to be loans by the Fund. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement, the
Fund will enter into repurchase agreements only with domestic banks with total
assets in excess of 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 the Fund will require that additional
securities be deposited with its custodian 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. 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. The Fund
will consider on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
Certificates of Deposit. 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. Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer than
seven days) at a stated interest rate.
Bankers' Acceptances. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and the drawer to pay
the face amount of the instrument upon maturity.
Investment Techniques
The following information supplements and should be read in conjunction
with the Fund's Prospectus.
Writing and Purchasing Options. To earn additional income on its
portfolio, the Fund, to a limited extent, may write covered call options on
securities owned by the Fund ("covered options" or "options") and purchase call
options in order to close option transactions, as described below.
A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price at
any time during the option period, regardless of the market price of the
security. The premium paid to the writer is the consideration for undertaking
the obligations under the option contract. When a covered option is written by
the Fund, the Fund will make arrangements with the Fund's custodian, to
segregate the underlying securities until the option either is exercised,
expires or the Fund closes out the option as described below. A covered option
sold by the Fund exposes the Fund during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. To limit this exposure, the value of the portfolio securities
underlying covered call options written by the Fund will be limited to an amount
not in excess of 20% of the value of the Fund's net assets at the time such
options are written.
The Fund will purchase call options only to close out open positions. To
close out a position, the Fund may make a "closing purchase transaction," which
involves purchasing a call option on the same security with the same exercise
price and expiration date as the option which it has previously written on a
particular security. The Fund will realize a profit (or loss) from a closing
purchase transaction if the amount paid to purchase a call option is less (or
more) than the amount received from the sale thereof.
Borrowing Money. The Fund is permitted to borrow to the extent permitted
under the Investment Company Act of 1940, as amended (the "Act"), which permits
an investment company to borrow an amount up to 33 1/3% of the value of its
total assets. The Fund currently intends to borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 15% 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. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
Other Investment Considerations and Risks
The following information supplements and should be read in conjunction
with the Fund's Prospectus.
The Fund's objectives and special considerations (social screens), as
described in the Fund's Prospectus, cannot be changed without approval by the
holders of a majority, as defined in the Act, of the Fund's outstanding voting
shares. The Fund's Board of Directors may adopt additional criteria or
restrictions governing the Fund's investments if the Board of Directors
determines that the new criteria or restrictions are consistent with the Fund's
objective of investing in a socially responsible manner, but the Board may not
change the four existing special considerations described in the Prospectus
without shareholder approval.
The Board will review new portfolio acquisitions in light of the Fund's
special concerns at their next regular meeting. While the Board will disqualify
a company evidencing a pattern of conduct that is inconsistent with the Fund's
special standards, the Board need not disqualify a company on the basis of
incidents that, in the Board's judgment, do not reflect the company's policies
and overall current level of performance in the areas of special concern to the
Fund. The performance of companies in the areas of special concern is reviewed
regularly to determine their continued eligibility.
The Board of Directors of the Fund may, to a limited extent, authorize the
purchase of securities of foreign companies which have not been declared
eligible for investment ("ineligible securities") in order to facilitate the
purchase of securities of other foreign companies which are contributing or will
contribute to the enhancement of the quality of life in America and which have
been declared eligible for investment ("eligible securities"). Certain countries
have limited, either permanently or temporarily, the ability of foreigners to
purchase shares of their domestic companies, shares which are already owned
outside the country or shares which may be obtained through the sale of shares
of other companies located in the same country which are owned outside that
country. Accordingly, the Fund may purchase ineligible securities so that these
securities may be sold or redeemed in the country of origin, and the proceeds
thus received used for the purchase of eligible securities.
Otherwise ineligible securities purchased for this limited purpose would
be held in the Fund's portfolio for a maximum of 60 days in order to enable the
Fund to have sufficient time to provide for the transportation of the securities
and their sale or redemption. Most transactions of this type, however, are
expected to be completed in a much shorter period. Furthermore, such investments
are limited, as a fundamental policy, in the aggregate, to a maximum of 2% of
the net assets of the Fund at the time of investment. Engaging in these
transactions will result in additional expense to the Fund in the form of
brokerage commissions incurred in the purchase and sale of the ineligible
security. Finally, the Board of Directors would authorize investments in
ineligible securities only for the purpose of facilitating the purchase of
securities of a specific eligible company.
Simultaneous Investments. Investment decisions for the Fund are made
independently from those of other investment companies advised by the Manager
and NCM. However, if such other investment companies desire to invest in, or
dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each. In some cases, this
procedure may adversely affect the size of the position obtained for or disposed
of by the Fund or the price paid or received by the Fund.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 16 as
fundamental policies. These restrictions cannot be changed without approval by
the holders of a majority, as defined in the Act, of the Fund's outstanding
voting shares. Investment restrictions numbered 17 and 18 are not fundamental
policies and may be changed by vote of a majority of the Fund's Directors at any
time.
1.....The Fund's special considerations described in the Fund's Prospectus
will not be changed without stockholder approval. The Board of Directors may
from time to time without stockholder approval adopt additional criteria or
restrictions governing the Fund's investments if the Board of Directors
determines that the new criteria or restrictions are consistent with the Fund's
objective of investing in a socially responsible manner. Any such new criteria
or restrictions would not be fundamental policies of the Fund and could be
subsequently terminated or changed by the Board of Directors at any time without
stockholder approval.
2. The Fund may not purchase the securities of any issuer if such
purchase would cause more than 5% of the value of its total assets to be
invested in securities of such issuer (except securities of the United States
Government or any instrumentality thereof).
3. The Fund may not purchase the securities of any issuer if such
purchase would cause the Fund to hold more than 10% of the outstanding voting
securities of such issuer.
4. The Fund may not purchase securities of any company having less than
three years' continuous operating history (including that of any predecessors)
if such purchase would cause the value of the Fund's investments in all such
securities to exceed 5% of the value of its net assets. See also Investment
Restriction No. 10.
5. The Fund may not purchase securities of closed-end investment
companies except in connection with a merger or consolidation of portfolio
companies. The Fund shall not purchase or retain securities issued by open-end
investment companies other than itself.
6. The Fund may not purchase or retain the securities of any issuer if
officers or directors of the Fund or of its investment adviser, who own
beneficially more than 1/2 of 1% of the securities of such issuer together own
beneficially more than 5% of the securities of such issuer.
7. The Fund may not purchase, hold or deal in commodities or commodity
contracts, in oil, gas, or other mineral exploration or development programs, or
in real estate but this shall not prohibit the Fund from investing, consistent
with Item 18 below, in securities of companies engaged in oil, gas or mineral
investments or activities. This limitation shall not prevent the Fund from
investing in securities issued by a real estate investment trust, provided that
such trust is not permitted to invest in real estate or in interests other than
mortgages or other security interests.
8. The Fund may not borrow money, except to the extent permitted under
the Act (which currently limits borrowing to no more than 33-1/3% of the value
of the Fund's total assets).
9. The Fund may not make loans other than by the purchase, consistent
with Item 18 below, of bonds, debentures or other debt securities of the types
commonly offered privately and purchased by financial institutions. The purchase
of a portion of an issue of publicly distributed debt obligations shall not
constitute the making of loans.
10. The Fund may not act as an underwriter of securities of other
issuers.
11. The Fund may not purchase from or sell to any of its officers or
directors, or firms of which any of them are members, any securities (other than
capital stock of the Fund), but such persons or firms may act as brokers for the
Fund for customary commissions.
12. The Fund may not invest in the securities of a company for the
purpose of exercising management or control, but the Fund will vote the
securities it owns in its portfolio as a shareholder in accordance with its
views.
13. The Fund may not purchase securities on margin, but the Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of securities.
14. The Fund may not sell any security short or engage in the purchase
and sale of put, call, straddle, or spread options or combinations thereof, or
in writing such options, except that the Fund may write and sell covered call
option contracts on securities owned by the Fund up to, but not in excess of,
20% of the market value of its net assets at the time such option contracts are
written. The Fund may also purchase call options for the purpose of terminating
its outstanding obligations with respect to securities upon which covered call
option contracts have been written. In connection with the writing of covered
call options, the Fund may pledge assets to an extent not greater than 20% of
the market value of its total net assets at the time such options are written.
15. The Fund may not concentrate its investments in any particular
industry or industries, except that the Fund may invest up to 25% of the value
of its total assets in a single industry.
16. The Fund may not purchase warrants in excess of 2% of the value of
its net assets. Such warrants shall be valued at the lower of cost or market,
except that warrants acquired by the Fund in units or attached to securities
shall be deemed to be without value, for purposes of this restriction only.
17. The Fund may not pledge, mortgage, hypothecate or otherwise encumber
its assets, except to the extent necessary to secure permitted borrowings.
18. The Fund may not enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase securities which are
illiquid if, in the aggregate, more than 15% of the value of the Fund's net
assets would be so invested.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of that restriction.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of the
Fund. The Board approves all significant agreements with those companies that
furnish services to the Fund. These companies are as follows:
The Dreyfus Corporation...........................Investment Adviser
NCM Capital Management Group, Inc.................Sub-Investment Adviser
Premier Mutual Fund Services, Inc.................Distributor
Dreyfus Transfer, Inc.............................Transfer Agent
Mellon Bank, N.A..................................Custodian
Directors and officers of the Fund, together with information as to their
principal business occupation during at least the last five years, are shown
below.
Directors of the Fund
CLIFFORD L. ALEXANDER, JR., Director. President of Alexander & Associates, Inc.,
a management consulting firm. From 1977 to 1981, Mr. Alexander served as
Secretary of the Army and Chairman of the Board of the Panama Canal Company
and from 1975 to 1977 he was a member of the Washington, D.C. law firm of
Verner, Liipfert, Bernhard, McPherson and Alexander. He is a Director of
American Home Products Corporation, Cognizant Corporation, a service
provider of marketing information and information technology, The Dun &
Bradstreet Corporation, Equitable Resources, Inc., a producer and
distributor of natural gas and crude petroleum, MCI Communications
Corporation, Mutual of America Life Insurance Company and TLC Beatrice
International Holdings. He is 65 years old and his address is 400 C Street
N.E., Washington, D.C. 20002.
LUCY WILSON BENSON, Director. President of Benson and Associates, consultants to
business and government. Mrs. Benson is a Director of COMSAT 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. From 1980 to 1994, Mrs. Benson
was a director of The Grumman Corporation and of the General RE Corporation
from 1990 to 1998. 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 72 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He is also a
director of The Muscular Dystrophy Association, The Noel Group, Inc., a
venture capital company (for which, from February 1995 until November 1997,
he was Chairman of the Board), Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, Health Plan Services
Corporation, a provider of marketing, administrative, and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway, Inc.), a button packager and distributor, and
Century Business Services, Inc.(formerly, International Alliance Services,
Inc.), a provider of various outsourcing services for small and medium size
companies. For more than five years prior to January 1995, he was
President, a director and, until August 1994, Chief Operating Officer of
the Manager and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager. From August 1994
until December 31, 1994, he was a director of Mellon Bank Corporation. He
is 55 years old and his address is 200 Park Avenue, New York, New York
10166.
For so long as the Fund's plans described in the section captioned
"Distribution Plans and Shareholder Services Plans" remain 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 fee and
reimburses them for their Board meeting expenses. The Chairman of the Board
receives an additional 25% of such compensation. Any Director who becomes an
Emeritus Director shall be entitled to receive an annual retainer fee of
one-half the amount paid to Directors. The aggregate amount of compensation paid
to each current Director by the Fund for the fiscal year ended May 31, 1999, and
by all funds in the Dreyfus Family of Funds for which such person was a Board
member (the number of which is set forth in parenthesis next to each Director's
total compensation)* during the year ended December 31, 1998, is as follows:
Total
Compensation
Aggregate From Fund and Fund
Name of Board Compensation Complex Paid to
Member From Fund** Board Member
Clifford L. Alexander $10,000 $ 80,918 (38)
Lucy Wilson Benson $10,000 $ 77,168 (24)
Joseph S. DiMartino $12,500 $619,660 (187)
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* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member served.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $1,440 for all Directors as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive Officer,
Chief Compliance Officer and a director of the Distributor and Funds
Distributor, Inc., the ultimate parent of which is Boston Institutional
Group, Inc., and an officer of other investment companies advised or
administered by the Manager. She has been employed by Funds Distributor,
Inc. for more than the past five years. She is 42 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President and
General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From August
1996 to March 1998, she was Vice President and Assistant General Counsel
for Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was
an associate with the law firm of Ropes & Gray. She is 39 years old.
FREDERICK C. DEY, Vice President, Assistant Treasurer, and Assistant Secretary.
Vice President of New Business Development for Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. He is 37 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Treasurer and Assistant
Secretary. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August 1995 to
April 1997, she was an Assistant Vice President with Hudson Valley Bank,
and from September 1990 to August 1995, she was a Second Vice President
with Chase Manhattan Bank. She is 31 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. She is 35 years old.
*JOHN P. COVINO, Vice President and Assistant Treasurer. Vice President and
Treasury Group Manager of Treasury Servicing and Administration of Funds
Distributor, Inc., and an officer of other investment companies advised or
administered by the Manager. From December 1995 to November 1998, he was
employed by Fidelity Investments where he held several positions in its
Institutional Brokerage Group. Prior to joining Fidelity, he was employed
by SunGard Brokerage Systems where he was responsible for the technology
and development of the accounting product group. He is 35 years old.
*GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice President
and Client Service Director of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by the Manager. From
June 1995 to March 1998, he was Senior Vice President and Senior Key
Account Manager for Putnam Mutual Funds. From May 1994 to June 1995, he was
Director of Business Development for First Data Corporation. He is 44 years
old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From July 1988 to August
1994, he was employed by The Boston Company, Inc. where he held various
management positions in the Corporate Finance and Treasury areas. He is 37
years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank & Trust
Company. He is 30 years old.
*KAREN JACOPPO-WOOD, Vice President and Assistant Secretary. Vice President and
Senior Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From June 1994
to January 1996, she was Manager of SEC Registration at Scudder, Stevens &
Clark, Inc. She is 32 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice President
and Senior Associate General Counsel of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From April 1994 to July 1996, he was Assistant Counsel at Forum
Financial Group. He is 34 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an officer
of other investment companies advised or administered by the Manager. From
July 1994 to November 1995, she was a Fund Accountant for Investors Bank &
Trust Company. She is 27 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice President
of Funds Distributor, Inc., and an officer of other investment companies
advised or administered by the Manager. From March 1990 to May 1996, she
was employed by U.S. Trust Company of New York where she held various sales
and marketing positions. She is 37 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166 except those officers indicated by an (*), whose address is 60 State
Street, Boston, MA 02109.
Directors and officers of the Fund, as a group, owned less than 1% of the
outstanding common stock of the Fund on August 10, 1999.
The following persons are known by the Fund to own 5% or more of the
Fund's voting securities outstanding on August 10, 1999:
(1) Nationwide Life Insurance Company, FBO Naco Variable Account, c/o IPO
CO64, PO Box 182029, Columbus, OH 43218-2029 - 6.88% (2) Nationwide DC Variable
Account, c/o IPO CO53, PO Box 182029, Columbus, OH 43218-2029 - 5.51% (3)
Nationwide Qualified Plans Variable Account, c/o IPO CO67, PO Box 182029,
Columbus, OH 43218-2029 - 5.41%.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets.
The Manager provides investment advisory services pursuant to the
Management Agreement (the "Agreement") dated August 2, 1994, between the Manager
and the Fund which is subject to annual approval by (i) the Board of Directors
of the Fund 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 Board of Directors who are not
"interested persons" (as defined in the Act) of any party to the Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Agreement is terminable without penalty, on 60 days' notice, by
the Board of Directors of the Fund or by vote of the holders of a majority of
the Fund's shares, or, upon not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically in the event of its assignment (as
defined in the Act).
As compensation for the Manager's services to the Fund, under the
Agreement the Fund has agreed to pay the Manager a fee payable monthly at an
annual rate of .75 of 1% of the Fund's average daily net assets. For the fiscal
years ended May 31, 1997, 1998 and 1999, the Fund paid the Manager pursuant to
the Agreement a fee of $4,045,691, $5,963,715 and $7,521,525, respectively.
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice
Chairman; J. David Officer, Vice Chairman and a director; William T.
Sandalls, Jr., Executive Vice President; Stephen R. Byers, Senior Vice
President; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Diane P. Durnin, Vice President-Product Development; Patrice M. Kozlowski,
Vice President-Corporate Communications; Mary Beth Leibig, Vice
President-Human Resources; Andrew S. Wasser, Vice President-Information
Systems; Theodore A. Schachar, Vice President-Tax; Wendy Strutt, Vice
President; Richard Terres, Vice President; William H. Maresca, Controller;
James Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary;
and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott, Martin C.
McGuinn, Richard W. Sabo, and Richard F. Syron, directors.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not including
the management fee paid by the Fund. The Distributor may use part or all of such
payments to pay Agents (as defined below) in respect of these services. The
Manager also may make such advertising and promotional expenditures, using its
own resources, as it from time to time deems appropriate.
The Manager has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by the Manager's employees does not
disadvantage any fund managed by the Manager. Under the Policy, the Manager's
employees must preclear personal transactions in securities not exempt under the
Policy. In addition, the Manager's employees must report their personal
securities transactions and holdings, which are reviewed for compliance with
Policy. In that regard, the Manager's portfolio managers and other investment
personnel also are subject to the oversight of Mellon's Investment Ethics
Committee. The Manager's portfolio managers and other investment personnel who
comply with the Policy's preclearance and disclosure procedures, and the
requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
Sub-Investment Adviser. NCM provides sub-investment advisory services to
the Fund pursuant to a Sub-Investment Advisory Agreement dated June 15, 1999
between the Manager and NCM. The Sub-Investment Advisory Agreement is subject to
annual approval by (i) the Board of Directors of the Fund or (ii) vote of a
majority (as defined in the Act) of the Fund's outstanding voting securities,
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 any
party to the Sub-Investment Advisory Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Sub-Investment
Advisory Agreement contains a restriction on NCM's ability to act as the
investment adviser or sub-investment adviser for other registered funds with
socially responsible investment policies without the consent of the Fund or the
Manager. The Sub-Investment Advisory Agreement is terminable without penalty, on
60 days' notice, by the Manager, by the Board of Directors of the Fund or by
vote of the holders of a majority of the Fund's shares, or, upon not less than
90 days' notice, by NCM. The Sub-Investment Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the Act). In
addition, if the Management Agreement terminates for any reason, the
Sub-Investment Advisory Agreement will terminate effective upon the date the
Management Agreement terminates.
As compensation for NCM's services under the Sub-Investment Advisory
Agreement, the Manager has agreed to pay NCM a fee, payable monthly, at an
annual rate as set forth below:
Annual Fee as a Percentage of
Total Assets Average Daily Net Assets
- ------------ ------------------------
0 to $400 million............................. .10 of 1%
In excess of $400 million
to $500 million.............................. .15 of 1%
In excess of $500 million
to $750 million.............................. .20 of 1%
In excess of $750 million..................... .25 of 1%
For the period from April 22, 1996 through June 14, 1999, NCM served as
the Fund's sub-investment adviser pursuant to an Amended and Restated
Sub-Investment Advisory Agreement (the "Former Amended and Restated Sub-Advisory
Agreement"), the terms of which were identical to the terms of the
Sub-Investment Advisory Agreement in all material respects. The fee structure
pursuant to which the Manager paid NCM under the Former Amended and Restated
Sub-Advisory Agreement was identical to the fee structure that is in effect
under the Sub-Investment Advisory Agreement, as set forth above. For the fiscal
years ended May 31, 1997, 1998 and 1999, Dreyfus paid NCM a sub-investment
advisory fee of $632,271, $1,166,450 and $1,682,175, respectively, pursuant to
the Former Amended and Restated Sub-Advisory Agreement.
The following persons are officers and/or directors of NCM; Maceo K.
Sloan, Chairman and Chief Executive Officer; Justin F. Beckett, Executive Vice
President and Director; Edith H. Noel, Senior Vice President, Corporate
Secretary and Treasurer; Clifford D. Mpare, Chief Investment Officer; Benjamin
Blakney, Director, President and Chief Operating Officer; Benjamin S. Ruffin,
Director; Victoria Treadwell, Senior Vice President and Director of Client
Services; Paul L. VanKampen, Senior Vice President and Director of Fixed Income;
Tammie F. Coley, Vice President and Chief Financial Officer; David C. Carter,
Vice President, Portfolio Manager; Michael J. Ferraro, Vice President and
Director of Trading; David A. Halloran, Senior Vice President and Director of
Equities; Linda Jordan, Regional Vice President, Marketing; Lorenzo Newsome,
Senior Vice President and Director of Fixed Income Research; Marc Reid, Vice
President, Client Services; Drake J. Graig, Vice President, Portfolio Manager;
Mellissa Thomas, Vice President, Client Services.
NCM provides day-to-day management of the Fund's portfolio of investments
in accordance with the stated policies of the Fund, subject to the supervision
of the Manager and the approval of the Fund's Board of Directors. The Manager
and NCM provide the Fund with portfolio managers who are authorized by the
Directors to execute purchases and sales of securities. The Fund's portfolio
managers are Paul A. Hilton, Maceo K. Sloan and Clifford D. Mpare. The Manager
and NCM also maintain research departments with professional staffs of portfolio
managers and securities analysts who provide research services for the Fund as
well as for other funds advised by the Manager or NCM.
Expenses. All expenses incurred in the operation of the Fund are borne by
the Fund, except to the extent specifically assumed by the Manager and/or NCM.
The expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, interest and distributions on securities sold short,
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 or NCM, or any affiliate of the Manager or NCM,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), cost of
shareholders' reports and meetings, costs of preparing, printing and
distributing certain prospectuses and statements of additional information, and
any extraordinary expenses. In addition, Class B, Class C and Class T shares are
subject to an annual distribution fee and Class A, Class B, Class C, Class T and
Class Z shares are subject to an annual service fee. See "Distribution Plans and
Shareholder Services Plans."
The Manager and NCM have agreed that if, in any fiscal year, the aggregate
expenses of the Fund, 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, with respect
to Class Z of the Fund, 1 1/2% of the average value of the Fund's net assets
attributable to its Class Z shares, the Fund may deduct from the fees to be paid
to the Manager, or the Manager will bear, the excess expense. For each fiscal
year of the Fund, the Manager and NCM will pay or bear such excess on a pro rata
basis in proportion to the relative fees otherwise payable to each pursuant to
the Management Agreement and the Sub-Investment Advisory Agreement,
respectively. Such deduction or payment, if any, will be estimated, reconciled
and effected or paid, as the case may be, on a monthly basis and will be limited
to the amount of fees otherwise payable to the Manager and NCM under each
respective agreement.
Distributor. The Distributor, located at 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's distributor on a best efforts basis
pursuant to an agreement which is renewable annually.
The Distributor may pay dealers a fee based on the amount invested through
such dealers in Fund shares by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs or (ii) such
plan's or program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Generally, the fee paid
to dealers will not exceed 1% of the amount invested through such dealers. The
Distributor may pay dealers a higher fee, however, and 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 from past
profits or any other source available to it.
The Distributor, at its expense, may provide promotional incentives to
dealers that sell shares of funds advised by the Manager which are sold with a
sales load. In some instances, those incentives may be offered only to certain
dealers who have sold or may sell significant amounts of shares.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses.
Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's investments.
Under a custody agreement with the Fund, Mellon Bank, N.A. holds the Fund's
securities and keeps all necessary accounts and records. For its custody
services, Mellon Bank, N.A. receives a monthly fee based on the market value of
the Fund's assets held in custody and receives certain securities transaction
charges.
PURCHASE OF SHARES
General. Class A, Class B, Class C and Class T shares may be purchased
only by clients of certain financial institutions (which may include banks),
securities dealers ("Selected Dealers") and other industry professionals
(collectively, "Agents"), except that full-time or part-time employees of the
Manager or any of its affiliates or subsidiaries, directors of the Manager,
Board members of a fund advised by the Manager, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing may purchase Class A
shares directly through the Distributor. Subsequent purchases may be sent
directly to the Transfer Agent or your Agent.
Class R shares are offered only to bank trust departments and other
financial service providers (including Mellon Bank, N.A. and its affiliates)
acting on behalf of customers having a qualified trust or investment account or
relationship at such institution or to customers who received and hold shares of
the Fund distributed to them by virtue of such an account or relationship, and
to charitable organizations as defined in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"). Class R shares may be purchased
for qualified or non-qualified employee benefit plans, including pension,
profit-sharing, IRAs set up under a Simplified Employee Pension Plan
("SEP-IRAs") and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entitites or state and local governments
("Retirement Plans") only by a custodian, trustee, investment manager or other
entity authorized to act on behalf of such Retirement Plan. Institutions
effecting transactions in Class R shares for the accounts of their clients may
charge their clients direct fees in connection with such transactions.
Class Z shares are offered to holders of those Fund accounts which existed
on August 30, 1999 and continue to exist at the time of purchase. In addition,
certain broker-dealers and other financial institutions maintaining accounts
with the Fund on August 30, 1999 may open new accounts in Class Z of the Fund on
behalf of Retirement Plans and "wrap accounts" or similar programs.
When purchasing Fund shares, you must specify which Class is being
purchased. 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.
Agents may receive different levels of compensation for selling different
Classes of shares. Management understands that some Agents may impose certain
conditions on their clients which are different from those described in the
Fund's Prospectus and this Statement of Additional Information, and, to the
extent permitted by applicable regulatory authority, may charge their clients
direct fees. You should consult your Agent in this regard.
The minimum initial investment is $1,000. Subsequent investments must be
at least $100. However, the minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant and $500 for Dreyfus-sponsored Education IRAs, with no
minimum for subsequent purchases. The initial investment must be accompanied by
the Account Application. The Fund reserves the right to offer Fund shares
without regard to minimum purchase requirements to employees participating in
certain qualified or non-qualified employee benefit plans or other programs
where contributions or account information can be transmitted in a manner and
form acceptable to the Fund. The Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time.
The Code imposes various limitations on the amount that may be contributed
to certain Retirement Plans. These limitations apply with respect to
participants at the plan level and, therefore, do not directly affect the amount
that may be invested in the Fund by a Retirement Plan. Participants and plan
sponsors should consult their tax advisers for details.
Fund shares also may be purchased through Dreyfus-Automatic Asset
Builder(R), Dreyfus Payroll Savings Plan and Dreyfus Government Direct Deposit
Privilege described under "Shareholder Services." These services enable you to
make regularly scheduled investments and may provide you with a convenient way
to invest for long-term financial goals. You should be aware, however, that
periodic investment plans do not guarantee a profit and will not protect an
investor against loss in a declining market.
Fund shares are sold on a continuous basis. Net asset value per share is
determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day the New York Stock
Exchange is open for business. For purposes of determining net asset value per
share, options will be valued 15 minutes after the close of trading on the floor
of the New York Stock Exchange. Net asset value per share of each Class is
computed by dividing the value of the Fund's net assets represented by such
Class (i.e., the value of its assets less liabilities) by the total number of
shares of such Class outstanding. The Fund's investments are valued based on
market value or, where market quotations are not readily available, based on
fair value as determined in good faith by the Fund's Board. For further
information regarding the methods employed in valuing the Fund's investments,
see "Determination of Net Asset Value."
If an order is received in proper form by the Transfer Agent or other
entity authorized to receive orders on behalf of the Fund by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on a business day, Fund shares will be purchased at the public
offering price determined as of the close of trading on the floor of the New
York Stock Exchange on that day. Otherwise, Fund shares will be purchased at the
public offering price determined as of the close of trading on the floor of the
New York Stock Exchange on the next business day, except where shares are
purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by the close of
trading on the floor of the New York Stock Exchange on any business day and
transmitted to the Distributor or its designee by the close of its business day
(normally 5:15 p.m., New York time) will be based on the public offering price
per share determined as of the close of trading on the floor of the New York
Stock Exchange on that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealer's responsibility to transmit
orders so that they will be received by the Distributor or its designee before
the close of its business day. For certain institutions that have entered into
agreements with the Distributor, payment for the purchase of Fund shares may be
transmitted, and must be received by the Transfer Agent, within three business
days after the order is placed. If such payment is not received within three
business days after the order is placed, the order may be canceled and the
institution could be held liable for resulting fees and/or losses.
Federal regulations require that you provide a certified taxpayer
identification number ("TIN") upon opening or reopening an account. See the
Account Application for further information concerning this requirement. Failure
to furnish a certified TIN to the Fund could subject you to a $50 penalty
imposed by the Internal Revenue Service.
Class A Shares. The public offering price for Class A shares is the net
asset value per share of that Class plus a sales load as shown below:
Total Sales Load
-----------------------------
As a % of As a % of Dealers'
offering net asset Reallowance as
Amount of Transaction price per value per a % of
- --------------------- share share offering price
----------- ------------- -----------------
Less than $50,000.......... 5.75 6.10 5.00
$50,000 to less than
$100,000................... 4.50 4.70 3.75
$100,000 to less than
$250,000................... 3.50 3.60 2.75
$250,000 to less than
$500,000................... 2.50 2.60 2.25
$500,000 to less than
$1,000,000................. 2.00 2.00 1.75
$1,000,000 or more......... -0- -0- -0-
A contingent deferred sales charge ("CDSC") of 1% will be assessed at the
time of redemption of Class A shares purchased without an initial sales charge
as part of an investment of at least $1,000,000 and redeemed within one year of
purchase. The Distributor may pay Agents an amount up to 1% of the net asset
value of Class A shares purchased by their clients that are subject to a CDSC.
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage
related or clearing arrangement with an NASD member firm or financial
institution with respect to the sale of such shares) may purchase Class A shares
for themselves directly or pursuant to an employee benefit plan or other
program, or for their spouses or minor children, at net asset value, provided
they have furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This privilege
also applies to full-time employees of financial institutions affiliated with
NASD member firms whose full-time employees are eligible to purchase Class A
shares at net asset value. In addition, Class A shares are offered at net asset
value to full-time or part-time employees of the Manager or any of its
affiliates or subsidiaries, directors of the Manager, Board members of a fund
advised by the Manager, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing.
Class A shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class A shares also may be
purchased (including by exchange) at net asset value without a sales load for
Dreyfus-sponsored IRA "Rollover Accounts" with the distribution proceeds from a
qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided, at
the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible Benefit
Plan and all or a portion of such plan's assets were invested in funds in the
Dreyfus Premier Family of Funds, the Dreyfus Family of Funds, certain Funds
advised by Founders Asset Management LLC ("Founders"), an affiliate of Dreyfus,
or certain other products made available by the Distributor to such plans, or
(b) invested all of its assets in certain funds in the Dreyfus Premier Family of
Funds, certain funds in the Dreyfus Family of Funds, certain Funds advised by
Founders or certain other products made available by the Distributor to such
plans.
Class A shares may be purchased at net asset value through certain
broker-dealers and other financial institutions which have entered into an
agreement with the Distributor, which includes a requirement that such shares be
sold for the benefit of clients participating in a "wrap account" or a similar
program under which such clients pay a fee to such broker-dealer or other
financial institution.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a broker-dealer or other financial
institution with the proceeds from the redemption of shares of a registered
open-end management investment company not managed by the Manager or its
affiliates. The purchase of Class A shares must be made within 60 days of such
redemption and the shares redeemed must have been subject to an initial sales
charge or a CDSC.
Class A shares also may be purchased at net asset value, subject to
appropriate documentation, by (i) qualified separate accounts maintained by an
insurance company pursuant to the laws of any State or territory of the United
States, (ii) a State, county or city or instrumentality thereof, (iii) a
charitable organization (as defined in Section 501(c)(3) of the Code) investing
$50,000 or more in Fund shares, and (iv) a charitable remainder trust (as
defined in Section 501(c)(3) of the Code).
Class T Shares. The public offering price for Class T shares is the net
asset value per share of that Class plus a sales load as shown below:
Total Sales Load
----------------
Dealers'
As a % of As a % of Reallowance
Offering price net asset value as a % of
Amount of Transaction per share per share offering price
- --------------------- -------------- ---------------- --------------
Less than $50,000............. 4.50 4.70 4.00
$50,000 to less than $100,000. 4.00 4.20 3.50
$100,000 to less than $250,000 3.00 3.10 2.50
$250,000 to less than $500,000 2.00 2.00 1.75
$500,000 to less than $1,000,000 1.50 1.50 1.25
$1,000,000 or more............ -0- -0- -0-
A CDSC of 1.00% will be assessed at the time of redemption of Class T
shares purchased without an initial sales charge as part of an investment of at
least $1,000,000 and redeemed within one year of purchase. The Distributor may
pay Agents an amount up to 1% of the net asset value of Class T shares purchased
by their clients that are subject to a CDSC. Because the expenses associated
with Class A shares will be lower than those associated with Class T shares,
purchasers investing $1,000,000 or more in the Fund will generally find it
beneficial to purchase Class A shares rather than Class T shares.
Class T shares are offered at net asset value without a sales load to
employees participating in Eligible Benefit Plans. Class T shares also may be
purchased (including by exchange) at net asset value without a sales load for
Dreyfus-sponsored IRA "Rollover Accounts" with the distribution proceeds from a
qualified retirement plan or a Dreyfus-sponsored 403(b)(7) plan, provided, at
the time of such distribution, such qualified retirement plan or
Dreyfus-sponsored 403(b)(7) plan (a) met the requirements of an Eligible Benefit
Plan and all or a portion of such plan's assets were invested in funds in the
Dreyfus Premier Family of Funds, the Dreyfus Family of Funds, certain funds
advised by Founders or certain other products made available by the Distributor
to such plans, or (b) invested all of its assets in funds in the Dreyfus Premier
Family of Funds, certain funds in the Dreyfus Family of Funds, certain funds
advised by Founders or certain other products made available by the Distributor
to such plans.
Dealer Reallowance -- Class A and Class T Shares. The dealer reallowance
provided with respect to Class A and Class T shares may be changed from time to
time but will remain the same for all dealers. The Distributor, at its own
expense, may provide additional promotional incentives to dealers that sell
shares of funds advised by the Manager which are sold with a sales load, such as
Class A and Class T shares. In some instances, these incentives may be offered
only to certain dealers who have sold or may sell significant amounts of such
shares.
Sales Loads -- Class A and Class T. The scale of sales loads applies to
purchases of Class A and Class T shares made by any "purchaser," which term
includes an individual and/or spouse purchasing securities for his, her or their
own account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single fiduciary
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Code) although
more than one beneficiary is involved; or a group of accounts established by or
on behalf of the employees of an employer or affiliated employers pursuant to an
employee benefit plan or other program (including accounts established pursuant
to Sections 403(b), 408(k) and 457 of the Code); or an organized group which has
been in existence for more than six months, provided that it is not organized
for the purpose of buying redeemable securities of a registered investment
company and provided that the purchases are made through a central
administration or a single dealer, or by other means which result in economy of
sales effort or expense.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class A
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth above at a price based upon the initial offering price
of $12.50:
NAV per share $12.50
Per Share Sales Charge - 5.75% of offering price
(6.10% of net asset value per share) $ .76
Per Share Offering Price to Public $13.26
Set forth below is an example of the method of computing the offering
price of the Fund's Class T shares. The example assumes a purchase of Class T
shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth above at a price based upon the initial offering price
of $12.50:
NAV per share $12.50
Per Share Sales Charge - 4.50% of offering price
(4.70% of net asset value per share) $ .59
Per Share Offering Price to Public $13.09
Right of Accumulation--Class A and Class T Shares. Reduced sales loads
apply to any purchase of Class A and T shares, shares of other funds in the
Dreyfus Premier Family of Funds which are sold with a sales load, shares of
certain other funds advised by Dreyfus or Founders which are sold with a sales
load and shares acquired by a previous exchange of such shares (hereinafter
referred to as "Eligible Funds"), by you and any related "purchaser" as defined
above, where the aggregate investment, including such purchase, is $50,000 or
more. If, for example, you previously purchased and still hold Class A and Class
T shares of the Fund, or shares of any other Eligible Fund or combination
thereof, with an aggregate current market value of $40,000 and subsequently
purchase Class A or Class T shares of the Fund, or shares of an Eligible Fund
having a current value of $20,000, the sales load applicable to the subsequent
purchase would be reduced to 4.50% of the offering price in the case of Class A
shares, or 4.00% of the offering price in the case of Class T shares. All
present holdings of Eligible Funds may be combined to determine the current
offering price of the aggregate investment in ascertaining the sales load
applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or your
Agent must notify the Distributor if orders are made by wire, or the Transfer
Agent if orders are made by mail. The reduced sales load is subject to
confirmation of your holdings through a check of appropriate records.
Class B Shares. The public offering price for Class B shares is the net
asset value per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC is imposed, however, on certain redemptions of Class B
shares as described in the Fund's Prospectus and in this Statement of Additional
Information under "Redemption of Shares--Contingent Deferred Sales Charge--Class
B Shares." Pursuant to an agreement with the Distributor, Dreyfus Service
Corporation compensates certain Agents for selling Class B shares at the time of
purchase from Dreyfus Service Corporation's own assets. The proceeds of the CDSC
and the distribution fee, in part, are used to defray these expenses.
Approximately six years after the date of purchase, Class B shares
automatically will convert to Class A shares, based on the relative net asset
values for shares of each such Class. Class B shares that have been acquired
through the reinvestment of dividends and distributions will be converted on a
pro rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
Class C Shares. The public offering price for Class C shares is the net
asset value per share of that Class. No initial sales charge is imposed at the
time of purchase. A CDSC is imposed, however, on redemptions of Class C shares
made within the first year of purchase. See "Class B Shares" above and
"Redemption of Shares."
Class R and Class Z Shares. The public offering price for Class R and
Class Z shares is the net asset value per share of the respective Class.
Dreyfus TeleTransfer Privilege. You may purchase shares by telephone if
you have checked the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any business day that the
Transfer Agent and the New York Stock Exchange are open for business will be
credited to the shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00 p.m., New York
time, on any business day the Transfer Agent and the New York Stock Exchange are
open for business, or orders made on Saturday, Sunday or any Fund holiday (e.g.,
when the New York Stock Exchange is not open for business), will be credited to
the shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use Dreyfus TeleTransfer Privilege, the initial
payment for purchase of shares must be drawn on, and redemption proceeds paid
to, the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular redemption
are to be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See "Redemption of Shares--Dreyfus TeleTransfer
Privilege." 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.
Reopening an Account. You 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.
DISTRIBUTION PLANS AND SHAREHOLDER SERVICES PLANS
Class B, Class C and Class T shares are each subject to a Distribution
Plan and Class A, Class B, Class C, Class T and Class Z shares are each subject
to a Shareholder Services Plan.
Distribution Plans. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant to
a plan adopted in accordance with the Rule. The Fund's Board has adopted such a
plan with respect to the Fund's Class B and Class C shares (the "Class B and
Class C Distribution Plan") pursuant to which the Fund pays the Distributor for
distributing each such Class of shares a fee at the annual rate of .75% of the
value of the average daily net assets of Class B and Class C shares. The Fund's
Board believes that there is a reasonable likelihood that the Class B and Class
C Distribution Plan will benefit the Fund and holders of its Class B and Class C
shares.
The Fund's Board has also adopted a plan pursuant to the Rule with respect
to Class T shares (the "Class T Distribution Plan") pursuant to which the Fund
pays the Distributor for distributing the Fund's Class T shares a fee at the
annual rate of .25% of the value of the average daily net assets of Class T
shares. The Distributor may pay one or more Agents in respect of advertising,
marketing and other distribution services for Class T shares, and determines the
amounts, if any, to be paid to Agents and the basis on which such payments are
made. The Fund's Board believes that there is a reasonable likelihood that the
Class T Distribution Plan will benefit the Fund and holders of its Class T
shares.
A quarterly report of the amounts expended under the Class B and Class C
Distribution Plan and the Class T Distribution Plan, and the purposes for which
such expenditures were incurred, must be made to the Board for its review. In
addition each Distribution Plan provides that it may not be amended to increase
materially the costs which holders of the Fund's Class B, Class C or Class T
shares may bear pursuant to the respective Distribution Plan without the
approval of the holders of such shares and that other material amendments of the
Distribution Plans must be approved by the Fund's Board, and by the Board
members 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
Distribution Plans or in any agreements entered into in connection with the
Distribution Plans, by vote cast in person at a meeting called for the purpose
of considering such amendments. Each Distribution Plan is subject to annual
approval by such vote cast in person at a meeting called for the purpose of
voting on the Distribution Plan. Each Distribution Plan was initially approved
by the Board at a meeting held on April 15, 1999. As to the relevant Class of
shares, the Distribution Plan may be terminated at any time by vote of a
majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution Plan
or in any agreements entered into in connection with the Distribution Plan or by
vote of the holders of a majority of such Class of shares.
Neither Distribution Plan was in effect during the fiscal year ended May
31, 1999, and accordingly, no fees were paid pursuant to the Distribution Plans
during that period.
Shareholder Services Plans. The Fund has adopted a Shareholder Services
Plan with respect to its Class A, Class B, Class C and Class T shares (the
"Class A, Class B, Class C and Class T Shareholder Services Plan") pursuant to
which the Fund pays the Distributor for the provision of certain services to the
holders of the Fund's Class A, Class B, Class C and Class T shares a fee at the
annual rate of .25% of the value of the average daily net assets of each such
Class. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the Fund
and providing reports and other information, and services related to the
maintenance of such shareholder accounts. Under the Class A, Class B, Class C
and Class T Shareholder Services Plan, the Distributor may make payments to
Agents in respect of these services.
The Fund has also adopted a Shareholder Services Plan with respect to its
Class Z shares (the "Class Z Shareholder Services Plan"), pursuant to which the
Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25% of the value of the
Fund's average daily net assets with respect to Class Z shares for certain
allocated expenses with respect to servicing and/or maintaining shareholder
accounts.
A quarterly report of the amounts expended under the Class A, Class B,
Class C and Class T Shareholder Services Plan and the Class Z Shareholder
Services Plan, and the purposes for which such expenditures were incurred, must
be made to the Board for its review. In addition, each Shareholder Services Plan
provides that material amendments must be approved by the Fund's Board, and by
the Board members 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 or in any agreements entered into in connection
with the Shareholder Services Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. Each Shareholder Services Plan
is subject to annual approval by such vote cast in person at a meeting called
for the purpose of voting on the Shareholder Services Plan. The Class Z
Shareholder Services Plan was last so approved by the Board at a meeting held on
April 15, 1999. The Class A, Class B, Class C and Class T Shareholder Services
Plan was initially approved by the Board at a meeting held on April 15, 1999. As
to the relevant Class of shares, the Shareholder Services Plan is terminable at
any time by vote of a majority of the Board members who are not "interested
persons" and who have no direct or indirect financial interest in the operation
of the Shareholder Services Plan or in any agreements entered into in connection
with the Shareholder Services Plan.
For the fiscal year ended May 31, 1999, the Fund paid Dreyfus Service
Corporation $1,084,748 pursuant to the Class Z Shareholder Services Plan. The
Class A, Class B, Class C and Class T Shareholder Services Plan was not in
effect during the fiscal year ended May 31, 1999 and accordingly no fees were
paid pursuant to that Plan during the period.
REDEMPTION OF SHARES
General. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail to
specify the Class of shares to be redeemed or if you own fewer shares of the
Class than specified to be redeemed, the redemption request may be delayed until
the Transfer Agent receives further instructions from you or your Agent.
The Fund imposes no charges (other than any applicable CDSC) when shares
are redeemed. Agents may charge their clients a fee for effecting redemptions of
Fund shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-current
net asset value.
Procedures. You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege, which is granted automatically unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611. (Holders of Class Z shares
should call 1-800-645-6561.) You also may redeem shares through the Wire
Redemption Privilege or the TeleTransfer Privilege if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer Agent.
If you are a client of certain Selected Dealers, you can also redeem Fund shares
through the Selected Dealer. Other redemption procedures may be in effect for
clients of certain Agents and institutions. The Fund makes available to certain
large institutions the ability to issue redemption instructions through
compatible computer facilities. The Fund reserves the right to refuse any
request made by telephone, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests. The
Fund may modify or terminate any redemption privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs, or other retirement plans, and shares for
which certificates have been issued, are not eligible for the Wire Redemption,
Telephone Redemption or TeleTransfer Privilege.
The Telephone Redemption Privilege or Telephone Exchange Privilege
authorizes the Transfer Agent to act on telephone instructions (including The
Dreyfus Touch(R) automated telephone system) from any person representing
himself or herself to be you, or a representative of your Agent, 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 an exchange of Fund shares. In such cases, you should consider using the
other redemption procedures described herein. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption had been used. During the delay,
the Fund's net asset value may fluctuate.
Contingent Deferred Sales Charge--Class B Shares. A CDSC payable to the
Distributor is imposed on any redemption of Class B shares which reduces the
current net asset value of your Class B shares to an amount which is lower than
the dollar amount of all payments by you for the purchase of Class B shares of
the Fund held by you at the time of redemption. No CDSC will be imposed to the
extent that the net asset value of the Class B shares redeemed does not exceed
(i) the current net asset value of Class B shares acquired through reinvestment
of dividends or capital gain distributions, plus (ii) increases in the net asset
value of your Class B shares above the dollar amount of all your payments for
the purchase of Class B shares held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has declined below their
original cost as a result of the Fund's performance, a CDSC may be applied to
the then-current net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years for the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
The following table sets forth the rates of the CDSC for Class B shares:
Year Since CDSC as a % of
Purchase Payment Amount Invested or
Was Made Redemption Proceeds
---------------------- -------------------
First............................... 4.00
Second.............................. 4.00
Third............................... 3.00
Fourth.............................. 3.00
Fifth............................... 2.00
Sixth............................... 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in net asset value of Class B shares
above the total amount of payments for the purchase of Class B shares made
during the preceding six years; then of amounts representing the cost of shares
purchased six years prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time within the
applicable six-year period.
For example, assume an investor purchased 100 shares at $10 per share for
a cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of the investment. Assuming at the time of the
redemption the net asset value had appreciated to $12 per share, the value of
the investor's shares would be $1,260 (105 shares at $12 per share). The CDSC
would not be applied to the value of the reinvested dividend shares and the
amount which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4% (the
applicable rate in the second year after purchase) for a total CDSC of $9.60.
Contingent Deferred Sales Charge--Class C Shares. A CDSC of 1% payable to
the Distributor is imposed on any redemption of Class C shares within one year
of the date of purchase. The basis for calculating the payment of any such CDSC
will be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge--Class B Shares" above.
Waiver of CDSC. The CDSC may be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70 1/2 in the case of an IRA
or Keogh plan or custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions pursuant to the Automatic Withdrawal Plan, as described below.
If the Fund's Board determines to discontinue the waiver of the CDSC, the
disclosure herein will be revised appropriately. Any Fund shares subject to a
CDSC which were purchased prior to the termination of such waiver will have the
CDSC waived as provided in the Fund's Prospectus or this Statement of Additional
Information at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Agent must notify the Distributor. Any such
qualification is subject to confirmation of your entitlement.
Redemption Through a Selected Dealer. If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by the
Transfer Agent prior to the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), the redemption request will be
effective on that day. If a redemption request is received by the Transfer Agent
after the close of trading on the floor of the New York Stock Exchange, the
redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited to your
account with the Selected Dealer.
In addition, the Distributor or its designee will accept orders from
Selected Dealers with which the Distributor has sales agreements for the
repurchase of shares held by shareholders. Repurchase orders received by dealers
by the close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor or its designee prior to the
close of its business day (normally 5:15 p.m., New York time) are effected at
the price determined as of the close of trading on the floor of the New York
Stock Exchange on that day. Otherwise, the shares will be redeemed at the next
determined net asset value. It is the responsibility of the Selected Dealer to
transmit orders on a timely basis. The Selected Dealer may charge the
shareholder a fee for executing the order. This repurchase arrangement is
discretionary and may be withdrawn at any time.
Reinvestment Privilege. Upon written request, you may reinvest up to the
number of Class A, Class B or Class T shares you have redeemed, within 45 days
of redemption, at the then-prevailing net asset value without a sales load, or
reinstate your account for the purpose of exercising Fund Exchanges. Upon
reinstatement, with respect to Class B, or Class A shares or Class T shares if
such shares were subject to a CDSC, your account will be credited with an amount
equal to the CDSC previously paid upon redemption of the shares reinvested. The
Reinvestment Privilege may be exercised only once.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be the investor,
or a representative of the investor's Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, the Fund will initiate payment for
shares redeemed pursuant to this Privilege on the next business day after
receipt if the Transfer Agent receives the redemption request in proper form.
Redemption proceeds will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account Application or
Shareholder Services Form or a correspondent bank if the investor's bank is not
a member of the Federal Reserve System. Holders of jointly registered Fund or
bank accounts may have redemption proceeds of only up to $250,000 wired within
any 30-day period. Fees ordinarily are imposed by such bank and borne by the
investor. Immediate notification by the correspondent bank to the investor's
bank is necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal 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 inform the operator of the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
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. You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two business days after receipt
of the redemption request. 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 System unless more prompt transmittal specifically is requested. Holders
of jointly registered Fund or bank accounts may redeem through the Dreyfus
TeleTransfer Privilege for transfer to their bank account only up to $250,000
within any 30-day period. See "Purchase of Shares--TeleTransfer Privilege."
Stock Certificates; Signatures. Any stock certificates representing Fund
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each owner of
a joint account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" should appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians and may accept
other suitable verification arrangements from foreign investors such as consular
verification.
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
portfolio of the Fund. If the recipient sold such securities, brokerage charges
would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings), (b) when trading
in the markets the Fund normally utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. You may purchase, in exchange for shares of the Fund,
shares of the same Class of another fund in the Dreyfus Premier Family of Funds,
shares of the same Class of certain funds advised by Founders, or shares of
certain other funds in the Dreyfus Family of Funds, and, with respect to Class T
shares of the Fund, Class A shares of certain Dreyfus Premier fixed-income
funds, to the extent such shares are offered for sale in your state of
residence. 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.
E. Shares of funds subject to a CDSC that are exchanged for shares of
another fund will be subject to the higher applicable CDSC of the
two funds, and for purposes of calculating CDSC rates and conversion
periods, if any, will be deemed to have been held since the date the
shares being exchanged were initially purchased.
To accomplish an exchange under Item D above, you or your Agent must
notify the Transfer Agent of your prior ownership of shares with a sales load
and your account number. Any such exchange is subject to confirmation of your
holdings through a check of appropriate records.
You also may exchange your Fund shares that are subject to a CDSC for
shares of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so
purchased will be held in a special account created solely for this purpose
("Exchange Account"). Exchanges of shares from an Exchange Account only can be
made into certain other funds managed or administered by the Manager. No CDSC is
charged when an investor exchanges into an Exchange Account; however, the
applicable CDSC will be imposed when shares are redeemed from an Exchange
Account or other applicable Fund account. Upon redemption, the applicable CDSC
will be calculated without regard to the time such shares were held in an
Exchange Account. See "Redemption of Shares." Redemption proceeds for Exchange
Account shares are paid by Federal wire or check only. Exchange Account shares
also are eligible for the Auto-Exchange Privilege, Dividend Sweep and the
Automatic Withdrawal Plan.
To request an exchange, you or your Agent acting on your behalf must give
exchange instructions to the Transfer Agent in writing or by telephone. The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the applicable "No" box on the
Account Application, indicating that you specifically refuse this privilege. By
using the Telephone Exchange Privilege, you authorize the Transfer Agent to act
on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be you or a
representative of your Agent, and reasonably believed by the Transfer Agent to
be genuine. Telephone exchanges may be subject to limitations as to amount
involved or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchanges. No fees currently are
charged shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules promulgated
by the Securities and Exchange Commission.
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.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such investor's
Retirement Plan account in another fund.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
you to purchase (on a semi-monthly, monthly, quarterly or annual basis), in
exchange for shares of the Fund, shares of the same Class of another fund in the
Dreyfus Premier Family of Funds, shares of the same Class of certain funds
advised by Founders, or shares of certain other funds in the Dreyfus Family of
Funds, and, with respect to Class T shares of the Fund, Class A shares of
certain Dreyfus Premier fixed-income funds, of which you are a shareholder. This
Privilege is available only for existing accounts. With respect to Class R
shares held by a Retirement Plan, exchanges may be made only between the
investor's Retirement Plan account in one fund and such investor's Retirement
Plan account in another fund. Shares will be exchanged on the basis of relative
net asset value as described above under "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business days
following notification by the investor. You will be notified if your account
falls below the amount designated to be exchanged under this Privilege. In this
case, your 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 Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which the fund being acquired may legally
be sold. Shares may be exchanged only between fund accounts having identical
names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611 (holders of Class Z shares should call
1-800-645-6561). The Fund reserves the right to reject any exchange request in
whole or in part. The Fund Exchanges service or Dreyfus Auto-Exchange Privilege
may be modified or terminated at any time upon notice to shareholders.
Dreyfus-Automatic Asset Builder(R). 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.
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 U.S. Government
automatically deposited into your Fund account. You may deposit as much of such
payments as you elect.
Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from the Fund in shares of the same Class of another fund in the Dreyfus
Premier Family of Funds, shares of the same Class of certain funds advised by
Founders, or shares of certain other funds in the Dreyfus Family of Funds, and,
with respect to Class T shares of the Fund, in Class A shares of certain Dreyfus
Premier fixed-income funds, of which you are a shareholder. Shares of other
funds purchased pursuant to Dreyfus Dividend Sweep 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 the 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 CDSC and the applicable CDSC, if any,
will be imposed upon redemption of such shares.
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.
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. Withdrawal
payments are the proceeds from sales of Fund shares, not the yield on the
shares. If withdrawal payments exceed reinvested dividends and distributions,
your shares will be reduced and eventually may be depleted. Automatic Withdrawal
may be terminated at any time by you, the Fund or the Transfer Agent. Shares for
which certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 12% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B shares under the Automatic Withdrawal Plan
that exceed on an annual basis 12% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 12% of the initial account
value. Withdrawals of Class A and Class T shares subject to a CDSC and Class C
shares under the Automatic Withdrawal Plan will be subject to any applicable
CDSC. Purchases of additional Class A and Class T shares where the sales load is
imposed concurrently with withdrawals of Class A and Class T shares generally
are undesirable.
Certain Retirement Plans, including Dreyfus-sponsored retirement plans,
may permit certain participants to establish an automatic withdrawal plan from
such Retirement Plans. Participants should consult their Retirement Plan sponsor
and tax adviser for details. Such a withdrawal plan is different than the
Automatic Withdrawal Plan.
Letter of Intent--Class A and Class T Shares. By signing a Letter of
Intent form, which can be obtained by calling 1-800-554-4611, you become
eligible for the reduced sales load applicable to the total number of Eligible
Fund shares purchased in a 13-month period pursuant to the terms and conditions
set forth in the Letter of Intent. A minimum initial purchase of $5,000 is
required. To compute the applicable sales load, the offering price of shares you
hold (on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above may be
used as a credit toward completion of the Letter of Intent. However, the reduced
sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months. If
total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A or Class T shares of the Fund, as applicable, held
in escrow to realize the difference. Signing a Letter of Intent does not bind
you to purchase, or the Fund to sell, the full amount indicated at the sales
load in effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class A or
Class T shares, you must indicate your intention to do so under a Letter of
Intent. Purchases pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at the
time such Letter of Intent was executed.
Dreyfus Payroll Savings Plan. Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum $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.
Dreyfus Step Program. Holders of Fund accounts since August 30, 1999 who
had enrolled in Dreyfus Step Program may continue to purchase shares of the same
class (currently designated Class Z shares) without regard to the Fund's minimum
initial investment requirements through Dreyfus-Automatic Asset Builder(R),
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan.
Participation in this Program may be terminated by the shareholder at any time
by discontinuing participation in Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case
may be, as provided under the terms of such Privilege(s).The Fund reserves the
right to redeem your account if you have terminated your participation in the
Program and your account's net asset value is $500 or less. See "Account
Policies-General Policies" in the Fund's Prospectus. The Fund may modify or
terminate this Program at any time. The Dreyfus Step Program is not available to
open new accounts in any Class of the Fund.
Corporate Pension/Profit-Sharing and Personal Retirement Plans. The Fund
makes available to corporations a variety of prototype pension and
profit-sharing plans, including a 401(k) Salary Reduction Plan. In addition, the
Fund makes available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, Education IRAs, SEP-IRAs and rollover IRAs) and
403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares. All
fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans may not
be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs with more than one participant, is $1,000
with no minimum on subsequent purchases. The minimum initial investment for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant, is normally $750, with no minimum on subsequent
purchases. The minimum initial investment for Education IRAs is $500, with no
minimum on subsequent purchases.
The investor should read the Prototype Retirement Plan and the Bank
Custodial Agreement for further details on 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 Shares."
Valuation of Portfolio Securities. Portfolio securities, including
warrants and covered call options written, are valued at the last sales price on
the securities exchange on which the securities primarily are traded or at the
last sales price on the national securities market. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recently reported bid and
asked prices. Bid price is used when no asked price is available. Market
quotations of foreign securities in foreign currencies are translated into U.S.
dollars at the prevailing rates of exchange. Short-term investments are carried
at amortized cost, which approximates value. Any securities or other assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Directors. The Fund's Board will review
the method of valuation on a regular basis. In making their good faith
valuation, the Board will generally take the following into consideration:
restricted securities which are, or are convertible into, securities of the same
class of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This discount
will be revised periodically by the Fund's Board if they believe that it no
longer reflects the value of the restricted securities. Restricted securities
not of the same class as securities for which a public market exists will
usually be valued initially at cost. Any subsequent adjustments from cost will
be based upon considerations deemed relevant by the Board of Directors. Expenses
and fees, including the advisory fees and fees pursuant to the Distribution
Plans and Shareholder Services Plans, are accrued daily and taken into account
for the purpose of determining the net asset value of Fund shares. Because of
the difference in operating expenses incurred by each Class, the per share net
asset value of each Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that the Fund has qualified for the fiscal year ended
May 31, 1999 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. Qualification as a "regulated investment company" relieves
the Fund of any liability for Federal income taxes to the extent its net
investment income and net realized capital gains are distributed in accordance
with applicable provisions of the Code. Among the requirements for such
qualification is that the Fund must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to its
shareholders and the Fund must meet certain asset diversification and other
requirements. However, the Fund may be subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed income and capital gains. If
the Fund does not qualify as a "regulated investment company", it will be
subject to the general rules governing the federal income taxation of
corporations under the Code. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by any
government agency.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividends or distributions and all future dividends and distributions payable to
you in additional Fund shares at net asset value. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss are taxable as ordinary income to
shareholders. The Fund may also make distributions of net capital gain (the
excess of net capital gain over net capital loss). Under current law, the
maximum effective federal income tax rate applicable net capital gains of a
noncorporate shareholder is 20%. Such treatment would apply regardless of the
length of time the shares of the Fund have been held by a shareholder.
Investors should be careful to consider the tax implications of buying
shares just prior to a distribution. The price of shares purchased at that time
include the amount of any forthcoming distribution. Any dividend or distribution
paid shortly after an investor's purchase may have the effect of reducing the
net asset value of the shares below the original cost of his investment. Such a
dividend or distribution would be a return on investment in an economic sense
although taxable as stated above. In addition, the Code provides that if a
shareholder holds shares of the Fund for six months (or such shorter period as
the Internal Revenue Service may prescribe by regulations) and has received a
long-term capital gain distribution with respect to such shares, any loss
incurred on the sale of such shares will be treated as long-term capital loss to
the extent of the capital gain dividend received.
Distributions of net investment income and capital gain are taxable as
described above whether received in cash or reinvested in additional shares.
Depending upon the composition of the Fund's income, the entire amount or
a portion of the dividends from net investment income may qualify for the
dividends received deduction allowable to qualifying U.S. corporate shareholders
("dividends received deduction"). In general, dividend income of the Fund
distributed to its qualifying corporate shareholders will be eligible for the
dividends received deduction only to the extent that (i) the Fund's income
consists of dividends paid by U.S. corporations and (ii) the Fund would have
been entitled to the dividends received deduction with respect to such dividend
income if the Fund were not a regulated investment company. However, Section
246(c) of the Code provides that if a qualifying corporate shareholder has
disposed of Fund shares not held for 46 days or more during the 90 day period
commencing 45 days before the shares become ex-dividend and has received a
dividend from net investment income with respect to such shares, the portion
designated by the Fund as qualifying for the dividends received deduction will
not be eligible for such shareholder's dividends received deduction. In
addition, the Code provides other limitations with respect to the ability of a
qualifying corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain or loss. However, all or a portion of the gain or loss
from the disposition of non-U.S. dollar denominated securities (including debt
instruments, certain financial forward, futures and option contracts, and
certain preferred stock) may be treated as ordinary income or loss under Section
988 of the Code. In addition, all or a portion of the gain realized from the
disposition of certain market discount bonds will be treated as ordinary income
under Section 1276. Finally, all or a portion of the gain realized from engaging
in "conversion transactions" may be treated as ordinary income under Section
1258. "Conversion transactions" are defined to include certain forward, futures,
option and straddle transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be issued in
the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund from
certain options transactions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Gain or loss will arise upon the
exercise or lapse of such options as well as from closing transactions. In
addition, any such options remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value, resulting
in additional gain or loss to the Fund characterized in the manner described
above.
Offsetting positions held by the Fund involving certain financial forward,
futures or options contracts may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
personal property. The tax treatment of "straddles" is governed by Sections 1092
and 1258 of the Code, which, in certain circumstances, override or modify the
provisions of Sections 988 and 1256. As such, all or a portion of any short or
long-term capital gains from certain "straddle" transactions may be
recharacterized as ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in certain financial forward, futures or options contracts, such
"straddles" could be characterized as "mixed straddles" if at least one (but not
all) of the positions comprising such straddles are "Section 1256 contracts." A
"Section 1256 contract" is defined to include any regulated futures contract,
foreign currency contract, non-equity option, and dealer equity option. Section
1256(d) of the Code permits the Fund to elect not to have Section 1256 apply
with respect to "mixed straddles." If no such election is made, to the extent
the "straddle" rules apply to positions established by the Fund, losses realized
by the Fund will be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the "straddle" and the conversion
transaction rules, short-term capital loss on "straddle" positions may be
recharacterized as long-term capital loss, and long-term capital gain may be
recharacterized as short-term capital gain or ordinary income.
Recently enacted legislation added constructive sale provisions that may
apply if the Fund enters into short sales, or futures, forwards, or offsetting
notional principal contracts with respect to appreciated stock and certain debt
obligations that it holds. In such event, with certain exceptions, the Fund will
be taxed as if the appreciated property were sold at its fair market value on
the date the Fund entered into such short sale or contract. Such legislation
similarly may apply if the Fund has entered into a short sale, option, futures
or forward contract, or other position with respect to property, which has
appreciated in value, and the Fund acquires that same or substantially identical
property. In such event, with certain exceptions, the Fund will be taxed as if
the appreciated position were sold at its fair market value on the date of such
acquisition. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.
PORTFOLIO TRANSACTIONS
The Manager assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in the Manager's best
judgment and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders at the most favorable net price.
When this primary consideration is met to the satisfaction of the Manager,
brokers may also be selected based on their sales of shares of other funds
advised by the Manager or its affiliates, or NCM, as well as their ability to
handle special executions such as are involved in large block trades or broad
distributions. Large block trades may, in certain cases, result from two or more
funds advised or administered by the Manager being engaged simultaneously in the
purchase or sale of the same security. Subject to the primary consideration,
particular brokers selected may also include those who supplement the Manager's
and NCM's research facilities with statistical data, investment information,
economic facts and opinions; sales of Fund shares by a broker may be taken into
consideration. Information so received is in addition to and not in lieu of
services required to be performed by the Manager and NCM and their fees are not
reduced as a consequence of the receipt of such supplemental information. Such
information may be useful to the Manager in serving both the Fund and other
funds which it advises and to NCM in serving both the Fund and the other
accounts it manages, and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to the Manager and NCM in
carrying out their obligations to the Fund. The overall reasonableness of
brokerage commissions paid is evaluated by the Manager based upon its knowledge
of available information as to the general level of commissions paid by other
institutional investors for comparable services. When transactions are executed
in the over-the-counter market, the Fund will deal with the primary market
makers unless a more favorable price or execution is otherwise obtainable.
Although it is not possible to place a dollar value on the research services
received from brokers who effect transactions in portfolio securities, it is the
opinion of the Manager that these services should not reduce the overall
expenses of its research department.
The Fund contemplates that, consistent with the policy of obtaining the
most favorable net price, brokerage transactions may be conducted through the
Manager or its affiliates. The Fund's Board has adopted procedures in conformity
with Rule 17e-1 under the Act to ensure that all brokerage commissions paid to
the Manager or its affiliates are reasonable and fair.
For its portfolio securities transactions for the fiscal years ended May
31, 1997, 1998 and 1999, the Fund paid total brokerage commissions of $531,274,
$1,049,596 and $1,430,703, respectively, none of which was paid to the
Distributor. The above figures for brokerage commissions paid do not include
gross spreads and concessions on principal transactions which, where
determinable, amounted to $29,760, $0 and $90,677 in fiscal years 1997, 1998 and
1999, respectively, none of which was paid to the Distributor.
The Fund's portfolio turnover rates (exclusive of U.S. Government
securities and short-term investments) for the fiscal years ended May 31, 1998
and 1999 were 70.41% and 75.88%, respectively. The Fund will not seek to realize
profits by anticipating short-term market movements. The annual portfolio
turnover rate indicates the rate of change in the Fund's portfolio; for
instance, a rate of 100% would result if all the securities in the portfolio at
the beginning of an annual period had been replaced by the end of the period.
While the rate of portfolio turnover will not be a limiting factor when
management deems changes appropriate, it is anticipated that, in view of the
Fund's investment objectives, its annual turnover rate generally should not
exceed 100%. When extraordinary market conditions prevail, a higher turnover
rate and increased brokerage expenses may be expected.
The aggregate amount of transactions during the last fiscal year in
securities effected on an agency basis through a broker for, among other things,
research services, and the commissions and concessions related to such
transactions were as follows:
Transaction Commissions and
Amount Concessions
$265,656,036 $230,192
PERFORMANCE INFORMATION
Prior to August 31, 1999, the Fund offered a single Class of shares
without a separate designation. The average annual total return of the Fund's
single Class of shares, which were redesignated as Class Z shares on August 31,
1999, for the one, five and ten year periods ended May 31, 1999 was 20.30%,
23.62% and 16.25%, respectively. Average annual total return is calculated by
determining the ending redeemable value of an investment purchased at net asset
value (maximum offering price in the case of Class A and Class T) per share with
a hypothetical $1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and distributions), dividing by the amount of the
initial investment, taking the "n"th root of the quotient (where "n" is the
number of years in the period) and subtracting 1 from the result. A Class's
average annual total return figures calculated in accordance with such formula
assume that in the case of Class A or Class T the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase or in
the case of Class B or Class C the maximum applicable CDSC has been paid upon
redemption at the end of the period.
The total return of the Fund's single Class of shares, which were
redesignated as Class Z shares on August 31, 1999, for the period March 29, 1972
(the Fund's inception) to May 31, 1999 was 3,065.18%. Total return is calculated
by subtracting the amount of the Fund's net asset value (maximum offering price
in the case of Class A and Class T) per share at the beginning of a stated
period from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the period and
any applicable CDSC), and dividing the result by the net asset value (maximum
offering price in the case of Class A and Class T) per share at the beginning of
the period. Total return also may be calculated based on the net asset value per
share at the beginning of the period instead of the maximum offering price per
share at the beginning of the period for Class A or Class T shares or without
giving effect to any applicable CDSC at the end of the period for Class B or
Class C shares. In such cases, the calculation would not reflect the deduction
of the sales load with respect to Class A or Class T shares or any applicable
CDSC with respect to Class B or Class C shares, which, if reflected would reduce
the performance quoted.
No performance information is provided for Class A, Class B, Class C,
Class R and Class T since they were not offered as of May 31, 1999.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio managers and may refer to, or
include commentary by the portfolio manager relating to investment strategy,
asset growth, current or past business, political, economic, or financial
conditions and other matters of general interest to investors. It may also
discuss or portray the principles of dollar-cost-averaging and may refer to
Morningstar or Value Line ratings and related analyses supporting the ratings.
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., Standard & Poor's 500 Composite Stock Price Index,
Standard & Poor's MidCap 400 Index, the Dow Jones Industrial Average,
Morningstar, Inc. and other industry publications.
From time to time, advertising materials may refer to studies performed by
The Dreyfus Corporation or its affiliates, such as "The Dreyfus Tax Informed
Investing Study" or The Dreyfus Gender Investment Comparison Study (1996 &
1997)" or other such studies.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each 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 have no
preemptive or subscription rights and are freely transferable.
Unless otherwise required by the Act, ordinarily it will not be necessary
for the Fund to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the election of 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 holding office at the time were elected by
shareholders.
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is following a market-timing strategy or is
otherwise engaging in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability of Fund Exchanges, or
reject in whole or part any purchase or exchange request, with respect to such
investor's account. Such investors also may be barred from purchasing other
funds in the Dreyfus Family of Funds. Generally, an investor who makes more than
four exchanges out of a Fund during any calendar year or who makes exchanges
that appear to coincide with a market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control will be
considered as one account for purposes of determining a pattern of excessive
trading. In addition, the Fund may refuse or restrict purchase or exchange
requests for Fund shares by any person or group if, in the judgment of the
Fund's management, the Fund would be unable to invest the money effectively in
accordance with its investment objectives and policies or could otherwise be
adversely affected or if the Fund receives or anticipates receiving simultaneous
orders that may significantly affect the Fund (e.g., amounts equal to 1% or more
of the Fund's total assets). If an exchange request is refused, the Fund will
take no other action with respect to the Fund shares until it receives further
instructions from the investor. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the Fund.
The Fund's policy on excessive trading applies to investors who invest in the
Fund directly or through financial intermediaries, but does not apply to the
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange requests
based on their separate components -- redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103,
as counsel for the Fund, has rendered its opinion as to certain legal matters in
connection with the shares of capital stock being sold pursuant to the Fund's
Prospectus to which this Statement of Additional Information relates.
Ernst & Young LLP, independent auditors, 787 Seventh Avenue, New York, New
York 10019, have been selected as independent auditors of the Fund.
